Making the Grade: The Economic Evolution of American School Districts

Making the Grade: The Economic Evolution of American School Districts

by William A. Fischel

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A significant factor for many people deciding where to live is the quality of the local school district, with superior schools creating a price premium for housing. The result is a “race to the top,” as all school districts attempt to improve their performance in order to attract homebuyers. Given the importance of school districts to the daily lives of


A significant factor for many people deciding where to live is the quality of the local school district, with superior schools creating a price premium for housing. The result is a “race to the top,” as all school districts attempt to improve their performance in order to attract homebuyers. Given the importance of school districts to the daily lives of children and families, it is surprising that their evolution has not received much attention.

In this provocative book, William Fischel argues that the historical development of school districts reflects Americans’ desire to make their communities attractive to outsiders. The result has been a standardized, interchangeable system of education not overly demanding for either students or teachers, one that involved parents and local voters in its governance and finance. Innovative in its focus on bottom-up processes generated by individual behaviors rather than top-down decisions by bureaucrats, Making the Grade provides a new perspective on education reform that emphasizes how public schools form the basis for the localized social capital in American towns and cities.

Editorial Reviews
"How Americans managed to achieve the feat of mass education and convince those without children to finance the education of other people's children is the subject of William Fischel's engaging and highly informative volume. . . . Making the Grade should be read by any historian or student of education who wants to learn about the evolution and functions of the school district. These mundane governmental units are a key to the initial success of the U.S. educational system. The book is also entertaining. Read it to learn why teaching became a female occupation, why summer vacations, standardized calendars, and age grading are ubiquitous, why property taxes pay for schools, why vouchers have gained adherents more in cities than in rural areas, and why teachers in many developing nations today, but not U.S. teachers in the nineteenth century, are frequently absent."-Claudia Goldin,

— Claudia Goldin

Washington Times
"Through detailed research into topics from the content of the Northwest Ordinance and the politics of Jim Crow segregation to recent home prices and climate conditions, Mr. Fischel tells his own story, making the case that school districts are efficient and enjoy popular support. . . . Fischel's apology for school districts is compelling."
Education Next
"Highly readable. . . . The conventional 'top-down' history of American education is at best incomplete. Instead, Fischel offers a 'bottom-up' history that, with a few parsimonious concepts, explains quite a lot about the development of the American school system."

"This accessible, thoughtful book examines the sources of political support for American local school districts, from the late 1700s through today with charter schools and vouchers. . . . Fischel draws interesting, sometimes surprising, conclusions from the scattered historical materials."
Martin West
Making the Grade is an important contribution to the study of the political economy of public education, drawing on an eclectic body of evidence ranging from anecdotes to survey data to maps from Google Earth. Fischel has an unusually engaging prose style, and I am confident that the book will be widely read and discussed by economists and political scientists with an interest in education policy.”

Robert A. Margo
“The American standard of living owes much to the early development of public schools. In this provocative and important new book, master economist William Fischel persuasively argues that many of the distinctive institutional features of American education—the proverbial one room school house, summer vacations, age-grading, school consolidation, and the geography of school districts—were ‘bottom-up’ demand-driven choices of parents and taxpayers seeking efficiency and maximal land values rather than ‘top-down’ decisions imposed by the educational bureaucracy.  Just like politics schools, Fischel implores, are all local—and it’s a good thing, too. The lessons for latter day educational reformers are nothing short of profound.”

Eric Hanushek
“Bill Fischel has done it again. He has taken a set of commonly accepted views about schools and turned them upside down—shattering our simplistic explanations for age-grading in schools, for the September to May school calendar, and for voter disapproval of voucher referenda. His clear and logical development of the interests of citizens and their impact on the geography and organization of schools is compelling. This fascinating book demonstrates the power of some simple economic ideas for organizing our interpretation of the world around us.”

Jon Sonstelie
“At a time in which K-12 education has increasingly become a focus of state and federal governments, William Fischel offers a refreshingly different perspective. His is a story of how school districts emerged from the concerns of local communities and adapted as those communities evolved. For those who are becoming weary of No Child Left Behind, standardized testing, and other top-down measures to improve our public schools, this book is a reminder of what we may be losing.” - Claudia Goldin
"How Americans managed to achieve the feat of mass education and convince those without children to finance the education of other people’s children is the subject of William Fischel’s engaging and highly informative volume. . . . Making the Grade should be read by any historian or student of education who wants to learn about the evolution and functions of the school district. These mundane governmental units are a key to the initial success of the U.S. educational system. The book is also entertaining. Read it to learn why teaching became a female occupation, why summer vacations, standardized calendars, and age grading are ubiquitous, why property taxes pay for schools, why vouchers have gained adherents more in cities than in rural areas, and why teachers in many developing nations today, but not U.S. teachers in the nineteenth century, are frequently absent."

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Making the Grade

The Economic Evolution of American School Districts


Copyright © 2009 The University of Chicago
All right reserved.

ISBN: 978-0-226-25130-1

Chapter One

Introduction: Mobility, Property, and Community

Making the grade" has two connotations for school districts. The more obvious and contemporary is the demand for public schools to conform to high standards of accomplishment. This is not just for educational reasons. Homebuyers are more interested in the quality of schools than in almost any other public service, and prospective home sellers are anxious to have schools perform well. School districts that are not making the grade are penalized in the property market.

The less obvious connotation of this book's title is the historical transformation of school districts. School districts once numbered in the hundreds of thousands, most of them governing a single, one-room rural school. Such schools had a pedagogical method that was much different than that used today. Children were not divided into age-specific cohorts, each of which was taught the same lessons each day. In one-room schools, children were divided into "tutorial-recitation" groups, not grades. Recitation group membership was not by age but by previous accomplishment, typically how far a child had progressed in a reader or speller or arithmetic textbook. Groups were thus composed of students of different ages, and individual students could be in different recitation groups for each subject.

One of my tasks in this book is to explain how the tutorial-recitation method was supplanted by the age-graded method that we now take to be the mark of "real school," to use the telling expression of David Tyack and Larry Cuban (1995). My main interest is in the process by which this transformation took place. Unlike most historians of education, I do not focus on the education leaders who were eager suppliers of education reform. I focus in this book on the demand side, the resident voters who reluctantly gave up their one-room schools. They agreed to consolidated, age-graded schools, I submit, because the one-room school did not prepare their children for a high school education. Farmers and other rural property owners were penalized if their schools were not "making the grade" and educating resident children in a more systematic way.

1.1 The Mundane Miracles of Mobility, Property, and Community

The themes that cut across the chapters of this book can be summarized as mobility, property, and community. To illustrate their relationship, I would like the reader to contemplate a miracle of the mundane. You have school-age children, and you and your spouse obtain new jobs in a different part of the country. In August, you arrive at a new home and enroll your children in the local public schools. The youngest just completed fourth grade, and the twins are entering high school. After you proffer proof of residence to your new school district, records will be transferred from your children's former school. Your daughter will enter fifth grade and the boys will start ninth grade, and they will almost surely be taught skills and material whose foundation was established in the schools of their previous home, even if it was in a different state.

As parents, you will find that within a month or two you will have numerous new acquaintances and friends in the community. You meet them through some school event or a birthday party or other child-oriented social event. Within six months you will be full-fledged members of a community whose name you may not have known a year earlier, and your kids, once they have gotten over the trauma of change, will be doing as well in their new school as they would have in the old.

These are mundane miracles. The K–1 sequence that makes your kids' new school interchangeable with their former school did not come about from any centralized direction. (Schools are "interchangeable" in the sense that rental cars are interchangeable for most drivers, who can operate the Lexus about as well as the Chevy.) Indeed, there is still no central direction for curriculum at the national level, and even uniform statewide standards are a relatively recent and controversial phenomenon. The whole system of free public education was developed state by state, and within most states centralized direction arrived only after the general contours of the system had been established by local residents.

The other mundane miracle is the public's financial affection for their local school district. Schools matter for property values. A house built on the favorable side of a school district line may have its value enhanced by 10 or 0 percent, a boundary-line premium that is seldom matched by any municipal boundary unless the city and school district boundaries are the same. Yet almost all social scientists who analyze education issues look upon school districts in the same way that the formal legal system does: districts are "creatures of the state" and have no constitutional ability to obstruct or alter a directive that comes from on high.

If school districts are so irrelevant in a constitutional sense, though, why do homebuyers put so much stock in them? It cannot be just naïveté or inattention on the part of homebuyers; most of them are putting down a good fraction of their life savings to buy a house. Nor is it just low taxes that makes a district attractive. The local school's test scores receive the same sort of scrutiny from prospective homebuyers that earnings reports receive from stock market analysts. Yet the mystery of school districts is compounded by the fact that most homeowners do not have children in schools. True, they know that some of the prospective buyers will have children, but that fraction of the market is going down, not up. Yet school district quality remains probably the most important single indicator of housing prices. Something beyond just schools is involved.

The "something beyond" is, I will argue, the sense of community that local schools provide for residents of their district. Schools are an important source of localized social capital for adults. This is hardly a new insight. What appears to be different is my contention that the communitarian virtues of schools have a spillover effect on the rest of the community. Adults without children in school benefit from the network of social capital that is fostered by public schools.

1.2 Early American Land Policies and the Marvelously Efficient One-Room School

The evolution of modern schools was something akin to a spontaneous order. School districts were so generic and numerous that they can be analyzed as markets rather than governments. I open chapter with a historical argument. Concern about property values drove the establishment of schools and school districts in the nineteenth century. My focus is on the Land Act of 1785, which provided for the measurement and sale of land in most of the nation, and the Northwest Ordinance of 1787, which established a method of governance and progression to statehood. The most notable feature of the Land Act of 1785 was its provision that a square mile of land—the "school section"—in each township be set aside as an endowment for schools for residents of the township.

The school-establishing features of these far-reaching Congressional acts can be best understood as attempting to maximize the value of the government's vast land holdings. The school sections were bait for settlers. The subsequent state constitutional provisions that encouraged education were responses to this same land-value concern. The demand for schools by settlers and subsequent purchasers is what induced the government to establish their education system. It was not something that wise, disinterested public officials tried to impose on an unwilling or indifferent population.

Chapter 2 then goes on to explain the technology of education in nineteenth-century, one-room schools and contrasts it to modern, age-graded education. (I sometimes refer to a general educational technology as a "pedagogy," but the reader should not anticipate discussions of the philosophy or psychology of education along the lines of Johann Pestalozzi, Maria Montessori, and John Dewey.) I argue that each system was appropriate to the geographic, economic, and technological circumstances of its time. Many features of the one-room rural school that are criticized as backward were actually efficient responses to their circumstances. For example, the tutorial-recitation method allowed children to attend school at irregular intervals. If they missed half a term because a family crisis required additional assistance on the farm, they could still make some progress in their texts when they returned. They were not held back a grade, since there were no grades to be held back in.

Understanding the one-room school's unique pedagogy can shed light on some practices that seem peculiar to people accustomed to a modern, age-graded system. Tuition payments, called "rate bills," were often charged to cover part of the expenses in one-room schools. Modern critics of this system often overlook the fact that most rate bills were used mainly to extend the term of one-room schools for a few weeks. Low-income children who were deterred from attending during this period were not held back in a grade. They simply had to wait until the tuition-free term began a few months later and continued to progress as before. The only advantage of paying the rate bill was that it enabled children to go through school faster. This explains why the "free school" movement, which abolished the rate bills in most states, appears to have had such a modest impact on educational attainments.

A modern, age-graded system might actually have resulted in less education for the vast majority of nineteenth-century Americans, who lived in low-density rural areas. Grades would have been too small, since rural children could not be transported to a large-enough school. Most farm families' irregular need for their children's labor would have interfered with the continuous and sequential attendance demanded by an age-graded pedagogy. As a result, farm children would have been stuck in an endless loop of grade repetition. By the same token, the nineteenth-century's one-room pedagogy could not produce enough specialized education in the twentieth century, when there was an increase in the demand for workers with skills taught in high school. The drawback of the tutorial-recitation method was that school children spent most of the day in what we would now call study hall, preparing for their brief recitation periods.

Family mobility shaped both systems. One-room schools of the nineteenth century had a generic, standard pedagogy that allowed for each period of attendance, however brief, to advance a child's education. Children could duck in and out of school without fear of failing to be promoted. Twentieth-century schools have a loosely standardized curriculum—the annual progression from kindergarten to twelfth grade. Age grading allows for more specialization by teachers and more attention to children in each grade, but it also demands that schools not be too much different from one another.

1.3 Explaining the School District Consolidation Movement

Chapter uses land-value concerns and economic and technical change to explain the dramatic decline in the number of school districts between 1910 and 1970. At the beginning of the twentieth century, there were probably more than two hundred thousand school districts. By 1970, the number fell below twenty thousand and has since drifted down much more slowly. Almost all the decline in district numbers to 1970 can be accounted for by the consolidation of rural, one-room school districts into larger districts that had multiroom buildings in which children were put on an age-graded track that led to high school.

The process by which rural consolidation and age grading became the norm is widely regarded as the triumph of centralized administrators. Some historians regard this triumph as unfortunate, whereas most others think of it as admirable. But the consensus is that it was accomplished by top-down pressure. For example, Terry Moe (2001, 184) writes (and later qualifies), "From its modern origins in the early decades of the 1900s, America's public education system was designed to be a purely governmental system in which markets play no role at all."

In chapter 3, I beg to disagree. I point out that many standard features of age-graded education that are thought to have been created by national commissions can be seen as generic responses to the need to accommodate mobile families. We would have something like "Carnegie units" for high school credits, even if there had been no Carnegie Commission to establish them. I also argue at length that most "top-down" proposals to consolidate school districts along preexisting political boundaries failed. The district boundaries we see today reflect what were then called "organic communities" rather than arbitrary boundaries.

The political success of the age-graded model was due, I believe, to the recognition by rural voters that their property values would be lowered if they did not get with the age-graded program. One-room, rural schools by 1900 attempted to adopt an age-graded system. This system did not work well in the one-room setting. Whereas students could be sorted broadly by ability and knowledge in the ungraded tutorial-recitation method, they had to be sorted narrowly by age in the new age-graded method. This made for many more recitations for the one-room teacher, and most adopted a compromise that nominally conformed to age stratifications but in practice continued to group children by ability and knowledge.

This compromise would have been tolerable—even admirable—if the only aspiration of public education was literacy and numeracy. The coup de grâce for the rural method was the rapid development of high schools and the growing demand for their graduates in the labor market. Now one-room school teachers had to be able to teach not only a larger number of grades but also a wider and deeper range of knowledge to prepare students for high school. The teachers in the age-graded schools of the city could deal with both of these more easily because they could specialize in subjects and grade levels. One-room schools thus became obsolete. Attendance began to shrink because of declining rural population and because parents of ambitious students moved to age-graded districts. The decline in rural property values that this occasioned in the more backward districts was the prod to do what bureaucratic educators had been urging for decades, which was to consolidate one-room schools into rural agegraded schools. It was this consolidation that accounted for almost all the decline in school district numbers from 1910 to 1970.

1.4 "Will I See You in September?" Labor Mobility and the Standard School Calendar

Chapter 4 offers indirect evidence that school districts were able to evolve from a one-room pedagogy to an age-graded system without a conscious, top-down organizer. My specific example of nearly spontaneous order is the coordination of school calendars, which I take as a marker for coordination of other aspects of school curricula. In reading the history of American education, I found that most rural schools held classes during the winter and the summer. I had always thought that modern-day summer vacation had emanated from the need for farm children to work during the summer. But just a little more thought about farming would have persuaded me that this was not a good explanation, since summer was actually not the time when the unskilled labor of children would be most useful. So summer was indeed a time when farm children attended school regularly in the nineteenth century. A separate winter term also was taught in most rural districts. School was generally not held in the spring and autumn in order to have all hands available for the urgencies of planting and harvesting.

So what does explain the existence of the standard school calendar? In a paper published in the Journal of Urban Economics, I argued that it is best explained as a coordinating device (2006b). It allows children and teachers to finish school at one place and move to another school district far away and begin the new school year with everyone else. The now-standard calendar facilitates labor mobility. One bit of evidence in support of coordination is that the standard calendar emerged around 1900, just as the majority of the nation was becoming urban. One-room schools did not require a standard calendar because they had a teaching technology that did not require continuous attendance in schools. But cities were adopting age-graded methods of instruction, and this pedagogy required continuous attendance. When urban, age-graded schooling became the national standard, a common beginning and ending period had to be adopted to coordinate the comings and goings of families and teachers from various districts.


Excerpted from Making the Grade by WILLIAM A. FISCHEL Copyright © 2009 by The University of Chicago. Excerpted by permission of THE UNIVERSITY OF CHICAGO PRESS. All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.
Excerpts are provided by Dial-A-Book Inc. solely for the personal use of visitors to this web site.

Meet the Author

William Fischelis professor of economics at Dartmouth College. He is the author of The Homevoter Hypothesis: How Home Values Influence Local Government Taxation, School Finance, and Land-Use Policies.

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