Thursday, March 29, 2012

High Button Shoes and Education Reform

As a very young child, I was fascinated by my grandmother’s collection of button hooks. It was the mid-1940s and high button shoes had been out of style for decades. She collected the hooks that were used to pull the tiny buttons through the holes that ran up the sides of the ladies’ shoes back in the early 20th century.
Often made of silver with decorative handles of porcelain or glass, the hooks made for an attractive display.

Warren Buffett and Charlie Munger, his long-time partner at Berkshire-Hathaway, also had a connection to shoe buttons. Munger’s grandfather had managed to corner the market on shoe buttons back around 1900. The grandfather exercised a virtual monopoly over their production and sale. Emboldened by his business acumen, the old man grew to believe that he not only knew more than anyone about shoe buttons but that he knew more than anyone about anything—and he preached and proclaimed at length on such. Munger and Buffett named the syndrome the Shoe Button Complex, and they encountered it frequently in their dealings with successful business practitioners.

Now Buffett struggled assiduously to avoid developing the Shoe Button Complex. As one of the richest persons in the world, the temptation to succumb would surely have been great. He was careful to restrict his actions and speaking to what he called his Circle of Competence. He recognized that there were a limited number of things he could know well, and he did not presume to act as though he was expert of those things lying outside the Circle.

Buffett’s recognition of his Circle of Competence led to some surprising decisions as he approached and passed his 80th birthday. He did not understand the emerging digital technology, and while the masses were losing their shirts trading high tech companies, Buffett was buying stocks in railroads and underwear manufacturers. Poseurs with enormous Circles of Competence scorned the old man when he reminded them that in the past 120 years in the U.S. more than 1,000 automobile manufacturers came and went, leaving just four. Buffett’s rise to the top of the list of the world’s billionaires left him with a problem as he saw the end of his career approaching. How does one with a small Circle of Competence give away tens of billions of dollars to some good end?

Bill Gates and the Shoe Button Complex

Buffett startled the world when he announced a few years ago that he was leaving his great wealth to the Bill & Melinda Gates Foundation. Buffett spoke thus in addressing the question of why he turned over his philanthropy to the Gateses:

Bill Gates is the most rational guy around in terms of his foundation. He and Melinda are saving more lives in terms of dollars spent than anyone else. They’ve worked enormously hard on it. He thinks extremely well. He reads thousands of pages a year on philanthropy and health care. You couldn’t have two better people running things. They have done incredible work, they’ve thought it through, their values are right, their logic is right. (p. 768 in The Snowball: Warren Buffett and the Business of Life)
Well, Buffett’s decision presents us with a conundrum. If he is not competent to determine the worthwhile recipients of his beneficence, then how is it that he knows that the Gates Foundation is dispensing beneficences in a worthwhile way?

Education is an arena particularly prone to attracting Shoe Button Complexes. Everyone has been to school; everybody thinks they know what is wrong with schools.

And so we come to the question, How is the Gates Foundation doing these days? This question is of more than passing interest on account of the fact that the Foundation is dispensing roughly $400 Million a year to education related causes. Moreover, some utterances by the benefactors have raised eyebrows among groups that have long made the search for understanding education their preoccupation. For example, Melinda Gates startled her interviewer on an NPR program in 2007 when she seemed to suggest that 100% of high school students should continue their education into college.

(Interviewer) I just want to ask you about a statement on the Bill and Melinda Gates Foundation's Web site that I read, which is that, "All students in the United States can and must graduate from high school, and they must leave with the skills necessary for college, work, and citizenship." I think everyone would agree that they better leave with the skills for citizenship because everyone can vote at age 18, and we urge them to. College. Can we reasonably expect 100 percent of high school students to become college students?

(Melinda Gates) Yes, I think we can. And, in fact, I'm here today in the Chicago school district visiting with students – huge number of Latinos and African-American populations, and guess what? I'm in schools where 95 to 98 percent of these kids are going on to college, and it's because they started freshman year with teachers who believe in them and said, 'These kids can do it.' …

(Interviewer) That would be a dramatic increase of the share of high school students, if 100 percent went on to college. I mean, you would be effecting an enormous social change if you could reach – (Melinda Gates) Correct, and that is the idea.

(Interviewer) How many years do you think it would take to achieve that particular – (Melinda Gates) I think it is going to take us quite a while. I think that this is a long-term effort and I think it's one that the foundation is going to be at for a very long time. ... (See the entire transcript here.)

We may be looking at a Circle of Competence problem here. And the situation may not be much better with her husband, who teeters dangerously close to the edge of a Shoe Button Complex. Bill Gates has referred to Diane Ravitch as “public enemy #1” of effective education. Whether either Diane Ravitch or the nation’s schools fall within his Circle of Competence is questionable. A few years ago when Gates testified to Congress on the current state and future of American education, he spent most of his time complaining about difficulties in obtaining visas and green cards for young tech employees of Microsoft. That his interest might be stronger in promoting the health of this business than in promoting the development of the nation’s children may be understandable. After all, what does the richest man in America really know about the needs of the nation’s children—the vast majority of whom will hold a half dozen low-level jobs during their lifetimes in industries like recreation, food services, child care, health care, and the like?

Now my own Circle of Competence does not extend much past some understanding of what is happening to K-12 public education in America. Thanks to Ken Libby of the National Education Policy Center and his analysis of the Gates Foundation grants to U.S. education, we have at hand new information about what Bill & Melinda Gates consider to be efforts to improve schooling that are worthy of their own and Warren Buffett’s support. The following table shows Libby’s breakdown of where Gates Foundation money for education went in the three years from 2008 through 2010.

Category Total $
Charters $73.1M 7
Alternative Public Schools $97.8M 9
Private Schools $47.4M 4
Small Schools $30.1M 3
School Reforms $61.4M 6
Government Agencies $9.0M 1
Advocacy $116.8M 11
Think Tanks $10.0M 1
Research $78.6M 7
Development $112.6M 10
College/Career Ready $52.4M 5
College Completion $145.4M 13
Common Core $18.5M 2
Early Learning $46.8M 4
Conferences $10.0M 1
STEM $26.0M 2
Human Capital $104.0M 9
Media $17.0M 2
RTTT & i3 $4.7M 0
Other $40.2M 4
Total $1,101.8M 100%

I leave it to the readers to make their own interpretations of the mind-set that lies behind these kinds of allocations. As for me, that mind-set shows little faith in the development of better education for the vast majority of America’s children, particularly children in poverty. It is a mind-set that comes about from drinking the Kool-Aid that the “market” will lead America’s schools to the promise land.

Consider the following example of how money from the Gates Foundation is being spent. A proposed law in Florida named Parent Empowerment was pushed this legislative season by a California-based group called Parent Revolution. Parent Revolution is funded by Gates, the Eli Broad Foundation, and the Walton Foundation. If Parent Empowerment became law in Florida, then 51 percent of the parents in a public school could sign a petition that would give them control of a school and give them the power to decide whether to close it or turn it over to a charter management organization. It is not difficult to see who the true beneficiaries of this bill would be. In fact, the parent Empowerment bill could have been written by lobbyists for the education management industry. (See Diane Ravitch's report on the true parents uprising that defeated this bill that was nonetheless backed by former governor Jeb Bush and current governor Rick Scott.) (Also, see the NEPC report on the EMOs for a revealing look at the breadth of this industry.)

The Gates Foundation support of dubious enterprises didn't start with the Parent Empowerment bill. As Diane Ravitch recently remarked, "The Bill & Melinda Gates Foundation puts up the money to ensure that ["Waiting for Superman"] this morality tale of good reformers and bad teachers is shown to state legislatures, to civic groups, to people living in housing projects. The movie itself is financed in part by an evangelical billionaire (Philip Anschutz) who contributes heavily to libertarian and ultra-conservative causes."

The Shoe Button Complex in Arizona

Jan Brewer, Republican governor of Arizona and famous for issuing a tongue wagging to President Obama, appointed Intel ex-CEO Craig Barrett to chair a council—Ready Arizona--to study and recommend public education reform for the state. It is unclear what Barrett knows about education. One suspects that we are encountering another case of the Shoe Button Complex. Barrett is urging businesses to push school reform. His public utterances strike familiar chords: the future of the entire state rests on the test scores of little kids; more science and math majors will attract businesses to the state; it’s a global economy. After all, the public schools are “suppliers” of labor for businesses. And at Intel, “if a supplier didn’t meet our specifications, we would call the supplier and say, ‘Meet our specifications or we will fire you.’” Apparently, Barrett shares his fellow Republican Mitt Romney’s pleasure in firing people.

Of course, what Barrett is actually and unknowingly talking about is crony capitalism: Linking government and business in relationships that favor the economy. Whether the intellectual, moral, physical, and aesthetic well-being of young people is benefited by their education probably never occasions to Barrett and his ilk. Or perhaps "well-being" to Barrett means having acquired a taste for consumerism and a job to support it. In fact, most industry leaders would like to see specialized training pushed down as early in the curriculum as possible so that high school graduates appear in their HR departments job-ready, trained at public expense. And if training kids for Intel just happens to involve piping a bunch of online courses into Arizona public schools, well so much the better since Barrett also serves on the board of K-12 Inc., the nation’s #1 supplier of cyber-courses. Whether the former CEO of Intel knows everything there is to know about selling microprocessors AND education, or whether this is merely another manifestation of the Shoe Button Complex remains to be seen.

Gene V Glass
University of Colorado Boulder
Arizona State University

Monday, March 19, 2012

How the Rich Get Richer—Arizona’s Tuition Tax Credits

The Arizona Tuition Tax Credit has been the subject at this blog on a couple of occasions. In its early form it drew the incredulous attention of scholars who questioned both its legality and its fairness (See Welner & Moses in References).

In 1998, the law allowed tax payers to direct up to $200 of their state income tax indebtedness to a public school to be used for extra-curricular activities. (The $200 extra-curricular thing was really just a sop to opponents of the main section of the bill, which now allows a $2,000 tax credit contribution to a private and/or religious school for tuition.) Glen Wilson calculated that in the first year of the program approximately $6 Million were contributed to a total of about 900 public schools. The per student donation was $8.80--nothing much to get excited about. But the program has grown amazingly large. Modifications of the law have raised the contribution limit to $400 for a couple filing their tax return jointly and permitted the money to be spent on character education programs.

Tens of millions of dollars of state tax indebtedness are now directed to public schools in Arizona. As one might expect, the money is hardly distributed equitably. Let’s take a look at a half-dozen schools in a single school district (Scottsdale Unified School District) that differ greatly in the socio-economic level of their attendance areas, and, as a result, differ greatly in how they are benefiting from the tax credit program. In the table below, four K-5 elementary schools and two 9-12 secondary schools are shown along with their enrollments, total contributions, per pupil contribution and typical housing prices of their attendance areas.

Total $
# Pupils$/Pupils
House Prices
Tonalea (K-5)$15,150550$28 $25,000 to $200,000
Tavan (K-5) $23,800770$31$200,000 to $300,000
Hopi (K-5)$70,300770$91$1,000,000 to $2,000,000
Kiva (K-5)$87,350770$113$500,000 to $5,000,000
Coronado (9-12)$121,5001,300 $93$100,000 to $200,000
Chaparral (9-12) $404,9501,900 $213$500,000 to $5,000,000

Tonalea and Tovan draw students from lower middle-class attendance areas and collect roughly $30 per student, while Hopi and Kiva are collecting 3 and 4 times that much. The former state superintendent of schools sent her children to Kiva, where one took a trip to Catalina Island on tax credit funds in the earliest days of the program. At the secondary school level the inequity is huge—more than a $100 per student difference in contributions. Coronado is a low-income high school receiving less than $100 per pupil under the tax credit program while Chaparral enjoys contributions topping $200 per student.

And so once again our legislators and their constituents have brought the Matthew Principle to the service of their children and their neighborhoods. “For unto every one that hath shall be given, and he shall have abundance: but from him that hath not shall be taken away even that which he hath .” (Matthew 25:29)


Moses, Michele S. (2000) Arizona Education Tax Credit and Hidden Considerations of Justice. Education Policy Analysis Archives, 8(37). Retrieved March 19, 2012 from

Welner, Kevin G. Taxing the Establishment Clause: The Revolutionary Decision of the Arizona Supreme Court in Kotterman v. Killian. Education Policy Analysis Archives, 8(36). Retrieved March 19, 2012 from

Wilson, Glen Y. (2000) Effects on Funding Equity of the Arizona Tax Credit Law. Education Policy Analysis Archives, 8(38). Retrieved March 19, 2012 from

Gene V Glass
University of Colorado Boulder
Arizona State University

Thursday, March 15, 2012

Eric Hanushek Testifies in School Finance Cases

Eric Hanushek testifies in school finance cases. Again, and again, and again. Thirty-some years ago in the Maryland (Hornbeck) case and most recently in the Colorado (Lobato) case. And each time, Hanushek, an economist at the Hoover Institution, testifies to the same position: increased funding for K-12 schools will not improve their effectiveness; court-ordered remedies that cost money will not improve the lot of poor students or English Language Learners or anyone else for that matter.

Hanushek is nothing if not a believer in the unconditional truth emanating from his regression equations. But of course, those equations have not always been as clear cut in their implications as some might believe. In 1997, Hanushek published an article in which he argued that a summary of dozens and dozens of correlation studies proved that teacher experience is unrelated to their students’ achievement—the financial implications being obvious. He presented the following summary of studies that investigated the relationship (in terms of regression coefficients) between student achievement and their teachers’ “years of experience.”

Although a statistically significant regression coefficient for “teacher experience” was six times more likely to be positive than negative, Hanushek nonetheless read the results as negative for the effects of teacher experience on achievement. “Importantly, … 71% [of the regression coefficients] still indicate worsening performance with experience or less confidence in any positive effect,” he wrote.

The logic of this conclusion is illusive—no; it makes no sense. Of results that reach statistical significance, 85% (60/70) are positive; students of more experienced teachers achieve at higher levels. Of the statistically non-significant results that can be determined, 55% are positive, but fail to reach conventional levels of significance. Hanushek creates an impression of no effect of teacher experience by lumping together the category (1) “indicative of worsening performance or less confidence of beneficial performance” all significant but negative coefficients (5%), (2) all nonsignificant coefficients whether positive or negative (30% + 24%) and, (3) remarkably, the 12% of the coefficients that were so incompletely reported that it could not be determined whether they were positive or negative. The treatment of these data is hardly even handed. By such logic, ten “positive studies,” “no negative studies” and 100 studies so poorly reported that the results could not be discerned would lead Hanushek to a conclusion of no confidence in a positive result. My reading of these results is much different from Hanushek's. Regression studies have generally shown a positive relationship between teacher experience and student achievement. Period.

So if Hanushek’s performance in reviewing the research on teacher experience and student achievement is as shaky as this, how does he perform in court on matters closely related? Aaron Pallas, in his blog "A Sociological Eye on Education" recently wrote on that question.

I was reminded of a school finance court case in Maryland some 30 years ago [Hornbeck; I testified in that case on the role of class size and student achievement ~GVG] for which I served as a consultant. … The poorest districts in the state, including Baltimore City, were suing the state to force it to equalize school funding. The state … hired noted economist Eric Hanushek to testify that money doesn’t make a difference in student outcomes. I was hired to prepare questions for cross-examination that might discredit Hanushek’s testimony.

A friend … suggested a novel line: If, as Hanushek argued, spending more money wouldn’t increase achievement, wouldn’t spending less money have no effect on achievement either? “Brilliant!” I thought.

The time came for the cross-examination, and, among many other questions, the plaintiffs’ attorney asked this question.

“That—that almost follows,” Hanushek replied.

It wasn’t the Perry Mason moment I was hoping for, but it was enlightening nevertheless. The reality is that Hanushek’s claim that money doesn’t matter was based on natural variations among districts in their spending patterns, and wealthy districts spent more and had better educational outcomes than poorer districts that spent less. There were no studies showing what would happen if spending were to increase or decrease precipitously over time ….

Now thirty years later, Hanushek is still telling courts that money doesn’t matter. (Linda Darling-Hammond probably made the most incisive comment on the “money doesn’t matter” position when she said, “If money doesn’t matter, why are the rich trying so hard to hold onto it?”) He testified in the recent Colorado school finance case (Lobato vs State of Colorado) once again that money doesn’t matter. Only this time, a Colorado judge had little sympathy for counter-intuitive social science stuff. In her 189-page ruling deciding in favor of the plaintiffs, Judge Sheila Rappaport commented thusly on Hanushek’s testimony:
Dr. Hanushek’s analysis that there is not much relationship in Colorado between spending and achievement contradicts testimony and documentary evidence from dozens of well-respected educators in the State, defies logic, and is statistically flawed.

For decades, judges at many levels in the judicial system have been cowered by complicated looking statistical testimony. One hopes that those days may be coming to an end.


Hanushek, Eric. (1997) Assessing the effects of school resources on student performance: An update. Educational Evaluation and Policy Analysis 19 (2), 141-164.

Glass, Gene V. (2002). Teacher characteristics. Chapter 8 (Pp. 155-174) in Molnar, Alex. (Ed.) School Reform Proposals: The Research Evidence. Greenwich, CT: Information Age Publishing, Inc.

Gene V Glass
University of Colorado Boulder
Arizona State University

Tuesday, March 6, 2012

The Cost of Online (Cybercharter) Schooling ... or Shooting Your Friend in the Foot

Today, Jennifer King Rice's critique of a Thomas B. Fordham Foundation report on the cost of full-time online K-12 schooling was published by the National Education Policy Center. Dr. Rice pointed out the many complications of attempting to put a dollar figure on ordinary brick-and-mortar schooling, let alone the price of a year of cyberschool. But the gist of both the Fordham Foundation article and Rice's critique as well as several other shots that have been taken at pricing cyberschooling is this: the latter costs about two-thirds to three-quarters of the former; roughly $10,000 per pupil per year vs $7,000. And it must be recalled that even this cost differential is clouded in the haze of dicey reporting by the for-profit cyberschooling companies (read "K12 Inc." and "Connections"). For example, the huge run-up in the past three years of K12 Inc. stock (LRN on the NYSE) includes profits on their half-billion dollars a year revenues, which profits must be sizeable to justify the price of the stock. In Arkansas, a state board of education member raised questions about the administrative costs claimed by the Arkansas Virtual Academy (a K12 Inc. company). Arkansas Virtual Academy was charging 15% administrative costs compared to 5% for brick-and-mortar schools in the state. (Perhaps K12 Inc. writes off lobbying expenses to "administrative costs." After all, in Mississippi where a pitched battle is being waged by K12 Inc. to have cyberschools included in the state's charter school system, former Governor Haley Barbour's nephew Henry has been hired as a lobbyist.)

The interesting sidebar to all this research and politicking is that one traveler in the free-market schooling campaign is shooting another fellow traveler in the foot. At the same time that the Thomas B. Fordham Foundation is putting out research claiming that cyberschools cost 30% less than brick-and-mortar schools, companies like K12 Inc. are trying to convince legislators around the country that the difference is zero, i.e., that the charter school should be reimbursed at 100% the cost of educating a pupil in a brick-and-mortar school.

In 2010, the Georgia State Commission on Charter Schools established a funding level of $3,500 per full-time K-12 pupil in online charters, plus a 3% administrative fee. Testifying in favor of 100% funding, one Allison Powell, vice president of the International Association for K-12 Online Learning (a lobbying front for the big cyberschooling companies) claimed, “The costs are pretty equal to a lot of brick and mortar schools. You don’t have the transportation or building costs, but you still have to provide Internet and computers. You have personnel. A lot of states will fund them at the same level.”

In truth, there are hardly any states that fund cybercharters at the level of funding for brick-and-mortar schools. But that is not to say that the companies are not trying. A bill currently making its way through the Arizona legislature would increase cybercharter per pupil funding to 100% state allocation provided a few easy hurdles are cleared: 50% for all students enrolled on October 1, 35% more for all who finish the year, and the final 15% for all those who pass an achievement test. The bill looks like it was written by lobbyists, who reluctantly, perhaps, acceded to pressure to add some symbolic "accountability" features.

Gene V Glass
University of Colorado Boulder
Arizona State University

Thursday, March 1, 2012

Arizona's Groundbreaking Tuition Tax Credit Law: Now $2,000 per Couple Can Go to Religious Schools

A bill that passed the Arizona Senate Finance Committee in mid-January was signed into law by the Governor on February 29th. The new law doubles the amount of state income tax money that individuals or couples can contribute to a Student Tuition Organization (STO). This law updates the original tuition tax credit law adopted in 1997. Previously, a couple could direct approximately $1,000 of their state income tax obligation to a STO. The STO could then allocate that money to students to pay their tuition at a private or religious school. The donation is a dollar-for-dollar tax credit, not a deduction.

This arrangement would seem to violate the state’s constitutional restriction on spending state funds to support religious education, but the Arizona Supreme Court declared otherwise (see Kevin Welner’s analysis of this revolutionary decision), and their decision was upheld by the US Supreme Court in 2009 on a 5-4 vote, arguing that the contributor was only redirecting "private" money. Since theoretically the state income tax owed never touched the state's coffers, it never was the state's money. (This is a head-scratcher of an opinion that originated in the Arizona Supreme Court on a 3-2 split vote, and has been critiqued by Kevin Welner in his article, "Taxing the Establishment Clause: —Revolutionary Decision of the Arizona Supreme Court." In 2010, more than 50 STOs received more than $55 Million in donations. More than 31,000 “scholarships” were distributed at an average of $1,650 per student.

The law just signed allows a doubling of the contribution provided that the STO uses the money to award a scholarship to a) a Kindergartener entering a private school, b) a student switching from a public to a private school, or c) a child of a parent on active military duty. Now, a couple can direct $2,000 of their state tax indebtedness to an STO.

A key sponsor of this bill is State Sen. Steve Yarbrough (R-Phoenix), Executive Director of the Arizona Christian School Tuition Organization, second largest in the state. STOs are allowed to keep 10% of all contributions for administrative expenses. Two executives of the largest STOs were recently discovered to have used their administrative fee monies to buy cars (2 Infiniti Luxury sedans for one director), hire relatives and purchase real estate. Two of the 55 STOs account for almost a third of all the $55 Million collected in 2010: Arizona Christian School Tuition Organization and the Arizona Scholarship Fund. The STOs are essentially unregulated since the enabling and subsequent legislation vested no agency with any responsibility or authority to monitor their dealings.A rider on the law just signed exempts religious and private schools from state achievement testing required of all public schools, traditional or charter.

Gene V Glass
University of Colorado Boulder
Arizona State University