Popping the hood at The Equity Project

The Equity Project, a K-8 charter school in Manhattan, thinks that working miracles for its students isn’t enough – that in order to truly reform education we also need to show our teachers a little more love. Here’s their claim: The Equity Project (TEP) can take a 90%+ low-income student demographic from New York City, pay its teachers $125,000/year, and perform in the top 10% of schools in the city.

Uh, wait . . . They do what?

Turns out, they actually do. And what was most impressive to us is that their formula is quite simple. They take all of the waste you see in a traditional school setting, they stop wasting it, and they reallocate the savings into the people and programs that actually work. Because this sounds a lot like the underlying purpose of Thriving Schools, we thought we’d pop the hood on their budget to see exactly what was going on.

The first metric we look at to determine a school’s investment in its teachers is what we call the “teacher expenditure to total funding ratio.” Stay with us here – we’re going to quickly run through this calculation for TEP. In 2012 (the latest year for which its financials are available), TEP spent approximately $4 million on teacher salaries, benefits, and payroll taxes (this total includes both regular and special education teachers but not administrators and support staff). During the same year, the school received $6.4 million in total funding. The next step is easy – using a little bit of division, we calculate the teacher to funding ratio to be 63%. That means for every dollar in funding the school receives, 63 cents is going directly to the teachers who are in front of students.

As an aside, we suggest members of the Thriving Schools community take the time to calculate this ratio for their own schools. Based on our estimates, we think you’ll arrive at a significantly lower figure.

Enough with the math! How do they do this?

According to TEP, they “accrue significant cost savings that result from the tremendous quality and productivity of its teachers.” The school employs administrators and instructional supervisors that also teach in the classroom, it has stopped wasteful spending in professional development, and it doesn’t contract out core instructional services to consultants or other organizations. As professional development is a key focus area here at Thriving Schools, it should be noted that TEP spends less than 1% of its funding on traditional PD (as compared to 6-9% at an average school – more on this in future posts).

TEP also creates significant savings by not employing a variety of administrative and support staff. It doesn’t have an attendance coordinator, a dean for discipline, parent outreach facilitators, or student activity personnel. Instead, each TEP teacher is placed in charge of one (and only one) school process, program, or project. The way it makes this sustainable is that teachers are asked to teach only one subject. TEP also believes this structure improves schoolwide communication (because every program now has just 1 point of contact and the individuals in charge of these programs also happen to know the students better).

Zeke Vanderhoek, the school’s founder, explains the rationale behind these decisions as follows: “People make the mistake of thinking that the salary that we’re offering is somehow designed to make a mediocre teacher better. [That’s] completely wrong. If you pay somebody more, it’s not going to make [them] better.” Instead, TEP uses its strong investment in teachers to attract the best talent to its organization. Zeke continues, “We have simply reallocated [our school’s] dollars and said ‘You know what?’ we need to be investing in the most important part of the educational experience for students. And that’s their teachers. Yes, we are going to sacrifice some other things to do so. We’re not going to have tiny classes. We are going to do without a lot of the other personnel in the building that typically would be in a school.” Put another way, teacher quality is far and away the school’s top priority.

What TEP has discovered is something we call the “asymmetry of spending.” The basic idea is that every dollar spent in education does not produce an equal impact. And that highly-focused investment in one or two spending areas can be significantly more effective than equal spending in a disparate and disorganized basket of programs.

The take-away here is that we need to do a better job at recognizing more is not always better. We can’t just fall back on more people, more programs, and more rules. As we’ve just discovered, a lot of things we spend money on just aren’t necessary when we have the right people on board. And when it comes to student outcomes, TEP has demonstrated that having the best teachers is what makes the difference.


TEP financials: http://www.tepcharter.org/TEP-2011-12-Audited-Financial-Statements.pdf

Interview with Zeke Vanderhoek: https://www.youtube.com/watch?v=M2DjsceS_Ik