Educational Spending Perspective

By Bob Myer

The Census Bureau reported this past week that in 2005 an average of $8701 was spent per student in government schools. That number in itself doesn't really say much because it doesn't provide a comparison to anything in particular. But it does offer a helpful starting point for running some numbers to analyze the business of government education.

Let's assume the following:

Each student "pays" his or her school $8700 a year for their education.
Each student takes 6 classes a school year, making the per-class distribution of funds $1450 per class.
Each teacher is paid the 2004-05 national average (source) of $47,600 (rounded down from $47,602), which does not include associated benefits costs. To give some indication of benefits, tack on 25% [in government employment the benefits may be higher, but this figure is realistic in the private sector -ed.] bringing teacher compensation to $59,500.
Given a secondary school teacher's schedule, each teacher teaches 5 classes a day with an average of 25 students per classroom. That's 125 students a teacher sees every day.

Therefore, for a given school year, a teacher takes in $36,250 per class or $181,250 in total.

In this model, 32.8% of that total goes directly to teacher compensation. That leaves another $121,750 per teacher for the school to cover administrative, counseling, maintenance, security, extra-curricular, and other activities. In business, this would be called a "gross margin" and a 67.2% gross margin is very healthy, indeed. That's a heap of money per school, especially considering that in large high schools, there may be 200 teachers.

200 teachers at $121,750 per teacher equals $2.435 million gross margin per school above and beyond teacher compensation. That's a lot of money to be managed.

For school-level administrators, there seems to be an expectation that they be chief instructional officers for their staff and quasi-CEOs of their schools simultaneously. It's an unrealistic expectation. This is big business wrapped in a cloak of education, and the two should probably be separated by structure - one side to deal with money, the other side to lead the school academically.

The really strange thing is that there is no reliable correlation between school spending and student achievement. It only makes sense that dollars are put in the headlines because they are digestible data chunks. What would be a more productive is a discussion about things that really affect student achievement, like teacher skills and expectations, family expectations and out-of-class activities.

But these things force judgment calls which some find uncomfortable or, God forbid, offensive - offensive because the discussion might place them in a bad light.