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Show Us the Money

October 16, 2013 in Economics

By Jason Bedrick

Jason Bedrick

A bank would never grant a loan to a business that failed to disclose its overhead. So why do taxpayers and state legislators consistently vote to increase spending on public schools without knowing their full cost?

A new report from the Cato Institute finds that state education departments routinely understate the cost of public schools and often completely fail to report key spending categories. This may be contributing to the public’s vast underestimation of the true cost of public education.

When government agencies offer incomplete or misleading data, they deprive taxpayers of the ability to make informed decisions.”

The report, “Cracking the Books: How Well Do State Education Departments Report Public School Spending?,” assigns A-to-F grades for the completeness, timeliness, and accessibility of the spending data that the departments publish on their websites. The report reveals that very few state education departments provide complete and timely financial data that are understandable to the general public.

The most useful figures for comparing school districts of varying sizes are the annual per-pupil expenditures (PPE). However, half of all state education departments report PPE figures that leave out major cost items such as buildings, interest on debt, and pensions, thereby significantly understating what is actually spent. Alaska’s Department of Education website does not report PPE figures at all.

Other important spending categories are often omitted. Eight states fail to provide any data on capital expenditures, ten states lack any data on average employee salaries, and 41 states lack any data on average employee benefits.

Few states manage to publish timely spending data. By the end of the last calendar year, only 13 states had published per-pupil spending data for the 2011–12 school year. Most states’ data were a year behind, and for a handful of states the most recent spending data were two or three years old.

In addition, states too often report spending data that are hard to find or interpret. For example, the commonly used term “current expenditures” gives the false impression that it refers to data that are recent, which is not necessarily the case.

The average citizen is unlikely to know that “current” refers to “operating” expenditures, indicating that the figure excludes some major categories of spending, such as capital expenditures. Moreover, state education departments often use undefined acronyms that are practically impossible for the average citizen to decipher.

This financial opacity may be contributing to widespread misperceptions about public-education spending. …read more

Source: OP-EDS

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