Public school administrators say they need more money. They say they don’t have enough money to provide the classroom instruction required by the state. Administrators could well be right about the need to increase funding for instruction, but they’re dead wrong about needing more money.

A study commissioned by the Governor’s Business Council finds annual operating costs increased $11 billion dollars from 1997 to 2004. Only $6 billion of this increase can be accounted for by enrollment growth, inflation, and increased costs associated with a growing population of economically disadvantaged students. Yet public schools spent an additional $5 billion above and beyond these costs.

Where did it go? Primarily to expand staff. The number of teachers increased by 17 percent, support staff increased 41 percent, campus administration increased 32 percent, and central administrators increased 35 percent.

But student enrollment increased only 13 percent.

Some of the money went for pay raises. From ’97 to ’04, average teacher pay increased by 25 percent, support staff up 21 percent, campus administrators’ pay increased 20 percent, and central administrator pay went up 24 percent. These raises exceeded the 17 percent rate of inflation, greatly exceeding pay increases earned by the average Texan.

Perhaps this spending could be justified if the student-teacher ratio were significantly decreased, or if teacher attrition were reduced, or if spending on classroom instruction was increased, or if student outcomes markedly improved.

Unfortunately, those things didn’t happen. The student-teacher ratio remained virtually unchanged, teacher turn-over actually increased, and instructional spending dropped from 57.9 percent to 51.8 percent of total school spending. Meanwhile, the percentage of students graduating with a high school diploma remained substantively unchanged.

Public schools must spend more wisely. The evidence clearly demonstrates that how education dollars are invested counts much more than how many dollars schools spend. When schools spend more on instruction, student performance rises. Spending on most other things – particularly administration – just doesn’t count.

Public schools must give a better accounting of spending. It’s impossible for Texans to take a close look at campus spending today. There’s no way to know if schools are investing instructional monies in state-required instruction or in optional activities, such as field trips or courses in flower arranging. Nor can Texans identify how many tax dollars underwrite non-educational costs, such as lobbying, lawsuits, membership fees in professional organizations, and contributions to chambers of commerce.

Things may change. House Bill 2, passed last month by the House and now under review in the Senate, requires schools to use standard cost accounting practices and report all expenditures separately as either educational, support, or administrative expenses. Additionally, HB 2 requires districts to identify individual campus expenditures, and report monies spent on dues, contributions, and lobbying. The Senate’s substitute legislation creates a financial accountability system that connects school spending and student performance, and redefines instructional costs as direct (such as curriculum) and indirect (such as lobbying).

These reforms are absolutely essential if schools are to allocate money in ways that will improve student outcomes, and critically necessary to control runaway spending. But these reforms are not sufficient.

Until Texans can look at the books and determine how much money really goes to classrooms, taxpayers will never be able to determine how their money is being spent.

So that taxpayers can effectively monitor spending, the legislature must require school districts to use a standardized electronic accounting system and check register that can be accessed by any Texan on a personal computer.

Texas public schools need better accounting systems, with stronger accountability and greater transparency. Connecting every new education dollar to these reforms is the only way to ensure all Texas children will have the schools they need and the opportunity to learn.

Chris Patterson is the director of research for the Texas Public Policy Foundation, a non-profit research institute based in Austin.