During the state budget crisis, lawmakers moan that there’s simply nothing that can be cut. Yet during the fat times, the budget increased at rates far greater than inflation. Begging the question — why does it cost so much more to run New York than it did 10 years ago?
Let’s take just one category, spending on public schools, where the numbers are staggering — and, from a taxpayer’s perspective, deeply distressing.
As reported by the State Education Department, New York spent an estimated $53.7 billion on public schools in 2008-09. That was an 81% increase compared to a decade earlier. The portion of that funding coming from state tax dollars jumped by 102% over the same period.
However, inflation (as measured by the GDP price deflator) only increased by 27% over the same period.
Even more striking is that enrollment actually declined slightly during this time. We are spending a great deal more to educate fewer children.
Total per-pupil public school spending hit $19,350 in 2008-09, up from $10,356 in 1998-99. Unsurprisingly, New York’s spending is the most lavish compared to the other states. According to the National Center for Education Statistics, no other state spent more than New York, which exceeded the US average by 66%.
So where is the money going?
Looking at State Education Department data for 2007-08 (the latest available), the first thing you notice is teacher salaries, which accounted for 35% of the $18,365 in total per-pupil expenditures. This is an increase of 64% from 1997-98, from $3,880 of the total expenditure to $6,367.
New York, by the way, had the second-highest average public school teacher salary among the states in 2008-09, at $64,336 — which exceeds the US average by 21%.
But salaries are not the entire compensation story. The costs of the luxurious benefits received by public school employees stand out for their acceleration in recent years.
Payments into the teacher retirement system increased from 2.6% of per-pupil spending in 1997-98 to 5.6% a decade later. Those expenditures went from $252 per pupil to $1,021 — a 305% increase! That’s more than 11 times the rate of inflation.
Health benefit costs for employees have skyrocketed as well. In 1997-98, per-pupil spending on health benefits registered $595, expanding to $1,570 in 2007-08. That jump of 164% pushed health benefits from 6% to 9% of total spending.
For good measure, the costs of assorted “other employee benefits” leaped from $666 per pupil to $1,222 — an 83% increase, remaining at 7% of overall spending.
So, it should be no surprise that these salary and benefit costs cover about two-thirds of per-pupil spending.
Other categories of spending also experienced large increases over the past decade. And though individually a relatively small part of total spending, when added together, they certainly contribute to the substantial overall rise in the costs of funding public schools.
For example, again on a perpupil basis from 1997-98 to 2007-08, central administration expenditures rose by 61%, operations and maintenance by 68%, and BOCES (Boards of Cooperative Educational Services) instruction expenses by 73%. Other instructional expenses (such as for supplies, materials, equipment, interscholastic athletics and co-curricular activities) jumped by 149%, going from 5% of total spending to 7%.
Transportation costs, which account for 5% of total spending, increased by 89%, and total debt service (payments for principal and interest) increased by 111%, covering a bit more than 5% of total spending.
In the end, all categories of public school spending have been racing ahead for a very long time — far beyond the decade of data looked at here — and far outpacing the rate of inflation.
But it must be recognized that a big share of the dollars go for compensating teachers. Unfortunately, in a government system with standardized pay scales and powerful unions, bigger bucks for teachers do not necessarily mean higher-quality education. In fact, compensation in unionized public schools is effectively disconnected from performance.
The late Milton Friedman, the economic father of school choice, observed the following in his classic book “Capitalism and Freedom”: “If one were to seek deliberately to devise a system of recruiting and paying teachers calculated to repel the imaginative and daring and self-confident and to attract the dull and mediocre and uninspiring, he could hardly do better than imitate the system requiring teaching certificates and enforcing standard salary structures that has developed in the larger city and state-wide school systems.”
That was written nearly 50 years ago, and it applies even more today.
Until the union-dominated, public school monopoly is broken and replaced by a market system of choice, competition and rewarding excellence while punishing poor performance in teaching, no one should expect anything different than continued rising costs, and stagnant or declining quality in teaching and education. After all, what do you do in government when a program is failing? Throw more money at it. And that’s what happens with public schooling.
Raymond J. Keating is a Long Island-based economist and writer.