Eric Hanushek has been one of the nation's best-known and most controversial education researchers over the last two decades. After earning a doctorate in economics from the Massachusetts Institute of Technology and serving in the United States Air Force, he rose to prominence in education circles during the 1980s with a series of papers questioning the strength of the relationship between education spending and student performance. That work has been widely interpreted to suggest that money isn't a significant ingredient of school quality or school reform.

Hanushek has subsequently participated in a number of high-profile academic and public policy debates on school funding, class-size reduction, and the impact of teachers on student achievement. In those debates and in his role as an expert witness in a number of education funding lawsuits, Hanushek has consistently criticized plans to spend more money on public education, arguing that new money would be largely wasted unless the system is first restructured and reformed.

Hanushek's most recent work, done in collaboration with the Texas Schools Project at the University of Texas—Dallas, has focused on the differing performance of public school teachers and the factors that influence teacher migration from school to school.

Currently the Paul and Jean Hanna Senior Fellow at StanfordUniversity's Hoover Institution, Hanushek lives in Palo Alto with his wife Macke Raymond, who is also a well-known education researcher. Both are members of Education Sector's research advisory board. Hanushek recently spoke about his work with Kevin Carey, Education Sector's research and policy manager.

Education Sector: What brought you to education policy?

Eric Hanushek: I got into education accidentally. I was in graduate school at MIT just when the original Coleman report on equality of educational opportunity came out. That report was very controversial because it suggested that schools weren't very important in determining student achievement. I found that hard to believe. And I managed to get involved in the faculty seminar organized by Pat Moynihan and Fred Mosteller at Harvard that was held to try to understand what the Coleman report was all about and what it said. That experience led me to write my thesis on student achievement when I was at MIT. While I was interested in housing, finance, labor, and economics issues in the 1970s, I just kept getting more and more interested in the details of education and I ended up focusing most of my energy there.

ES: Some people have said that you don't believe money matters in school reform. What is the current relationship between resources and outcomes in education?

H: Very, very small to negligible. In some places, you put money in and you get results. In other places, you put money in and you don't get any results. It's not that money can't matter and it's not that it doesn't matter in some circumstances. It's just that if you do what the courts talk about, what legislatures often talk about, which is a helicopter drop of large amounts of money into districts with no expectations for how well it will be spent, you don't see much coming out the other end.

ES: Has the debate about resources and outcomes reached any kind of consensus?

H: I think it's actually mainly resolved. Nobody believes that simply doing more of the same is going to be very effective. We have a lot of history of doing the same thing more intensively and we haven't seen much in the way of results. Now, there is a silly version of the debate that says: Does money matter?  It's quite clear that you need resources to run schools and in a tautological sense if you spend money well it's going to do a good job. The real issue is how to organize the system so that you get the most you can out of the resources you put in.

But while I think the issue has been resolved in a policy and intellectual sense, it hasn't been resolved in a legal sense because we continue to have lawsuits that are almost entirely based upon whether we should put more money into the schools or not.

ES: You can go to the website of the Heritage Foundation and find the following statement: “Eric Hanushek has conducted several studies of the effects of spending on achievement and has concluded that there is no relationship.” No qualifiers there, just "no relationship."

H: Both ends of the political spectrum, for their own purposes, go to very simplified versions of this. The way I say it doesn't make a very good sound bite, so if you're looking for sound bites then you go to the simple version. My version is that we know that there are big differences in the performance of different teachers and different schools. It's just that the schools that are doing better are not necessarily the schools that are spending more, or the teachers who are being paid the most. And if you don't have a system that relates the pay of personnel and spending on schools directly to achievement it's not surprising that you don't see much achievement.

ES: Why don't you push back on those who you feel misrepresent your work? 

H: I frankly don't know how to do that. I can't call up every reporter and say write a retraction or clarification because that just doesn't happen. I speak to most media people who call me and I try to be very accurate. That's my general position and I try to be very accurate in my positions any time I talk. I'm not one who says we should ignore our schools or squeeze them to death, nor am I one who says we should just reward schools when they could clearly be doing much better with what they have.

New York City and the Role of the Courts

ES: You mentioned school funding lawsuits. You've served as an expert witness in a number of those lawsuits, always working for states defending themselves against charges that their school funding systems unfairly short-change some school districts.
H: I have. I've been involved in those cases over a long period of time. I have always testified on the defense side, although I volunteered to testify on the side of New York City when the suit was just starting. I spoke with the person who was running the Campaign for Fiscal Equity—the plaintiffs in that case—and said that I was most concerned about the state of learning and performance in NYC schools and that if the lawsuit was designed to try to improve that performance I was quite willing to work with him on that. I said that I was not interested in working with him if the only issue was whether we get more funding for NYC schools, which were already spending a lot of money. He said, "Fine, I'll call you back." And he never did.

ES: Do the courts have a role to play in education policy?

H: I think making school policy through the courts is a bad idea. Judges, just like everybody else, are concerned about the state of education and the quality of schools. They want to help. But the tools and levers that the courts have to affect student performance are very limited. They can't just say, "You have to have some students achieving at a given level." So most of the courts have restricted their attention almost entirely to financial issues. That's the NYC example. The Manhattan judge who was trying that case ruled that NYC should be spending $5.6 billion per year more on schools. That would put NYC spending at somewhere around $17,000 to $18,000 per student, way above what you see anyplace else in the nation.

But the judge also ruled that there was no need to add any further accountability for how the funds were spent, that the whole issue was funding. This seems like very bad policy if it were ever put into place. I can't see that the New York state legislature is ever going to agree to this ruling. Unless something happens to change course, the state is going to face a constitutional crisis about whose role it is to determine appropriations for schools.

ES:  When the NYC lawsuit was originally filed, the city was getting less money than other districts around the state. But the theory of the case has mostly centered on the "adequacy" of school finance, where states have to provide districts with enough money to reach certain educational goals, given the students they serve, which could mean more money for NYC than other districts. The adequacy theory has been adopted by courts in a number of other states. What do you think of the adequacy concept?  And is there any role for the courts in cases where school districts are clearly getting short-changed by state legislatures?

H: There is certainly a role for the courts. The courts are required to interpret state constitutions, and every constitution has an "education clause" which obligates the state to provide students with a public education. These clauses are the source of the adequacy cases. The problem is that almost all state constitutions, including New York, describe the state's educational obligations vaguely. They typically define a floor or minimum requirement. In New York, the requirement is to provide a "sound basic education," which the courts interpreted as having a Regents diploma and the ability to understand DNA analyses and a variety of other things that don't sound like a sound basic education to me.

But the important distinction is not whether you want students to have Regents diplomas and want them to have a high level of education, but whether the court should be actively involved in setting the policies that get you there. That seems much more like a policy that should be set by the political branches. Now you could argue, "Well, the legislature hasn't been able to solve this problem, so you might as well have the judicial system involved in it." But that's dangerous. Among other things, it leads to the kinds of crises that prevent any fundamental change in our schools. The New York legislature can't think about how to change the system very well if it has to deal with $5.6 billion for NYC and however much more for Rochester, Syracuse, Yonkers, and Buffalo. So they have to focus entirely on the levels and distribution of funding, as opposed to more fundamental issues of trying to improve the schools.

ES: But surely there is some minimum amount of money below which schools cannot accomplish the task that's been put to them. A legislature couldn't say, "We're cutting funding by 80 percent" and pretend that they're still meeting their constitutional obligations. So it seems like the courts have said, "We're going to try to find what that minimum amount of money is, and require the state to spend it." Do you disagree with that approach?

H: We don't have the capacity to determine that amount of money. There have been a series of consulting firms that have sold the ability to find the cost of providing some given amount of education that they call "adequate." There is no scientific basis for their work. These are entirely political activities.

ES: You've called their work "pseudo science."

H: I have called it that. It's hard to imagine that we're anywhere close to the minimum level. Over the last 40 years inflation-adjusted expenditures per pupil have tripled. And student performance has been flat according to the NAEP [the federal National Assessment of Educational Progress, which has been administered to a sample of students nationwide since the early 1970s]. So we've been running this experiment of doing it all by putting more money into schools, and we've gotten nothing out of it. It's hard to imagine that now that we're spending three times as much per pupil as we did in the past we're still not at that minimum and if we just go a little further achievement is going to jump up.

ES: The minimum amount must be linked to some idea of the minimum goals of education. Do you have an opinion as to what those goals should be? In the NYC case, one of the judges made a somewhat infamous comment that the minimum was an 8^th grade level of education. That was later rejected on appeal.

H: It was a silly statement. Once that judge made that statement is was clear that the Court of Appeals [the highest court in New York] had to overturn that. You couldn't let something like that stand, that an 8^th grade education is what they were aiming for.

But I don't think we have any way of establishing a minimum level of expenditures. We just don't have the capacity to do that. Right now we know that there's not much relationship between spending and performance. So if you think of what it would take to increase performance—given that you keep the current system—it could be almost any amount of money, because we aren't sure of getting much value for every added dollar spent. On the other hand, if we thought of more radical changes in what we do, such as providing incentives to people who do a good job, then the relationship between achievement and resources could be very different.

ES: When a court is faced with the need to correct an obvious funding inequity, doesn't it have to try to find the best answer it can with the resources available? The various methods that people are using, regression analysis, looking at spending in successful schools, relying on the professional judgment of experts, these seem like a good faith efforts to answer an important question.  

H: You can say it's a good faith effort, but it's been used in an entirely political matter. The defendants in the NYC case attempted to introduce a study of the cost of education in NYC according to a "professional judgment" model, which basically relies solely on the opinions of educators and experts as to what schools need to spend. The plaintiffs argued, successfully, that the professional judgment evidence should be excluded in part on the grounds that there was no scientific basis for such a study.

But when the judge ruled the current system unconstitutional, he asked a panel of referees to help him out in determining how much should be spent. The plaintiffs then hired precisely the same firm they had previously argued was doing unscientific things to determine the cost of an adequate education in NYC. That firm and another firm got together and came up with the $5.63 billion figure, using a professional judgment model which was then admitted into the court and formed the basis for the court's ruling. I'm not sure why we suddenly think that it's scientific, and not purely political, just because it now supports the plaintiff's case. These cost estimates are highly manipulable. By all accounts they are manipulated to satisfy the demands of the people that pay for them, people who usually have a defined interest in the result.

There's also a deeper, more fundamental issue in these costing studies. In our separation of powers, we give the appropriations powers to the political branches of government. Governors usually propose budgets and legislatures appropriate funds and pass on how much should be raised in taxes and spending. We do that for good reason; it's necessary to balance both public and private interest in making decisions about how far the government should go. This calls, among other things, for deciding how much should we spend on education versus things like highways, welfare, prisons, and police protection. It also calls for making judgments about how much money we should raise in taxes and spend on government versus how much we should allow private citizens to keep and spend the way they think is best. When the courts make these decisions and the consulting firms provide these cost estimates, they act as if the only thing that we're going to spend money on is education, and that there is some absolute level of education that is required and that we should spend whatever it takes.

ES: But now that the standards movement is fully entrenched, hasn't the government in fact defined some absolute level of education that's required?  Under NCLB, schools are told how much students have to learn and are held accountable if they fall short.

H: Standards are an attempt to set clear goals for the schools of what we want students to learn. And I believe in setting those clear goals. I believe in assessing their performance. But I do not believe that whenever the standards are set, that becomes a constitutional mandate. For example, the New York state Board of Regents—which is an appointed, not elected body—has set the goal that all students should have a Regents diploma. I don't think that moves into the realm of a constitutional requirement that the courts should enforce. It does set a very real goal and is designed to influence the way the legislature and executive branches think about funding schools versus other things. I'm not objecting at all to having an aspiration that all students in New YorkState get Regents diplomas. If we could do that it would move us up to the level of a good European school system, as opposed to our current system. That's a good idea.

ES: So you think that that minimum constitutional level is somewhere between an 8^th grade education and a Regents diploma?

H: I haven't thought about the constitutional level very much. Having an 8^th grade education is clearly not the aspiration that we have for students in New York state. I would certainly make a public policy commitment to do a lot better than 8^th grade education. At the same time, just declaring that all students in New York state have to get a Regents diploma or they don't get any diploma is crazy policy. Because you do not want to take students who formerly did not get a Regents diploma and say they haven't achieved.  

There's a whole series of things wrapped up in these policy issues that are beyond what the courts have experience in and are capable of handling. So I object to the courts being the ones that try to figure out how to do this. I also think that it's currently beyond our experiences to know how to achieve that in general. We don't know how to organize the system to ensure that everyone gets to the Regents level of achievement, and it's going to take a lot of experimentation and a lot of different thinking before we do. Just expanding the current system by X percent in dollars is not going to get us there and I think everybody realizes that.

ES: The fact that these clauses exist in constitutions does privilege education over other public services for which there is no constitutional obligation to provide the services.

H: Sure. One of the most important things that states do is run education systems. But that's not an infinite obligation.  It doesn't mean that no matter how badly you run the schools you have to keep spending more on them until they do better.

ES: Lets say another state lawsuit came up with circumstances similar to New York when their lawsuit was originally filed: an urban area with high poverty, low achievement, and less money than other districts in the state. What would be a reasonable legal remedy for that inequity?

H: Let's be clear. At the beginning of the NYC lawsuit they were spending slightly less then the state average. But if NYC were a stand-alone state it would have been the 7^th highest-spending state in the nation, with the state as a whole much higher. NYC was compared to WestchesterCounty, but Westchester spends off the map. The second thing to remember is that while NYC has a lot of poor kids it also has this place called Manhattan. It's actually a fairly rich district, one that has traditionally lowered its own tax on itself whenever the state has put in more money. It has spent less in part because it has not taxed its own population or its own property wealth as heavily as other places have.

So there's a real question here of what we mean by "inequitable." What I call inequitable is the fact that there are huge proportions of kids in NYC who are not learning to the level they need to be. That's the inequity. Changing that involves making some much more fundamental changes in the system. My academic work suggests that teacher quality is probably the most important element driving student achievement. It is hard to think of improving the quality of the schools in NYC or anywhere else without improving teacher quality. It's also hard to imagine—at least in my lifetime—improving the quality of teachers very much by paying everybody more, paying the good and the bad teachers more. It's a fundamental economic theorem that bad teachers like more money as much as good teachers. So if you pay them more you have to wait until you've replaced teachers over time and hope that you do a better job hiring of all the new teachers in order to improve quality. We are talking about decades before we see any measurable change. I don't think that's politically viable, paying much larger salaries and never seeing any change for decades.

ES: Constitutional issues aside, there seems to be some consensus that, as a matter of policy, it's a good idea to give very high-poverty districts more funding per pupil than an average district. Do you agree?

H: I think so. I think you have to provide extra resources and help for kids who start at a lower point because of their backgrounds.  

Long-Term Learning Trends and the Productivity of Schools

ES: You said previously that we've tripled inflation-adjusted spending while test scores have been flat. But NAEP scores have actually increased somewhat, haven't they?

H: Reading is precisely the same in 1970 and 2005 and math is a little up and science is noticeably down and writing is badly measured but seems to have fallen. So I average the NAEP scores and basically say it's flat. There's been movement around up and down and every time NAEP scores go up by 2 points people declare victory and say we're on a path to improvement. But it just hasn't been there over the long term.

ES: On the spending side of things there is an argument that says: If you look at any sector of the economy that's mostly about people doing things as opposed to making things—law, journalism, etc.—they're probably also spending a lot more money than they were 30 years ago. But there's no reason to think lawyers are any better now than they were then. Yet people don't use that fact as evidence that the legal system itself is horribly flawed. So is it fair to apply that standard to education?

H: There's a long-term argument in the economics field about exactly this point. If you have two parts of the world, one that has rapid productivity growth and one where productivity is flat, you expect the cost in the industry with no productivity growth to go up. And it's clearly the case that schools have to compete for college-educated labor with other industries where productivity gains have been more rapid and these pay more over time, particularly to women as their wages have gone up dramatically.

There's an analogy in economics about a string quartet. In order to get string players you have to compete with other things that they could do. They could be computer scientists as opposed to string players, so the price of string quartets goes up because the wages needed to attract people into the industry goes up.

But there are two things about that analogy that don't quite work here. One is that you could argue that musicians have become much more productive now with MP3 players and CD's everywhere. Per minute spent, they can certainly get to a much larger audience. That's not the case in schools.

Secondly, what schools have done in the face of rising wages for string players is turn the string quartet into a string quintet by having smaller class sizes and doing everything to add to the number of teachers. The normal argument is that if one of the inputs to your process is getting more expensive, you would try to conserve on that input. But that's not what schools have done. It's not what you would call normal economic behavior. That's why if you deflate expenditures in schools by a wage index to allow for these factors, you still see very sharp increases in spending per pupil.

ES:  But are K-12 educators getting more scrutiny on their productivity than other professionals? It seems like all of those things might be true for other less productive areas, occupations where they've just gotten a reasonable share of the overall increase in national wealth and as such their productivity looks lower. Should they be blamed for that?

H: These other industries face competitive pressures and they must compete and provide services that have competitive prices. We may in fact pay lawyers more than we used to. We might pay them too much by some people's accounting. But they're in an industry where if they overcharge of their services, people are going to buy less of them. The case in schools is that this is a publicly-provided good and we know that the outcomes are very important. So yes, schools have gotten more scrutiny because they do not face the same controls and checks and balances as competitive markets that these other sectors of the economy face.

Improving Teacher Quality

ES: You've said that teacher quality is the most important thing. So presumably if we could use money to buy better teachers for low-performing districts, that would be a good idea. What kind of teacher policy reforms would have to be in place for you to be comfortable saying, "Yes, another dollar spent there would make a difference"?

H: There are many instances where I might say another dollar spent might make a difference. The most important reforms are those that in one way or another reward performance and quality. Reforms where teachers who do well get rewarded, while teachers who do poorly don't get rewarded at the same level. Schools that do well get rewarded and schools that don't do well don't.

There's a conundrum here that has parallels in welfare policy. Welfare policy has always been schizophrenic because we would like to provide welfare for the deserving poor but not the un-deserving poor. We want funds to go more toward the poor who truly need and deserve help, and not those who are poor just because of slothfulness. The same exact issues come up in schools. We know that some schools that serve large minority and disadvantaged populations have a tougher job because they're trying to educate students who come to school less prepared. We would want to provide more resources in situations like that, to provide more schooling to make up for less family.

At the same time we don't want to reward schools that just do a bad job. So if we just look at the performance of kids at a school we have this classic problem of distinguishing between low performance that comes because the kids are less prepared when they come to school and low performance that comes because the schools are just bad. We need policies that accurately target money to high "value-added" teachers and schools—those that achieve the greatest learning growth for students—and don't target money to low value-added teachers.

There is a whole wider set of policies at work here. Do we retain teachers who year after year harm children? Or do we do what we can to make sure that the really good teachers stay around a little bit longer?  Doing that is not always a matter of money. It's a matter of working conditions and other rewards and other policies about retention and so forth, of teachers and personnel.

ES: Working conditions may be a matter of money.

H: Probably. I'm frankly a bit appalled by the average level of working conditions for teachers, let alone some of the poorer working conditions that we don't think much about. We don't think much about how to make these jobs attractive to high level people. We don't worry as much about small matters of personal safety and other bureaucratic mechanisms and so on that seem to plague schools that serve disadvantaged students. It's probably the case that we have some of the worst working conditions, the worst managers and so forth in schools for the kids who need it the most.

ES: How much money do you think a really good teacher, someone in the top 10 percent in terms of value-added growth in student learning, would get paid in an open teacher labor market, a market without price controls?

H: It certainly would be in the six figures. I don't think there's any doubt about that. If we had a more open market for quality, the ones who were really good at it are worth a lot. Among other things, the ones who are really good at it can usually teach larger classes and more kids at once and really get more value out of their good performance. So we could make the funds available by paying the really good teachers to teach more students.

ES: The Houston school district recently announced that it's implementing a kind of value added-based merit pay system, but it's not going to start with a lot of new money. Is it your sense that more pay differentiation is needed?

H: Absolutely. We say that we've tried merit pay systems in a lot of places, but it's often only a few hundred dollars and it's for doing extra work, not just doing a better job. We really haven't experimented with merit pay at all. Go to some of the leading business schools in the country and see what they pay top teachers. You'll find that the best university teaching anywhere today is found in business schools. They've decided that one of the things they have to pay attention to is the quality of their teaching, because it affects their rankings. Business schools have emphasized teaching and they reward it with substantial sums of money. That's a better model than some of these silly little things that are only a few hundred dollars and usually get scrubbed pretty quickly because the unions work continuously from day one against any idea of merit pay.

ES: What other aspects of teacher quality are you interested in exploring?

H: I'm interested in questions about the market for teacher quality. One of the most intriguing initial findings from our latest work in Texas was that while schools for disadvantaged students have higher turnover rates, it's not necessarily the best teachers who are leaving these schools. People often say we have to make sure that our best teachers don't leave schools with disadvantaged students, and therefore we need to raise everyone's salary. It turns out that the good teachers in these schools tend to stay around more than the poorer teachers. That's not an argument against compensating the good teachers. It's an argument that we have to be careful to target quality when we think about these policies.

Markets, Accountability, and NCLB

ES: Where do you see the NCLB debate going forward?   

H: I'm a big supporter of accountability. NCLB was clearly a first attempt to get a good national accountability system. There's some awkwardness and some glitches that should be worked on, and we need to think about how you judge adequate yearly progress and how you judge hig