Some unpleasant news on education spending priorities

Indiana’s General Assembly is working through some details on the final education budget, and there are issues that merit discussion. Be warned, this column is likely to leave most folks a bit flustered. Facts are unfriendly to badly informed opinions.

I begin by noting that the State of Indiana does not pay teachers. The State of Indiana funds K-12 education, and school boards pay teachers. It is critical to be clear about this, and not submit to the temptation of silly retail politics. This is important because school boards make decisions that affect teacher pay. For example, almost four out of every 10 school districts in Indiana are so small that overhead costs eat a disproportionate amount of state funding. In these places, consolidating districts would free up money to keep local schools open and pay teachers better.

Most other teacher pay decisions are likewise part of a school board’s job. Statewide, the data are clear; there is no teacher shortage. However, in many school districts, finding and keeping the teachers those schools need is very difficult. Folks, if your school district is too small to attract the teachers you need, the problem isn’t in Indianapolis, it is at your school board. That is the place to start the pay and budget discussion.

It is worth noting the overall issue of teacher pay. The best data I have seen concludes that Indiana teachers are paid less than the average in surrounding states. It is almost certain that some of this is erased after comparing teachers in similar communities, but it does raise some important questions. Most importantly, it is nearly impossible to compare salaries between public sector occupations. For example, an Army Second Lieutenant makes less than $29,000 in a nine-month salary. That is about $6,000 less than the starting wages for a teacher.

Whether Indiana teacher salaries are too high or too low is nearly impossible to determine. Moreover, I don’t think it is the real issue. The real issue is how the state is allocating resources on developing human capital. Getting the state better aligned on these issues will have to wait until the next budget session, but it is worth reviewing some ugly budget issues that are coming to pass this year.

This biennium budget is designed for the 10th year of economic expansion, the longest on record. Yet, we seemingly have real budget struggles. How can that be? One possible answer is that we tax ourselves too little, but I’ll save that for another column. Another answer is that we are spending far too much remediating the ill effects of poor education, and too little preventing poor education.

To help figure this, I’ll compare the budget for 2010 and 2017, which is after the changes to the tax laws that began in 2008, through the most recent year of data that is available. I adjust for inflation using the consumer price index. Over this time, per student spending on K-12 rose 0.45 percent. That amounts to about $5.19 per student in extra spending each year. Per student spending on higher education declined by 11.4 percent, or roughly $93.60 per year. During the same time spending on the big three poverty programs; Medicaid, TANF and other cash assistance rose by a whopping 42 percent. At the same time, the number of people in poverty declined by 67,000 people. On a per capita basis, these programs rose in cost by 52.7 percent, or $183.8 per year.

Moreover, the current budget allocates large increases in funding to Department of Child Services, ostensibly to deal more effectively with the opioid crisis. There is also more funding for community and technical education based on little more than the dubious claim of a worker shortage, especially in low wage jobs. So here comes the indelicate revelation about this spending.

Nearly all spending on Medicaid, TANF (welfare), other cash assistance programs, DCS, FSSA and much of CTE training addresses some form of the same problem; too little basic education.

Spending more money on education will not be a panacea, as legislators well understand. Still, it is a lot cheaper to help fix the problems of poverty by better educating three- to eight-year-olds than it is to wait until they are adults and barrage them with public assistance and training programs designed for jobs, not careers.

In roughly four months from now, the U.S. will be in its 10th year of economic expansion. This should be a time of innovative and forward-looking public policy. It should be a time when we tackle our most vexing problems with budgets full of tax revenues. This should be a time of investment in the very distant future where we have resources enough to make sure every kid can read, every high school graduate is college ready and career opportunities (not simply job opportunities) are available to every adult. This is my budget wish for the next biennium.

Michael J. Hicks is the director of the Center for Business and Economic Research and an associate professor of economics in the Miller College of Business at Ball State University. Send comments to [email protected].