How schools can survive the financial downturn

Back-to-school time, soaring fuel prices, and a wobbly economy are all upon us, so it shouldn't surprise anyone that the papers are brimming with sad stories about schools getting slammed by skyrocketing costs and slumping tax revenues. "Hard Times Hitting Students and Schools," reported the New York Times recently. "Schools eye four-day week to cut fuel costs," declared Reuters.

And it's true that public schools from coast to coast are cutting back on "non-essentials": art classes, field trips, technology upgrades, and more.

But don't start crying into your coffee, because the appropriate reaction is anger, or at least exasperation, not empathy.

How come? Think about how businesses face downturns. If revenues shrink, costs must be contained. And in labor-intensive enterprises, that includes cutting staff. That's no happy task, but it comes with a silver lining: a period of belt-tightening can encourage companies to trim the fat by releasing their low-productivity employees and those in the least necessary roles.

But in public education--perhaps the ultimate labor-intensive enterprise--this option is almost always off the table. That's because powerful teacher unions have lobbied legislatures and school boards to adopt policies which require that schools follow a "last hired, first fired" approach to any layoffs--and which give lifetime tenure to just about everyone after a few years on the job.

These policies lead to preposterous outcomes. Consider the case of Homer Knightstep. A retired Army Ranger, he joined the estimable Troops-to-Teachers program and landed at an inner-city school in Dayton, Ohio, where every single child is poor. He soon earned accolades as the district's "teacher of the year." But then the Gem City hit hard times, and the district laid off Knightstep in 2007, solely because he was one of its more junior teachers. A few months later, he found another teaching position, this time in a swanky suburban school that boasts a 99 percent passing rate on the state test. And we wonder why there's a massive achievement gap in this country?

This approach to cost-cutting doesn't even work, at least over the long run. Because junior teachers earn less than lifers, many more of their jobs have to be eliminated in order to achieve the same result. And that means more pain down the road. As the American Enterprise Institute's Frederick M. Hess told Education Week, "Districts have gotten more conscientious about hiring than they were 10 years ago, and if you've put dollars and time into hiring carefully, you don't want to take a machete and walk off with your newest hires."

Upwards of 80 percent of public education's $550 billion annual budget goes to personnel costs. Imagine this: If the education system could trim the least productive 10 percent of teachers, administrators, and central office staff, it could save in the neighborhood of $40 billion per year. That's about as much money as the entire federal budget for primary-secondary schools. Maybe, then, the schools wouldn't eliminate art and music. And while they would have to make do with fewer teachers, administrators, and other staff, I would posit that they will be dramatically more effective without the low performers--even if it means raising class sizes a bit.

When school districts let go of great young teachers, or cut popular education programs, or eliminate field trips, or ask parents to pay "activities fees" for sports, or engage in any number of dubious cost-saving measures, it's not just a pity. It's an outrage. Parents should tell their school board members and legislators: keep the good stuff, and fire the bad teachers and administrators instead.

A slightly different version of this article first appeared on National Review Online.

Michael J. Petrilli