In this Let People Prosper episode, let's discuss how the recent election gives us insight on how we need more civil discourse to find ways to strengthen institutions so people can flourish.
My recent paper on how institutions matter provides a good overview of what I discuss in this episode along with economic data to support the theory. Here is a graphic that explains rather well the ecology of human development.
The data provide overwhelming evidence that the Texas Model of inclusive institutions with a relatively low tax-and-spend burden, no individual income tax, and sensible regulation provides an institutional framework supporting more job growth, higher wages, lower income inequality, and less poverty than in comparable states and the U.S., in most cases. Texas is doing something right. Other states and D.C. would be wise to consider adopting Texas’ inclusive economic and political institutions that champion individual liberty, free enterprise, and personal responsibility.
This is a path to providing an economic environment that allows entrepreneurs the greatest opportunity to thrive and for prosperity to be generated for the greatest number of people. Despite this success, improvements are needed to keep the Texas Model competitive and create even more opportunities for all to flourish. These improvements to Texas’ institutional framework include:
• limiting the growth in government spending,
• eliminating the state’s onerous business franchise tax,
• reducing barriers to international trade,
• reducing the escalating burden of property taxes, and
• relieving Texans from burdensome occupational licenses.
Even with these improvements, the data overwhelmingly show it was not a miracle in Texas, but rather abundant prosperity generated by Texans from a proven institutional framework called the Texas Model.
By strengthening institutions to let people prosper, we can also engage in more civil discourse so that we have many opportunities to work together.
Texas’ public education spending, in inflation-adjusted dollars, has increased in recent years with little-to-no improvement in the quality of education received. A problem with the philosophy of throwing more money at the education problem expecting a different result is that it doesn’t work.
As you can see in Figure 1, per-student education expenditures have been volatile and are currently on the rise. This is interesting as a recent University of Texas study finds that 47 percent of Texas voters believe too little is spent on education.
Where is the money going?
From FY 1993 to FY 2015, student enrollment at public schools in Texas increased by 48 percent while non-teaching staff increased by 66 percent and teachers increased by only 56 percent. Public education spending should be dedicated to benefitting students, not excessively expanding administrative staff at schools.
Moreover, Texas teachers are only receiving roughly 21 percent of classroom expenditures, which is abysmal considering the importance of teachers. The average Texas teacher makes $51,891 per year, which may not be enough to attract the most talented teachers possible. If the increase in non-teaching staff had matched the increase in the student enrollment, Texas teachers could be earning an additional $6,318 per year.
Despite what a plurality of Texans think, Texas should not just continue increasing per-student public education expenditures without focusing on the level of student achievement. By making major reforms to the state’s school finance system through student-centered funding and considering a simpler funding source, more students, teachers, and Texans can flourish.
Does Texas need more money for public education? This question can cause heated debates, which were on full display during the 85th Texas Legislature’s regular and special sessions.
Although most of the debate has centered on how much money has been or should be spent, the focus should not be on taxpayer dollars spent, but really on how best to increase student achievement.
Read this paper to learn more: https://www.texaspolicy.com/content/detail/texans-need-more-education-for-their-money.
Read the entire post with figures here: https://www.texaspolicy.com/blog/detail/spending-more-wont-solve-school-finance-or-property-tax-flaws-in-texas
Watch my explanation of the Conservative Texas Budget, school finance reform, property tax reform, and more in the @TXCapTonight interview at time 4:30 here: http://www.twcnews.com/tx/austin/capital-tonight/2017/06/13/capital-tonight-june-13--a-day-in-the-life-of-a-cps-caseworker.html
The Texas Senate passed an education choice bill (SB 3), that was amended many times (overview of the latest version) last Thursday that allows lower income households and students with special needs to apply for an education savings account (ESA). It will allow an opportunity to access taxpayer dollars for education services that best meets students' needs instead of them too often being stuck at a public school that doesn't do so.
I'd prefer that the final product of SB 3 was more like the original so it would be a more universal ESA program. This would have allowed many more students the opportunity to use this program.
Regardless, SB 3 is a great step forward for students, teachers, parents, and Texas!
The bill will go to the House now and hopefully make its way to the Governor. It's got an uphill battle, but students and families should have choices in education, just like they do with so many other goods and services, besides only those with the means to afford it.
The Texas Public Policy Foundation along with several other organizations were a key part of the fight for passing SB 3. I had the honor of helping out in that process, as I was surrounded by many individuals who are passionate about providing students, parents, teachers, and all Texans the best opportunities to succeed in the education system.
Here's my recent testimony that summarizes research on fiscal, academic, teacher pay, and economic effects of educational choice through ESAs.
Here is my paper, The Effects of Education Savings Accounts on Teacher Pay in Texas, co-authored with Dr. John Merrifield of the University of Texas at San Antonio that highlights the fiscal savings of ESAs and the resulting opportunities for increases in teacher pay. Here's a summary: "Although public school districts employ roughly 90 percent of teachers in Texas, teachers have little negotiating power in today’s labor market. Budget reallocations at public school districts (with fiscal savings of $165 million) and private schools from ESAs could increase teacher salaries in the first year, with some increasing by as much as $28,000. A more competitive teacher labor markets will gradually contribute to increases in teacher salaries beyond those facilitated by ESAs and improvements in working conditions. It's clear that the freedom to choose in education and teacher labor markets will benefit students, teachers, and all Texans."
Here is my paper, Economic Effects of a Universal ESA Program in Texas, co-authored with Dr. Marty Lueken of Ed Choice that summarizes the economic benefits, fiscal savings, and other positive effects of education choice in Texas. Here's a summary: "Expanding education choice is a smart and sound investment that Texas can make to grow the state’s economy and build a stronger society, creating better matches between students and their education will likely lead to fewer dropouts, which would improve social and labor market outcomes. By expanding school choice, will improve the quality of education for Texas children, lead to higher property values, and spur job creation."
Of course, the results of the passed SB 3 will be less than a universal ESA program in our studies, but the fact remains that by allowing student-centered funding to replace the currently fundamentally flawed school finance system of school district-centered funding, many more students will be able to best meet their needs and benefit in the process.
Let's hope that SB 3 becomes law and that it is the first step toward a universal ESA program in Texas!
A simpler and efficient school finance system would be one that provides equitable student-centered funding paid for by taxes collected from a reformed sales tax.
Video of my testimony begins at times 3:08:20: http://tlcsenate.granicus.com/MediaPlayer.php?view_id=42&clip_id=11595.
Here is the handout of my testimony: http://www.texaspolicy.com/content/detail/revamping-texas-school-finance-system.
This commentary originally ran in the McAllen Monitor print edition on April 25,2016.
The Texas Supreme Court could release their ruling any day (possibly today) on most-watched school finance trial. The question before the Court is whether the public school system is efficient. The decision could substantially affect public schools in McAllen and statewide. Regardless, public schools must be reformed so that they are student-centered and competitive.
The Court defines efficiency as “effective or productive of results and connotes the use of resources so as to produce results with little waste.” Put simply, quality education results from limiting waste based on actual tuition.
Unfortunately, numerous expert witnesses during the trial noted that it’s impossible to know the true public school tuition. Only the amount spent on education is known, which was $61 billion, or $12,761 per student, in the 2014-15 school year. Therefore, the current system will never improve unless Texans can identify the market tuition.
I recently co-authored the paper Texas School Finance: Basics and Reformwith my colleagues at the Texas Public Policy Foundation. This paper provides taxpayers with clarity of a highly complex government-run school finance system. It also explains how Texas can achieve equity and efficiency in the education system by the student-centered, market-based approach of universal education saving accounts.
With 4.8 million students enrolled at public schools compared with only 375,750 students at accredited private schools, public schools dominate the schooling market. Very little competition from other forms of schooling and the power of the public purse make the public school system essentially a government-run monopoly that reduces the consumers’ well-being.
In addition, the public school system fails to have an efficient tuition because of a third-party payer system. While Texans typically think that local property tax dollars fund public schools, the truth is that state funding formulas determine how multiple revenue sources are redistributed to all school districts. This process, known as “Robin Hood,” is based on providing equitable school district funding.
Nevertheless, since the government funds schools, parents don’t know the true tuition because they don’t pay for it directly. Again, only the arbitrary amount the state spends is known.
Without market activity to determine the actual tuition, students will continue to receive subpar public schooling in many places statewide.
Fortunately, there is a solution: education freedom.
By providing this through education saving accounts, the market tuition can be known. Parents would receive an amount on a debit card that would be limited to education services to choose which ones best meet their child’s needs, allowing for a competitive, first-payer school system.
This means that market tuition at public schools as well as private and other education services must be posted for parents to determine their best option. These prices would create behavioral changes as parents and students seek out their best fit instead of being locked in a school based on their zip code.
The weighted tuition average at accredited private school organizations statewide is $7,848 per student. Therefore, the per student expenditure at public schools is 63 percent higher than at private schools, where there is an efficient tuition and mostly better outcomes.
Given competition, public and private tuition would likely converge at a level far below the current bloated amount of $12,761 and increase its quality, as has been shown in academic research.
It’s time for parents to know the actual tuition of public schools and have the choice to meet their child’s needs through education saving accounts. Per the state’s constitution, efficiency and equity per student will be achieved. Students in McAllen and statewide will improve their education outcomes and help take Texas to the next level of economic opportunity for all.
Texas spends $61 billion on PK-12 education annually. Where does this money come from? Where does it go? And how can we improve the system for future generations? Read the full report here.
Vance Ginn, Ph.D.