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A Lesson in Waste: Where Does All the Federal Education Money Go?, Cato Policy Analysis No. 518

A Lesson in Waste: Where Does All the Federal Education Money Go?, Cato Policy Analysis No. 518

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Published by Cato Institute
Executive Summary

Since the 1965 passage of the Elementary and
Secondary Education Act, which concentrated
unprecedented authority over American education
in the hands of the federal government, federal
lawmakers have passed increasingly restrictive
laws and drastically escalated education
spending, which ballooned from around $25 billion
in 1965 (adjusted for inflation) to more
than $108 billion in 2002.

For many years that phenomenon appeared
to be of little concern at the state and local level.
Under the No Child Left Behind Act, however,
that seems to be changing
Executive Summary

Since the 1965 passage of the Elementary and
Secondary Education Act, which concentrated
unprecedented authority over American education
in the hands of the federal government, federal
lawmakers have passed increasingly restrictive
laws and drastically escalated education
spending, which ballooned from around $25 billion
in 1965 (adjusted for inflation) to more
than $108 billion in 2002.

For many years that phenomenon appeared
to be of little concern at the state and local level.
Under the No Child Left Behind Act, however,
that seems to be changing

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Published by: Cato Institute on Mar 26, 2009
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Since the 1965 passage of the Elementary andSecondary Education Act, which concentratedunprecedented authority over American educa-tion in the hands of the federal government, fed-eral lawmakers have passed increasingly restric-tive laws and drastically escalated educationspending, which ballooned from around $25 bil-lion in 1965 (adjusted for inflation) to morethan $108 billion in 2002.For many years that phenomenon appearedto be of little concern at the state and local level.Under the No Child Left Behind Act, however,that seems to be changing—citizens and policy-makers are aggravated by the law’s dictates, anda revolt against federal control of education isbrewing. Of course, states can refuse their shareof billions of federal education dollars and there-by avoid having to adhere to federal regulations,but turning down the money is difficult, espe-cially since the federal government took themoney out of state taxpayers’ pockets in the firstplace. And it’s not just state unrest that’s callingfederal control of education into question:Despite the huge infusion of federal cash and thenear tripling of overall per pupil funding since1965, national academic performance has notimproved. Math and reading scores have stag-nated, graduation rates have flatlined, andresearchers have shown numerous billion-dollarfederal programs to be failures.Both state unrest and academic failure neces-sitate an examination of federal spending oneducation. States must decide if the benefits of federal funding outweigh the costs of complyingwith federal rules, and the nation as a wholemust determine if the federal presence in American education should continue at all.The answers, fortunately, are not elusive. Evenwhen projects are measured against theDepartment of Education’s own mission state-ment, it is clear that federal dollars are going toprojects that should not be receiving them. Moreimportant, when evaluated using academicresults, the strictures of the Constitution, andplain common sense, almost no federal fundingis justified. For all those reasons, the federal gov-ernment should withdraw from its involvementin education and return control to parents, localgovernments, and the states.
 A Lesson in Waste
Where Does All the Federal Education Money Go? 
by Neal McCluskey 
_____________________________________________________________________________________________________
 Neal McCluskey is an education policy analyst at the Cato Institute.
Executive Summary 
No. 518July 7, 2004
 
Introduction
 As 2003 drew to a close, two events affect-ing education were close at hand, passage of the federal budget and the No Child LeftBehind Act’s second anniversary. OnDecember 8 a press release from JohnBoehner (R-OH), chairman of the HouseCommittee on Education and the Workforce,triumphantly melded the two together:When President Bush signed the his-toric bipartisan No Child Left Behind Act into law nearly two years ago, wemade a promise. That promise was tosignificantly increase spending on edu-cation, and to provide those resourcesin exchange for accountability andresults for the first time ever. We tookthat commitment seriously, and it’sexactly what we’ve delivered.
1
 And deliver money is precisely what the feder-al government has done, increasing its infla-tion-adjusted education expenditures from$25 billion in 1965 to $108 billion in 2002.
2
Sadly, while the federal government hasclearly been providing major support for edu-cation, the indicators of what Americans aregetting for their money aren’t good. Despitethe more than quadrupling of federal spend-ing on education and the near tripling of realper pupil expenditures (which include state,local, and federal funds), between 1965 and2003 most measures of student achievementhave remained flat.
3
That’s a problem thatdemands an explanation. And that’s not the only compelling reasonto scrutinize federal spending on education: Aggravated by the demands of the No ChildLeft Behind Act, states across the country arebeginning to revolt against federal control of education. By March 2004, measures eithercalling for repeal of the law or advocatingstate action against it had passed at least onechamber of 12 state legislatures.
4
Fortunately, the federal government is ableto exert control only by “buying” states’ com-pliance; if states don’t take their share of fed-eral education money, they don’t have to fol-low the rules that accompany it. Of course,turning down hundreds of millions of dollarsis hard to do, especially since it is, in essence,money being returned to state taxpayers afterthe federal government grabbed it out of theirhands. Utah Republican state representativeMargaret Dayton describes the predicamentwell: “We gradually give up our state sover-eignty when we accept our tax money backinto the state with strings attached to it.”
5
That leads to a painful choice for states: they can either maintain their independence, orthey can take back money that belonged totheir citizens to begin with.In light of that dilemma, as well as the aca-demic stagnation that has plagued the nationfor the last 40 years, the time has come toreassess the federal role in education, especial-ly at the elementary and secondary level. At theheart of this reassessment must be an in-depthaccounting of where, exactly, federal educa-tion money has gone, how much has gonethere, and the academic results it has pro-duced. That is the task of this analysis.Note that while the main objective of thispaper is to take an in-depth look at federal K-12 spending, that does not mean that only spending on programs classified as “elemen-tary and secondary” will be analyzed. Doing sowould overlook a huge amount of money,considering that more than 36 federal depart-ments and organizations run major educationprograms
6
and that many of those adminis-tered by the Department of Education andclassified as other than “elementary and sec-ondary” have considerable impact on K-12students. Therefore, many initiatives, such asearly childhood programs designed to preparechildren for K-12 education, are included, asare vocational, adult, and other programs that,though not primarily K-12 focused, nonethe-less serve many such students.
What Are the FedsDoing Here?
Education has traditionally been the do-
2
Turning downhundreds of millions of dollars is hard todo, especially since it is, inessence, money being returned tostate taxpayers.
 
main of families, as well as local and stategovernments. Federal involvement is a rela-tively new phenomenon. To understand how  American education has traditionally beendelivered, and to put the federal govern-ment’s recent educational foray into context,a short history is in order. American public education began well overa hundred years before the federal govern-ment—and the nation itself—came into exis-tence; it dates back at least as far asMassachusetts’s 1647 Old Deluder Satan Act,which established the first compulsory andpartially public education in what would even-tually become the United States.
7
The act—which required all settlements with at least 50families to employ a teacher of reading andwriting and settlements of 100 or more fami-lies to establish a grammar school—wasintended to ensure that all members of thecolony were sufficiently literate to read theBible, enabling them to fend off the induce-ments of Satan.
8
Money to pay for teachersand schools was raised through tuition fromthose who could afford it, and public fundswere provided for those who could not.
9
By present-day standards, colonial Massa-chusetts’s educational system was very decen-tralized. Outside New England educationwas even more decentralized. In the South itwas almost entirely a family affair; childrenwere taught in their homes because south-erners believed that government should haveno role in education. In the ethnically andreligiously diverse middle colonies, a wide variety of schools popped up, free of govern-ment interference, to serve the needs of the various religious denominations.
10
The systems remained largely unchangedfor nearly two centuries after passage of theOld Deluder Satan Act, despite the fact thatin the intervening period the United Statesdeclared independence, established and dis-solved a national government under the Articles of Confederation, and, in 1789,established an entirely new form of govern-ment under the Constitution.
11
For modern Americans, the last is themost important of the aforementionedevents, as the Constitution is the primary federal law under which we live. It is what theConstitution does
not 
do regarding educa-tion, though, that is most important: itgrants no authority to the federal govern-ment to control education. The federal gov-ernment has only those powers enumeratedin the Constitution, and, as the Tenth Amendment reminds us, all other powers arereserved to the people or the states. AsMadison wrote in
 Federalist 
no. 45:The powers delegated by the proposedConstitution to the federal govern-ment are few and defined. Those whichare to remain in the State governmentsare numerous and indefinite. The for-mer will be exercised principally onexternal objects, as war, peace, negotia-tion, and foreign commerce. . . . Thepowers reserved to the several Stateswill extend to all the objects, which, inthe ordinary course of affairs, concernthe lives, liberties and properties of thepeople, and the internal order,improvement, and prosperity of theState.
12
Education in this system clearly is not a fed-eral responsibility, its administration beingneither an enumerated federal power nor oneimplied under the federal government’sauthority over “external objects.”With that as the prevailing wisdom, formore than a century after 1789 Americaneducation evolved almost entirely withinstate boundaries. Much of that evolution,though, involved increasing centralization of both the administration and the funding of schools. By the early 1800s the most well-known stage of that evolution, the commonschool movement spearheaded by HoraceMann, began to emerge. Spurred in large partby massive immigration, Mann and othersargued that a system requiring mandatory attendance at free, government-run schoolsshould be used to integrate America’sincreasingly heterogeneous peoples. As edu-cation professor Christopher J. Lucas writes:
3
It is what theConstitutiondoes
not 
doregardingeducation that ismost important:it grants noauthority tothe federalgovernment tocontroleducation.

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