Across the U.S., school districts spent an average of 61.3 percent of their budgets on "in the classroom" expenses, as defined by the National Center for Education Statistics (NCES). In some districts, the figure is much lower, below 50 percent.

Recently, an organization called First Class Education (FCE) has been pushing a simple proposal: require school districts to increase "in the classroom" expenditures by 2 percent a year until they reach 65 percent. FCE argues that this is a simple, common-sense approach that requires school districts to focus their resources on children in classrooms rather than administration and overhead. The group estimates that nationwide adoption of the 65 percent standard would shift $14 billion a year—enough for a new computer for every student in the country or 300,000 new teachers (at $40,000 per year).

"It's overwhelmingly popular. It appeals to everybody," says Tim Mooney, a Republican consultant heading up FCE's Washington, DC office. He cited polling carried out by Harris Interactive for FCE and released in November 2005. "There is not a single demographic subset that is less than three-to-one in favor, no matter how you slice it: 78 percent of Republicans, 81 percent of Democrats, 89 percent of Hispanics, 96 percent of African Americans."

"My general reaction is this is sort of seductive but seriously oversimplified and possibly harmful," says Chester Finn, president of the Thomas B. Fordham Foundation and self-described education policy wonk. "It's seductive for all the obvious reasons: it meets the test of common sense that two-thirds of school dollars should be spent in classrooms, and speaks to the feeling that it is both astonishing and alarming that this is not the case." But, warns Finn, "It's a blunt mechanism that is insensitive to underlying problems."

The Fine Print

First Class Education says its goal is to have the 65 percent solution passed either as legislation or through ballot initiatives in all 50 states and the District of Columbia by the end of 2008. The campaign got a big boost from a George Will column published in April 2005.

The plan is straightforward: it uses the National Center for Education Statistics' definition for "in the classroom" expenses that would qualify for the 65 percent share:

• classroom teachers and aides;
• general instructional supplies;
• instructional aides;
• activities (field trips, athletics, music, arts);
• special needs instruction;
• tuition paid to out-of-state districts and private institutions for special needs students.

"Outside the classroom expenses" which would be competing for the remaining 35 percent are:

• administration (salaries and expenses);
• building operations and maintenance;
• food services;
• transportation;
• instructional staff support;
• student support (nurses, therapists, guidance counselors).

The NCES definition, which was created some 30 years ago, excludes school libraries and librarians, while covering such things as coaches and uniforms. (The American Library Association is urging states considering the measure to use the No Child Left Behind definition of instructional staff, which does include librarians and media specialists.) Similarly, speech/language pathologists and other specialists who work with learning disabled students are not included, though special education teachers are. Teacher training is excluded.

Districts that spend less than 65 percent of their budgets on "in the classroom" expenses would have to come up with plans to increase the percentage they spend by two percent a year until 65 percent is reached. If district officials feel they can't reach that goal, they could apply for a one-year waiver, which could be renewed.

The Rationale

A driving force behind the 65 percent solution is entrepreneur Patrick Byrne, the founder of Overstock.com, who has pledged $1 million towards the effort. Byrne has told reporters that the idea came to him after looking at 2002-2003 data from NCES which showed that the five states with the highest student standardized test scores—Massachusetts, New Hampshire, Vermont, Minnesota and Connecticut—spent on average just over 64 percent in the classroom. The five worst-scoring states—Louisiana, Alabama, Mississippi, New Mexico and the District of Columbia—spent on average 59.5 percent.

Critics say Byrne's thinking ignores other factors—such as the fact that high performing states generally spend more overall per student, and that low performing states not only spend less, but have more poor and minority students.

But supporters say it comes down to common sense and good management. Brian Janssen is leading the effort to get the 65 percent solution on the ballot in Washington State for November 2006. Janssen, former Microsoft Corp. employee who later co-founded Onyx Software, is now a stay-at-home dad with three young children who is active in philanthropic causes.

"I feel strongly about public education," says Janssen. "My parents were public school teachers...When we started our software company, we ran it very leanly. We had to do things efficiently, and we had to prioritize. It was an enormous challenge but a very healthy exercise to go through."

Janssen says that he's discouraged by the quality of Seattle public schools. "I've seen over the last years so many extreme examples of waste and bad decision-making," says Janssen. As a donor to various charitable organizations, "I always tell the executive director of that organization, 'You really have a moral imperative to achieve the maximum effect with every dollar you receive from a donor.' I feel the same holds true for public education dollars."

In Washington State, says Janssen, 59.5 cents on every dollar go to "in the classroom" expenditures. "I am completely confident that our districts could do better, if they really looked at competitive bidding, sharing services." He questions whether the state really needs 296 districts, some of them very small. And he suggests adoption of a statewide curriculum would stop every district from "reinventing the wheel."

Though teachers' unions oppose the measure, Janssen insists that as he travels the state, individual teachers are enthusiastic and often give him examples of wasteful spending. "There's a never-ending call for more money for education from teachers' unions, sometimes quite justified," says Janssen. "But how much is enough?"

But Will It Work?

The proposal is seen skeptically by many researchers and analysts who have spent years researching school finance and governance and student achievement.

Eric Hanushek, a senior fellow at the Hoover Insitution, is an economist who has spent decades "trying to understand why some kids learn more than others, how you can increase achievement, how policies and finance interact with student performance and outcomes."

He terms the 65 percent solution "a great sound bite," and worries that it will become a distraction. "We are now finally at a stage where we are paying a lot more attention to whether kids are learning something," says Hanushek, referring to the new national emphasis on accountability. "It seems much more sensible to continue to concentrate on that, to hold districts responsible for improving achievement, and to help them do it."

"I understand wanting to cut down on the blob of bureaucracy," says Hanushek, but he argues that any measure that looks only at inputs—ie, where the dollars go—without also tracking outputs—how students perform—is fundamentally flawed.

Jane Hannaway, director of education policy at the Urban Institute, studies how school districts allocate their funds. She says that the 65 percent rule "is not a very refined school reform effort and can easily be gamed."

More importantly, it can reduce the ability of reformers to act. Hannaway has done research on San Diego's successful school reform efforts. She notes that the architects of that reform, Alan Bersin and Tony Alvarado, centralized a lot of discretionary funding—such as federal Title I funding—to pay for rigorous professional development of their principals and teachers. Then, "Once everyone was on the same page, they started sending money back to the schools," says Hannaway. The 65 percent solution would make it difficult for carry out such a plan.

In 2005, Standard & Poor's analyzed school spending in nine states that are considering implementing the 65 percent solution. The S&P report, issued last fall, found "no significant relationship between instructional spending at 65 percent or any other level and student performance." Put simply, the common-sense belief that directing more money to classrooms helps kids learn is not borne out by the data.

Fordham's Finn believes the whole focus on kids in classrooms is outdated anyway. "I'm very pumped about online learning, virtual learning, all the ways that the education of kids is going to occur outside the four walls of the traditional classroom...to confine spending to those four walls might actually retard that kind of change."

Politics, Politics

The momentum that the 65 percent solution has gained in certain states seems to be tightly linked to partisan politics on the ground.

Mooney has acknowledged being the author of a memo that outlines the advantages of the proposal for Republicans. In states with the issue on the ballot, the memo says, Republican candidates will be able to champion a popular measure to increase classroom spending without raising taxes. Another plus: The proposal "naturally puts administrators and teachers at odds with one another...Because most state education unions represent both administrators and teachers, the proposal will create tremendous tension." In a recent interview, Mooney also said that the measure is more popular among Republican governors and candidates for state office than among Democrats.

The National PTA issued a position statement opposing the 65 percent solution in January. "This is consistent with a position we have that supports local control of how schools are funded. We feel that local school boards and districts know best," says National PTA President Anna Marie Weselak. "Sixty-five percent may work in some districts, but not in others."

While the National PTA claims about 6 million members, Weselak notes that it is up to local PTAs to decide if and how they will be active on the issue if it comes up in their state.

Mooney dismisses the National PTA as "a furtherance of the teachers' unions... It just shows you how out of step with the American public, the American taxpayer and the American parent these organizations are."

Where Is the Action?

As of the beginning of 2006, the 65 percent solution was being pursued to varying degrees in at least 14 states:

Active efforts are underway to put the issue before voters through a ballot initiative or referendum in Arizona, Colorado, Ohio, Oregon and Washington.

In Florida, backers hope to put a proposed constitutional amendment before voters in November.

In Georgia, the House and Senate have both passed a 65 percent bill pushed by Republican Gov. Sonny Perdue, who is up for election this year. In Illinois, some Republican legislators are seeking enabling legislation this year. The Kansas legislature adopted 65 percent as a policy goal last July, but there are no penalties for non-compliance. In Louisiana, the legislature unanimously approved a resolution in June 2005 urging the state Education Department to adopt the 65 percent standard statewide. Dick DeVos, a Republican running for the GOP nomination for Governor in Michigan, is espousing the goal of increasing the portion of existing education funds that go to classrooms.

Minnesota legislators have two bills before them, one of which calls for 70 percent of education spending to go towards "in the classroom" costs, while the other sticks with 65 percent. In Missouri Republican Gov. Matt Blunt is pushing 65 percent legislation, but observers say initial momentum seems to be fading.

In Texas, Gov. Rick Perry, a Republican, has issued a directive that takes effect in the 2006-2007 school year.

Mooney said he expected active campaigns to launch in two more states this year.

Susan Phillips is the former executive editor of Connect for Kids.