Originally Posted by aeh
spending is not necessarily reflective of effectiveness or meaningful resourcing. But I think that's one of the takeaways from the original article.

Exactly. Talent (i.e. compensation) is, unsurprisingly, the lion's share of expenditures for most human capital based organizations. In our public system in Canada, the salary component of K-12 expenditures reaches up to the high 80%s, mostly thanks to the paltry materials offering for students, generous union pay increases, and increasingly dilapidated infrastructure.

From my own research among Canadian private schools, this figure can creep below 50%, reflecting some combination of, among other factors:

- endowments for financial aid,
- property and equipment,
- lower teacher compensation,
- contracted extra-curricular activities,
- lobbying / consulting fees,
- travel

With the price points mentioned in the article, I would expect the compensation share of tuition to be around 50-60%.

As with any purchase, it's best to be informed about what you're paying vs what you're receiving. And aeh, you make an excellent point about public schools not being free - there's an implicit housing price and tax cost associated with living in the catchment of competitive schools.

This study from the St. Louis Fed finds there is about an 11% price premium at purchase, all else equal, for mean houses located in the zones of schools one standard deviation above average in terms of school "quality" (based on MAP scores). The study doesn't extrapolate premia beyond 1SD, but even with a conservative estimate of a linear relationship, it wouldn't be out of the realm of reasonable for a family to pay upwards of $200K for school quality premia on a $1MM home in urban areas served by magnet schools, and a 10%+ lift in annual property taxes as a result. And, if families move once to recalibrate for preferred middle/high school, you could see transactions costs plus premia exceed $250K easily.

Put in that context, for a single child household, the private schools mentioned in the article are 2.5-3 times the annual cost of a public school with scores ~2SD above the mean - just shy of $17K/year amortized over 12 years with one move for a $1MM home vs a median US private tuition + ancillary expense of about $16K/year.

So, at the risk of gross over-simplification from these *very* rough estimates: factoring in the opportunity cost of capital, families with one child would be financially better off sending their child to private school than splurging on a house in a competitive school district, all else equal, in many parts of the US. This relationship would be even more unfavourable for public school attendance the more expensive the home, and the smaller the % down payment.

Sources: https://files.stlouisfed.org/files/htdocs/publications/review/10/05/Chiodo.pdf

https://educationdata.org/average-cost-of-private-school

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