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Calculating the Savings From Ending Last-in, First-Out

Critics of "last-in, first-out" policies, which compel districts to lay off the least experienced educators first, say those arrangements undermine the talent pool by forcing school systems to make decisions about their workforce that have nothing to do with teaching ability.

But in a newly published essay, a pair of scholars make the case that there's another consequence for "LIFO": When times are tough—as they are now—it forces districts to lay off more teachers than they otherwise might.

State and district leaders will probably read the paper with interest, as they scramble for ways to cut costs without undermining classroom instruction. This year, a number of states, including Florida, Idaho, Illinois, and Ohio, took steps to in some way reduce the role of seniority protections in layoff decisions.

In an essay in the journal Education Next, authors Dan Goldhaber and Roddy Theobald examined layoff notices given to teachers in Washington state during two years: 2008-09, when 1,717 educators received notices, and 2009-10, when when 407 did, with 130 teachers receiving a layoff notice both years.*

Teachers who received layoff notices were much less likely to hold advanced degrees, and on average, they made about $15,000 less than those told they would keep their jobs.

Had all the Washington state teachers targeted for layoff lost their jobs, it would have saved about $5.5 million, Goldhaber and Theobald concluded.

But if teachers had been laid off at random, rather than based on seniority, districts around the state could given notices to nearly 400 fewer teachers—1,349 of them—and saved the same amount of money. (That assumes the unlucky ones made the average salary in their districts.)

While this is a simplified calculation across all districts, the authors also present a more conservative and realistic estimate meant to show the impact of protecting teachers based on seniority, rather than effectiveness, in individual school systems, Theobald explained in an e-mail.

"[D]istricts would only have to lay off 132 teachers under an effectiveness-based system in order to achieve the same budgetary savings they would achieve with 145 layoff notices under today's seniority-driven system, a difference of about 10 percent," the authors wrote.

A full version of the paper is under review at an economic journal, Theobald said. He and Goldhaber released very similar findings earlier this year, in a working paper. See my colleague Steve Sawchuk's item on that research, which concluded a very different group of teachers would have been targeted for layoffs, had they been judged on effectiveness, rather than seniority.

* An important note: As is often the case, many of the teachers who were set to be laid off were hired back, their jobs saved largely because of federal economic-stimlus money. Of the 1,717 who received a "reduction in force" notice in 2008-09, 1,457 returned to the same district the following year, the authors found.

Despite the rehiring of those teachers, Goldhaber and Theobald say that the data about who districts initially targeted for layoffs are relevant, because of what it reveals about their seniority policies. I'd also note that with future rounds of layoffs, districts are less likely to have emergency federal aid to bail them out.

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