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Chapter 3
THE ECONOMY
AND DEMOGRAPHICS
Focus Questions
• What is the business cycle?
• How does the business cycle affect
spending on education?
• According to the 2000 Census, how is
the U.S. population changing?
• What are the implications of these
demographic changer for education
policy?
THE ECONOMY
AND DEMOGRAPHICS
•
•
•
•
•
WHY ANALYZE THE POLICY ENVIRONMENT
ECONOMIC ENVIRONMENT
DEMOGRAPHICS AND THE POLICY ENVIRONMENT
IMPLICATIONS FOR EDUCATION POLICY
HOW ABOUT LARGE NEW INVESTMENTS IN
SCHOOLS?
• THINK AND LEARN
WHY ANALYZE THE POLICY ENVIRONMENT
Defining Policy Environment
• Every public policy-including every education policy-is a
response to a specific social setting that includes a wide range
of phenomena studied by the social sciences: economic forces,
demographic trends, ideological belief systems, deeply held
values, the structure and traditions of the political system,
and the culture of the broader society.
• Although these phenomena changes over time, most of them
also reveal historical continuity. The complex social
dimensions of a specific place at a particular time constitute
its policy environment.
Policy and Its Social Context
• Public policies-including education policies-are not
like the goddess Arsenal! They do not suddenly
emerge from nowhere, taking everyone by surprise.
• Public policies are responses to the complex
dynamics of a specific social setting. Although shifts
in policy are not fully predictable, people who are
knowledgeable about a policy environment are
usually not taken completely by surprise.
• Their understanding of broad social trends prepares
them for certain types of change.
• Another reason for understanding the policy
environment is that such knowledge can help school
leaders avoid wasting time, energy, and resources as
educational Don Quixotes tilting at policy windmills.
• Some school leaders, unaware of a changed
environment, continue to push for policy changes
that have become unrealistic.
• For example, a curriculum supervisor who has been
working with the state department of education to
get funds for a professional development program
may think he does not have time to follow the news.
• Unaware of economic indicators that a recession is
looming, he may plough ahead with his project, not
realizing that developing alternative strategies for
this changing policy environment would be wise.
• If the legislature cuts the department’s budget,
eliminating the money he had hoped to obtain, he
may be caught by surprise, even perceiving this
legislative action as sudden.
• Caught off-guard without a contingency plan, he may
feel he has wasted many months of hard work.
Sensitivity to the changing policy environment makes
avoiding such disappointments easier.
• Finally, understanding the relationship between the
social environment and education policy helps school
leaders conceptualize the broad direction of
educational policy.
• Human beings need to make sense out of their
experience, especially in periods of rapid change.
• School leaders who have developed an intellectual
framework to use in thinking about policy issues are
equipped to interpret the flow of policy change; the
policy world no longer seems like Oz to them.
• Such understanding builds their confidence in their
own ability to act constructively as public leaders in a
changing world.
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ECONOMIC ENVIRONMENT
Importance of the Economy
• Two of the most important aspects of the
policy environment are the structure of
economic system and the current economic
climate.
• In fact, some thinkers believe that ultimately,
the economy is the only aspect of the social
environment that matters and that all other
social phenomena are determined by it.
Economic Environment
• Short-Term Economic Changes
(1) Economic Indicators
(2) Monitoring Business Cycles
• Long-Term Economic Trends
(1) Globalization
(2) Inflation
(3) Growing Gap Between Rich and Poor
Economic Indicators
• Economists use various statistics, known as indicators,
to track the general trends of the economy. In
general, an economic expansion is indicated by such
signs as strong growth in the real GNP, a decline in
the unemployment rate, and important increases in
the sales of durable goods, consumer installment
credit, new housing starts, and business investments.
• A recession is indicated by the opposite signals. The
CPI increases during both expansions and recessions;
however, it increases more slowly during recessions.
• The most important is probably the gross national
product (GNP), a measure of a country's total
economic output. When adjusted for inflation, this
indicator is called the real CNP; real GNP figures for
two or more consecutive years can be compared.
• The unemployment rate, which is the percentage of
residents older than age 16 who want to work but
lack jobs, is another important indicator.
• A third is the Consumer Price Index (CPI), a general
measure of the prices of goods and services
prepared regularly by the U.S. Bureau of Labor
Statistics. It suggests what the inflation rate is doing.
• The Misery Index is calculated by adding the
unemployment rate to the inanition race; it provides
a rough way of predicting the outcome of
presidential elections.
• Almost always, if the Misery Index has declined
within the twelve months before an election, the
candidate of the incumbent party will win; if it has
increased, the other party will win.
• Other indicators of the economy’s direction include:
(1) sales of durable goods such as furniture, cars, and
major appliances; (2) consumer installment credit; (3)
business investment in plant and equipment; and (4)
new housing starts.
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Monitoring Business Cycles
• Education leaders must be aware of where the
economy is in the business cycle; they can use
many methods to maintain such awareness.
• Most daily newspapers include a business section
that covers both national and regional economic
news.
• Major metropolitan newspapers periodically
publish a summary of indicators for their area.
• Cable and commercial television channels as well
as some radio stations broadcast shows about
business.
• Online services such as America Online also offer
up-to-date business and economic news, as do
many Internet sites. Today following economic
trends is easier than ever.
Which of these is rising?
Falling?
·Real GNP (over the last two
years)
· Unemployment
· Misery Index
· New dousing starts
· Sales of durable goods
· Business investment
From local observation,
what is happening?
· Are businesses moving in or leaving?
· Are any businesses expanding?
· Are shopping areas busy or
relatively deserted?
· Are new houses being built?
· Are sales of existing houses moving
well or slowly?
· Are restaurants and recreational
facilities doing a lot of business?
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Globalization
• A another major long-term trend of the U.S.
economy is globalization, meaning that
increasingly our economy is not independent but
rather part of a larger, worldwide economic system.
• Many causes for this trend have been identified;
however, the most important ones are probably
technological.
• Because of advances in computer science and
telecommunications, information, money, and
processed data can move thousands of miles in
seconds.
• As a result, "for the first time in human history,
anything can be made anywhere and sold
everywhere". This means that businesses-which are
more and more likely to be parts of large
multinational corporations-can move their factories
add offices to places where labor is cheap, taxes are
low, and regulation is minimal.
• This also cleans that national governments have
lost much of their power to influence their own
economies through national economic polities.
• By providing them with stiff international
competition, globalization has forced nearly
businesses to restructure, merge, or even go
bankrupt.
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Inflation
• Since the end of World II, the United States has
experienced what economists call "endemic
inflation"-persistent, ongoing price increases that
cannot be completely controlled (Heilbroner, 1985).
• In fact, since 1945, the CPI has increased in all years
but two. It was relatively low until the 1970s when it
exceeded 10% in some years; under Reagan's
supply-side economics it dropped again.
• During the 1990s, the inflation rate averaged about
3% although by the very end of the decade it was
running between 1 and 2% (Blank, 2000; Hamrin,
1988; Makin, 1996,1997).
• Although high inflation weakens an economy and
disturbs citizens, a certain amount of inflation is
helpful to debtors. They can pay off their loans in
dollars that are cheaper than the dollars they
borrowed.
• However, even a relatively low inflation rate makes
financial planning difficult,
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Growing Gap Between Rich and Poor
• One of the most troubling trends of the U.S.
economy is the increasing difference in income
between the top 20% of the population and the
bottom 80%. It began in 1968 and has accelerated
with the passage of time, caused by complex set of
factors.
• First of all, the top 20% of the population is doing
better than ever; they are well-educated, highly
skilled workers who can command good salaries in
the emerging information economy.
• On the other hand, the lower 80% is less skilled
and is therefore doing less well; in fact, the less
skilled a worker is, the more difficulty he or she has
earning a decent wage.
• Table 3.3 shows how the distribution of wealth
among the five quintiles (or fifths) of the U.S.
population and the wealthiest 5% changed
between 1950 and 1997.
• The table clearly shows that both the richest 5% and
the richest 20% of the population have become
richer while everyone else has experienced a decline
in their share of the national wealth.
• Younger workers have been especially hard hit by
this change in the distribution of wealth; in the
1990s almost one third of American men aged
twenty-five to thirty-four did not earn enough to
keep a family of four above the poverty line.
• An especially distressing aspect of this problem is its
impact on children. Between 1974 and 1994 the
child poverty rate in the United States increased by
49%.
• Although it dropped slightly during the long
expansion of the 1990s, it still hovers around 20%-by
far the highest rate among industrialized nations.
TABLE 3.3 Share of Aggregate Income Received by Each Fifth any Top 5%
of Families, 1950-1997
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Shares of aggregate income
Top 5
year
Lowest
fifth
1997
1995
1990
1985
1980
1975
1970
1965
1960
1955
4.2
4.4
4.6
4.8
5.3
5.6
5.4
5.2
4.8
4.8
9.9
10.1
10.8
11.0
11.6
11.9
12.2
12.2
12.2
12.3
15.7
15.8
16.6
16.9
17.6
17.7
17.6
17.8
17.8
17.8
23.0
23.2
23.8
24.3
24.4
24.2
23.8
23.9
24.0
23.7
47.2
46.5
44.3
43.1
41.1
40.7
40.9
40.9
41.3
41.3
20.7
20.0
17.4
16.1
14.6
14.9
15.6
15.5
15.9
16.4
1950
4.5
12.0
17.4
23.4
42.7
17.3
Second
fifth
Third
fifth
Forth
fifth
Highest
fifth
percent
DEMOGRAPHICS AND THE POLICY
ENVIRONMENT
The Importance of Demographics
• Those who wish to understand education policy must
pay as much attention to demographics as they pay
to the economy. Demography is the scientific study
of the characteristics of human populations and how
they change over time.
• The closely related term demographics to the
characteristics of a specific population, such as U.S.
residents or U.S. schoolchildren (The American
Heritage Dictionary of the English Language, 1992).
• Demographers record and analyze information about
the size of a specific population, its growth patterns,
age distribution, and vital statistics. Like the economy
the demographic context can create severe
constraints education policy.
• After World War II, for example, the U.S. birthrate
soared. Suddenly, school systems accustomed to
demographic stability because of the Great
Depression and World War II faced the challenge of
educating unusually large numbers of children.
• They had little choice: most of the available
resources had to be channeled into constructing
school buildings, hiring additional staff and equipping
new classrooms.
• A declining school enrollment presents a different set
of challenges, and an aging population creates
special pressures for schools.
• School leaders must be aware of broad demographic
trends not only in the nation, but also in their own
geographical area.
Which of these is rising? Falling? Remaining stable?
The percentage of people older than 50?
The percentage of people between ages 5 and 18?
The percentage of high-income families?
The percentage of low-income families?
The percentage of minority population?
The percentage of white population?
The percentage of people whose native language is English?
The total population?
What is happening to rural, urban, and suburban populations?
What is happening to family composition and lifestyle?
Long-term Demographic Trends
•
•
•
•
Immigration and Migration
Suburbanization
Increasing Diversity
Changing Family life
Immigration and Migration
• We live in a period of enormous population
movement. The United States and several other
nations receive hundreds of thousands of immigrants
each year, many of them from Third World countries.
• During the 1990s, the estimated number of legal and
illegal immigrants into the United States was 820,000
annually.
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Suburbanization
• Another internal population shift that has been
occurring for decades is suburbanization. The rural
population has been in decline for a long time; but,
as the twenty-first century begins, the urban
population is also dwindling.
• City dwellers are not, however, fleeing to the country
but rather settling in the suburban belts that girdle
large cities. Nevertheless, suburbs are no longer the
sheltered havens from the pressures of modern life
they once were.
• Most large cities are surrounded by at least three
rings of suburbs: (1) older suburbs that sprang up
between 1920 and 1945; (2) the suburbs of the postWorld War II era; and (3) newer suburbs, often many
miles from the inner city.
• The older suburbs have taken on many of the
characteristics of the inner city. Not surprisingly, then,
for twenty-five years child poverty has increased
most rapidly in suburban areas, growing by 76%. By
the mid-1990s, 14% of suburban children were living
below the poverty line.
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Increasing Diversity
• Because of both immigration and differential birth
rates, the U.S. population is becoming more diverse
ethnically, linguistically, and religiously.
• The fastest-growing ethnic groups are Hispanics and
Asians/Pacific Islanders. The 2000 census found that
35.2% of U.S. schoolchildren belong to a minority
group; for the first time, Hispanic children
outnumbered African American ones.
• In addition, the number of Americans who consider
themselves bi- or multiracial is growing.
• People who are Asian, Black, Caucasian, and Native
American-are becoming increasingly common.
Because immigration levels vary considerably among
states, some areas have experienced the challenges
of greater cultural diversity for years.
• For example, in 1990 40% of the children enrolled in
the public schools of New York City belonged to racial
minority groups.
• In the same year 31.4% of public school pupils in
California were Hispanic, 11% were Asian, and 8.9%
were African American.
• Until recently, in fact, five states (California, Florida,
Illinois, New York, and Texas) received most new
immigrants, so the impact of this new diversify was
geographically restricted. Today, however, this wave
of immigration is fanning out into other areas which
are less experienced in dealing with it.
• For example, in North Carolina the number of
students with limited English proficiency grow by
440% between 1990 and 1997; the corresponding
figures for Alabama and Kentucky are 429% and
208% respectively.
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Changing Family Life
• Changes in the U.S. family provided much fuel for
political fires in the 1980s and 1990s. Although the
demographic statistics do not fully support
politicians' rhetoric about family values, they are
troubling.
• Between 1980 and 1990, births to unwed mothers
increased by 76%; most of this increase was caused
by an increase in births to unmarried white women,
and many of these mothers were in their 20s and 30s
rather than in their teens.
• Although the teen pregnancy rate dropped
significantly during the 1990s, the 2000 census
reported that less than a quarter of U.S. households
consist of a married couple with school-age children,
a slight decline since 1990.
• Moreover, the percentage of households made up of
unmarried mothers with children udder 18 has
grown slightly. In 1994, 24% of children in the United
States lived in fatherless homes, four times as many
as in 1950.
• Because such children are more likely to be poor, to
drop out of school, to be placed in foster care, to
commit crimes or felonies, and to become teenaged
parents than children with a father in the home, this
trend has raised widespread concern,
• A related fact recently documented by the Urban
Institute is that approximately 4,000,000 children
between the ages of 6 and 12 are unsupervised by
adults for part of the day.
• Even those children who are growing up in twoparent households do not experience the idyllic
lifestyle frequently depicted in the television
situation comedies of the 1960s and 1970s.
• Because their parents and older siblings often hold
down one or two jobs outside the home and because
commuting time has increased, children receive less
attention at home than previously.
• Mother usually is not standing at the door when they
arrive home from school, milk and cookies in hand,
ready to assist with homework.
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IMPLICATIONS FOR EDUCATION POLICY
Implications of the Business Cycle
• Because tax revenues expand and contract
with the business cycle, that cycle has
important implications for the level of funding
that is likely to be available for public
education.
• Guthrie and Koppich (1987) analyzed the political
economy underlying each of four national education
reforms:
• (1) the passage of the National Defense Education Act
under President Eisenhower in 1958;
• (2) the passage of the Elementary and Secondary
Education Act during President Johnson's war on
Poverty in 1965;
• (3) the passage of Public Law 94-142, the Education for
All Handicapped Children Act, in 1975; and
• (4) the education excellence movement of the 1980s.
• They compared these four reform periods in
relation to nine variables of the political and
economic environment, finding that only two of
the various were consistent across all four cases.
• The first was that all four reform periods were
sparked by a catalyst such as the launching of
Sputnik or the release of a commission report.
• The second was that “an upbeat economy
undergird[ed] enactment or initiation of all four
reform efforts"(p.37) They concluded: "It may well be
that economic buoyancy is a precondition of
widespread change" (p. 38).
• The demographic trends suggest that the task of
public schools is going to become increasingly difficult.
First of all, about one out of every five schoolchildren
is growing up in poverty with all its associated
problems: poor nutrition, inadequate health care,
transience, and stress.
• Moreover, many children-and not just poor oneshave special social and educational needs, these
needs might include bilingual or English-as-a-secondlanguage programs; activities to introduce their
parents to the expectations of U.S. schools; academic
curricula that include more coverage of Asia, Africa,
and Latin America; before- and after-school
programs; tutors to help with homework;
remediation; and mentoring.
• Finally, discipline problems and violence in school
have increased and are likely to continue to do so.
The probable needs of today's and tomorrow's
schoolchildren are such that public education will
need far more money in the near future than it
receives today.
• However, the economic and demographic trends
together suggest that raising more money will not be
easy and that raising as much as was raised in the
recent past may even be impossible.
• For complex reasons including slower economic
growth, stagnating wages, the aging of the
population, the threat of unemployment, and heavy
consumer debt, Americans have become averse to
tax increases-and even to maintaining the current
level of taxation.
• So-called tax revolts were common in the late 1970s;
as a result many states passed tax and expenditure
limitation laws that are still on the books.
• Experts see no signs that these will be lifted soon; in
fact, such limitations are likely to be made more
restrictive.
• Moreover, increased concerns about terrorism and
military actions to counter it have diverted public
funds that might have gone to education under
different circumstances.
• TO THE EDITOR: The article, "Schools 1 for 3 on
levies" [Aug. 7], said that superintendent of the
Maple Hills school district was disappointed that the
“neighborhood did not support the schools.” I was
one of those “disappointments”.
• If I have my information correct, the Maple Hills
school levy would have cost my spouse and me $540
a year based on what we feel our home is worth.
• My spouse and I have no children and we both work.
This year my spouse will make what she made in
1994 and I will make about one half of that I made in
1994.
• This is all due to the "extensive job opportunities and
high-paying positions" that all the newspapers write
about. Someone with a $100,000 home and five kids
pays $180 a year for the tax levy. Someone with a
more expensive home and no kids pays $540.
• Where is the logic to this formula?
• My neighbor told me that my home value went down
when I informed him how I voted. If this type of
taxation continues, someone else will own this house.
“Do More With Less"
• Two broad reactions can be found to the
implications of long-term economic and
demographic trends. One can be described as
the "Do more with less" philosophy.
• Those who hold this position believe that
public schools already receive more money
than they need; the real problem is that
educators waste it.
• The incentive structure in education needs to be
changed, not the amount of money available. Many
of the reforms of the 1980s and 1990s can be
understood as attempts to alter the incentive
structure in order to encourage more effective
educational practices.
• For example, in the early days of the excellence in
education movement, graduations requirements
were increased and statewide testing programs were
initiated or revised.
“Do a Lot More with a Little More"
• Others are willing to provide more money for schools,
but only if it is used in certain ways.
• Proposed and actual education policies that reflect
ideas similar to Clune's include: (1) standards-based
reform; (2) authentic assessment; (3) school-linked
services; curricula that emphasize higher order
Blinking skills' and (5) professional development to
support neb curricula and pedagogies.
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HOW ABOUT LARGE NEW INVESTMENTS
IN SCHOOLS?
• Theoretically, a third possible policy response to the
current economic and demographic environment
would be to make massive new investments in
schools to help them meet the unprecedented
challenges that they face.
• No major U.S. political leaders have seriously
advocated this alternative. In fact, many policy
makers argue that, given the economic and
demographic situation, this alternative is out of the
question.
• However, cross-national comparisons suggest that
it is not.
• France, for example, has a more elderly population
than the United States, has received numerous
Third World immigrants in resent years, has a
relatively high percentage of poor people, has a
heavier tax burden than the United States, and has
experienced severe economic problems since 1973.
• Yet, in 1985 the French government adopted a policy
of massive investment in secondary education to be
phased in between 1985 and 2000.
• This policy was pursued by governments of different
political parties and enjoyed widespread public
support. As a result, between 1985 and 1989, French
senior high school enrollments increased by 7 .4%
every year.
Ten questions to help in reading
• What are the financial implications of this policy?
• Will it cost the same as, more than, or less than
alternative policies?
• Will anyone gain financially from the policy? It so,
who?
• Will anyone lose financially because of this policy? If
so, who?
• Will this policy shift costs-as measured in money,
materials, or time-from government to parents,
teachers, administrators, or others?
• Will this policy shift costs from one level of
government to another?
• Could this policy be used to cut costs in ways not
intended by its advocates?
• How will this policy affect the affluent, the middle
class, and the poor?
• Will this policy encourage more diversity, less
diversity, or leave the current degree of diversity
unchanged? (Consider racial, ethnic, religious,
linguistic, and social class Diversity as well as
handicapping conditions.)
• Will this policy support family life? If so, how? If not,
why not?
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Think And Learn
1. Questions and activities for discussion
1.1 Using a daily newspaper find several
indicators of the health of the economy.
What are the implications of your findings
for education policy?
1.2 In class, brainstorm ideas for gaining senior
citizens’ support for public schools.
• 1.3 Identify a major problem of at-risk
children in your geographic area and
suggest a policy for dealing with it.
• 1.4 Write a letter to the editor in
response to the letter in Figure 3.6
1.5 Using the questions in Figure 3.7,
determine some of the unmentioned
objectives that occasionally lie behind
the adoption of these education policies:
inclusion, site-based management, and
vouchers.
2. Pro-con debate: Should the schools
teach all children a core curriculum?
YES
• Today, more than ever, children in all U.S. public
schools must be exposed to the same core
curriculum.
• This curriculum should include the basic skills of
reading, writing, and mathematics as well as
exposure to the cultural heritage of the United States
and its European antecedents.
• Two reasons exist for adopting such a
curriculum.
• First, U.S. schools have historically been common
schools because all children could attend them and
also because they provided all children with a
common experience. In a nation as diverse as ours,
continuing this tradition is essential.
• How else can we develop in children the
understanding that we are all part of the same
culture and should be loyal to other Americans?
• Second, our society has become extremely
mobile. A core curriculum would make life
easier for children who move from school to
school and from district to district with out
falling behind.
NO
• The genius of the United States has always
been its diversity. We have citizens whose
ancestors came from many continents, and we
also have many fine local traditions of
education.
• Honoring this rich tradition by adapting the
curriculum to the needs of the specific
children who will use it is important.
• In some places this will mean including much
material about the African American experience; in
others it will mean an emphasis on our European
roots; in still others it may mean delving into the
history of the labor movement.
• Each school, each ethnic group, and each community
should have the freedom to develop a curriculum
tailor-made for the needs for its children. Let a
thousand flowers bloom!
2. NEWS STORY FOR ANALYSIS:
The pressure is on the federal government to
pay more for special education
• San Antonio, TX-As a presidential commission picks
apart the nation’s special education system Monday
in Houston, few cities could be affected more by its
findings than San Antonio.
• In the 2000-2001 school year, 15% of Bexar County
students qualified for special education services.
That compares with 12% of students statewide and
10% in other urban centers such as Houston and
Dallas.
• Special education serves children who have
disabilities and medical conditions that interfere with
their ability to learn.
• San Antonio’s figures are high, officials say, because
of thins like high mobility, a military system that
brings in families from all over the world to be near
top-notch medical facilities, and the reputations of
its school districts.
• But they also admit some students in special
education shouldn’t be there.
• The pressure is on the federal government to pick up
more of the cost of special education. In 1976, when
the first law was passed, Congress promised to pay
40% of the bill, but the federal government now pays
only 15%.
• But first, Republicans have pledged to seek reform in
the system and they have zeroed in on minority
students being put in special education when they
simply need extra help with school work.
• Some Bexar County districts are already tackling the
problem by first dealing with other issues that affect
learning, such as limited English skills, cultural
differences in learning styles, or not being read to
often as a young child.
• In the Somerset School District, for example, officials
have boosted their bilingual education program.
Somerset has seen its special ed numbers drop from
17% of enrollment in 1999-2000 to 15% last year.
• Several districts, including Somerset, look at
how they assess students so no one is
automatically shifted into special ed when
there is a problem.
• “It’s a paradigm shift from special education
being the first thing to fix a problem to the
last,” said Michelle Harmon, Judson School
District’s special education director.
• “Being disabled is very different from
being a slow learner,” Harmon said. “We
should be more aggressive, because of the
diversity of the population, about
understanding cultural difference.”
Questions:
• 1. What aspects of the economic environment
in 2002 may have led school districts to
pressure the federal government to pay more
for special education?
• 2. Why do you think that the federal
government has not kept its promise to pay
40% of the cost of special education?
• 3. Given the demographics of San Antonio,
Texas, why do you think that school officials
have placed minority children who don’t
speak English and come from other cultures in
special education?
• 4. What kinds of policies would be more
effective in dealing with these children than
special education placements?
The End