[inaudible conversations] >> welcome to booktv. every weekend beginning at this time here on c-span2. over the next 48 hours, we'll bring you programs on nonfiction books, authors and the publishing industry. .. and co-editor of stretching the school dollars joined by

education specialists to present their thoughts on how america's schools can cut costs and better manage their budgets. this event is hosted by the thomas b. fordham institute in washington. >> good afternoon. welcome to our event which we are calling strategies and opportunities for schools and districts. we have a terrific panel and we will have a fruitful discussion about the challenges facing schools and changes they must make to financially survive and thrive in the future. for those not familiar with thomas fordham we produce rigorous commentary and research on all things education. we also have an on the ground presence in ohio where we have roots, we do hand on school reform. we sponsored charter schools and do policy work. we know from our experience in columbus how challenging the

forecast is looking to be. today we have a new book called stretching the school dollar, how schools and districts can save money and it advises frederick hess who is on the panel and eric monitor who just left the thomas fordham institute which we are sad about, a huge part of our success, has gone on to run a private school in maryland. this is a launching pad that we will have discussions today that go much further than just the book. in person they're bringing home their own copy of the book. others go to the harvard education press website where you will be motivated to do so. let me briefly introduce our panel and talk about what we're going to talk about that you have thereby allow information in your package for more. rick hess is director of the

american enterprise institute and co-editor of the book. he will give us background on the book and explain his themes. might cast of the, his executive director of council of city schools and author of one of the book's chapters will tell us about the council's initiative to help urban school districts improve their financial management and operational practicees which were innovative benchmarking. and then we have karen all the smiles, president and executive director of education resource strategy will share the wisdom she gleaned from helping urban district analyze the way they use resources and altering strategies and creating better systems and finally dr. john covington, superintendent of kansas city school district who will tell his story and share his battle scars about his efforts for with schools by closing half of the building's shifting resources and making some tough changes. the book and this event are

predicated on the assumption that schools are facing some very difficult times in terms of budgets. not just for the next couple years as the country pulls itself out of recession but possibly for many years to come that we may be answering a new semi permanent phase that is a very austere phase. that basically we might be entering a time when the era of big spending in education is over and behind us. you don't have to be too cynical to hear that and say come on, seems like we have heard this story before from our schools. every year we are hearing there's not enough money for our schools. they have to have bake sales to the basic demands, teachers are reaching into their own pocketbooks to pay for pencils and cans and paper. i want to ask rick to tell us is it true then this time is different? we're not crying wolf, our school districts are facing

something different and historic and if so what will they need to do to get through this. let's get started again with a wreck. >> pleasure to be with all of you today, pleasure to be here with the panelists. mike castelli is spearheading a national effort, one of the half dozen folks being most aggressive and john covington who has actually done it. i don't actually do any of it. i write about it, i ponder it. that is a lot easier. from where i sit and ponder, from 1933 until 2008 america increased per pupil in nominal spending nationally every single year. through the 73/74 collapse and

the 87 market crash, every year we increased nominal student spending year over year. first time in three generations we haven't done this last two years. the reality is -- i have all kinds of trouble with my mike here. sorry about that. the reality is these last two years are probably only the start of a broader change. what has changed? straightforward let's keep in mind the way property-tax collection works. property taxes account for a third of education. depends on which state you're actually in, the exact amount. property-tax assessments tend to lag property values by three years. today states are still collecting property taxes pretty much based on 2007 assessments. that was the height of the bubble. we are not going to see today's

new residential real-estate rates really kick in until 2013. many experts think the residential market might not bottom until early next year which puts us at 2014. nobody expects commercial real-estate to bottom until next year which means wind won't see the full trickle through until 2014. this means states and districts are going to face a downward gravitational pull from property-tax those in all likelihood through the dirksen senate office building 4 team if not water. that will be a question of how fast the real-estate market picks up and as we are all well aware that might be a while yet. that is one consideration. second consideration is there is a way for districts to override declining property valuations to raise the tax rate and mortgage rate. however, in a context where homeowners have lost lots of wealth, there are many demands and substantial overhaul on the public dollar and where there is

substantial concern about other tax increases, it is dubious whether we are going to see district able to has substantial increasees. look to new jersey this spring where we saw in an unprecedented wave more than half of the requests for tax increases voted down. first-time that emerged since the 1970s. second developmented district and state 7 cushion to last several years, these dollars are starting to trickle out of the system. what was disconcerting was the 34 state budgets enacted since july 1st, '23, they plugged in unspecified additional stimulus dollars to come. given that it is looking less likely that congress is actually going to cough up additional stimulus funds states are going to fill holes in their budgets. we have seen education department put little if any

effort into figuring out how they are going to significantly and permanently downsize their anticipated revenues. third, when we look at the cuts states have made they have generally protected k-12. they don't feel this. doesn't seem that way but the reality is that that is the way the world looking. on the private sector as reduced employment by 7%, the public sector has reduced by a fraction of 1%. mike reported a few weeks ago that if you count education jobs we have added jobs in k-12 schooling since the beginning of this recession. the reality is k-12 is likely to be last in line with colleges and transportation, first responders start lining up at the state house looking to get back some of the money they suffered in recent cuts. what all this means is we need a new mentality in education.

for 70 years our mindset has been reforming the process of this and that. we keep doing what we do and do reform by buying it. in addition to everything we currently expended. when secretary of education arne duncan was superintendent of chicago. there was a much auditory praise for the district's teacher merit pay initiative. what involved was leaving a tax in contracts that involve sprinkle on top of that new dollars at 24 schools passing performance pay. nothing wrong with this but it is a way of doing business that we're not going to be able to do for the next half decade. two problems with how federal policy has addressed this to date. first as i mentioned stimulus has helped plug these holes. in doing so it could have done what t.a.r.p. did for general motors which was provide political cover for difficult and hard choice that needed to

be made going forward. unfortunately congress gave way both the stimulus dollars without attaching any conditions. without even asking for clean accounting of pension funds. we have now pumped $100 billion plus into education k-16 and are no better positioned to deal with the rough waters going forward than we were before we spend that hundred billion. the second thing we have gone wrong is the most exciting initiative that occurred, race to the top and the i 3 fund involving encouraging states and districts to dream up a grand new plans for spending and to hire grant writers who can come up expensive new programs for improvement distracting the limited bandwidth in state indication agencies from the work of figuring out how to start to live within our means. as will forward their two ways to live within our means and i

am going to let mike and john talk about this in more detail. one is the question of incremental adjustment to. how to use data to figure out whether we're getting bang for the but? is a reading program actually a good investment? these are vital questions. the bigger questions which we will get to as well are how we start to rethink the challenges of schooling. how we frank technology not as something that supplements instruction but allows us to start doing cost-effective displacement of the usual way of doing business. how will look at staffing levels which have grown 50% faster than student enrollment even in the last decade and start to rethink how we use faculty and staff schools in a way that helps us live within our budgets. thanks so much. look forward to the conversation. >> your job is to tell us these changes that are considered incremental better very fundamental and important which is how do you make a bigger and school system run more efficiently and effectively so they are not wasting dollars on

things? >> thanks for the invitation to present today and thanks for the invitation to submit a chapter for the book stretching the school dollar. a i am executive director of the council of city schools. much chapter in the book describes a set of key performance indicators that our organization invented to help urban school districts operate more efficiently and effectively. the work is in keeping with the council's larger effort to improve public education by initiating of the urban district assessment, publishing our annual test scores city by city conducting research on why some big city school district to improve faster than others, providing on the ground technical assistance in surprising -- supporting standards and other initiatives to improve the quality of urban schools. our key performance indicators

are consistent with these efforts and was begun in 2004 as a way to improve managerial and operational effectiveness and efficiency, save money and read deploy resources into the classroom. we also wanted to be able to measure our operational effectiveness, compare ourselves with one another managerial and identify effective managerial and operational practices and make better data decisions dated driven decisions. unfortunately at the time there was nothing in place and there is still nothing in place that would allow us to do these things so we invented what is now a full-fledged national performance management system for urban schools across the country that is unique in public education and municipal and state government. when i did the book chapter the system consisted of 227 indicators across four functional areas. last week we released an expanded version of these

performance indicators that consisted of another almost 100 indicators in four operational areas in 20 functions including budget and finance information technology, human-resources and business services including transportation, procurement and safety and security. each operational area has indicators that are further divided in three ways. we have power indicators for superintendents and school board members. some 68 of these mostly at the school district policy level. what we call an essential few indicators, 58 of these for senior line administrators and chiefs and 217 key performance indicators for operational staff. what is new this year about the system that we release is each of the operational indicators comes with a full-fledged narrative description about how

it is these functions work and hard is they are driven up and down. the system is fully automated. school districts can submit all of their operational and financial data electronically but they can also ask what if questions and compare themselves with other cities by size, demographics, union of 40 and collective bargaining agreement and the like. the system also allows results to be analyzed so each city can see how they rank across functional areas. for instance a city can see how it compares to procurement by looking at its aggregate rankings are cross card transactions, starck turn ratios, competitive bidding, distribution lead time another indicator is. in addition it can also see how the district stacked up in transportation by looking at its aggregate ranking are cross cost per student, daily process,

on-time performance, daily ride times. under the previous version of the system as city has the ability to compare itself to a medium on any single indicator across all of the cities and calculate how it might save money by moving closer to the mid point. a district for instance that has 500 buses but only 345 on any given day might save $1.5 million by losing -- moving closer to the medium by selling 80 of those buses at expected rate of depreciation. we have lots of examples how this might happen. what we can do now is look at performance across multiple indicators simultaneously in any functional area to be able to tell who's generally doing better financially and operationally. 64 of 65 cities are participating in providing data on the system and slowly but

surely we are using the system or the system is growing and becoming more imbedded in urban school operations across the country. rochester discovered that its cost per student as a percentage of general fund for transportation was higher than its peers. the reason was it was scheduling its bus runs in a single tear so it decided to stagger its start and end times so each school or each bus could make multiple runs in the morning and afternoon and save the district million dollars. albuquerque look at how ranked the information technology and found it was staying more than other cities for its provider services, renegotiated its debt district $200,000 a year. in seattle it used procurement kp is to see the time to process recommendations was higher than the norm so it boosted its

electronic procurement system to cut average processing time from seven days to one. nashville use the system to streamline its custodial operations. orlando used the system to increase school breakfast participation and benchmark its transportation costs. since the nanny decides to cut expenses on safety and security philadelphia has now use the kp is as part of its school reporting net work and report cards. austin has abetted the system into its balanced scorecards and has seen revenue increases in school meals and has cut its plumbing repair costs by 10%. houston uses the system in areas of teacher attendance, staff retention and budget versus actual dollars spent. miami dade uses the it among others to gauge effectiveness and efficiency. los angeles has used its bond

proceeds to upgrade the operations. the examples go on and on about how it is they're being imbedded in these systems. our next steps involve expanding the use of the system, fine-tuning the indicators, conducting case studies in districts whose operations are consistently in the top two, developing standards for each of a power indicator is, conducting benchmark against non educational sectors and institutions and expanding into the instructional arena. we are also beginning to design a system to better examine and benchmark the cuban capital resources had a strategic level rather than an operational one like our current system allows. this will involve staff compensation, pension, dollar allocation and other things that rick mentioned that will improve our ability to analyze returns on investments. all of this should give us a better sense overtime how we can

use our scarce resources more effectively. finally i think we are proud of the fact the we did this work ourselves if out any prompting, pressure or resources from the outside except for a little bit of money from the chill of foundation over the last year worse though. so before our critics of some urban schools are not capable of innovation or learning from others or borrowing practices and ideas from other sectors. they should consider this effort which in combination with giving urban schools a new tool box by which to leverage our improvements, we are not sitting around waiting for someone else to save us or to reform us. instead we're doing everything we can to rise to the challenge the nation has put in front of this particularly in this bad economy and teach our children to the highest standards at lowest possible cost. >> not waiting for superman.

we hear from my column these innovations to rain in these costs, making sure the food service and all that is as efficient as possible but that is so we don't have to make tougher decisions around letting class size go up or firing teachers or strategic things are will get to next. several your experience let's talk about a fundamental overhaul and fundamental changes to not just sit for a couple hundred thousand dollars here and there but to spent 15% less than they were spending before? >> i'm with education resource strategy and we work with large urban school districts as a nonprofit organization all over the country. is it on? deep analysis to do deep analysis of school resources by combining data districts don't usually combine to understand

how they are aligned with their strategy. i want to start out by just saying i have been doing this for two decades and this is a moment in time that is really unprecedented. incredibly precarious because we are in the toughest financial times we have ever been. there is wide awareness of it and it is also a moment for potentially huge transformation. i like to talk about it not so much in terms of austerity and productivity improvements, but what are but argue is school and school systems are not set up an organized now in the way to take advantage of the 20 first century technology, the knowledge we have about how students learn, how professionals work well together and how to get the best folks into schools. so this is our moment to interrupt all the fundamental structures and that are based on

antiquated work force notions of, organizational notions that don't match what we know of a high performing schools are doing. so when we talk about the fact recant that high-performance to scale on would argue and we were all argue with this book it is about resources. the reason you can't get high performance to schools is the resources are structured fundamentally in ways that will not allow that. jim guthrie's chapter begins by talking about what rick hess was talking about with the rising spending and lack of outcome is. but what people don't realize is the costs that underlying schools right now guarantee there will be no productivity increase. we organize schools based on class sizes which not only state of the same but have gone down over time and are mandated in

some places constitutionally and those class sizes at the secondary school level don't vary across subject, students need or grade level and they aren't managed by schools or districts except those that are high performing. we have put a cap on staff and created contrast, state legislation and stuff that stock rates remain the same and compensation. we have compensation's structured in virtually every district around the country so that it goes up unrelated to any kind of contribution or performance. when we analyze compensation spending in school district will we see is teacher salary is double over their careers and the doubling comes about 20% from educational, getting course credits and the rest comes from staying in the system longer and when we look at what districts

spend on those pieces, of 100% of compensation spending house that split out? i am not going to get it totally right but 25% goes to benefits which is way out of line with private sector spending, 25% goes to longevity, 7% goes to pay for educational attainment and the rest goes into these base salaries. there is very little that teachers get for playing additional roles in school, played a leadership rules or improving performance. despite discussion of merit pay and so on when we look percentage of jobs, compensation dollars and school districts that go for placing greater role, giving more time, play leadership roles it is between 2% and 4% in every district including denver bridge is implementing a brand new

compensation. we have got ratios to teacher compensation and special education which in this country spending has gone since 1967 the percentage of total spending has gone from 4% to 21% of total spending. general education spending has dropped from 80% to 50%. there is the opposite of fiscal accountability in special education spending. the federal law and state laws require maintenance of spending so even if you found a more efficient way of doing it you would have to maintain your spending level. secondly, people who write the individual education plan have no accountability for thinking about the collection of resources that and go towards that or how those play out and school organizations so vacant define the resources being used with of thinking about organization and how matt would work. so we got into a system where we

have to tackle four big paradigm shifts that coincide with what we know high performing schools to. we know that high performing schools started individual attention based on student needs but we have class sizes that don't allow doing that and special education structures that don't link the skills or achievement of compensations so we have to break-ins side of that one size fits our class size model. secondly, we know high performing schools found not of individual teachers as witches but they think of teams of teachers with combined sets of skills that work together using data that bringing the collection of what they have to bear and played different roles in school. some work full years. some work half days, some work at teacher leaders, some work in the classroom. they played different roles and get rewarded according to the different roles and how they

combined together in those roles. we have to change the paradigm how teachers work in schools and how they are rewarded and compensated. special lead, we know these high performing schools are not using rigid labeling models. there intervening early, investing in reading and math and lastly, time is is huge piece of this too which is we need to think about using existing time differently and breaking down barriers to creativity and using that and all the various mandates how to describe school needs to spend time. we can talk more about that the two things i will say, if we are going to break into these paradigms and take advantage of this moment where there is increased scrutiny on spending and people will be picking up a book on stretching the school dollar, let me tell you, this is the first year people are calling us up and saying we have to figure out how to use dollars better in school. for the last 20 years we have been thinking how to market

this. how do we get people interested in saving money in schools. so it is a big moment. but the capacity is not universally fair to think about how to do this differently. the second thing is the politics of this are incredibly difficult because in this end is about salaries of existing people and people who vote in the elections and said the rule the state legislature and unions are often not going to be the ones who will be pushing for these transformations unless we can make really clear the fundamental trade-offs we are talking about and the operations we have for how we want to see schools be different and build those to scale. it is a big moment but it won't be unless we can help urban districts and other district understand that this is the time. >> now we're getting going. we are going to raise class size and get rid of the salary schedule and looking at people's

pensions and all this. this means politics are very difficult and dr. covington can tell us a little bit about that. you have the cleanup position here. >> thank you. i appreciate that and the comments made by my colleagues and i appreciate the opportunity to share in this panel discussion today. a little about the kansas city school district. i'm going into my fifteenth month as superintendent of kansas city. school district was founded in 1867 serving approximately 2100 students and over the next several decades the enrollment grew to approximately 75,000 students. during the decade of the 70s, 80s and 90s, kansas city went through a desegregation period as a result of the brown

decision and student enrollment declined to approximately 35,000 students. during those years the court awarded kansas city for desegregation purposes $2 billion. to my knowledge i don't know of another school district in the country who received an award, a single award of $2 billion. this however stabilize the district's -- $2 billion given to the districts in kansas city. so enrollment was stabilized for the next ten years. as a result of receiving but $2 billion kansas city somehow adopted the mindset that if you build it or buy it the what they will come. we did things like recruit

teachers from russia. we built elaborate high-school is with olympic size swimming pools, with underwater viewing facilities. eight lane tracks. we did a lot of good thing is. and they're very nice to have. one question the value they had to student performance outcomes. approximately 30 years, and 26 superintendents later, and roland dropped by to 17,500 students by the fall of 2009 serving and as quickly as diverse student population, 20% hispanic, 7% white, 2% asian and 2% american indian.

eighty% of qualified for free reduced lunch we have approximately 30 one hundred employees with a student teacher ratio of 14-1. if there's any research out there that says there is a direct correlation to measurable student academic achievement and class size in kansas city with a 14-1 ratio should have had the highest scores in the state. however, in 70% of our school, less than 25% were at the efficient level as required by the state sentiment and in turn required by the no child left behind act with a vote goal being that 100% of students would be proficient by the year 2014. in addition to that, we were doing business with 6,300

vendors. six thousand three hundred vendors. when we look at the value that these vendors were contributing to student performance outcomes the data suggested that the value that they added or should have been adding just wasn't there. we at a projected expenditure in the fiscal year can for $360 million and we only had two ninety-seven million in available revenue. we faced a projected expenditure of $301 million in fiscal year 11 with $257 million. we could have they corrected the district with an $8 million

deficit. so we then decided based on the data, we made a data informed decision to right size our schools particularly when we looked and saw that we were only using approximately 40% to 50% of the capacity but yet still we were operating 61 or 62 schools and only needed half the space. we cut our schools by half. we cut our vendors from 6,300 down to about 900 to date. we used additional savings to make sure those dollars were reallocated and the human capital we were able to maintained, like human capital and the dollar's we were able to save as a result of the right size of the initiative were

returned to the classroom where learning takes place. where the dollar should have been first of all. and we allocated both human and financial resources based on a system of equity. we cut this central office of administration to 3%, an average of any district is 5. we cut it to 3% and terminated approximately 1,000 employees. we terminated all the principles requiring them to reapply for their positions if they maintained an interest in remaining with the district for continued service. so that is pretty much the story. it was not necessarily about -- although we had a primary goal to make sure that the system remain solvent, our greatest

goal was to make sure we were utilizing human and financial resources in ways that would have a positive impact on what we should be about which is an exceptional teaching and learning. >> let's start our discussion with this. i want to talk about politics. you mentioned this being a sticky point. we heard some major ideas of streamlining especially the back office thing. using class size strategically. may be keeping it low to get out bigger and even by a middle school and high-school minister is subject, rethinking the way we do teacher salaries. there has been a lot of conversation about that in washington and nationally and looking at benefits, spending a lot of money on health care benefits that most teachers and administrators don't pay much

attention to. we haven't talked about pensions too much but that is another thing. and consolidating schools is another big one. before we get to -- there is another week of fundamental changes but these are pretty tough. what are the politics >> so far? in kansas city what was the public reaction to these efforts especially around consolidating these schools? >> any time you talk about closing one work week to schools it is always going to without question -- a very impassioned debate from communities. you can imagine when i made the recommendation to close, certainly, certainly unheard of. giving credit to kansas city, it wasn't nearly as difficult as one might think. i have never been in a community

quite like kansas city. were members of the community members of the business and industry, parents, they have no for quite some time, even back-and-forth, great big schools conducted a report for the district in 2006, making such a recommendation that the school district should right size. everyone was fully aware that this was something that needed to be done and because kansas city had gotten to the point where they had decided that enough -- sternly enough -- they rallied behind by recommendation, recommendation of my leadership team with the support of a majority of the board members to see that we were successful. it was painful, but at the same time the way in which the

community galvanized itself to do what they considered and what i believe the right thing to do for the benefit of all children, it wasn't as volatile as one may think. >> did any decision that reversed? was there an attempt and the neighborhood would lobby? >> we made sure that we did our due diligence in going through the community and getting as much input as we could possibly get. we promised the community that in the community forums that we held if there was something that was said or done that would give my administration some reason to go back and think about a recommendation about a particular school or a group of schools and if their argument had validity we would then give it due consideration and i can remember on one occasion one community indicated to us that we have not looked at the data properly and if we had, we would

know that 74% of students in that particular school block to school. they were not being transported and as a result it was a true labor school and that schools should come off of the list. when we looked at it, we found out that was the case and we removed that particular school from the list. with maintaining, creating a sense of trust with community that you were going to listen and do your due diligence and make decisions that would be the best of all communities across the board, that worked to the benefit of recommendations. >> you want to raise class size and rethink teacher salaries so how on earth are we going to sell that to teacher unions whose job is to protect their members and have an interest in making sure those jobs don't go away or keep salaries go down or change or see their health care benefits or pension the way. can we crack that not?

>> an easy question. >> we will all be taking notes. >> there are four big components. the first is a vision. it is certainly not an attractive vision raising class size and cutting teachers' salaries. those are the two basics but that is not a vision for improving school either. vision for improving schools is really thinking differently about resources in such a way that puts a huge premium on pay and for teacher contribution and resolve and thinks about raising teacher salaries dramatically for the folks that are doing more and also the job of teaching as one in which teen work is premium and in which there is plenty of time for collaboration, in which the school day is a professional one. in the context of a vision that

is about teacher professionalism, about targeted individual attention that includes not just class size but grouping kids differently on different days of the week for different skills subject and all those things with different features and different skills and different technologies. very different visions of how schools are organized that places a huge premium on teacher effectiveness. in the context of that vision, and then data. i heard john talking about that. bringing the data to bear and to light so you could make the trade-off really clear and having this credible communication that you were describing, really being able to make the case and have folks believe that you are being straight with them about that. it is about leadership and community support and so on. i will give you a quick example

of charlotte mecklenburg. they pulled off some amazing things about this. by doing what i said. vision, data and clarity and communication. they face an $80 million deficit which they had, which they had been building, understanding that for quite some time, and first and foremost they had been pursuing a teacher quality initiative requiring quite a bit of investment and they got a grand to do it and so on. they said that as a goal not only to fill the deficit but maintain spending on that teacher effectiveness initiative which meant they had to do some layoffs and raise black ties which is something charlotte had been working hard to reduce class size. to take a two child class size in grades 2 through 6. he did this in the context of laying out the data about the trade off. if we can do this we can

preserve paying teachers more for greater effectiveness and preserve our turnaround strategy and all these things and put them in to dollars and cents, what it meant in terms of those trade offs and discussions with the school board and the community around that. by putting -- i think it is called believe. putting that vision out there and really being clear about what is required to get there, it won't always work but it is about getting community support. >> that is very encouraging. people say what about making the buses run on time and be more efficient? imagine if you find out you are redistrict and look at your benchmark and something like hiring teachers is costing much more than other districts. that might be because some people in the h r office are not doing much good. district have been able to look at the central office and be able to fire people and make decisions based on those

performance issues and how tough is that to do politically? >> all of this is difficult politically. whether it is closing schools or forcing the h r people to hire people on time. all of this is difficult to do because there are people who have a stake in keeping things as they are. i think what the system might describe, key performance indicators has helped us do and has helped the individual urban school systems do, is compare themselves with other major urban school systems with many of the same challenges politically, financially and in terms of human capital. so in some ways, we know

personally, conversation, individuals have been having in their cities about the changes that have to be made and when they discover that they are in the bottom two quartiles of performance or cost efficiency and the like, there have in fact been quite a few people fired as a result of poor performance. but i think one of the advantages this system has is the system is able to compare performance across districts in a very specific objective and database way. so you have taken some of the politics out of this because you can actually document performance very objectively. it doesn't make it easier, but it creates a foundation by which you can have a conversation in a

more intelligent fashion. >> rick is going to look so much better than the rest of us on a per year basis. you had some ideas about how we can get to a higher class sizes in some cases and end performance pay in a way that is very attractive? spell that out. >> the key point that you raised is one that asks how are we going to focus on productivity, how do you focus on cost-effectiveness in a way we can all come together? the answer is you can't. no organization is good at productivity when times are good. everyone of us in the course of our daily life likes to avoid making people unhappy if we can avoid it. if more money is coming in, you are making money for profit you don't want to go out of your way to fire people. you don't want to discipline employees. is not the way we are wired. anybody anywhere for profit,

non-profit only revisits these decisions when you have no options. the first thing to keep in mind is the reason we are having these conversations today is because the money is not there. if you are serious about these issues, that is an absolutely essential starting proposition. if you are a superintendent and trying to identify low performers in your transportation unit and instructional league in times of good people and you are just mean. if you raise superintendent has to 56% to trim out of your budget, then you can say it is not mean. i have no choice. we are putting people in a position to succeed. all that does is create possibilities. the first thing we need is serious substantial political backing which does not permit excuses and half measures. the kind of stuff we have seen in washington the last 18 months, free money flowing out of states and districts.

jobs for stimulus has been destructive in terms of getting serious about cost-effectiveness because if you are a union leader and you know that more money might be coming in you look like a sucker if you go to the table and give away benefits or give away the kinds of -- give away the kinds of concessions. we systematically have seen congress and the administration cut the knees out from under people, who are trying to get serious about spending. an example of how to do this right is the gold star teacher initiative. we talk about raising class size as a political loser. everybody hates it. there is no upside. your kid is a larger class endure teach a larger class and all the savings that accrue have nothing to do with you. another way to think about this.

is there a way to make it in the teacher's interest to teach more than one kid? of course. in any walk of life we don't get merit pay simply for being good at the same old thing. usually we get more money because we are being asked to take on new responsibility. because we are growing in our role. we don't care if you are hospital or university or technology corp. usually merit pay is associated with growing into new responsibilities. in education if we have terrific teachers and they have taught 24 kids last year and they will teach 24 kids next year giving them more money doesn't do much good for anybody. on the other hand, paying that teacher of 24 kids to take on additional kids starts to change the proposition. we know for instance from international data from nations like singapore and south korea, average middle school class sizes of 45 kids. it is not a good size but we

know it is doable. what about teachers who are high performers? you are eligible if you choose to be a bold start teacher. if you so choose we know on average each extra kid you take in class is going to save the taxpayer about $3,000. we are going to split that with you. $1,500 goes back to the states or local treasury. you can take up to 12 additional kids. teachers are making and $18,000 bonus in addition to any other merit pay money because they're more productive. taxpayers are saving $18,000. we have actually now got a way to change the culture of the teacher lunchrooms so that teachers who might want to bump 53 say i don't mind making 71 next year and starting to think it might not be such a bad idea to want to have additional kids in their classroom. how about parents? we all know there are parents who say i would love to have mrs. johnson's class but i can't.

not enough slots. we can give these parents and opt out. mrs. johnson can handle 12 additional kids. if you don't want your child in a gold star classroom that is your privilege but just recognize the bold start teachers will handle more kids because that is how we squeeze productivity out of the system. rather than raising class sizes across the board we are talking about using larger classes as a way to reward teachers and get kids with the most productive and effective educators and start to rethink how we are allocating talent. >> if you're a teacher you say this guy will reward me with larger class size you can e-mail wreck -- not a lot of agreement on this panel. let's start some disagreement. rick is saying the bailout and stimulus for schools which is $100 billion plus and the new jobs bill which is the $23 billion was damaging to our school. the number of people listening here are saying this sound like a mean and so be. these are dollars per kid for

schools. if we can bailout wall street what bailout our schools? if anyone makes the case that we should be talking about another bailout because our schools, we need it right now. >> i would say certainly in some cases the money is going to be helpful but there are a lot of things that we are doing or not doing in our school that we could be doing that don't necessarily require more money. if monday was the end all in all cases, after having received $2 billion from the school district, why aren't we on top of the world? we need the additional resources. the question comes how are those resources being managed to the

benefit of children? one of the things we're doing in kansas city that won't require a lot of additional money, if we were somehow able to resurrect wally and beaver cleaver and have them walk down the hallways of our schools, the only thing that wally and beaver would find odd is the dress and the ethnicity of the students walking down the hall. when they go into the classroom and sit before the classroom teacher they will feel right at home. because we for the last 150 years have continued to deliver instructional programs and services to children for different age. we have moved from that to a paradigm of changing structure in schools. we said to teachers forget about think time. think time is variable.

when a student is ready to move on they move. we have purposefully driven a nail in the coffin of social promotion and children move from one level to the next based on whether they have mastered the standard and ready for the rigor of the next level because we don't have grades, we don't have grade levels. we have been able to do that by wisely using the resources that we have available to us and i believe it will make all the difference in the world. >> that is another great segway. i want to get into this. we will get some questions from the audience as well as folks watching our web cast. send it to questions. mike had something. >> i just wanted to pick up on your question whether or not anybody disagrees with rick's

characterization of the stimulus. i always appreciate his perspective on the world. but i do disagree. i don't think the stimulus or jobs bill was destructive. i think they were good things and i was wholeheartedly in favor of both, and actively supported the passage of both. i also don't think of these things are mutually exclusive. the stimulus money actually provided a great deal of resources that helped boost our capacity in any number of different areas. we were able to improve our on line capacity. we were able to improve our language programs for english-language learners. we were able to overall curriculum. we were able to extend data

systems. we were able to do all kinds of things at the same time we were working on improving the efficiency in the system. these were actually quite doable at one time. it is hard to do. it takes time to do. but i disagree that the stimulus money was destructive. i think it was very constructive. >> so why not continue it? >> maybe we ought to. >> you think education groups are right to say let's make the expanded federal role in funding schools permanent or semi permanent and go forward because the federal government can borrow money but can't balance the budget for dependent on property values? why not get the federal government into paying 30% of the bill? >> i didn't argue in favor of 25% to 30% of the bill. i did suggest the federal government has up proper role to

play in the underwriting public education and i do believe the stimulus money was a constructive addition to the system that did help us to build our capacity. >> what i would say is when i was describing the cost of structures and underlying cost structures that difficult to change, folks that can't be laid off, existing schools that take a while to close. transitioning to new cost tractors does save time and takes investment. what i have seen in the urban district we work closely with is a lot of tension to can i use these funds to support the transition and how can i use this moment to make the kind of cuts that move me in the

direction of that transformation 90 to do? what we have got to do is keep the political pressure on because sadly no matter what the federal government vote for it is going to be tough in two years for the school district. it is not like we're getting out of that. how we put strings on those dollars? encourage some productivity challenge grants? encourage the kinds of changes that need to be made in pensions and salary structures that make sure those dollars are used well? >> very quickly. we have gone from a nation of risks, america 2000. no child left behind. now we are racing to the top with additional -- additional dollars coming from the federal

>> open it up to some questions. i'll get you in a second. want to get people into these questions, so here in the audience raise your hand, we'll get a mic to you. if you're watching over the web, it's questions at excellence.net. we have a question in the front row, barbara. wait for that mic. tell us who you are and then, please, ask your question.

>> i'm with k-12. i guess i'm interested in hearing the panel just talk from their different perspectives about this issue of seat time. dr. covington, it sounds like you didn't have state policy or law that prevebted you -- prevented you from changing that in many states, you know, that is a consideration. i guess, you know, and, rick, maybe you can sort of chime in on the -- who's defending resisting the notion of, you know, completely changing the paradigm about seat time? >> and to be clear, seat time, we're talking about state laws that say, hey, you know, you've got to have kids in instructional time for 900 hours a year in order to be considered a school and get funding. and now there's interest especially with online learning that, hey, if a kid can learn it online much quicker and move on to the next level, we should allow that, but some of those state laws and rules are getting in the way. dr. covington? this? >> well, with regard to seat time in kansas city, there is a

law in missouri that also requires seat time, but that's more closely monitored at the -- i'm sorry, more closely monitored at the secondary level, grades 9-12, when children began to earn a carnegie unit which is actually based on time to determine whether or not they've earned enough credits to be eligible for graduation. elementary schools, while there's still seat time, the students are placed in a learning environment where we say if you can master this body of knowledge within seven months opposed to the nine, that's fine. you move to the next level. or if it takes you ten months or 11 months to get it, that's also fine. you progress through levels and not grades based on whether or not you've mastered specific identified learning targets, and then we have an individualized education plan for each and

every child that's based on the deficiencies that they have based on assessment outcomes. and we give, now, children what they need rather than requiring every child to do it at the same time, at the same rate, sitting in the same chair with the same book. and with a number of assessments to determine whether or not they've mastered those skills. >> yeah and -- >> i'd say another form of seat time involves teachers and the use of professional development dollars. this is not students, but a lot of states require that teachers have a certain number of hours or days of professional development over the course of the year, and the institution itself spends untold millions, hundreds of millions of dollars maybe on this particular activity when there is actually very little research to suggest that most of that time is actually productive in terms of its ability to raise student

achievement. >> i think barbara raises a really important point. we've talked so far mostly about schools and districts, and can we have talked some about the federal government, but states are probably the biggest player. so i'm curious, in what ways are states keeping districts from doing things smartly in terms of being efficient and productive? if you're a state policymaker, let's say you're running to be the governor of ohio and you're facing an $8 billion deficit and you've got to make some hard decisions, what are some things you can do at the state level that will make it more likely that superintendent covington and his peers around the country will be able to save money while serving students best? rick, do you want to start off on that one? >> sure. there's a couple ways to think about it. one is the thing states can do to create conditions for districts to be able to solve these problems. second is places where states can get out of the way and the third is where states can start to fix things. an example of the first is if you look around the nation, there's not a single state right now or when you look at the

state report card for schools and districts you can actually see which schools and districts are doing better in terms of bang for the buck. we now have report cards in every state where you can look at school performance, but if you want to know how a district stacks up to another district because it's spending twice as much or half as much, you have to go through crazy online gymnastics to try to get your hands on these data and figure out what's comparable. so the first thing you could actually do if you were governor of ohio is push through the legislature a change in which your state report card was going on a basis that was adjusted for demographics and adjusted for cost of living, going to start reporting actual per-pupil outlays and looking at school performance on that basis. second kind of example of where states can get out of the way is, for instance, the major federal aid programs for student, for disadvantaged students. most of that money runs through title i of nclbesea.

there is language-related title i relating to particularly supplement, not supplant that is now 45 years old in terms of efforts to make sure that federal dollars are not an excuse for states to cut back on their own expenditures. reasonable enough. on the other hand, if you talk to folks in school crickets across -- districts across the land who happen to be working in the wrong states, we have a written rule of state red tape pure rock si which makes it impossible for folks to make cost-effective decisions because they are not allowed to cut back on budget outlays, zero out expenditures because this would be regarded as a case of violation of supplement, not supplant. it is entirely within the power of states to revisit their guidance on this because, folks, at 400 maryland at the u.s. department of education will tell you these state practices are inconsistent with their guidance. so somebody is being disingenuous here, and i think it's the folks at the state who

are allowing decades of accumulated bureaucracy to stand in for smart decision making. the third thing is places where states can start to be proactive. one is state pension systems are not susceptible to erisa, the regulatory framework which oversees private pension systems. what this means is they make up numbers left and right at your friendly state pension system which is why we're going to be cannibalizing operational outlays for years to come just to make up the dollars that we actually have not put into retirement and health care. or the other is something as simple as a bankruptcy provision. general motors had heard for 30 years, 40 years that there were problems with its productive -- with its model, with the way many which it was approaching delivery of goods and services. knowing what was wrong wasn't enough. what gm actually needed in order to start to rethink the uaw contract, the overextended dealer network was a political excuse, the pressure that came

with t.a.r.p. when they finally had no way out of the trap except to give these givebacks which made uaw finally have to play ball. states could create bankruptcy mechanisms for districts whose budgets don't work, for districts who are academically underperforming and insist the continuation of state aid is provisional on them rethinking fundamental assumptions about what's in the contract, what staffing looks like and the rest. >> okay, mike? >> yeah. this is one where i mostly agree with rick, particularly his comments about a data system and the like. the states actually have very poor data systems by which local school districts could use to improve their overall operations. and in part it's because the states by and large don't operate anything when it comes to local schools and school systems, so they don't necessarily have the expertise. i also agree that by and large there is a great deal of

disingenuousness on the parts of the states, and by ask and large their overall capacity is one built around compliance, not operational efficiency or providing technical assistance or data systems. they're a compliance agency for better or worse. >> okay. karen, anything you want to add on the state policy ideasesome. >> yeah. i wanted to echo the health six thing piece of it which is -- because we're working in lots of urban districts, even some within the same state, and what we find is each district is trying to figure out their own teacher evaluation system, their own set of formative assessments, their own way to do value-added metrics, and all of this, you know? and then investing federal dollars to develop their own each one of these systems. and so -- and their own ways of reporting finances and their own

metrics for understanding resource use. this is crazy. and, and, you know, and they don't have the capacity but, quite frankly, some of the urban districts we work in have greater capacity than do the states to do some of this work. and so it's a question not of states necessarily doing this work, but it's states, states commissioning the work or states finding the very best people to do some of these things that individual districts just shouldn't be doing on their own as far as developing ways of measuring things, teacher evaluation systems and the move to standards. and measuring student performance is the ultimate in productivity enhancement. >> now, i'm surprised we haven't talked about some of the basics like getting rid of the class size mandates which many states have, right? getting rid of things like the mandate like last hired, first fired which many states have, not at the district level, and many categorical programs like a

state like california has all these hundreds of different pots of money that you can only use for that prescribed purpose. i think there was a big reform lately in which the governor in california legislation, okay, you can use your textbook money on general expenses. we've got that across, what, dozens if not hundreds of categorical programs. and the goal would be, hey, let's give districts a lot more flexibility and a lot fewer mandates around how that money is spent. anything else, john? >> sure. i would totally agree with mike, rick and karen with regard to how states operate primarily from a compliance standpoint. and then if you look at a lot of the leas within a given state, they're also relegated oftentimes to also be compliant, making sure that state mandates are being carried out. but one of the things that i really liked about rick's and eric's book is that it provides an avenue for schools or school

districts to really look at using data, how they are making expenditures against the available revenues that they have to improve proficiency, and as a result of that have an impact on measurable student academic achievement, and that is looking at how you are making expenditures based on a per-pupil cost. across the board. whatever that is, whether it's class size, offering an ap class compared to offering a regular-ed class or offering athletics programs in comparison to those programs that you should be offering to increase competency and efficiency in the common core. so that's already been very, very beneficial to the kansas city, missouri, school district. >> examples there, we find that something like cheerleading in some schools is a very expensive activity to fund, so now we're also going to go after cheerleading. [laughter] a politically-popular move. >> these are very difficult

things for school districts to deal with many part because of -- in part because employee organizations will go to the state legislatures and lobby for those various protections in either class size or staff retention provisions in state laws or state legislatures -- just like federal legislatures -- will think that they've got the latest, greatest silver bullet and pass a categorical program of one kind or another, name it after themselves for legacy purposes, and it's there in perpetuity. [laughter] so within the school district has to deal with the fact that they are having to apply for a thousand different cat bore call -- categorical programs, and at times when they are trying to realize greater efficiencies or effectiveness are stymied by state law. >> let's get a question from the

webcast. shane hedges writes in to say that private tax-paying educational providers are highly capable of cutting costs. what advice would you give these providers so they are met by those in control of the system? hey, let us in, we can help you innovate and do some of these things more effectively. maybe rick and then maybe superintendent covington, why don't we start with you. >> sure. i mean, i think the reality is i think the questioner's exactly right. we talk about school improvement generally by talking about how do we improve the entire box. everything that goes with schooling. we're going to teach all of these summits, we're going to pro-- subjects, we're going to provide all of these services, we're going to meet every need of every child, and then we wonder why we have trouble actually systematically improving the efficiency of of our problem solving. that's not how the world usually works. people figure out how to solve one problem, and if they do

that, that's what they specialize in the. and the advantage of some of these providers, for-profits, like it or not, grow a lot faster, what they tend to do is focus on meeting certain kinds of needs and solving certain kinds of problems. and what districts and schools can do is leverage these both to increase efficacy and cost effectiveness. what we heard john mention before is where districts and school leaders generally get this wrong is remember, 80% of principals started out as classroom teachers, their schools of education teach them little or nothing about business management principles, so we've got an entire industry where we have, unfortunately, relatively few people who have got a lot of experience and a lot of savvy when it comes to managing vendors and managing to really using smart metrics in terms of cost effectiveness. so we heard john talking about when he inherited a district, there were lots of snake oil salesmen and lots of other

unnecessary providers lined up in the queue. what we need to do is build up internally these metrics where we're measuring are these providers providing useful services, whether that's tutoring, reading support, whatever it happens to be. we've got to measure how effective that is in terms of dollars spent, so how cost effective is it, and then we've got to get over this bizarre discomfort we have with using folks who are able to serve kids whether there happen to be for-profits or nonprofits. >> okay. let's get another question from the audience. i've got one over here. again, your name and where you're from and make sure it's a question. >> jim from knowledge alliance, and i'd like to pick up a little bit more on this topic of innovation. rick, you've talked a lot about innovation in the past and recognizing that innovation as a process 75% of the time, roughly, you fail.

so how do you put a innovation stream or process into a struggling school system that is cutting back and doesn't -- can't afford to try the kind of experimentation that you're talking about? the also i'm curious to hear what you have to say about washington, d.c. that is being celebrated as a great, innovative center now, laboratory. but it did a lot of its innovation through external funding, same with harlem children's zone. >> yeah. okay. >> and so you're creating a dependency on external funding to do the kind of innovative work -- >> how do but innovate in tough times? >> innovation's a bad word. we've got this bizarre fetish with innovation in education. i hate innovation. i like problem solving. we've got a bunch of problems in the schools and districts that we're talking about. we don't have parents as engaged as they should be, we have

students who are disengaged and disaffected. we're not good at teaching, you know, non-native english speakers the language. we're not good at teaching kids algebra by eighth grade. what we need are better solutions which don't cost more and to which the answer is not more support, more professional development, more bodies, but in which solutions are about how do we do these jobs more effectively with fewer resources? we've got to stop talking about innovation. in fact, the great thing about scarcity, about the fact that we don't have new dollars to throw at it is it's going to force districts and schools to go back and say how do we solve these problems without additional resources? this and to me, that's the real mother's milk of problem solving. i think your point, jim, on harlem's children zone is exactly right. this is, again, this sprinkle a little more sugar on the doughnut school of reform where reform is we're going michelle rhee in order to get her d.c.

teacher's contract increased the pay of every single teacher in that system, it's just that teachers could make a whole lot more money if test scores went up rather than just a good chunk more money. i don't know of any high-performing organization in the world which figures is is we think the problem is we've got a lot of lousy employees, so we're going to top everybody up 10, 20, 30%. what we need to do is is think about rethinking staffing, new contracts, new compensation schedules as an opportunity to steer dollars that are going to have the most bang for the buck. and that means some educators need to make a lot less. we need to have fewer educators, and some of them need to be making a lot less money than they do now, and that's where we're going to free up the money to reward high -- >> where right. that's easier for us think tankers to say. but michelle had to get a contract that she could get the union to sign, so how is it going to play out a year from now, five years from now, ten? when are we going to see a union

say, okay, i'll take that deal where some of my employees are going to get laid off -- >> well, originally michelle was supposed to be getting money before the economy went south, in fact, joel klein had o give that decrease with randy wine garten in '04 and got a whole lot less than michelle did. the unions are never going to willingly come to the table. it's not what unions do, it's not their job. but tough times start to change the landscape so that unions will see as a good deal deals that they once would have rejected, and if we have leaders in business communities and school boards that are looking for these opportunities of pushing aggressively, we are going to see deals done in the next three, four years that would have been unimaginable a couple years ago. >> with mike? this. >> yeah. i agree with rick on this issue of innovation. we often have too much innovation and too little problem solving.

i'd just like to go back to one issue that karen put on the table and used charlotte member eleven berg as an example. in addition to more problem-solving strategies, i think we also need a lot more attention to trying to align our resources with the instructional and academic priorities that we are setting both at the local, state and federal level. because a lot of the resources that we are currently devoting to our issues are not aligned with the priorities at all, nor is the technology and the state of affairs for aligning resources with priorities very good other than the work that karen and marguerite rosa and others are doing. so in addition to kind of setting aside this innovation for innovation's sake question and focusing on problem solving, i think the discussion about

aligning scarce resources is an important one as well. >> okay. one more question from the crowd or else we'll go to our webcast. we are in washington, d.c., so let's ask is a political question which is what impact might next week's elections have if republicans gain additional seats? i think many of us think it's likely that republicans are likely to take over the house. there's a lot of question about the senate, but let's say republicans take over the house. what happens? does that put an end to any talk about future bailouts from the federal government? the panel says what? >> yes. >> yes. [laughter] >> yes, yes -- >> yes. >> yes. more than likely, okay. [laughter] all right, that's important. so the message -- i mean, this -- will educators in the field, like, are people going to get this message that says there is no one riding to the rescue this time? this is for real, this spending cliff is going to happen, and now is the time to get serious? or will people still hold out hope? i mean, how is this going to play out in local school districts around the country? >> i think if conversations we

had at our annual meeting last week were any gauge at all, i think superintendent, boards, senior staff and others at least in the urban school districts get it, that resources are about to go over a cliff. they are trying to budget for longer-term spending than they have done in the past, and they are, as a matter of fact, thinking much more creatively and strategically about how it is they use their resources. so some of this pressure is actually having a very profound, practical and realistic impact on the discussions locally about how people stretch the dollars that they have. >> thank you. and thanks for plugging the title of the book there, too, i like that. good. [laughter] cain. >> yeah. i just -- >> i'm getting an extra bonus. [laughter] >> take on additional responsibility.

>> i just wallet to build on -- >> the more than enough, thank you. [laughter] >> building on that, though, mike, i think that urban district leaders get it, but that doesn't mean, a, that their communities that surround them don't think it's a little bit primal because this is what they have heard for the last two decades. every year we have trouble. so i think that, you know, the leaders get it, that it's different this time. i don't think that in the communities surrounding -- it's universeally understood or believed and, two, i think there's a real dearth at the local level of ideas and pressure around what the big cost levers are. so closing schools is a big one, you know, slashing central office and, you know, going for efficiency, those are big. but then beyond that the conversation stops. and so, you know, so it's like, you know, how small can we get the central office which we know is going to be critical for a

lot of the sorts of innovation that we have. so there's a huge need for outside folks, folks outside the school systems to be bringing credibility to this tough times message and then to be bringing the data to bear locally around what some of the big pressure points need to be including compensation, pension, strategic class sizes, you know, all of those things that we've talked about, effective use of time, all of that. >> let me ask one last question, and this'll be our lightning round. you've got to be kind of quick on this. there's reason to be concerned that the districts that are going to feel the brunt of this are the ones serving a lot of poor kids, that if states decide to slash formulas across the board, it is mostly the high-poverty districts that get most of their money from states, also charter schools that get most of their money from states, the wealthier districts that get their money from local areas will be less impacted. so are there reasons to be worried this is going to set us back in terms of equity and achievement gap and those things we've been working on for so

many years? we'll start with you, john. >> sure. i think it's going to have a critical impact on local districts to deliver the kind of education, educational programs and services that urban children and those children who are coming from backgrounds of extreme poverty to provide them with what they need to demonstrate, in fact, that we are, in fact, closing the achievement gap. and with regard to lack of revenue and scarcity of dollars, while i think there are some districts out there that's done a fairly good job, i think generally speaking i would have to admit that the job that we've done in terms of those of us who are school leaders may not have demonstrated to the community that we're utilizing those resources that we have at our disposal as best as they could have been used. and as a result of that failure, additional dollars are less

likely to come through an increased levy if we're not able to be either innovative through creative problem solving. we haven't had a tax levy increase in kansas city since 1969, and until such time that we demonstrate that we can adequately use those resources that we have available to us, additional resources, it's not likely to come. >> okay. karen, real quick? this. >> yes, i think this will hurt urban school districts more than other districts, and i think the fact that so much is tied up in these six cost structures makes it even more compelling. what happens is is you've got all this stuff in too many buildings, you've got all this stuff in central office structures and revenues go down, more of it goes towards fueling those fixed cost structures, so there's got to be political pressure at the local level and from states and fed to do that restructuring of the cost structure. >> mike? >> i think since it's the