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Published on Leave a comment on Bad Journalism, Bloomberg Style

Some days, you just have to wonder. What could be the motivation for an article in Bloomberg news that starts out like this?

U.S. Students Spend More Time Working Paid Jobs Than Going to Class

Facing mounting debt, U.S. college students spend double the time working paid jobs than in the library. 

The rest of the article goes on to explain how awful it is for students, what with all the work and borrowing. But the proof of this assertion is a survey by HSBC in which students were prompted with the question, "On average, how long do you spend doing the following each day?" Here are the answers:

Going to lectures/tutorials/seminars: 2.3 hours
Visiting the library: 1.5 hours
Studying at home: 2.8 hours

That's a total of 6.6 hours on school work.

Working (paid employment): 4.2 hours
Volunteering (unpaid): 0.9 hours

That's a total of 5.1 hours on work unrelated to school. So yes, based on these categories, 4.2 > 1.5 and 4.2 > 2.3, so the facts asserted in the headline and the statement that follows it are true. But 5.1 < 6.6, so what's the big deal?

But wait, there's more. The same survey reports the following responses for the rest of the day:

Texting/messaging/emailing: 2.3 hours
Watching streaming devices: 2.2 hours
On social media: 2.5 hours

So that's 7 hours on screens, more than both school work and paid work. (Also listed are 4 hours of socializing.) I guess if I were going to write a news article in Bloomberg and be objective about it, I would include that. But then how could I make the case that life is somehow unfair to students because, what, between school work and other work, they only get to spend 11 hours socializing or looking at screens?

When I blogged about the media earlier this month, noting that with the increase in quantity we have seen some bad examples of quality, this is the sort of media I had in mind. A survey has been cited selectively and incorrectly to push a point of view. Further, I first came across this in my local paper, which had no link to the survey. This is bad journalism. It is unprofessional. And it erodes the trust we'd like to have in those who bring us the news.

Published on Leave a comment on I Guess I Did See This One Coming

About two years ago, I noted that the Los Angeles Superior Court judge in the Vergara v. California case had overreached when he declared that tenure and other job protections for teachers in primary and secondary public schools are unconstitutional. The plaintiffs' logic was that since poor and minority students were more likely to be saddled with ineffective teachers protected by these provisions, there must be a violation of their civil rights. I predicted that this ruling would be overturned on appeal, and last week, that's just what happened.

Echoing the theme of my earlier post, the Appeals Court ruled:

The court’s job is merely to determine whether the statutes are constitutional, not if they are ‘a good idea,’ ... The evidence did not show that the challenged statutes inevitably cause this impact.

Education is like many public policy issues today -- we spend too much, get too little, and either don't yet know how to improve on those outcomes or don't have the leadership skills to implement what we do know.

Published on Leave a comment on If I Wanted To Start the New Year Off by Raising College Tuition, I Would Propose This

From yesterday's New York Times:

Lawmakers have proposed requiring that about 90 colleges with endowments of $1 billion or more spend about 25 percent of their annual earnings for tuition assistance — or forfeit their tax exemptions.

Suppose that college costs $65,000 at one of these institutions and that half of the 4,000 students receive financial aid. If the college raises the cost to $66,000, then it gains the $2 million from the students not receiving financial aid and owes $2 million more to the students receiving financial aid. Since the numbers offset, no endowment income has to be reallocated, but the college is now $2 million closer to reaching the lawmakers' objective. "Tuition assistance" is necessarily defined relative to a price that the college controls and not everyone faces. Raising it here confers the double bonus of generating more revenue and more credit against the lawmakers' new requirement.

A minor complication is that some students might qualify for financial aid at the higher cost but not at the lower cost. So the college would owe slightly more than $2 million in additional aid. A more important complication is that colleges cannot raise their prices without facing some market competition, in this case from colleges with endowments under $1 billion who are not subject to the new constraints.

I presume that "annual earnings" here would refer to a multiyear average, since the constraint wouldn't be binding in any year that annual earnings were negative or positive but very small. Or maybe the threshold would be specified as a percentage of the value of the endowment, not its annual income. Better than this policy, I think, would be to place more requirements for overall cost containment on any college that accepts federal funds for particular purposes.

Published on Leave a comment on Escrow for the Common Good

Years ago, when I was teaching finance more regularly, I read The Squam Lake Report and thought its recommendation to improve corporate governance by requiring deferred compensation (in cash) for top management made sense. Why should a manager with significant oversight responsibility be paid in full today if the firm does not survive well into the future? It is a straightforward approach to moral hazard when the consequences of a manager's actions take some years to be fully realized. Put a portion of the payment in escrow, and hold it there until reasonable performance has been demonstrated.

I'd like to propose two other applications of the same basic idea to areas I have been thinking about for teaching and research of late. Consider the payments that are made by the public sector to organizations that operate prisons. Why should a prison be paid in full today to incarcerate an inmate who recidivates shortly after release? One estimate puts the rate of recidvism at 40% within 10 years. The prison operator has considerable control over the inmate's daily activities while incarcerated. That time should be used to help prepare the inmates to stay out of prison upon their release. If it is not used productively, it shouldn't be just the taxpayer who bears the financial cost to re-incarcerate the prisoner. Why not condition a portion of the payment to the prison operator on the released inmate staying out of the penal system for some period of time? Put the payments in escrow, and release them to the prison operator slowly over time, based on the released inmate's law-abiding behavior. The low cost of interventions like prisoner education and job training compared to the relatively high cost of re-incarceration suggests that prison operators have room to do a better job.

The other example is higher education. Policy makers are currently wrestling with the issue of what to do about student debt repayment. By some estimates, 1 in 6 borrowers are severely delinquent. Why should a university be paid tuition in full based on the proceeds of a loan that may not be repaid? The university has every opportunity to convey knowledge and teach skills that increase the likelihood of repayment. But it does not bear the financial consequences of a loan not being repaid. Instead, put a portion of the tuition payment in escrow, and release it only as the student loan is repaid. This arrangement provides a financial incentive for universities to provide a better education and to avoid enrolling students who are unlikely to be able to convert this education into enough earnings to repay their loans. These two issues are at the heart of our student debt repayment problem. The problem is financial -- the solution should also have a financial component.

Published on Leave a comment on The End of Tenure in California Public Schools?

Judge Rolf M. Treu of the Los Angeles Superior Court has ruled in Vergara v. California that tenure and other job protections for teachers in primary and secondary public schools are unconstitutional. I think this is a clear case of judicial overreach -- legislating from the bench.

I don't think it is a hard case to make that the implementation of employment protections in many public school systems is bad policy. However, bad implementation of the policy does not mean that the policy is unconstitutional. The ruling pays lip service to this distinction, but that seems to be all. The key excerpt from the ruling in this case is:

Substantial evidence presented makes it clear to this court that the challenged statutes disproportionately affect poor and/or minority students.

Any policy under the purview of the public sector in which the benefits and costs fall unevenly by race would be deemed to violate the civil rights of the disadvantaged group. It is interesting to me that almost all of the tentative decision focuses on how bad the Challenged Statutes are at their worst, only two paragraphs focus on the effect on low-income and minority students in particular, and none of it discusses potential advantages of the job protections in the Challenged Statutes.

Even if those two paragraphs are the essential part of the ruling, the remedy is to ensure that the policy is implemented better, not necessarily to declare the policy unconstitutional. For example, based on what is presented in the ruling, consider a system in which:

  1. The Permanent Employment Statute had a 3-5 year evaluation period (as a defense witness suggested and as is found in most other states), 
  2. The Dismissal Statute had protections only at the level described in the Skelly v. State Personnel Board case cited in the ruling, 
  3. The "Last In, First Out" Statute were relaxed to having seniority considered as one among many factors rather than the only factor (as the ruling notes is the case in 20 other states), and
  4. The State could establish that there was no correlation between a school's incidence of low-income or minority students and the presence of ineffective teachers (where the latter was measured based on performance facing a standardized classroom).

This system would appear to violate no principle identified in the ruling. I don't expect this ruling to survive on appeal. I expect a higher court to require the State to implement a system like what I have outlined here.

Published on Leave a comment on College Admissions in Michigan, Again and Again

Supreme Court Justice Sonia Sotomayor's dissent in the Schuette v. Coalition to Defend Affirmative Action case is puzzling to me. She accuses her colleagues in the 6-2 majority of "trying to wish away racial inequality." They do nothing of the kind. It seems very hard to believe that there is anything in the Constitution or judicial precedent that would deny the citizens of Michigan the prerogative to affirm that a public university they support will be constrained to not treat applicants differently based on their race. This says nothing about whether the Michigan policy is a good one -- only that it is within the purview of the citizens to make this requirement. It does not say that every state must affirm such a policy. Is Sotomayor really saying that there is a Constitutional requirement that public universities must treat applicants differently based on race?

In the context of figuring out what is an equitable policy, we often hear questions about non-racial preferences in admissions, like athletes and legacies. Given the racial composition of profit-sport athletes relative to the student body, I don't expect the coalition that is pushing for Sotomayor's worldview to challenge those preferences. But it would not surprise me to see, and I think the day is coming when we will see, a legal challenge to legacy preferences at public institutions based on the claim that they discriminate against racial minorities. Legacy preferences perpetuate a legacy of discriminatory admissions standards (or simply unequal college preparation) that may have existed years ago. I doubt it would be too hard to show that the potential pool of legacy applications to any flagship state university is tilted away from racial minorities relative to the potential pool of applicants statewide. It would also not surprise me if Michigan was once again the battleground for this challenge.

Published on Leave a comment on Donating the Voucher

In honor of National School Choice Week, I'd like to highlight a paper I published last year that considers the federal government's tax treatment of private school enrollments. In brief, I'd like to see the federal tax code be as neutral as possible with respect to the funds that are used to meet the requirement that all students have access to primary and secondary education. Neutral with respect to financing helps to promote choice.

The starting point for the paper is the observation that most dollars spent by citizens to educate primary and secondary students are a tax deduction on their federal income taxes. For example, my property taxes and state income taxes are deductions when I file my federal income tax. My payment of these taxes has nothing to do with how much I use the public schools, only that I live in a jurisdiction subject to these taxes and that I have the right to send my children to these schools without additional payment. It also doesn't matter how much the public schools spend -- they could be spartan or lavish, efficient or inefficient. All of the tax payments can be claimed as deductions.

This arrangement contrasts with the funds that support private schools. Some of these funds are tax deductions -- for example, when a charitable donation is given to a private school, even if the donation is from a parent whose child attends the school. But the tuition payments paid by the parents are not tax deductible, and this is where my question arises. What should the federal government's tax treatment of private school tuition be? I think the answer starts with some recognition that enrolling children in a private school reduces the financial burden on the citizens of the state and locality of funding their attendance at the public school which their residence entitles them to attend. If there were no private schools, then public schools and the taxes that support them would have to be higher. Those higher state and local taxes could then be claimed as deductions on federal income tax returns.

We can approximate the amount of higher deductions by the per-pupil expenditures in the school districts of those students who attend private schools, modified to exclude those expenditures that would not follow the typical student and capped at the amount of private school tuition paid. This is what the paper noted above contributes -- an estimate of the tax cost to the federal and state governments for allowing these deductions by combining data from the American Community Survey, Public School Finance data, and the NBER Taxsim calculator. The result of the analysis is that the tax cost to federal and state governments is surprisingly small -- under $10 billion per year in 2010 dollars using the ACS from 2006 - 2010.

The title of the paper is "Donating the Voucher," based on the idea that if every student received a voucher equal to the per-pupil expenditures in his or her district, then 10% of the students are claiming no services with their vouchers and have essentially donated them back to the citizens who fund the public schools. I blogged about the politics of the idea several years ago, before I started work on the paper. The full abstract of the paper is:

Approximately 10 percent of school-age children in the United States are enrolled in private schools, relieving the financial burden on public school systems, and the taxpayers who support them, of the cost of their education. At present, the tax code does not allow families who provide this financial relief an income tax deduction, even though such relief is a gift to governments for exclusively public purposes and thus analogous to a charitable donation. Using the Public Use Microdata Sample of the American Community Survey and the NBER Internet Taxsim calculator, this paper estimates that granting families who enroll their children in private schools an income tax deduction equal to the per-pupil expenditures in their public school district would cost the federal government an average of $7.75 billion per year over the 2006 – 2010 period. This amount is less than one percent of federal income tax revenues. Because private school enrollment, public school expenditures, the likelihood of itemization, and marginal tax rates increase with taxpayer income, the dollar benefits of this change are positively related to income. At the margin, high-income taxpayers would receive about 35 cents in federal and state tax relief for each dollar of per-pupil expenditures foregone. 

Published on Leave a comment on More MOOC Blogging

Echoing some of the skepticism in my most recent post on Massive Open Online Courses, Marc Bousquet writes in "Good MOOCs, Bad MOOCs" in the Chronicle's Brainstorm blog:

Good MOOC’s, in their view, foreground and sustain the social dimension of learning and active practices, i.e., knowledge production rather than knowledge consumption. To a limited extent, certain experiments in MOOC’s that foreground social media participation over “content mastery” realize some of the ideals of Siemen and Downes.

So what’s the rub? Well, the good intentions and featured best practices of Siemens and Downes exist in political and institutional realities. If institutions really wanted to sustain participatory learning, they would already be doing so, for instance, by reducing lectures and high-stakes testing, investing in teaching-intensive faculty and the like. Instead, driven less by cost concerns than a desire to standardize and control both faculty and curriculum, administrations rely more than ever on lectures and tests.

It’s hard to imagine that an education vendor, particularly one driven by profit, will do more than use Siemens’s and Downes’s excellent, sincere efforts as a tissue-paper justification for passing off cheap “social media opportunities” as a substitute for sustained interaction with working professional academics. Like their bricks-and-mortar counterparts, not to mention the community colleges and distance vendors they’re competing with, the heart of Coursera will be in lectures and tests.

That would be a shame -- a real missed opportunity to use online technology to enhance a college education.  Read the whole thing.

Published on Leave a comment on Who’s Afraid of the Big, Bad MOOC?

The latest venture into the world of massive open online courses, or MOOCs, is a new consortium of research universities headed by Coursera to offer such opportunities.  I'm all for incorporating technological advances to help deliver educational content and opportunities to students.  As I wrote in a recent newsletter on campus,

The question we should ask ourselves is now that such material and experiences can be delivered adequately, if not superbly, online and globally, what does this free us up to do in the on-campus environment?

I think there will be plenty of good answers to that question.  I see online opportunities more as complements than as substitutes for on-campus learning.  So MOOCs just don't get me riled up.  There is quite a lot still left to be determined about them if they are to substitute for what we traditionally regard as a college education. Consider these passages from The New York Times article announcing the venture:

MOOCs were largely unknown until a wave of publicity last year about Stanford University’s free online artificial intelligence course attracted 160,000 students from 190 countries. Only a small percentage of the students completed the course, but even so, the numbers were staggering.

[...]

David P. Szatmary, the university [of Washington]’s vice provost, said that to earn credit, students would probably have to pay a fee, do extra assignments and work with an instructor.

[...]

Coursera does not pay the universities, and the universities do not pay Coursera, but both incur substantial costs. Contracts provide that if a revenue stream emerges, the company and the universities will share it.

Although MOOCs will have to be self-sustaining some day — whether by charging students for credentials or premium services or by charging corporate recruiters for access to the best students — Ms. Koller and university officials said that was not a pressing concern.

[...]

One looming hurdle is overcoming online cheating.

[...]

Grading presents some questions, too.

The hurdles, open questions, and unresolved issues are all the messy parts of running a sustainable education business.