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Don’t ask me why, but my high-powered brain turned toward education this week, and I decided to compare my birth state to my adoptive state. Check out the following tables:
New York spends a lot more than North Carolina on public education—$14,663 more per pupil, to be precise.
| State | Per Pupil Spending |
|---|---|
| New York | $24,040 |
| North Carolina | $9,377 |
But New York doesn’t allocate its education dollars as efficiently as North Carolina. The most important education variable controlled by the state is the teacher. New York, however, only devotes 20.01 percent of its classroom resources to compensating its teachers. North Carolina devotes 31.91 percent.
| State | Average Teacher Salary | Average Teacher Salary Plus Benefits (Calculated by Multiplying Average Teacher Salary by 1.33) | Average High School Classroom Size | Spending Per Pupil | Average Spending Per Classroom (Average High School Classroom Size Multiplied by Per Pupil Spending) | Percent of Classroom Spending Going to the Teacher |
|---|---|---|---|---|---|---|
| New York | $79,588 | $105,852 | 22.0 | $24,040 | $528,880 | 20.01% |
| North Carolina | $46,801 | $62,245 | 20.8 | $9,377 | $195,042 | 31.91% |
And that inefficiency exacts a terrible toll. New York spends a lot more than North Carolina but basically gets the same results. New York has a slightly higher percentage of students scoring 1400 or higher on the SAT (about a third of a percent more), but North Carolina has a slightly higher average SAT score (about three percent more).
| State | Per Pupil Spending | Number of Students Taking SAT in 2018 | Average SAT Score | Number of Students with a High SAT Score (1400 to 1600) | Percent of Test-Takers with a High SAT Score |
|---|---|---|---|---|---|
| New York | $24,040 | 162,551 | 1068 | 10,598 | 6.52% |
| North Carolina | $9,377 | 54,987 | 1098 | 3,391 | 6.17% |
A Plea to New York State
You’re spinning your wheels when it comes to education, New York. Try something different. Here’s a suggestion.
- Keep your per pupil spending the same.
- But give your students the option, starting in the 7th grade, of choosing a pared-down education that spends $5000 less per pupil than the standard education. In other words, students selecting this option would get the best education New York can provide for a per-pupil cost of $19,040.Quick aside: This amount of per-pupil spending would still be more than double what North Carolina spends.
- For each student choosing a pared-down education, set up a custodial account with a discount brokerage firm for him or her and deposit the $5,000 saved from providing a pared-down education into that account. The money placed in the brokerage account would be used to buy shares of an S&P 500 index fund. The student would take full ownership of the custodial account when he or she turns 18. He or she could then use whatever money’s in that account to tickle whatever fancy he or she may have—pay for college, start a business, use for a downpayment on a house, buy a car, etc., etc.
- Bonus suggestion: Chuck Schumer is the leader of the senate, and he’s from your state. Have him use his clout to amend Roth IRA rules so schools can open and fund Roth IRAs for their students once their students reach the 7th grade.
What the Groovy Plea to New York State Could Accomplish
If New York State embraced the Groovy Plea and gave students the option of a pared-down education coupled with a brokerage account, here’s what the 7th-graders who choose this option would have in their brokerage accounts once they finished high school.
$37,150 ($416.67 per month invested in an S&P 500 index fund earning seven percent annually over the course of six years)
Now let’s suppose that Senator Schumer is able to amend the Roth IRA rules and instead of a brokerage account, New York schools are able to put the pared-down education savings into a Roth IRA for each student choosing a pared-down education. Here’s what the 7th-graders who choose this option would have in their Roth IRAs once they reached the age of 59.
$649,773 ($37,150 invested in an S&P 500 index fund earning seven percent annually over the course of 41 years)
And if the 7th graders who choose the pared-down education invested $100 a month into their Roth IRAs once they turned 18 and began working, here’s how much money they would have in their Roth IRAs when they turned 59.
$932,469 (assuming a seven percent annual return on average)
And here’s what their Roth IRAs would be worth at 59 if we upped the monthly contribution to the following amounts (again, assuming a seven percent annual return on average):
$200: $1,215,164
$300: $1,497,860
$400: $1,780,555
$500: $2,063,251
Crony Socialism
On the surface, my Groovy Plea to New York State is a no-brainer. Education wouldn’t suffer. With at least $19,020 to spend per pupil for junior and senior high school students, New York would still be able to provide its secondary students—whether they chose the pared-down education or not—with all the math and English instruction they need for success. The teachers needn’t suffer a pay cut either. But with a revenue base of $19,020 per pupil, teachers teaching pared-down education students would need to get 25 percent of classroom spending rather than 20 percent. And, finally, my Groovy Plea would not only set students up for success in adulthood and possibly retirement but it would also get kids excited about saving, investing, and personal finance.
But my Groovy Plea will never see the light of day. And the reason is simple. There are roughly 2.6 million public school students in New York State. If half of those students are in junior and senior high, and all these students opted for a pared-down education, New York’s education bureaucracy would be denied $6.5 billion annually ($5000 x 1.3 million students). That adds up to a lot of jobs, programs, and egos being put in harm’s way. And New York’s education bureaucracy would never tolerate such a threat. It would fight tooth and nail to squash my Groovy Plea. It would help primary any incumbent politician who supported it, it would donate lavishly to any incumbent politician who opposed it, and it would use its toadies in the media to deride it as a sop to Wall Street and a blow to education. “How can we divert billions of education dollars to those rascals on Wall Street,” an indignant New York Times editorial would no doubt ask, “when our students are already being shortchanged—especially our students of color?” And the effect of such intense lobbying would be all too familiar. The majority of New Yorkers would be against my Groovy Plea—since New Yorkers pride themselves on being “pro-education”—and no politician would touch it.
And this is what I mean by crony socialism. We know well the scourge of crony capitalism. Established, well-heeled private businesses lobby for favoritism that suppresses competition and punishes the consumer, and our lovely politicians oblige them. Well, our large public bureaucracies are no different. They lobby just as fiercely as our private businesses do. And they are just as hostile to the dictates of fair play, the overall health of our society, and the wallets of the consumers (i.e., the taxpayers).
Final Thoughts
Okay, groovy freedomist, that’s all I got. What say you? I say our public education business model is a joke—whether we’re focused on New York, North Carolina, or any other state—and it needs to be disrupted with extreme prejudice. I also say that such disruption will never happen because crony socialism is just as ubiquitous and troublesome as crony capitalism. But, hey, maybe I’m missing something. Let me know what you think when you get a chance. Peace.
I think it’s an intriguing idea and there’s some potential. I remember most of my senior year in high school being a number of electives simply to meet the minimum numbers of classes necessary to graduate.
I also know building maintenance/construction is a huge expense too. Busing is expensive too.
My assumption is that New York’s property maintenance costs are more per square foot than NC for several factors (i.e., age of building, labor costs, etc.)
In our small rural county here in TN, a surprising amount of the school budget is spent renovating buildings built a lifetime ago to be modernized for 21st century technology, asbestos removal, etc.
Our county also recently added two county-specific taxes that go specifically to fund public schools as the property tax revenues are insufficient (a topic for a different day).
One is a wheel tax that was supposed to be temporary. on top of the standard tax to renew the county license plates. But the county commissioners renewed it minutes after it originally expired.
We also have a “facilities tax” on new constructions. All new commercial and residential structures pay $1 per square foot that has central air conditioning/heating. All of that money goes into the public school kitty.
My last complaint is how our state rules set the annual salary of the county school superintendent. It’s based on the rates of the adjacent counties.
So, our school superintendent makes somewhere around $150,000 per year. Our high school principal is in the low six figures too which significantly more than most of the other county employees.
The median annual income in our bedroom community is around $40,000 (Walmart is our best retail store and you need to drive 40 minutes to get to a department store like Kohls or Bed Bath & Beyond). But their salaries are higher due to the adjacent county being the 3rd largest city in the state and having a median income closer to $60,000.
You might say our highest officials earn “California wages” without having to live in California. And us taxpayers have to foot the bill.
The state also requires a lot of “unfunded mandates” for public school systems on that the counties and cities have to figure out how to fund.
The local politicians may try to cut the budget, but there are a lot of “sacred cows” in the school budget.
I was surprised by how much of our county budget is only for public schools when our county raised property taxes last year. They may have to again this year when the budget session opens in July.
Obviously, I’m not big on paying taxes which is why I live in a low-tax state. After the events of 2020 and increased financial insecurity in the private sector workspace, my wish is that the county, state, and federal budgetmakers would re-evaluate government spending and go back to the basics.
The basics in 2021 are probably a little different than in 1950. The Roth IRA is a nifty ideas that invests money in businesses (i.e. rising stock values) and can keep today’s youth out of poverty (i.e. less spending on social safety nets which already are financially insolvent).
If NY is only spending about 20% of the education budget on teachers, what is the other 80% spent on? Seems to me that we could reduce spending by a lot outside of the classroom. One of my pet peeves has to do with the required classes in high school. Why is it that kids are required to take 4 years of gym but only 2 years of math or science?
Agreed. The business model and the curriculum are broken. And there’s so much more we can do with the 700 billion dollars we throw at K-12 public education annually. But crony socialism is a fierce beast, and our educrats like the system just the way it is. So will be spending a lot for little results for years to come. Sigh. Have a great weekend, Pat. Cheers.