The limits of money: schools K-12 have plenty of dough, but what have they to show?

JOHN KERRY has repeatedly denounced the Bush administration for promoting an ambitious education agenda but refusing to foot the bill. Kerry charged in his campaign book, A Call to Service, that the administration has "undermin[ed] education funding as part of a larger strategy of directing every available school dollar toward tax cuts for the wealthiest Americans." Kerry has particularly attacked Bush for not spending enough money to support the federal No Child Left Behind (NCLB) act. In a July speech to the American Federation of Teachers, Kerry accused the administration of "[breaking] their promise by shortchanging the law by $27 billion. Millions of children have been left behind--left with overcrowded classrooms, left without textbooks, and left without the high-quality tests that measure what they are learning."

Kerry's signature education proposal is a new National Education Trust, a pool of funds supporting federal education mandates. Kerry promises to draw on those dollars to "fully fund" NCLB, give a $5,000 pay increase to teachers in troubled districts or hard-to-staff subjects, pay for a costly reauthorization of the Individuals with Disabilities Education Act, and fund a $24.8 billion school-facilities-modernization bond drive. All told, analysts have calculated that Kerry's increases would amount to $200 billion over ten years.

The administration has not responded by insisting that money be spent more responsibly. Instead, it has bragged about its own largesse, pointed to a GAO study explaining that No Child Left Behind isn't technically an "unfunded mandate" (since states can opt out), and berated states for not having spent a backlog of $6 billion in previous aid rapidly enough.

President Bush's campaign website trumpets the administration's success at enacting "historic levels of funding" on its watch, including a 49 percent increase in total K-12 spending, $139 million for reading programs totaling four times the anount spent in FY 2001, and a 75 percent increase in special-education funding. Bush has highlighted school spending on the campaign trail, telling a West Virginia crowd, "Listen, we've increased the budgets out of Washington by 49 percent since 2001. That is a healthy increase." A Department of Education official later publicly boasted, "Funding has gone up 49 percent under President Bush. Let me repeat that: 49 percent. That's a huge, historic, gargantuan increase in federal education spending."

The administration is correct. In its first three years, elementary and secondary-education spending increased by more than it did during the entire Clinton administration. Between 2001 and 2004 federal education appropriations nearly doubled, from $29.4 billion to $55.7 billion. Moreover, the GAO has concluded that the new requirements actually imposed by NCLB--testing every child, for example--are relatively inexpensive and are more than adequately offset by federal education dollars.

The problem is not with the particulars of the defense offered by the administration, but with its basic assumptions. Conservatives have permitted the debate to proceed on the dubious assumption that Americans are shortchanging our schools and that promising new dollars is de rigeur for those who would promote serious school reform. The current debate has obscured the fact that, by any reasonable standard, American schools are exceptionally well funded.

The truth is that, between 1960 and 2000, after-inflation education spending more than tripled. Harvard's Caroline Hoxby has found that real, inflation-adjusted spending grew from $5,900 per pupil in 1982 to more than $9,200 in 2000. In its most recent figures, the Organization for Economic Cooperation and Development (OECD) estimates that current U.S. education spending is over $10,800 per child.

In fact, some may be surprised to learn that the U.S. ranks at the top of the international charts when it comes to education spending. In 2000, the most recent year for which international comparisons are available, the OECD found that the United States spent significantly more per child than any other industrial democracy, including those famous for their generous social programs. In primary education, on a per-pupil basis, the United States spent 66 percent more than Germany, 56 percent more than France, 27 percent more than Japan, 80 percent more than the United Kingdom, 62 percent more than Finland, 62 percent more than Belgium, and 122 percent more than South Korea. At the secondary-school level, the figures are similar, with the U.S. outpacing Germany, Japan, the United Kingdom, Sweden, and South Korea, among others, by more than 40 percent per pupil.

Despite all this spending, the U.S. ranked 15th among the 31 countries that participated in the OECD's 2000 Program for International Student Assessment reading exam. Ireland, Iceland, and New Zealand were among the nations that outperformed the U.S. while spending far less per pupil. The results in math are equally disquieting: In the international 1999 TIMSS study, which assessed mathematics and science achievement at the eighth-grade level, the U.S. ranked 19th out of 38 countries.

Not only are we spending education dollars without much payoff, we are spending more than we think. The accounting guidelines in schools would bring smiles to the former executives of Enron or Tyco. Unlike private-sector businesses, school systems exclude several major costs when computing "current expenditures." Among those excluded: property acquisition and construction.

UCLA business professor Bill Ouchi has calculated that in New York City, during the 2001-2 academic year, the cost of debt service, school construction, and renovation added $2,298 to the $11,994 in reported current expenditure--meaning the district actually spent $14,292 per student. In Los Angeles, the true per-pupil cost in 2001-2 was $13,074. A reasonable estimate is that the per-pupil spending figures you see in your local paper represent only about 70 to 80 percent of what is actually being spent.

In California, a state beset by yawning budget problems, personnel costs outstripped revenue growth in 13 of the 20 largest school districts between 1996 and 2002. Sacramento enjoyed revenue growth of 33 percent and saw enrollment grow by just 4 percent in that period, yet even then found a way to boost its personnel costs by 41 percent. This summer's state budget, passed after a contentious legislative session, included a 5 percent increase for K-12 education and devoted $49.2 billion of the $78.7 billion education budget to K-12 schooling. Were the educators elated by their good fortune? Hardly. Education Week reported that state superintendent of public instruction Jack O'Connell was "disappointed" by the budget and that educators were simply relieved "the numbers were not as bad as they could have been."

The endless flow of money has allowed schools to avoid cutting fat even as other organizations have slimmed down. Between 1949 and 1999, the number of non-teachers employed by American schools increased from one for every 2.36 teachers to one for every 1.09 teachers. In New York City, for instance, the public-school district employs about 25,000 central-district personnel to manage the affairs of the district's 1 million students. The New York archdiocese, which enrolls about 110,000 students (approximately a tenth of what the city's public schools enroll), makes do with a district staff of 22.

For decades, we have poured money into shrinking class sizes and reducing teacher workloads. Between 1960 and 2000, the ratio of teachers to students fell from one teacher for every 26 students to one for every 16.1 students, meaning that today's teachers instruct only about 60 percent as many students as teachers did 40 years ago. Meanwhile, the amount of time teachers spend with students each day has actually shrunk, from an average of 4.5 hours in 1980 to 3.9 hours in 1998.

In short, we're spending more to hire more non-teachers and more teachers (each of whom spends less time teaching fewer children). The result is that, while total spending on teachers has rocketed, individual teachers have seen limited increases and feel underpaid. Additional personnel have soaked up dollars that could have rewarded accomplished practitioners, been invested in technology, or used for effective professional development.

It is indeed possible that we do not spend enough on schooling. However, until we start wringing out inefficiencies and rewarding educators for finding ways to do more with less, there's no way to know. Until we make that effort, more spending is an excuse for lethargy and for ducking hard decisions.

Leading conservative voices in Washington and in the state capitals have allowed themselves to be backed into a corner where their credibility as serious education reformers rests on their willingness to first promise more money for the schools.

New spending inevitably yields new initiatives tossed atop old inefficiencies. Buying off the status quo is no way to focus the education debate on accountability, competition, parental choice, flexibility, or results. Rather than brag that they too can spend like drunken sailors, serious reformers should instead insist that educators show them the money--and the results. The truth is that our schools should be doing a lot better for the money we spend. Elected officials should remember that--and run on it.

Mr. Hess is director of education-policy studies at the American Enterprise Institute and author of Common Sense School Reform.