Teacher layoffs are likely this fall as $190 billion in federal pandemic aid expires. By one estimate, schools spent a fifth of their temporary funds on hiring new people, most of them teachers. Those jobs may soon be cut with many less experienced teachers losing their jobs first. The education world describes this policy with a business acronym used in inventory accounting: LIFO or “Last In, First Out.” 

Intuitively, LIFO seems smart. It not only rewards teachers for their years of service, but there’s also good evidence that teachers improve with experience. Not every seasoned teacher is great, but on average, veterans are better than rookies. Keeping them in classrooms is generally best for students.

The problem is that senior teachers aren’t evenly distributed across schools. Wealthier and whiter schools tend to have more experienced teachers. By contrast, high-poverty schools, often populated by Black and Hispanic students, are staffed by more junior teachers. That’s because stressful working conditions at low-income schools prompt many teachers to leave after a short stint. Each year, they’re replaced with a fresh crop of young teachers and the turnover repeats. 

When school districts lay teachers off by seniority, high-poverty schools end up bearing the brunt of the job cuts. The policy exacerbates the teacher churn at these schools. And that churn alone harms student achievement, especially when a large share of teachers are going through the rocky period of adjusting to a new workplace. 

“LIFO is not very good for kids,” said Dan Goldhaber, a labor economist at the American Institutes for Research, speaking to journalists about expected teacher layoffs at the 2024 annual meeting of the Education Writers Association in Las Vegas.

The last time there were mass teacher layoffs was after the 2008 recession. Economists estimate that 120,000 elementary, middle and high school teachers lost their jobs between 2008 and 2012. The vast majority of school districts used seniority as the sole criteria for determining which teachers were laid off, according to a 2022 policy brief published in the journal Education Finance and Policy. In some cases, state law mandated that teacher layoffs had to be done by seniority. LIFO rules were also written into teachers union contracts. In other cases, school leaders simply decided to carry out layoffs this way. 

Economists haven’t been able to conclusively prove that student achievement suffered more under LIFO layoffs than other ways of reducing the teacher workforce. But the evidence points in that direction for children in poverty and for Black and Hispanic students, according to two research briefs by separate groups of scholars that reviewed dozens of studies. For example, in the first two years after the 2008 recession, Black and Hispanic elementary students in Los Angeles Unified School District had 72 percent and 25 percent greater odds, respectively, of having their teacher laid off compared to their white peers, according to one study. 

Districts with higher rates of poverty and larger shares of Black and Hispanic students were more likely to have seniority-based layoff policies, according to another study. “LIFO layoff policies end up removing less experienced teachers, sometimes in mass, from a small handful of schools,” wrote Matthew Kraft and Joshua Bleiberg in their 2022 policy brief for the journal, Education Finance and Policy.

Budget cuts can create some messy situations. Terry Grier, a retired superintendent, who ran the San Diego school district following the 2008 recession, remembers that his district cut costs by eliminating jobs in the central office and reassigning these bureaucrats, many of whom had teacher certifications, to fill classroom vacancies. To avoid additional layoffs, his school board forced him to transfer teachers in overstaffed schools to fill classroom vacancies elsewhere, Grier said. The union contract specified that forced transfers had to begin with teachers who had the least seniority. That exacerbated teacher turnover at his poorest schools, and the loss of some very good teachers, he said. 

“Despite being relatively new to the profession, many of these teachers were highly skilled,” said Grier. 

Losing promising new talent is painful. Raúl Gastón, the principal of a predominantly Hispanic and low-income middle school in Villa Park, Ill., still regrets not having the discretion to lay off a teacher whose poor performance was under review, and being forced instead to let go of an “excellent” rookie teacher in 2015.

“It was a gut punch,” Gastón said. “She had just received a great rating on her evaluation. I was looking forward to what she could do to bring up our scores and help our students.”

The loss of excellent early career teachers was made stark in Minnesota, where Qorsho Hassan lost her job in the spring of 2020 because of her district’s adherence to LIFO rules. After her layoff, Hassan was named the state’s Teacher of the Year. 

Hassan was also a Black teacher, which highlights another unintended consequence of layoff policies that protect veteran teachers: they disproportionately eliminate Black and Hispanic faculty. That undermines efforts to diversify the teacher workforce, which is 80 percent white, while the U.S. public school student population is less than half white. In recent years, districts have had some success in recruiting more Black and Hispanic teachers, but many of them are still early in their careers. 

The unfairness of LIFO layoffs became evident after the 2008 recession. Since then, 20 states have enacted laws to restrict the use of seniority as the main criteria for who gets laid off. But many states still permit it, including Texas. State laws in California and New York still require that layoffs be carried out by seniority, according to TNTP, a nonprofit focused on improving K-12 education, and Educators for Excellence. 

While there is a consensus among researchers that LIFO layoffs have unintended consequences that harm both students and teachers, there’s debate about what should replace this policy. One approach would be to lay off less effective teachers, regardless of seniority. But teacher effectiveness ratings, based on student test scores, are controversial and unpopular with teachers. Observational ratings can be subjective and, in practice, these evaluations tend to rate most teachers highly, making it hard to use them to distinguish teacher quality.

Others have suggested keeping a seniority system in place but adding additional protections for certain kinds of teachers, such as those who teach in hard-to-staff, high-poverty schools. Oregon keeps LIFO in place, but in 2021 carved out an exception for teachers with “cultural and linguistic expertise.” In 2022, Minneapolis schools decided that “underrepresented” teachers would be skipped during seniority-based layoffs. Still another idea is to make layoffs proportional to school size so that poor schools don’t suffer more than others.

This story about teacher layoffs was written by Jill Barshay and produced by The Hechinger Report, a nonprofit, independent news organization focused on inequality and innovation in education. Sign up for Proof Points and other Hechinger newsletters.

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Schools spend billions of dollars a year on products and services, including everything from staplers and textbooks to teacher coaching and training. Does any of it help students learn more? Some educational materials end up mothballed in closets. Much software goes unused. Yet central-office bureaucrats frequently renew their contracts with outside vendors regardless of usage or efficacy.

One idea for smarter education spending is for schools to sign smarter contracts, where part of the payment is contingent upon whether students use the services and learn more. It’s called outcomes-based contracting and is a way of sharing risk between buyer (the school) and seller (the vendor). Outcomes-based contracting is most common in healthcare. For example, a health insurer might pay a pharmaceutical company more for a drug if it actually improves people’s health, and less if it doesn’t. 

Although the idea is relatively new in education, many schools tried a different version of it – evaluating and paying teachers based on how much their students’ test scores improved – in the 2010s. Teachers didn’t like it, and enthusiasm for these teacher accountability schemes waned. Then, in 2020, Harvard University’s Center for Education Policy Research announced that it was going to test the feasibility of paying tutoring companies by how much students’ test scores improved. 

The initiative was particularly timely in the wake of the pandemic.  The federal government would eventually give schools almost $190 billion to reopen and to help students who fell behind when schools were closed. Tutoring became a leading solution for academic recovery and schools contracted with outside companies to provide tutors. Many educators worried that billions could be wasted on low-quality tutors who didn’t help anyone. Could schools insist that tutoring companies make part of their payment contingent upon whether student achievement increased? 

The Harvard center recruited a handful of school districts who wanted to try an outcomes-based contract. The researchers and districts shared ideas on how to set performance targets. How much should they expect student achievement to grow from a few months of tutoring? How much of the contract should be guaranteed to the vendor for delivering tutors, and how much should be contingent on student performance? 

The first hurdle was whether tutoring companies would be willing to offer services without knowing exactly how much they would be paid. School districts sent out requests for proposals from online tutoring companies. Tutoring companies bid and the terms varied. One online tutoring company agreed that 40 percent of a $1.2 million contract with the Duval County Public Schools in Jacksonville, Florida, would be contingent upon student performance. Another online tutoring company signed a contract with Ector County schools in the Odessa, Texas, region that specified that the company had to accept a penalty if kids’ scores declined.

In the middle of the pilot, the outcomes-based contracting initiative moved from the Harvard center to the Southern Education Foundation, another nonprofit, and I recently learned how the first group of contracts panned out from Jasmine Walker, a senior manager there. Walker had a first-hand view because until the fall of 2023, she was the director of mathematics in Florida’s Duval County schools, where she oversaw the outcomes-based contract on tutoring. 

Here are some lessons she learned: 

Planning is time-consuming

Drawing up an outcomes-based contract requires analyzing years of historical testing data, and documenting how much achievement has typically grown for the students who need tutoring. Then, educators have to decide – based on the research evidence for tutoring –  how much they could reasonably hope student achievement to grow after 12 weeks or more. 

Incomplete data was a common problem

The first school district in the pilot group launched its outcome-based contract in the fall of 2021. In the middle of the pilot, school leadership changed, layoffs hit, and the leaders of the tutoring initiative left the district.  With no one in the district’s central office left to track it, there was no data on whether tutoring helped the 1,000 students who received it. Half the students attended 70 percent of the tutoring sessions. Half didn’t. Test scores for almost two-thirds of the tutored students increased between the start and the end of the tutoring program. But these students also had regular math classes each day and they likely would have posted some achievement gains anyway. 

Delays in settling contracts led to fewer tutored students

Walker said two school districts weren’t able to start tutoring children until January 2023, instead of the fall of 2022 as originally planned, because it took so long to iron out contract details and obtain approvals inside the districts. Many schools didn’t want to wait and launched other interventions to help needy students sooner. Understandably, schools didn’t want to yank these students away from those other interventions midyear. 

That delay had big consequences in Duval County. Only 451 students received tutoring instead of a projected 1,200.  Fewer students forced Walker to recalculate Duval’s outcomes-based contract. Instead of a $1.2 million contract with $480,000 of it contingent on student outcomes, she downsized it to $464,533 with $162,363 contingent. The tutored students hit 53 percent of the district’s growth and proficiency goals, leading to a total payout of $393,220 to the tutoring company – far less than the company had originally anticipated. But the average per-student payout of $872 was in line with the original terms of between $600 and $1,000 per student. 

The bottom line is still uncertain

What we don’t know from any of these case studies is whether similar students who didn’t receive tutoring also made similar growth and proficiency gains. Maybe it’s all the other things that teachers were doing that made the difference. In Duval County, for example, proficiency rates in math rose from 28 percent of students to 46 percent of students. Walker believes that outcomes-based contracting for tutoring was “one lever” of many. 

It’s unclear if outcomes-based contracting is a way for schools to save money. This kind of intensive tutoring – three times a week or more during the school day – is new and the school districts didn’t have previous pre-pandemic tutoring contracts for comparison. But generally, if all the student goals are met, companies stand to earn more in an outcomes-based contract than they would have otherwise, Walker said.

“It’s not really about saving money,” said Walker.  “What we want is for students to achieve. I don’t care if I spent the whole contract amount if the students actually met the outcomes, because in the past, let’s face it, I was still paying and they were not achieving outcomes.”

The biggest change with outcomes-based contracting, Walker said, was the partnership with the provider. One contractor monitored student attendance during tutoring sessions, called her when attendance slipped and asked her to investigate. Students were given rewards for attending their tutoring sessions and the tutoring company even chipped in to pay for them. “Kids love Takis,” said Walker. 

Advice for schools

Walker has two pieces of advice for schools considering outcomes-based contracts. One, she says, is to make the contingency amount at least 40 percent of the contract. Smaller incentives may not motivate the vendor. For her second outcomes-based contract in Duval County, Walker boosted the contingency amount to half the contract. To earn it, the tutoring company needs the students it is tutoring to hit growth and proficiency goals. That tutoring took place during the current 2023-24 school year. Based on mid-year results, students exceeded expectations, but full-year results are not yet in. 

More importantly, Walker says the biggest lesson she learned was to include teachers, parents and students earlier in the contract negotiation process.  She says “buy in” from teachers is critical because classroom teachers are actually making sure the tutoring happens. Otherwise, an outcomes-based contract can feel like yet “another thing” that the central office is adding to a teacher’s workload. 

Walker also said she wished she had spent more time educating parents and students on the importance of attending school and their tutoring sessions. ”It’s important that everyone understands the mission,” said Walker. 

Innovation can be rocky, especially at the beginning. Now the Southern Education Foundation is working to expand its outcomes-based contracting initiative nationwide. A second group of four school districts launched outcomes-based contracts for tutoring this 2023-24 school year. Walker says that the rate cards and recordkeeping are improving from the first pilot round, which took place during the stress and chaos of the pandemic. 

The foundation is also seeking to expand the use of outcomes-based contracts beyond tutoring to education technology and software. Nine districts are slated to launch outcomes-based contracts for ed tech this fall.  Her next dream is to design outcomes-based contracts around curriculum and teacher training. I’ll be watching. 

This story about outcomes-based contracting was written by Jill Barshay and produced by The Hechinger Report, a nonprofit, independent news organization focused on inequality and innovation in education. Sign up for Proof Points and other Hechinger newsletters.

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In his 2013 book, “Capital in the Twenty-First Century,” French economist Thomas Pikkety made a provocative argument about rising income inequality and the growing importance of disparities in wealth. He suggested that the world was returning to a sort of 19th century dynastic capitalism where the rich, with their inherited wealth, and the poor masses were growing ever farther apart. Pikkety’s follow-up book, “Capital and Ideology,” published in English in March 2020, argued that inequality trends are turbocharged in our current period of “hypercapitalism.” 

There are consequences for education, too. A new analysis of school funding by a Pennsylvania State University researcher finds that the highest spending school districts are investing even more in their public schools, from kindergarten through high school. The school funding gap between a top 1 percent district and an average-spending school district at the 50th percentile widened by 32 percent between 2000 and 2015, the study calculated. These top 1 percent districts were already funding their schools at much higher levels in 2000 but then increased annual school funding at a faster rate than everyone else. 

“The people who can and wish to spend more are running away with it,” said Bruce Baker, a school finance expert at Rutgers Graduate School of Education. “This is what educated people with fewer fiscal constraints want for their own children. Those communities clearly set a higher bar and increase that bar at a faster rate over time.”

The May 2020 study didn’t identify the roughly 1,300 districts at the top, which educate fewer than 500,000 of the nation’s children, but characterized them as mostly wealthy, white suburbs. They are not necessarily the wealthiest zip codes in the United States or where the wealthiest Americans live but they are the highest spending school districts. The table accompanying this story shows how three wealthy suburban school districts, which are certainly among the top 1 percent, increased their funding relative to their nearby cities. The Lower Merion district located in the suburban Philadelphia Main Line boosted its education funding 87 percent between 2000 and 2015 to more than $23,000 per student. That’s more than double the amount that Philadelphia, one of the poorest cities in America, spent on its students. 

Why we should care about high levels of education spending among the rich is a matter of debate. Baker argues that their choices affect the rest of us. That’s because education investments by the rich can potentially boost their children’s achievement levels and give them an advantage in college applications. As these well-educated children move from well-funded schools to elite universities, their advantages continue as they apply to graduate schools and seek the most coveted jobs. Those at the bottom as well as those in the middle can struggle to compete against this kind of educational privilege. 

“It’s kind of like baseball,” Baker said. “When the Yankees spend more, it makes it harder for everyone else to compete.” 

Baker was not involved in the Penn State study, which was conducted by Matthew Gardner Kelly, an assistant professor of education. Kelly points out in his article, published in the peer-reviewed journal Educational Researcher, that researchers often exclude the highest spending districts because they’re such outliers and have a tendency to push up national averages. The top 1 percent districts across the nation funded their schools by an average $21,000 per student in 2015. That’s almost three times the level of the bottom 1 percent of school districts where funding levels were $7,500 per student. 

Related: Data show segregation by income (not race) is what’s getting worse in schools

New York State has the highest concentration of students who attend schools in the best-funded districts, Kelly calculated. That’s because the state has many narrowly drawn, tiny school districts where most of the residents are wealthy and districts rely on local taxation to generate revenue. Often local governments don’t have to actively raise taxes but they passively collect more taxes as property values rise. Nassau County, just outside New York City on Long Island, has the highest concentration of students who attend the best funded public schools among all counties in the country. Almost 17 percent of all the top 1 percent students in the nation live in this one county. 

California, by contrast, has the greatest concentration of under-funded students in the bottom 1 percent. Among counties nationwide, Los Angeles County has the greatest concentration of students who are funded at the bottom 1 percent level, Kelly calculated. California was also one of 13 states that bucked the national trend, where gaps did not grow between the top 1 percent and the average district between 2000 and 2015. State law has made it difficult for even wealthy communities to raise taxes since the 1978 passage of California’s Proposition 13.

Kelly’s calculations excluded federal funds, which allocate extra money to high poverty districts but constitute only 8 percent of overall education funding. Only local and state funds were analyzed.

The demographics of these top 1 percent of districts are striking. The communities are 72 percent white, 12 percent Latino and 5 percent black. By contrast, the bottom 1 percent of districts, as measured by school funding, are 51 percent white, 25 percent Latino and 15 percent black. 

The school funding debate shifted in the 1980s, away from trying to equalize funding among all schoolchildren to making sure that every child gets enough funding for an adequate education. But many scholars and policy experts are now questioning whether aiming for a reasonable minimum bar is enough anymore. 

Zahava Stadler, director of policy at EdBuild, a nonprofit organization that advocates for more equitable education funding, said in an interview that current school funding policies reinforce residential segregation by income. “It’s a vicious cycle,” said Stadler. “Families with means want to move to school districts that spend more on education and the price of homes go up. As home values rise, that district is able to collect more property tax and finance schools at a higher level. The best financed school districts become islands of affluent families, where no one else can afford to buy into the community. You wind up with school districts with wealthy kids and the poor kids on the other side.”

“This promotes and entrenches a segregation that’s bad for kids,” she added.

Related: Inside the Reardon-Hanushek clash over 50 years of achievement gaps

Stadler isn’t optimistic that school funding policies will change. “The communities that are able to finance their schools more have the loudest voices in the statehouse,” she said. “Concentration of wealth also means concentration of political power in a few school districts.”

The current coronavirus recession is likely to make things worse.  Sales and income taxes that states collect are plummeting and states are expected to cut their contributions to schools. Low-income schools are especially reliant on these state funds. Meanwhile, residential property taxes in the suburbs are more stable and likely to weather a recessionary period with less damage. The poor will suffer yet another assault while funding gaps widen further.

This story about rich schools was written by Jill Barshay and produced by The Hechinger Report, a nonprofit, independent news organization focused on inequality and innovation in education. Sign up for the Hechinger newsletter.

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