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Where Did $600 Billion Go?

09 Wednesday May 2012

Posted by Matt in K12, Uncategorized

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There are 3 important things I’ve learned recently about our education system:

  1. No one knows where the dollars in K-12 education are really going (we know the sources of funding, but we don’t know how those funds are spent).
  2. This leads to inefficient and unintended uses of the funding.
  3. There are powerful structural elements — including K-12’s various stakeholders and conditions/contingencies tied to how funding is used — that work against fixing the situation.

First, a little context about the K-12 world.

    • Large: Education spending for kindergarten through 12th grade is massive, totaling $600 billion, which is about $12,000 per year per student (with WIDE variations on per student spending depending on the state and district you live in, roughly from $5K-$15K).
    • Growing: Spending on K-12 education has grown 2-3x over last 30 years (even when adjusting for inflation).  Federal funding alone has doubled in the last decade.
    • Funding Sources #1 – 10/45/45: The $600 billion is funded 10% from federal dollars, 45% from state (sales & income taxes), and 45% from local (property taxes).
    • Funding Sources #2 – Taxes:  Education funding is the largest claim on your tax dollars except for Medicaid.

I spent some time with Marguerite Roza at the University of Washington’s College of Education who is the country’s expert on K-12 financing.  Her book, Educational Economics: Where Do School Funds Go?, is terrific — short, sweet, and clearly written — and I’ve excerpted a number of items from it below.

So, revisiting the three things I’ve learned….

1) No one knows where the dollars in K-12 education are really going (we know the sources of funding, but we don’t know how those funds are used).

How can this be true?  Well, the problem is districts don’t track what they spend on each school.  Seems like this would be pretty important, but they don’t do it.

As a result, “despite extensive financial reporting requirements, most districts cannot answer basic questions [such as]: How much does the district spend on professional development?…How much does the district spend on sports and electives? How much does Johnson Elementary receive relative to Lincoln Elementary?” (pg 47).

2) This leads to inefficient and unintended uses of the funding.

There are many examples, but let’s pick one with a particular historical connection.

In 1965, LBJ launched the War on Poverty and with it created a new federal education program called Title I.  The program was well-intentioned: it was meant to provide funds to schools with the highest concentrations of poverty.  More specifically, it was meant to provide incremental funds ON TOP of an equitable distribution of all other funds across all the schools in a district, so Title I would provide a real boost to the students most affected by poverty.

To this day, Title I is the largest slice of the $60 billion federal edu pie at $15 billion per year.  The problem is, it’s not working as intended.

How can this be?  To have any sense for where money goes in K-12, it helps to start by looking at compensation, as salaries and benefits count for ~70% of spending (we think!).

Since more experienced and therefore more expensive teachers (due to seniority vs. merit-based compensation plans) choose to teach in wealthier schools with middle & upper-class students, these schools receive more funding by way of higher salary spending.  For instance, 1 teacher in poor school tends to be less experienced so gets $40K whereas 1 teacher in a wealthy school tends to be more experienced so gets $60K.

The funding gap between schools with wealthy and poor student populations is so large that Title I dollars cannot make up for it — instead of providing a boost, it can’t even provide a level playing field.  So the highest poverty schools actually receive less than wealthier schools — completely opposite of what is intended.

Targeted Federal Funding atop Uneven Base Allocations in One School District (pg 35)

As a result, we’ve reached a world where, “one could argue that the implicit [my emphasis] strategy in spending realized at the school level is one where the system:

  • is trying to increase the gaps between minorities and whites;
  • reinforces the benefits realized by wealthier students;
  • is working to expand the achievement gap between high and low performers” (pg 68).

3) There are powerful structural elements — including K-12’s various stakeholders and conditions/contingencies that limit how funding is used — that work against fixing the situation.  

There are numerous stakeholders who are involved in the K-12 world: school boards, superintendents, central office staff, principals, parents, and political officials at the local, state and federal level.  Why is this necessarily a problem?

Well all these chefs each vie for their own favored projects — and those better at working the system assert greater influence over where funding goes vs. programs (e.g. Title I) intended to sure equitable distribution.  For instance: “Parents band to block school closures and prevent budget cuts to cherished programs.  In one district, students marched into a [school] board meeting playing their musical instruments, thus saving the middle-school music program in a single school.” (pg 30)

In addition, more chefs lead to more rules which limit a school’s site-based discretion.   For instance: “In [one] school, the district continues to provide bus transportation to all students to the school, despite the fact that more than half could safely walk.  The principal wants to redirect the funds to other services but says the district cannot, since those funds are earmarked by the state for transportation only.”  (pg 66)

What to Do?

There is no magic solution.  But I do think there are opportunities to (a) advise districts on how to better make use of and understand their data as well as (b) create technology solutions to track spending down to the school level — not just software to enable compliance, but software to enable insight into where money really goes and whether it’s being spent in ways that drive student achievement.

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2,500 Year Old Medical Problem

30 Monday Apr 2012

Posted by Matt in Uncategorized

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I came across an interesting whitepaper by HealthPrize.com, which is a company addressing what turns out to be the massive issue of patients not taking their medications (what’s called “medication non-adherence”).

Although it sounds counter intuitive, 50%-70% of people, after being prescribed medications by their doctors, don’t take them.

And interestingly, this is a phenomenon which has been going on for thousands of years — as the paper’s quote from Hippocrates almost 2,500 years ago (“Keep a watch also on the faults of the patients, which often make them lie about taking of things prescribed.”) indicates that humans have had a long history of non-adherence.

Hippocrates Refusing the Gifts of Artaxerxes I (1792) by Anne Louis Girodet de Roucy-Trioson

How pervasive is this?

  • Up to 25% of people don’t fill their prescription in the first place.
  • Of those that do, up to 40% stop taking within the first 60-90 days; another 20% drop off somewhere along the way.
  • As a result, only 30% of people take their prescriptions as they’re supposed to (that’s (i) 75%, those who actually fill their initial prescription, multiplied by (ii) 40%, those who complete their treatment).

What’s going on here?

Non-adherence obviously has costs for patients; drug companies (e.g. lost revenue); and increased costs on the medical system as patients worsen — the total costs are estimated at “$290 billion in ‘otherwise avoidable medical spending’ in the US per year”.  And as this is not a new problem, you can imagine that there have been a lot of efforts to fix it — with practical things like alerts and reminders for patients.

But maybe part of the issue is that prior fixes have focused on addressing rational vs. emotional thought.  After all, one of the key reasons people don’t take their medications is that they don’t like the constant reminder of their affliction.

In that context, it seems to me that fixes could be designed to meet people in a different way — e.g. giving people counseling (even if limited?) for the duration of their prescription period?  If that’s cost-prohibitive to do across all medications, focus it on the chronic afflictions where there’s the highest-cost to all parties.

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Are We As Smart As We Think…or Smarter?

25 Wednesday Apr 2012

Posted by Matt in Uncategorized

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Interesting article in Sunday’s NY Times called “Would You Vote for This Face” (called “A Facial Theory of Politics” in online editions) which highlights — based on the results of a series of studies — the importance of candidates’ looks in determining their electability.

Some excerpts:

  • “It turns out that a candidate’s appearance — not beauty, but a look of competence — can generate a far greater vote swing than we previously thought.  Furthermore, this effect is not only powerful but also subliminal.  Few of us believe that appearance determines our vote, yet for a significant number of us, it may.”
  • “After all the talk about the economy, health care and other contentious issues, the issue that may swing an election may be which candidate best looks the part.”

As the author notes, few of us are likely to admit that looks determine our sense for others’ competence.  But as is true in these studies, just as it is in our everyday lives, we often rationalize our decisions after we’ve already made a determination that may be based on a subliminal process, an emotional response,  a gut feel, etc.

Since by its nature, this undercurrent can be hidden from rational thought, it can be hard to be aware of it, but I suspect if you pay attention to this, that in the next day or two you’ll come across an instance where you justify a decision with your rational thought process that your emotional or instinctive intelligence had already made.

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Big and Fragmented: K-12 Education

08 Sunday Apr 2012

Posted by Matt in K12, Uncategorized

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There’s an increasing amount of attention being paid by tech companies to how data is used in K-12 education.  More and more start-ups (as well as larger companies, including the education publishers) are focusing on how to capture and make use of student, school, and district data to drive academic gains — e.g. capturing student performance in real-time to enable teachers to provide personalized learning, differentiated instruction, etc.

I was curious about what kind of publicly available K-12 data exists today, so I headed over to the National Center for Education Statistics (which is run by the US Dept of Ed) to see what they have.

What I found was mostly a collection of macro-level, dated info (some of the most recent data is from 2010).  More useful for policy makers than for students and teachers.  But what’s clear from the data is that while K-12 market is massive, it’s extremely fragmented — and it’s why the emerging tech companies will face distribution challenges unlike in any other tech market.

1) Big Market: Growth in K-12 Student Population

The growth of the US elementary and high school population has almost doubled in the last 60 years to 56 million.  Interestingly, much of that growth occurred from 1950-1970 with the baby boom explosion, and for the last decade, the population has remained essentially flat.   By 2019, the US DOE predicts there will be an additional 3 million K-12 students or about 60 million.

2) Fragmented Market:  Dispersion of K-12 Student Population

The 17,00 US school districts are highly fragmented:

  • ~30% of districts (nearly 5,000) have only 1 school, accounting for just 3% of students
  • ~99% of districts have 50 schools or less, accounting for 72% of students
  • Only 0.4% of districts (just 65) have more than 100 schools.  But these account for 16% of students

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Battling Evolution: The Difficulty (And Importance) of Keeping Your Cool

27 Tuesday Mar 2012

Posted by Matt in Uncategorized

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In the dizzying hours following JFK’s assassination, while most were understandably overcome with emotion, the man right in the center of it all who suddenly found himself ascended to the Presidency, was by many accounts extremely calm.

As Robert Caro describes in “The Transition”, his gripping New Yorker article this week, LBJ’s life instantly transformed from a going-nowhere-fast Vice Presidency that was likely about to be embroiled in a kick-back scandal, to the most powerful man on the planet.  Yet in those few hours on November 22, 1963 — when he was whisked away from the shots being fired, to the hospital where JFK was pronounced dead, to Air Force One to be sworn in — he’s described generally as calm, cool, and collected.

LBJ is sworn in on Air Force One, Nov 22, 1963

We know such composure can be valuable.  But according to Laurence Gonzales in his book Deep Survival, “only 10 to 20 percent of people can stay calm and think in the midst of a survival emergency.”

Why?

If being calm is good in emergencies, why doesn’t it come easily to us?  Said another way, why is LBJ’s poise unusual and noteworthy even 50 years later?

Gonzales argues that stress, which releases hormones that interfere with the part of the brain that allows us to perceive our broader environment and make decisions, “causes most people to focus narrowly on the thing that they consider most important.”  Could be fight.  Could be flight.  Could be anything.  The problem is, we live in a modern world where it’s not just all about getting to safety — every day we face an infinite set of “hazards” that evolution couldn’t possibly have forseen to prepare us for.

He continues: “Emotions are survival mechanisms, but they don’t always work for the individual.  They work across a large number of trials to keep the species alive.  The individual may live or die, but over a few million years, more mammals lived than died by letting emotion take over, and so emotion was selected.  For people who are raised in modern civilization, the wilderness is novel and full of unfamiliar hazards.  To survive in it, the body must learn and adapt.”

One of those key adaptations is the ability to control one’s fear, enabling the brain to maintain its ability to perceive and make informed decisions.

Great adventurers have described this necessity in their own way.  Gonzales quotes one of the first South Pole explorers in 1910 as saying the “quality which is perhaps the only one which may be said with certainty to make for success [is] self-control.”

Shear acts of will might be required to extert self-control and overcome our ingrained instincts.  As Teddy Roosevelt wrote many years after his time in the North Dakota badlands:  “There were all kinds of things which I was afraid at first, ranging from grizzly bears to ‘mean’ horses and gunfighters; but by acting as I was not afraid I gradually ceased to be afraid.”

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Some Like it Hot

20 Tuesday Mar 2012

Posted by Matt in Uncategorized

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Today was hot.

Maybe not Ted Stricker hot, but still hot enough that walking around outside qualified as a workout.  In Central Park today, the National Weather Service said it reached 73 degrees.

Let’s put that in context: normally it’s 51 degrees on March 20th in New York.  Fittingly, last year, it was 51 degrees on this date.  Today wasn’t an all time record — that belongs to 1945’s 83 degrees — but safe to say this has been an unusually warm winter in the city, as well as in many other parts of the country.

I was curious what stats are available to help us quantify how mild the season has been, so I headed over to the National Weather Service’s site, which, if you can get past the 1995 look n’ feel, is actually pretty useful (they have NY data back to 1869).

Here’s what I found:

  1. This winter has been the second warmest on record — interestingly, 4 of the top 5 have occured in the last twenty years.
Average Temperature for Dec-Feb (Warmest Rankings)
Temperature Season
41.5 2001-2002
40.5 2011-2012
40.1 1931-1932
39.6 1997-1998
39.2 1990-1991
Normal: 35.1

2.  Over the past 150 years, the average monthly temperature for March has been 40.3 degrees — interestingly, since 2000, that average is 7% higher at 43.1 degrees.

So today’s temperature of 73 degrees is over 80% higher than the usual monthly average in Central Park.

Feels great in the short term.  But if the warming trend is only in one direction, it does make you wonder what are the implications for the long term.

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