The 65 percent solution

A new fad, called the “65 percent solution,” is sweeping through school-reform circles. Eager to answer the education lobby’s endless demands for more money, would-be reformers have embraced the idea that school districts should instead better focus existing dollars by spending at least 65 percent of their budgets on classroom expenditures. The idea has an initial, facile appeal. But it deserves a second, more careful look.

Championed by the new organization First Class Education, the proposal has already been adopted in Texas, Louisiana and Kansas, and is before the legislatures of at least 18 other states. Supporters have been undeterred by the absence of evidence that the admittedly arbitrary 65 percent figure has any relationship to school performance or operational efficiency.

The proposal’s appeal is largely political. A Harris Interactive poll last fall showed that 70 percent to 80 percent of Americans, of all demographic stripes, endorse the idea. Polling data suggests that the measure can be used to help blunt the appeal of other questionable gimmicks — like mandatory programs to shrink class size. But short-term political appeal is hardly the final measure of a proposal’s merit.

Before wrapping themselves in the idea’s popularity, however, reformers might want to think twice. In fact, the 65 percent solution focuses attention on dubious input measures and is an invitation to creative accounting. Most troubling, though, is the manner in which it embraces heavy-handed, autocratic management — under the guise of “decentralization” — and endorses one-size-fits-all guidelines.

In an age when some of the most successful public schools are finding ways to serve all students — whether through virtual schooling, supplemental tutoring or hybrid high school-college programs — this accounting exercise promises to stifle creative problem solving. How will tutoring programs or virtual schools, which may have unconventional expenditures, be accounted for? Should that be a barrier to their growth?

There is a real possibility that the 65-percenters will discourage fresh thinking. How will their mandate handle nontraditional school models, where high schoolers might spend much of their time in a laboratory or on a college campus? The 65 percent model would stifle such efforts or reward innovators with a sheaf of new paperwork and legal obligations.

If a “corporate reformer” acquired Wal-Mart and decreed that 65 percent of all revenues be spent on floor staff and in-store improvements, Wall Street would greet him with derision. There is nothing innately wrong with such moves — but well-managed firms know that one-size-fits-all management went out with lava lamps and leisure suits.

Recognizing that local educators are in the best position to decide how to educate their students, thoughtful reformers, left and right, have fought to bring enhanced accountability and flexibility to public education. Reformers from Bill Clinton to President Bush have sought to foster creative problem solving by giving educators more flexibility and holding them accountable for results. The 65 percent solution cuts in exactly the opposite direction.

The proposal also presents more prosaic problems. Given the lack of uniform accounting standards in public education, determining what spending qualifies as “classroom” spending is frequently arbitrary and inconsistent. Whether a special education teacher is a classroom or administrative expense, for instance, will depend on whether a school district assigns teachers to individual or multiple schools. Even if these questions were cleared up, the implied auditing and oversight would require substantial new accounting expenditures and a new bureaucracy to inspect and verify line-item expenditures.

In fact, reformers might wind up wishing that schools would cook the books. After all, the easiest ways to fulfill the mandate is to give teachers an across-the-board raise or go on a teacher hiring binge. Experience offers little reason to believe that such expenditures are an efficient use of funds. In fact, easy money has allowed teachers unions to avoid tougher teacher evaluation methods, performance-based pay and other efforts to modernize the profession. While the unions have been skeptical of the measure, no one should be surprised if they ultimately turn out to be its biggest winners.

Reformers should remember the hard-earned lessons of recent decades. Sensible incentives that encourage initiative, allow professionals to solve problems and reward success consistently prove to have happier long-term consequences than even well-intentioned mandates.

It’s a troubling commentary that the kind of crude input management left for dead in the 1970s is today being pushed as state-of-the-art school reform. This is one silver bullet that should stay in its chamber.

Frederick M. Hess is director of education policy studies at the American Enterprise Institute and author of the new book “Tough Love for Schools.”