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Does School Reform = Spending Reform? The Effect of the New Orleans School Reforms on the Use and Level of School Expenditures

A policy brief and technical report by Christian Buerger and Douglas N. Harris on the effects of the post-Katrina school reforms on the operating expenditures of New Orleans' publicly funded schools.

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Does School Reform = Spending Reform? The Effect of the New Orleans School Reforms on the Use and Level of School Expenditures

by Christian Buerger, Douglas N. Harris

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School Revenues and Expenditures

Over the past quar­ter cen­tu­ry, few ideas in edu­ca­tion reform have had more con­sis­tent sup­port than giv­ing schools more auton­o­my. One way to do that is through char­ter schools. In par­tic­u­lar, these pub­lic-pri­vate part­ner­ship schools, freed from dis­trict rules and union con­tracts, have the flex­i­bil­i­ty to spend their fund­ing as they think best. This study esti­mates the effects of the post-Kat­ri­na school reforms on the oper­at­ing expen­di­tures of New Orleans’ pub­licly fund­ed schools. We com­pare all the city’s pub­licly fund­ed schools to a group of Louisiana school dis­tricts that had sim­i­lar spend­ing pat­terns before the New Orleans reforms shift­ed the city to a char­ter-dri­ven sys­tem. We also show changes for both groups before and after the post-Kat­ri­na school reforms, focus­ing espe­cial­ly on the most recent year of data avail­able (2014). We draw the fol­low­ing con­clu­sions: New Orleans’ pub­licly fund­ed schools spent 13% ($1,358 per stu­dent) more per pupil on oper­at­ing expen­di­tures than the com­par­i­son group after the reforms, even though the com­par­i­son group had near­ly iden­ti­cal spend­ing before the reforms. Spend­ing on admin­is­tra­tion in New Orleans’ pub­licly fund­ed schools increased by 66% ($699 per stu­dent) rel­a­tive to the com­par­i­son group, far more than the over­all spend­ing increase. Of this increase, 52% ($363 per stu­dent) is due to a rise in total admin­is­tra­tive salaries. Rough­ly one-third of the increase in admin­is­tra­tive salaries is due to hir­ing more admin­is­tra­tors, and the remain­der is due to high­er aver­age salaries per admin­is­tra­tor. Instruc­tion­al expen­di­tures in New Orleans’ pub­licly fund­ed schools actu­al­ly declined by 10% ($706 per stu­dent) rel­a­tive to the com­par­i­son group. This decline is dri­ven by a drop in spend­ing for instruc­tion­al staff ben­e­fits ($353 per stu­dent) and in instruc­tion­al staff’s salaries ($233 per stu­dent). Almost all of the decrease in total instruc­tion­al salaries is due to low­er aver­age salaries per instruc­tor, though new teach­ers still earn more today than teach­ers pre-Kat­ri­na who had the same years of expe­ri­ence. Trans­porta­tion spend­ing and oth­er expen­di­tures, which typ­i­cal­ly include con­tracts to out­side firms, each increased by 33%. How­ev­er, stu­dent sup­port expen­di­tures and main­te­nance were large­ly unchanged. The fact that instruc­tion­al expen­di­tures have decreased despite a large increase in oper­at­ing expen­di­ture is strik­ing. The increase in admin­is­tra­tive spend­ing also sug­gests either that the lack of economies of scale has posed a real chal­lenge in this decen­tral­ized sys­tem or that the edu­ca­tion­al mod­els of char­ter schools involve high­er man­age­ment costs and per­haps a more top-heavy approach. There is no one right way to use edu­ca­tion­al resources, and it is worth not­ing that these changes in spend­ing lev­els and pat­terns came along­side a large improve­ment in edu­ca­tion out­comes for stu­dents. Still, these results are some­what sur­pris­ing giv­en the com­mon con­cern that tra­di­tion­al school dis­tricts spend too much on large bureau­cra­cies. We find that char­ter schools spend even more in that area. What­ev­er the rea­sons, it is clear that the post-Kat­ri­na reforms led to more spend­ing in total and dif­fer­ent spend­ing pat­terns in New Orleans’ pub­licly fund­ed schools.

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