The changing landscape of education under new federal legislation places heavy responsibility on states to create policies that ensure better student outcomes amid tight fiscal realities. States are rightly focused on how to improve reading, math, and career readiness in K-12 schools. They cannot do that, however, without a firm understanding of why making such improvements has been challenging in the past. Why is it so difficult for educators to figure out what works, scale promising practices, and use public dollars to maximize student learning?
CRPE was founded more than 30 years ago to try to answer that question. Our researchers have studied school finance, governance, staffing, accountability, and innovation.
Our view is that three interlocking “tragic practices” cause deep fiscal inefficiencies in public education: opaque funding and budgeting systems, mandates and contractual constraints that restrict flexibility, and barriers to innovation and cost-effective experimentation. Schools and educators are not incentivized to use data and adopt what works, compounding these problems.
The result is a set of absurd realities that harm students and frustrate educators. Money and staffing don’t match student needs; educators have too little flexibility to craft solutions; and known best practices fail to take hold in classrooms.
States can and must overcome these system absurdities to make progress on academic outcomes. This Phoenix Rising series is designed to surface ideas to help them do it. Still, we also offer a framework here that suggests that making schools more efficient cannot be done without changes in the way we govern, finance, and assess public education today.
Whether any state or locality can refocus its public education system on efficiency depends on how strongly leaders, both within and outside of education, ensure that every penny of public expenditure benefits students.
Why is education inefficient?
1. Opaque Funding: Schools Can’t Track or Improve Cost-Effectiveness.
Districts do not fund schools in real dollars. Instead, they assign personnel and resources through centrally administered formulas. As Marguerite Roza’s body of work done at CRPE revealed, this practice obscures actual spending, preventing both districts and schools from knowing how much they spend—or if they’re spending their money wisely. For example, schools cannot assess whether a reading specialist or a technology intervention delivers value because they can’t compare real-dollar costs or outcomes. Any assessments of cost-effectiveness, whether of particular programs or of whole schools, are at best linked to reality only weakly.
Districts know the average cost of any school or program, but not precisely how much is spent in a particular school or classroom. This is the case for several reasons.
First, the broad budget category of “instruction” is poorly defined and bundles together a lot of different programs whose costs aren’t broken out.
Second, some schools have more programs and resources (e.g., tutors, counselors, bands, science programs, enrichment specialists) than others, but these costs are tracked only district-wide. Though these schools get a lot of extra spending, it is not evident in the district budget.
Third, some schools have more senior (and thus higher-paid) teachers than others. Yet in most school districts, the published budget for a particular school is based on the average, not the actual, cost of teacher salaries. This can mask significant spending differences.
These ways of accounting for spending hide major inequities:
- Senior teachers, who cost far more and should, on average, be more effective, tend to work for more affluent schools.
- High-need schools, often serving marginalized students, are usually staffed by newer teachers and lower-salaried teachers. These teachers leave as soon as they gain a little seniority and are replaced by novices.
In short, the most disadvantaged schools get the least continuity and the least strategic flexibility—while the public remains in the dark about where the money actually goes.
2. Mandates and Contracts Lock in Inefficiency.
The lack of cost transparency is only the tip of the iceberg. Layers of mandates from state legislatures further constrain schools, federal law, district policy, and collective bargaining agreements. These rules prescribe how schools must allocate time, personnel, and funds without regard to cost or impact on student learning.
Examples include:
- State staffing formulas that require fixed roles or set administrative structures (e.g., a librarian, a nurse, a principal, and an assistant principal) regardless of a school’s size or needs.
- Teacher licensing requirements that block schools from hiring specialists or career-switchers with relevant expertise.
- Restrictions on instructional time, rigid class sizes, and salary increases tied to tenure or degrees—regardless of effectiveness.
Some of these mandates, like class size limits, teacher licensing, seat time requirements, and measures that drive salary decisions and protect school employees, were initially justified in the name of school effectiveness. There are examples where schools have adopted specific, logical policies (e.g., small class sizes) to good effect. However, none of these mandates are based on evidence that the required actions made all schools more effective, or that certain mandates were more effective than other, similar-cost alternatives.
Collective bargaining agreements, in particular, can institutionalize inefficiencies by:
- Awarding automatic raises and tenure linked to seniority or additional training rather than performance
- Limiting teachers’ availability for instructional time
- Mandating seniority-based hiring and layoff decisions
- Allowing senior teachers displaced from their schools to “bump” junior teachers from their jobs, regardless of the consequences of the disruption
Each mandate may seem minor in isolation, but in aggregate, they’ve created a system where resources are used to preserve adult job protections, not maximize student learning. This system has resulted in:
- Funds tied up in mandates whose costs and consequences are not readily apparent or tracked
- Funds spent to satisfy special interest groups, partisan posturing, or labor peace (even if the expenditures have little or nothing to do with student outcomes)
- Funding requirements that might make sense in certain situations, but are enforced universally, even in situations where they do not produce any measurable advantage
3. Schools Can’t Evolve When Innovation Is Blocked.
Even when school leaders see a better way forward, they are rarely allowed to act. Mandates and contracts severely limit experimentation and prevent reallocation of resources toward more effective solutions. Unless they want to violate express requirements of law, contract, or policy, school and district leaders often cannot:
- Change how students are grouped, including by offering larger class sizes in some subjects, to fund smaller class size options for students who need individualized support.
- Shift money from non-instructional to instructional uses (from transportation, facilities, or rent to more class time, individualized instruction, online material access, etc.).
- Hire experts who are unlicensed, but no less prepared to teach—for example, allowing advanced physics graduate students to teach physics.
- Make evidence-based tradeoffs between the use of live teachers and online resources. Teachers who have not mastered advanced math and physics often teach those subjects anyway, and online resources may effectively supplement their knowledge gaps.
None of the suggestions above is proven effective in every case, and there is no reason to suggest that all schools should pursue them. However, they can expand possibilities for more effective instruction. Experimentation with these ideas could lead to new approaches that could benefit more schools. Most critically, districts are not incentivized to pursue what works. Evidence-based practices struggle to scale because politics, rigid governance structures, or outright resistance from unions or school boards hinder adoption. Politically motivated school boards can also undercut evidence-based practices by forcing shifts in strategy that are more motivated by politics than by evidence. Recent CRPE interviews with superintendents point to these challenges.
Innovative practices too often do not scale for similar reasons. Past CRPE research studies on personalized learning and other systemic innovations have shown that promising innovations often fail to spread across schools and school districts for similar reasons as cited above.
Without the ability to make tradeoffs, schools cannot learn from their successes—or their mistakes.
A Framework for Efficiency in Public Education
To move beyond symbolic reforms, public education needs a structural overhaul based on four foundational principles:
- Transparent Spending Linked to Outcomes
- Efficiency-Based Accountability
- Open Pathways for Innovation and Growth
- Aligned Incentives for All Stakeholders
These principles would allow schools and families to benefit from improved learning outcomes and reduced costs, creating powerful alignment between student success and system efficiency. They would also encourage schools to look for methods to encourage students to attend, do the work, and learn rapidly.
Rewiring the System for Impact
Public education doesn’t fail for lack of money. It fails because money is misused, misallocated, and misunderstood. A system that hides costs, discourages innovation, and protects inefficiency cannot serve students equitably or effectively.
If we want real progress, we must redesign the financial and governance systems of schooling to reward what works, allow for adaptation, and hold every actor—from schools to policymakers—accountable for using every dollar wisely. An integrated finance and governance system for efficient public education would include:
- Student-based funding, where each student carries actual dollars to the schools or online programs they attend. Funds move with the student when they transfer schools, with the state retaining a small portion for oversight and data analysis.
- Full budgetary freedom for schools, allowing them to allocate resources as needed to support instructional programs—without deductions for not renting facilities or staffing in traditional ways.
- Parent choice, enabling families to leave schools where their children are not learning to capacity.
- Performance-based accountability, requiring all schools to operate under performance contracts, with annual reviews that track student learning and how funds were used.
- Clear, rigorous standards, supported by state-maintained data systems that measure individual student progress and link it to school-level spending.
- Openness to innovation, allowing new school models and providers to enter the system and compete on equal footing.
- Consequences for inefficiency, including the withdrawal of charters from schools that consistently underperform relative to their costs.
Whether a state or locality can reorient its education system around efficiency depends on whether its leaders—inside and outside education— can prioritize rewiring schools for impact. Efficiency is not about spending less: it’s about getting more for every dollar, and every dollar directly benefiting students.
