Still no correlation between amount spent on education and actual education

We’ve already learned that Nevada’s doubling of inflation-adjusted spending on education has had no impact whatsoever on the quality and level of education.

A couple of academics writing in Investor’s Business Daily now have crunched the numbers on education spending and outcomes state-by-state, while adjusting for cost of living and demographic differences. Behold: There is no correlation whatsoever … still.

IBD chart

You may notice that Nevada ranks 40th in overall per-pupil spending but 43rd in 8th-grade test scores, but No, 1 spending Wyoming is in the middle of the pack and 50th ranked in spending Utah is well ahead of Nevada in outcome. States that spent less than Nevada are in the top 10 in outcome.

W. Michael Cox and Richard Alm, of the O’Neil Center for Global Markets and Freedom at SMU, concluded:

Better schools are certainly within our means, but we won’t get them with current assumptions and institutions. It’s time to harness the tried-and-true forces of capitalism — most important, choice and competition. Capitalism in the classroom will create proper incentives, spur innovation and drive entrepreneurial activity.

Milton Friedman famously argued that the private sector could do better than government in educating America. In 1955, he laid out a plan to issue taxpayer-funded vouchers for each student, which families would use to pay for the schools of their choice.

Typically, Friedman was both right and ahead of his time. Over the next six decades, the idea of incorporating market mechanisms into education has gained traction as the failure of government schools has become impossible to ignore.

A variety of school-choice options have been introduced in all parts of the country — voucher programs, charter schools, tax deductions and rebates, tax-credit scholarships, private schools, home schooling, online learning and educational savings accounts.

But in Nevada the teachers are pushing for mo’ money, mo’ money, mo’ money, even though mo’ money has done nothing to improve the level of education. The Nevada State Education Association has the margin tax on the November ballot, which will cripple the state’s business and still not guarantee any improvements.

We can keep doing the same ol’ thing or do as Cox and Alm suggest:

Americans are romantic about their public schools. We need to be realistic. We can keep doing what we’re doing — spending more on education, failing our students and undermining the American middle class. Or we can embrace choice and competition, the powerful forces that give us better products for less money in the private sector.

It’s time we let choice and competition work in education — we’ll end up spending less and getting better schools.

Newspaper column: How the margins tax would work

The November 2014 mid-term election is still a year away, but the campaigning over a key ballot question should be starting in earnest soon — as reported in this week’s newspaper column, available online at The Ely Times and the Elko Daily Free Press.

The Nevada State Education Association managed to gather enough signatures and survive enough court challenges to have its The Education Initiative go before the voters. The initiative proposes a 2 percent margins tax on all Nevada businesses that gross more than $1 million a year.

The union has estimated the tax would bring in $800 million a year in additional funding for K-12 education.

A coalition of businesses is coming together and expects to start its opposition campaign possibly before the first of the year. There is already a website that spells out reasons to vote against the tax.

Carole Vilardo, president of the Nevada Taxpayers Association, explained how the tax would be assessed.

Once a business exceeds $1 million in gross revenue, it must pay the tax, Vilardo said. Then the business may take one of three deductions: A. A straight 30 percent of revenues, leaving the tax due on 70 percent of revenue. B. The cost of goods sold. C. Employee compensation up to $300,000 per employee. Gaming taxes and the payroll tax are also deductible.

Kelly Bullis’ certified public accounting firm in Carson City has created an online spread that business owners may use to estimate what the margins tax would be for their companies. It may be downloaded from the Nevada Manufacturers Association website.

Read the entire column at the Ely or Elko site.