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The financial news on the education front goes from bad to worse. With the economy in the doldrums, tax revenues for education have plummeted. Indeed, education revenues are a classic countercyclical example: As needs increase, revenues decrease. As the economy slumps, income-tax, excise-tax, capital- gains-tax, and sales-tax revenues fall; and while property-tax revenues are not as quick to fall, in periods of prolonged stagnation they too will fall. By way of illustration, Superintendent Pascal D. 鈥淧at鈥� Forgione Jr. of Austin, Texas, reports that assessed valuations in his district fell by $1 billion last year, which translates into a $6 million revenue shortfall this year.

As it happens, high school (and postsecondary) enrollments are mildly countercyclical as well: As the economy lags and jobs are scarce, teenagers and young adults are more likely to go to school than when the economy is robust, placing greater demands on schools (and school budgets). In fact, the modern high school is virtually a product of the Great Depression; as the economy collapsed in the 1930s, enrollments in high school soared, reaching historic highs in the depths of the Depression.

While times are not as bad as that today, for school districts reduced to counting their pennies, the mood is bleak. And Uncle Sam, even when he鈥檚 generous, is a small-time player in the world of education finance, anteing up about 7 percent of total education expenditures (and that for categoricals, not operating or capital expenses).

Does technology have anything to offer schools in times of scarcity? The example of the private company is illuminating. In addition to belt-tightening, there is one tried-and-true strategy: using technology to increase productivity. That has been the key to success in the larger economy and offers significant promise in the education realm.

The first page from the private-sector book is to treat technology as an investment rather than an operating expense; the second page is to confront the issue of substituting capital for labor head-on. Particularly in a labor-intensive environment, that is the obvious target. Substitution of capital for labor has a single purpose, to increase productivity. (The iconoclast and wit Paul Schneider observes that in times of scarcity, schools complain that they are doing more with less, a classic example of increasing productivity.) It is important to stress that substituting capital for labor is not a strategy to fire teachers or administrators; rather, it recognizes that work can be rationalized and made more efficient, that capital wisely invested can increase output.

That is why is the question of productivity in school is important. It helps break two bad habits. First, in the long history of education reform and improvement, there has been a powerful tendency to treat any new program as an add-on rather than a replacement. Doing more with more, it might be called. Embedded as policy in Title I鈥檚 supplement not supplant provisions, the idea has a life of its own in most school districts. Particularly in times of scarcity, schools must begin to think of new programs as in lieu of old, not as additional programs.

Second, though less noticed in the public sector, a capital investment pays for itself. It is not a cost, it is an investment. This is precisely why the Committee for Economic Development titled its pathbreaking 1985 policy statement 鈥淚nvesting in Our Children: Business and the Public 69传媒.鈥�

In part, the distinction between capital investments and operating expenditures is ignored in the public sector because schools pay no taxes; as a consequence, they do not worry about depreciation of capital assets as the private sector does, nor are they as concerned about productivity enhancements. They should be. The conviction that scarcity is a permanent state drives the private sector at all times, not just hard times; only occasionally does it drive the public sector. One thing all stewards of the public fisc should always remember is that there is never enough money to do all that you would like to do: Economics鈥攖he dismal science for a reason鈥攊s the art of dealing with necessarily scarce resources. The only serious issue is whether the resources in question are scarce or scarcer.

What would it mean in education circles to treat technology as an investment rather than an operating expenditure? A culture shift, in which technology would be viewed as a way to increase output in precisely the way the mass-produced textbook, the workbook, the lead pencil, cheap paper, the classroom clock, the bell, the electric light, and central heating increased productivity in the late 19th and early 20th centuries. While each of these examples was a product of the factory model of schooling, each represented a transforming technology, one which expanded the reach and effectiveness of schooling.

The difference in today鈥檚 high-technology environment is attitude and perception; depending on point of view, a laptop computer is either an add-on (a toy) or a productivity tool. It can be used to play games (no productivity increase) or deploy a spreadsheet, word-processing, or presentation program (with a potential for productivity increases). Take research as an example: To those who want easy and fast access to information resources鈥攁 teacher, a researcher, or a reporter, for example鈥攖he Web is a pearl beyond price, offering unparalleled ease and speed, which is to say, significant increases in efficiency.

In the larger economy, technology does things that people cannot do unaided, whether it is plowing a field, lifting great weights, flying through the air, or viewing things otherwise invisible to the naked eye (from telescopes to microscopes to MRIs). In the vast majority of examples, technology actually pays for itself by increasing outputs by more than the cost of the technology in question. In fact, examples of technologies that are not cost-effective are actually few: They either occupy unique niches in spite of their great cost (such as novel weapons systems) or are aberrations such as the Concorde, the supersonic passenger plane which was a symbol of vanished grandeur.

In an education setting, substitution of capital for labor would include provision of Web-enabled content, providing anytime, anywhere access. Imagine an effective English-as-a-second-language program on the Web, or Web- enabled foreign-language study for students to use as they want and need to. Web-enabled content is already transforming higher education, ranging from Duke University鈥檚 M.B.A. online to Phoenix University鈥檚 appearance on the education stage as the nation鈥檚 fastest-growing university. And the fastest growing part of Phoenix is its online program. What鈥檚 good for adult students should have applications for young adults as well.

The power of self-guided instruction, of course, is that it represents simple substitution of student labor for teacher labor: Making students workers frees teachers to be managers of instruction. Technology should be the lever of change in the school, precisely as it has been on the farm and in the factory.

But as important as substitution of capital for labor may be, there is an even more important example: the redirection of labor into more productive pursuits. The farmer who learns about crop rotation and contour plowing increases yields as far into the future as we can see. The auto manufacturer who robotizes production lines increases quality and output at the same time. Both of these are examples of applied human intelligence at work.

There is an equally important technology fix for schools that involves the management of information, very large data sets, and the nuts and bolts of institutional decisionmaking. The process of knowing where you are, where you want to go, and how to get there is thrown into high relief by the No Child Left Behind Act and its 鈥渁dequate yearly progress鈥� requirements. 69传媒 are awash in data: The challenge they face is turning data into knowledge and knowledge into wise action.

In this connection, the first thing that technology can do in a school setting is to facilitate routine and repetitive data-entry tasks, laying the foundation for academic analysis, diagnosis, and prescription. Web-enabled academic-performance-tracking software permits teachers and administrators to identify what works and what doesn鈥檛, online in real time. It is no accident that Parkinson鈥檚 last law was delay is the deadliest form of denial. Nowhere is this truer than at school: A nationally normed test, given in the spring and returned in the fall, has almost no diagnostic utility. What does have diagnostic utility is embedded assessment, testing that provides nearly instantaneous feedback鈥攕omething every good teacher knows.

Such knowledge holds the promise of eliminating remediation because it permits schools to do it right the first time. Quality Is Free, the title of business guru Philip B. Crosby鈥檚 bible, is as true for schools as it is for companies. The first lesson that every school should learn is that remediation is a sign of failure, not success. Title I, for example, is a temple to remediation, to catch-up ball. After more than $120 billion and a third of a century, the objects of its ministrations still lag woefully behind.

No single accomplishment would be more important than eliminating the need for remediation and freeing those resources for more productive uses. Think of a nationwide program that keeps kids up to speed as an alternative, like Henry Levin鈥檚 accelerated schools vision. Real productivity increases are technology鈥檚 promise.

Denis P. Doyle is a co-founder and the chief administrative officer of , a Web-enabled school reform company. The author of numerous books, including Winning the Brain Race (with former Xerox Corp. Chief Executive Officer David Kearns) and Reinventing Education (with former IBM Chief Executive Officer Louis V. Gerstner Jr.), he also publishes a weekly e-newsletter, The Doyle Report (). He can be reached at denis@schoolnet.com.