The Union Issue
It is widely acknowledged - even by Democrats - that the teacher’s unions are not working in the best interests of students or teachers. The unions have become politically powerful organizations with a lot of money to throw around. The Democrats rely on them, they can hold parents hostage by striking, and they have a moral Teflon that they "care about the children". The bastions set up by the unions are too strong for a frontal assault so siege tactics must be brought to use.
The key is to undermine the walls by breaking the stone base their castle sits on, which the unions believe to be invincible and eternal. First, they believe the union members have been brainwashed and intimidated enough that they will never reject the union. Second, they believe that parents will put up with anything because they have no alternative. Third, they believe they have the unwavering support of the leftist non-profit sector. Each of these can be undermined with a different operating model for schools and some strategically placed donations.
Teachers want to be treated with respect, and rightly so, because they do the most important profession in our society - preparing the next generation of the species to be productive. For this to happen they must be allowed to act as, be held accountable as, and be compensated as individual professionals.
A New Operating Model
The modern American education system is born of the post-WW2 zeal for efficiency, standardization, and ideology. Each day, the students recite the Pledge of Allegiance, which was instituted during the Eisenhower administration. Ike added "under God" to the pledge to make the U.S. distinct from the atheist USSR. Students were viewed as "learning units" to be put through an efficient standardized education process. The assumption was that the process was sound, so any defects were the result of low-quality input materials. Changes have been made and the jargon has changed but the model remains. The system is full of perverse incentives and lacks pricing mechanisms.
Students are not all the same, so they do not all require the same talents or effort to educate. But teachers are paid the same salary no matter how much effort they put in or how difficult the students assigned to their class are. The marginal benefit to the teacher of adding a student to their class is zero. However, the cost is variable and potentially very high if the student is disruptive. The incentive is to push for small class size and to put the "defects" into dark corners to limit their effect on the cost of producing other units.
A better model incentivizes teachers for taking on additional work and efficiently prices the effort. The natural inclination is to pay bonuses for the number of "A+" students. If done without a backward-looking performance measure this system incentivizes bigger class sizes for high-performing students. This resolves the incentive for smaller class sizes but strengthens the incentive to exclude students who are not already A-level or nearly so.
If a marginal improvement is included such that taking a "C" student to an "A" level is rewarded, the class size disincentive is solved as is some of the perverse incentive to exclude. There is now an incentive to bring underperforming students up to their full potential. However, it still leaves the high-risk/low-performance students out in the cold and misprices the marginal value of education to students and society. Human capital, as with any other kind of capital, has the highest marginal rate of return where there is little of it.
Consider a high-school student who is on the track to a life of crime and, eventually, prison. The cost to the state of jailing that student and the cost of damage from their crime can easily be in the tens of millions of dollars. Imagine the benefit to society of taking someone headed for jail and turning them into a law-abiding bum, much less a productive citizen. That is a difficult job which cannot be done by most people, no matter how good their intentions or how strong their zeal.
With perverse incentives dealt with and a notion of the pricing mechanisms needed, we can address the operating model. Teachers, as with all professionals, have a diverse set of talents, experiences, work-life balance needs, etc. There is no single "right" working environment for a professional - they find that for themselves. The obvious conclusion is that teachers should have some ability to shape their classes based on their personal specialties and target compensation. In line with the marginal benefit to society, students with the most risk factors have the highest payouts for marginal improvement (more on this below).
In the new model school, teachers hold a "draft" for their incoming students based on objective data about the student and the subjective assessments of prior teachers. Teacher X might be great at reaching troubled students, but only in a class setting of ten students or less. Teacher Y is great at working with students who have been abused or are homeless and finds optimal class size varies based on a number of measures. Teacher Z works best with high-achieving students that need guidance on optimizing their performance and finds a class of fifty students can be handled easily. Each of those teachers can craft their desired class structure and overlaps are resolved by Dutch auction.
The Pricing Mechanism
As with any system that lacks a pricing mechanism, it is impossible to know where resources should be allocated without prices. To form prices there must first be information for market participants to plan with and base expectations on. The primary problem with using information in the American school system is a lack of willingness to even look at information that already exists. The school system calls this “tracking” and is prohibited because it is assumed to be prejudicial to the detriment of students. Aside from the macro, there is also squeamishness at the individual level about passing judgement on risk factors. A student without a father in the home is more at risk than a student with both parents in the home but nobody wants to be the one to say it in-school. Students are assessed ex post based on their in-school performance and the data is compiled into aggregates with no view into the individual situations of those students or their long-term success in society.
Tracking the student across time also allows for compensation to be distributed across time based on the student’s long-term performance. Payout “residuals” for students could differ based on the age or risk profile of the student. For example, the effect a high school teacher has on student performance might show up much sooner than the effect of a kindergarten teacher. Inventive-based compensation rapidly calls attention to new methods of teaching and teamwork that will be adopted by their colleague competitors. Early-grade teachers will want to send their students to the right teacher with the right learning plan. Later-grade teachers will want to work with early-grade teachers to craft the class and create learning plans. Everybody is incentivized to work together to maximize their payout.
The data from social services, law enforcement, non-profits, and simple personal surveys can provide all the information needed to create a risk profile for a student. That information can be regularly updated along with comprehensive assessments of student progress that run the length of their academic career and into adulthood.
Compensating Teachers as Professionals
On inspection, the current compensation system has been designed to promote the interests of union leaders and politicians from both parties. The trick being used is the old switcheroo. Teachers are paid relatively low salaries but with the promise that over the course of their career the lifetime pension and healthcare benefits earned will make up the difference. This compensation plan is built on perverse incentives from the ground up. First, the system ties teachers to their jobs and the union. Second, it allows politicians to push back liabilities far enough to be someone else’s problem.
In fifteen states, including Massachusetts, teachers are excluded from the Social Security system. The reason given is that the teachers are better off with a pension that provides better benefits and is guaranteed by the state’s constitution (maybe). Pensions are structured such that retirement benefits are accrued over twenty- to thirty-years, but heavily weighted (60-75%) into the last three years. Note that pension credits are not portable across states. So, someone who is fifteen years into a teaching career is tied to the mast whether they like job or not and whether they like the location or not. Simply moving to an honest model where teachers have a 401K and are paid a proper salary will remove serious perverse incentives that currently exist. The current system traps dissatisfied workers in their jobs - which incentivizes them to do the minimum - and keeps out hundreds of thousands of young aspiring teachers. Teaching is much too important to be left to someone who is not passionate about their job and holding someone’s retirement savings hostage for thirty years is uncontainable.
Conclusion
The public education system in the United States has performed badly because of the all-too-common problem of perverse incentives. Most U.S. states have “balanced budget” provisions in their constitutions, which limit the ability of state-level legislatures to rack up debt the way Congress does. By paying teachers, and other state- and local-government employees, with promises of future payments the state legislatures were able to tap into a hidden source of debt. When you pay in promises, you try to keep putting them off as long as possible, so you backweight the awarding of pension benefits to the final years of a long career. For a teacher who finds themselves fifteen years into a thirty-year pension plan and decides they want to make a change the choices are ugly. Leave your job and take the financial hit of being underpaid for fifteen years and getting little or no pension, or keep your head down and hope your union gets good terms. Hardly an environment for encouraging professionals to achieve peak performance, especially when the stakes are so high.