Who Benefits from the Public Schools?

Public schools in the United States, particularly in "blue" cities like New York and Washington,D.C., seem to be an ongoing slow-motion train wreck. Recently the state of the New York City schools came to the top of the recurring-news pile. While Mayor (for life) Michael Bloomberg pursued his various important concerns, CBS News reported that 80 percent of New York City high school graduates required remedial classes in reading, arithmetic, or both, before they were prepared for classroom work in New York's own community colleges.

The report was originally headlined "80 percent illiterate" because not being prepared for college work is not the same as being actually illiterate. But then it's appropriate to point out that the New York City schools have a graduation rate of only around 65 percent, and we can also assume that students applying for admission to the community colleges are to some extent self-selected as well. If only 20 percent of that selected population are prepared for a community college curriculum, what about the others?

The automatic recommendation when school systems are performing badly is higher funding and more teachers, and when you first look at the New York schools, it seems plausible. After all, the schools in NYC have been reduced to holding bake sales to buy school supplies, and asking parents to bring toilet paper to the schools.

But then we look at the actual school budgets. According to an article in the Huffington Post, New York City reports spending about $18,600 per student per year. A Cato Institute study examines the accounting, which understates or eliminates some costs, and arrives at $26,900 per student per year.

Five years ago I wrote a piece for PJM called "A One-Room Schools for the 21st Century." I also wrote an extended piece on the same topic called "Cosmopolitan One-Room Schools: A Modest Proposal," which was picked up and circulated widely. (Bootlegged, to be honest. Dylan, the Grateful Dead, and me. Who knew?)

The basic idea was to go back to basics, and examine a modern one-room school in Manhattan commercial office space. Without going through the whole discussion again, we can sketch an income statement for such a school. These income statements assume the reported cost per student (for both reports), and assume office rents of $50 a square foot a year, along with rather lavish technology and supply budgets of $3000 and $1000 per student per year, respectively. These income statements exclude the cost of a teacher, for reasons which will become clear shortly.

Revenues HuffPo Cato
Gross revenues446,400624,000
Rent @ $50/ft^231,25031,250
Tech @ $3000/student72,00072,000
Supplies @ $1000/student24,00024,000
TOTAL EXPENSES127,250127,250
NET INCOME319,150496,750

Based on these figures, we now have a net income of $319,150,  or $496,750 per 24-student classroom in midtown New York commercial office space, depending on which figures we use for per-student spending.

We exclude the teacher's salary because my original article made the assumption that these were essentially entrepreneurial schools: net income became the "wages" of the teacher.