A Tale of Two Theories of Education and Economic Growth

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A Tale of Two Theories of Education and Economic Growth

Remarks of U.S. Secretary of Education Arne Duncan to the Oregon Business Association’s Statesman Dinner

October 12, 2011

This is both an exciting and challenging time for Oregon’s educators, parents, and children.

I’m delighted to join you tonight to honor the extraordinary bipartisan duo, Roseburg Republican Bruce Hanna and Coos Bay Democrat Arnie Roblan, the co-Speakers of the Oregon House of Representatives. Working together across party lines, they successfully shepherded the most sweeping reform legislation of Oregon’s education system in the last quarter-century.

With the leadership and backing of the Governor, they assembled a remarkably diverse coalition that led to overwhelming approval of an education overhaul in an evenly divided legislature.

That coalition included not only the Oregon Business Association and Oregon Business Council, but outstanding non-profits like the Chalkboard Project, unions like AFSCME and the Oregon chapter of the American Federation of Teachers, and grassroots groups like Stand for Children.

Just a few short years ago, Oregon was not in the vanguard of education reform. Oregon’s application for a competitive Race to the Top grant frankly did not impress expert peer reviewers.

In the last decade, Oregon’s eighth graders have slipped from being in the top tier of all states in reading and math down to the middle of the pack. Fourth graders have gone from the middle of the pack to the bottom tier of states. There has been a lack of urgency here that is troubling.

But your new law is a great starting point for transforming and elevating education in Oregon. It moves the PreK-20 education system beyond separate silos and fill-in-the-form accountability to carefully coordinating programs from cradle to career and measuring outcomes that matter.

State lawmakers smartly insisted on preserving funding for the Oregon Pre-Kindergarten Head Start program, at a time when spending in many parts of the state budget were cut. That is one of the best investments we can make. And for the first time, all Oregon schools will now be required to provide a full-day kindergarten option by 2015.

So, Representatives Hanna and Roblan, I have a proposal for you: Please come back to Washington with me, and give us some pointers in how to get along! Let me tell you, we need a little bit of that Oregon magic! You are doing what the country needs to be doing. Thanks for the example you set for all of us.

All joking aside, Oregon’s success is a great model of how courage, commitment, and collaboration can challenge the status quo and lead to real change for children. Oregon’s ambitious rethinking of its education system is Exhibit A of how to get beyond partisan purity to do what’s right for our children and our country.

Now, just as the Governor has asked everyone to step back and create a comprehensive cradle-to-career education system, I want to ask the business and community leaders assembled here tonight to stop for a moment to think about the role of education in promoting economic growth.

Washington is currently engaged in a great battle over two competing theories of education and its relationship to economic growth. And the outcome of this debate has enormous consequences for our children, job creation, and our economic competitiveness.

The first theory--which I absolutely believe is right--is that the path to prosperity lies in investing judiciously in education, modernizing schools and crumbling infrastructure, and providing targeted tax cuts for small business and on payroll taxes to accelerate job creation.

Education, in other words, should not be just an expense--it’s an investment. The Governor summed it up well in his state of the schools speech in Springfield last month when he said that “the state does not run schools. The state invests in schools.”

The federal government doesn’t run schools either. But it has a unique and limited role to play in investing in education.

We help ensure that states set a high bar for success in a knowledge-based economy—instead of encouraging states to dummy down academic standards.

We provide incentives, technical assistance, and research support to help states and districts strengthen public education and accelerate learning.

And we are charged with preserving equal educational opportunity for disadvantaged students, students with disabilities, minority students, and English language learners.

Now, this idea, that today education and economic growth are tightly linked, stems from the recognition that the job market has changed profoundly. In a knowledge-based global economy, countries that out-educate us will out-compete us. That wasn’t the case when I was growing up. It is today. And if you think education is expensive in the 21st century, try ignorance. It won’t take you far in the information age.

So, yes, I absolutely believe education is now the engine for long-term economic growth. But that is not a Democratic theory. In fact, the vast majority of governors from both parties subscribe to that view. And it’s a view shared by many business leaders as well.

Everywhere I travel, I meet visionary corporate executives committed to investing and scaling up the most innovative and effective programs for improving education.

Earlier today I met with Nike executive Julia Brim-Edwards and her team. They briefed me on Nike’s School Innovation Fund in the Beaverton, Portland, and Hillsboro school districts.

Nike is committed to investing in innovation. But it is also committed to bottom-line results. Already they’re seeing that their initiative is boosting high school readiness, improving student reading and writing skills, and strengthening school leadership.

This summer, I was at a White House meeting with President Obama and a number of leading CEOs. And the consensus about the link between education and economic growth was striking, even among corporate leaders who might disagree with the President on other issues.

Jim Barksdale, the former CEO of Netscape, presented charts that showed the staggering economic toll caused by students who fail to finish high school. Over a 20-year period, Barksdale projected that high school dropouts lost $14 trillion that they would have earned if they had finished high school. That sum is roughly equivalent to the size of the entire U.S. national debt.

If those high school dropouts had not only graduated from high school but gotten at least some postsecondary training and beyond, they could have prevented the loss of over $42 trillion in worklife earnings over a 20-year span.

In the last few years, I’ve had the opportunity to work closely with leading GOP governors like Mitch Daniels in Indiana, Bill Haslam in Tennessee, and Chris Christie in New Jersey.

We don’t agree on everything. But they believe, like I do, that smart investments in education are the fuel of an expanding economy.

They believe, as I do, that state and local governments always will have the lead in education--but that the federal government should play a role in supporting state and local reform, and taking to scale what works.

They believe in a smart and selective use of market incentives and competition, rather just than doling out every dollar of federal aid in formula funding.

Here’s what they do not believe: They do not think the federal government should serve as an ATM for states and local governments, sending out checks in block grants. And they oppose the extreme idea of eliminating the federal role in education altogether.

Today, unfortunately, that consensus about the value of education in a vibrant economy is threatened. An alternative theory of education and economic growth is taking hold in some quarters of Congress. The proponents of this theory have a self-described, three-word prescription for job creation and economic growth: Cut, cut, cut.

Cut government spending, cut regulation—and cut taxes, not just for small businesses and middle –class Americans, but for corporations and the affluent too.

The proponents of this theory of job creation believe that uncertainty about regulations, deficits, and taxes is what is slowing job creation and restraining the recovery.

They don’t view education as a necessary investment to sustain economic growth. And they don’t believe the federal government has a role to play in encouraging states to pursue educational innovation and academic rigor.

For example, the current GOP plan in the House would cut Pell Grant college scholarships for low-income and working-class students. By some estimates, the House bill would eliminate Pell Grants for a million students, roughly 10 percent of those eligible—and this at a time where our nation is fast falling behind other countries in college completion.

Just one generation ago, America had the highest college attainment rate in the world. Today, we’re in sixteenth place among young adults. Australia is out-educating us. So is Ireland and Israel.

The House GOP plan would similarly eliminate funding for the competitive Race to the Top program and i3, the Investing in Innovation fund.

It would eliminate funding for School Improvement Grants, which states and districts are using for the first time to turn around chronically low-performing schools. The House Republican bill would have school districts go back to a dysfunctional status quo, when low-income children languished in low-performing schools for years on end--while school districts tinkered around the edges, or did nothing to help low-income students get the quality education that should be every child’s birthright in America.

I just came from a meeting with Carole Smith, the Portland school superintendent, and Charlene Williams, the outstanding new principal at Portland’s Roosevelt High School. Last year, the Roosevelt campus started its three-year, $7.7 million school improvement grant to turn around its low-performing schools.

Turning around a low-performing school is some of the most important, time-consuming, and toughest work in education. But principal Williams and the teachers at Roosevelt have taken on that challenge--and they are changing the course of children’s lives.

After just one year of the federal grant, more students are graduating, and math and reading scores have shown double-digit gains. Discipline referrals have dropped more than 25 percent.

Just as promising, the federal School Improvement Grant and the process of transforming Roosevelt led school administrators and Roosevelt’s teachers to collaborate together to design a new teacher evaluation process. They dispensed with the inadequate teacher review tool used in Portland’s schools for the last 30 years because it failed to provide teachers good feedback on their craft or define clear instructional goals.

The new teacher evaluation process at Roosevelt proved so popular that the district and union have now adopted it district-wide.

And I’m happy to report that groundbreaking collaboration was facilitated in part by a national conference on management-labor collaboration that our department hosted last February in Denver, which Portland’s superintendent, the school board chair, and the president of the teachers association all attended.

Now, I am not an economist or a business leader. But the cut-cut-cut theory of education and job growth seems to defy common sense and economic history.

When did we last hear the argument that cutting taxes and cutting spending and cutting regulation would drive a burst of job creation?

That would be in the run-up to 2008. In fact, a decade of tax cuts and housing and banking deregulation sent the American economy from an economic boom and government surplus to spiraling into the Great Recession.

To paraphrase Yogi Berra, it’s déjà vu all over again.

Many CEOs and independent economists far more expert than me, like Moody’s Mark Zandi, project that cutting spending and regulation would have little impact on job creation during the next year.

This theory of job creation is the 2011 Field of Dreams—if you cut spending and regulation, the job creators will come.

In April I had the opportunity to attend a BDT Capital Partners dinner in Omaha with Warren Buffett. He is legendary for being a tough-minded, savvy investor. And in sixty years of investing, Warren Buffett says he has yet to see anyone shy away from a good investment because of the tax rate on the potential gain. In his experience, companies create jobs, and investors invest, for a simple reason: To make money.

By a large margin, surveys of small employers and corporate leaders find that they do not believe the slow pace of job creation today is primarily driven by uncertainty about regulation and taxes.

Let me be clear: That doesn’t mean government regulations and the tax code aren’t a problem—they are, and should be reformed and reduced. There is a lot that we should be doing to make the education system more productive, including at the federal level. In fact, a year ago, I gave a speech devoted to the subject of doing more with less at the American Enterprise Institute, a conservative think tank in Washington.

But the fact is that employers themselves today repeatedly report that the chief problem slowing job creation is straightforward: Slack demand, or a lack of customers and sales.

If the slow pace of the recovery is due to slack demand, then we ought to be taking steps as a nation now to boost demand and reduce unemployment now. That’s exactly what President Obama’s American Jobs Act does.

The American Jobs Act is not a silver bullet for the economy. But in the near-term it is vitally important to put more Americans back to work--just as strengthening the education system is vitally important in the long-term to sustaining a competitive workforce.

The President’s bill includes two education components. It would keep teachers in the classroom instead of on unemployment lines. And it would put construction workers back to work modernizing and repairing public schools and community colleges. And if we now need to pass it in pieces, then let’s get it done.

I have yet to find anyone who thinks it’s a good idea to lay off teachers in droves or send children to schools that are antiquated and falling apart. Modernizing schools and keeping teachers in the classroom is a win-win proposition for children, construction workers, and communities looking to create jobs.

Last year, the unemployment rate for construction workers here in the Portland area was 20 percent, roughly double the unemployment rate in the region. Under the American Jobs Act, Oregon would receive more than $250 million that would put as many as 3,300 construction workers back on the job, modernizing public schools.

It’s no secret that Portland’s aging schools are badly in need of modernization. The district has already identified more than $500 million in repair and renovation work.

The roof at Grant High School is in such bad shape that the damage is reportedly visible on images from Google Maps.

Cleveland High School is a good school with an International Baccalaureate program. I love that curriculum. But think of how much better a school it would be if it didn’t have a shortage of computer and science labs, and if students didn’t have to contend with periodic floods and chilly classrooms, caused by aging plumbing and antique boilers.

The last inspection of the school turned up a list, twelve pages long, of 347 school site deficiencies.

Frankly, that’s not surprising because Cleveland High School was built in 1929, when Herbert Hoover was president. Eighty-two years later, the students at Cleveland deserve better. They deserve a world-class education that prepares them with 21st century skills.

Children also deserve not to have scores of committed teachers laid off. Under the American Jobs Act, Oregon would receive $350 million to prevent layoffs and support the hiring or re-hiring of 4,600 educators.

It’s a telling contrast that high-performing nations are finding ways to avoid laying off teachers by the thousands. But too many Americans have unfortunately slipped into complacency—or even worse, denial--about the competition that students will face from their peers in the global job market.

South Korea now has the highest percent of young adults with a college degree in the world. So when President Obama met with President Lee of South Korea, he asked him, “What is your biggest education problem”?

President Lee said “my biggest problem is that my parents are too demanding”…

Yes, that story usually makes Americans chuckle—or wince. I wish that was my biggest challenge.

But President Lee wasn’t making that up. South Korean parents don’t want their children to have to wait until second grade to learn English. So South Korea has had to import thousands of teachers from other nations to teach children English starting in first grade.

They are out-educating us, out-competing us--and they can’t hire teachers fast enough. In America, we’re letting go teachers en masse. Something is radically wrong with that picture.

Now, sometimes people say “We believe the government should invest in keeping teachers on the job. We believe the government should invest in fixing schools, and roads, and bridges--just not now. Not when the government is strapped for cash.”

Yet in America we invest for the future, not just in spite of challenges, but as the means of overcoming them.

Remember that the Hoover Dam and Golden Gate Bridge were both constructed during the worst Depression in our nation’s history.

And so it has been with our education system. Even before the states ratified the Constitution, the Continental Congress passed the Land Ordinance of 1785 and the Northwest Ordinance of 1787, granting federal lands to states to create and support public schools.

In my home town of Chicago, one federal land grant for schools is now Midway Airport. That land was first set aside for the support of public schools. And when Midway was built, the airport authority sent payments to the Chicago Board of Education.

In the midst of the Civil War, President Lincoln signed the Morrill Act, creating our nation’s land grant colleges, including Oregon State University.

Decades later, in the aftermath of World War II, Harry Truman helped establish the nation’s community college system.

And don’t forget that FDR signed the GI Bill during the battle of Normandy. If it wasn’t for the GI Bill, I’m not sure that the Governor would be sitting up here today.

His father marched from Normandy to the Battle of the Bulge to Berlin to defend his country. And when he came home, a grateful nation gave him a free college education.

Both of the Governor’s parents became teachers. And his family moved to Oregon when John was a child because his father, an English professor, was commissioned by the Portland Public School system in 1958 to do a study of PPS’s curriculum.

How much else would Oregon have lost if the government has said to John’s father and other war veterans, “sorry, but we cannot afford to invest in your education.”

I wish more corporate executives, community leaders, and parents recognized the urgency of our current educational challenges. We cannot wait—we have to improve faster than ever before.

Here in Oregon, only a quarter of high school graduates are ready to do college-level work--even though 60 percent of Oregon’s jobs will require at least a technical certificate or associate’s degree in the future.

In Multnomah County, more than 40 percent of high school students drop out or fail to graduate on time. And of those who do graduate, nearly nine in ten local students who enter Portland Community College need to take at least one remedial course.

Students who drop out or aren’t career and college-ready impose a staggering cost on the local economy. CEOs for Cities projects that increasing the completion rate for bachelor’s degrees by just one percentage point in the Portland region, would create a $1.6 billion increase in annual personal income in the area.

Now, when I talk about the mediocre performance of U.S. students, too many people respond that ‘my kid, my school is fine. Other people’s kids are the problem--it’s the disadvantaged students, minority children, and the immigrants learning English that are struggling.’

But the unexpected truth is that Oregon’s higher-achieving schools are not doing as well as some might think. And on the other hand, the performance of low-performing schools is not as intractable as many people believe.

Last year, Stanford economist Eric Hanushek and his colleagues did a study that showed how well each individual state did at producing high-achieving students in mathematics. He found that if Oregon was its own country, it would rank 33rd in the world in producing students at an advanced level of math, behind 25 nations and seven U.S. states.

But the results for Oregon’s white students were even more telling. In 13 U.S. states, white students are more likely to be high-achievers in math than white students in Oregon. And in 27 nations, all students are more likely to be high-achieving math students than just Oregon’s white students alone.

Students in Estonia, Slovakia, and Poland are out-performing white students in Oregon. That should be a wake-up call for Oregon.

So, how can business leaders help turn around Oregon’s educational stagnation? I believe the business community needs to be far more engaged in public education than it has been traditionally.

Because of both self-interest and altruism, the corporate sector should be deeply committed and concerned about the quality of their community's school system. And we need the business community to demand more from us—from government and educators, holding us accountable for results.

You can invest smartly in developing and scaling the most innovative tools and techniques to advance and accelerate student learning.

You can help secure key legislative reforms, as you did brilliantly this year.

You can drive consumer demand for better education. You can promote the idea that education is an investment in the future, not a spreadsheet debit.

And you can debunk the dangerous idea that cutting education spending, firing thousands of teachers, and ending federal involvement in education is the way to build a world-class education system for the 21st century.

I know that business can invest smartly in education and improve outcomes. I know it because I’ve seen great partnerships right here in Oregon.

The CLASS project, set up by the non-profit Chalkboard Project, is an outstanding example of grassroots union-management collaboration, with federal support. CLASS districts are showing substantially more success than comparison districts in elevating graduation rates and boosting student achievement. In fact, Chalkboard was awarded a $24.4 million federal Teacher Incentive Fund grant from us to support teachers in 55 high-need schools.

Working with the Portland Schools Foundation, and with funding from JPMorgan Chase, the Gates and Paul Allen foundations and others, the city of Portland has created a cutting-edge cradle-to-career initiative. It includes the Summer Youth Connect program, which is having a positive impact on academic outcomes, helping at-risk students accumulate more high school credits.

And with the support of business, the state is making progress as well.

Not too long ago, Oregon set a very low bar for success for students in reading. The NAEP, known as the nation’s report card, found that in 2009, Oregon had the second lowest standard for proficiency in fourth grade reading of the 50 states. That’s bad for children, bad for education, and ultimately bad for the state.

But that history of lying to children and parents about academic performance is drawing to an end here in Oregon. Last year, Oregon adopted the Common Core standards. Those standards were developed by the states--and are much more rigorous than the ones they replace.

For the first time, Oregon will have true standards for career and college-readiness. That is a game changer. And it’s a great sign that Oregon is one of the leaders in a state consortium that is developing the next generation of assessments to replace the narrow fill-in-the-bubble tests of today and better evaluate critical thinking skills.

Now, we also have a little welcome news coming out of Washington, too. You may have heard. Last month, the President announced that we will be reviewing applications from states for waivers from the No Child Left Behind law.

The President wants to provide states much more flexibility, in exchange for a clear commitment to setting a high bar for success that reflects real readiness for careers and college.

We want to give states the flexibility to measure student growth and gain, not just proficiency. We also want states to develop locally defined solutions, and look at other measures of success beyond test scores.

We want to do a whole lot more to get Washington out of the way.

In exchange, we will be asking states to show they have college and career-ready standards, are committed to tackling underperforming schools, and are developing new teacher and principal support and evaluation systems.

I have said all along that I care much more about measuring student growth over the course of the school year than one-shot, year-end tests of student proficiency.

The waiver process will allow states to finally measure the outcomes that matter--the outcomes that parents, educators, and business leaders really care about—like student growth, college and career-readiness, graduating from high school, enrolling in college, and college perseverance.

To ensure that state standards for career and college-readiness are truly aligned with post-secondary expectations, states that win waivers will be required to publicly report college enrollment and credit-accumulation rates for all students and subgroups, by district, and by high school.

We know states need relief from NCLB’s well-intentioned but ultimately unworkable provisions. But as we leave much of NCLB behind, we will never abandon accountability. We will only partner with states committed to taking a big step forward, and not with those looking to retreat.

Transforming education is tough work. If it was easy, it would have happened long ago. Everyone—educators, parents, school leaders, union heads, business executives, community leaders, non-profits, students themselves, and yes, the federal government—have to work together to change a status quo that fails too many of our children.

As Oregon has so clearly demonstrated, education must be a bipartisan cause. In America, there are no Democratic public schools. There are no Republican state universities. There are no Tea Party community colleges.

The challenge of building a world-class education system for all children is large. But so, too, is the American promise of education as the great equalizer.

As we strive to fulfill that American promise, let us remember the urgency of our mission--and never forget that children have only one chance to get a great education.

Oregon is helping to lead the nation where it needs to go. And with your example of collaboration, courage, and commitment, more children will get their shot at a world-class education.

Oregon has taken an important first step. Working together, let us make that success the norm for every child in Oregon and in America.