Educational Redlining: How Zillow’s School Ratings Help Segregate Communities

Heights Community Congress has just released Educational Redlining: How Zillow and GreatSchools Profit from Suspect School Ratings and Harm Communities,  a report on the practice by Zillow, the real estate website, and GreatSchools to guide home buyers to choose communities according to color-coded school ratings posted online. Heights Community Congress (HCC), founded in 1972, is Greater Cleveland, Ohio’s oldest fair housing enforcement organization.  For over four decades HCC has been conducting audits of the real estate industry to expose and discourage racial steering and disparate treatment of African American and white home seekers.  This blog covered HCC’s preliminary work on educational redlining here.

Ralph Day, author of HCC’s report, explains that GreatSchools, launched by the venture capital group, NewSchools Venture Fund, “arbitrarily divides schools into three categories—green, yellow, and red.”  In most states GreatSchools’ ratings merely represent the aggregate standardized test scores of each school’s students.  Day continues: “The act of coloring red whole communities of schools is an alarming reminder of mortgage redlining of recent past, which was declared illegal with the passage of the Fair Housing Act in 1968.  Anecdotal evidence suggests that many home seekers automatically exclude whole communities with ‘red’ labeled schools from their search.  And Zillow in its book (Zillow Talk) exacerbates this trend by cheerfully steering home buyers into the highest rated (highest income) GreatSchools areas they can afford.”

Day summarizes GreatSchools’ methodology:  “In most states, GreatSchools rates schools on their standardized test scores alone.  Schools of the same grade levels are ordered within their state from high scores to low.  Then a school’s rank is converted to a number 1 through 10, where 10 means the school is in the top 10 percent, 1 the lowest 10 percent, 5 and 6 about in the middle, and so on.”  Day continues: “In the past, mortgage redlining was practiced to systematically withhold financing from certain communities that lenders chose for disinvestment… Educational redlining recycles this pernicious idea by taking aim at schools, and discouraging home buyers from purchasing homes in moderate income communities.  Because school test scores have repeatedly been shown to highly correlate with a community’s socio-economic status, and GreatSchools ratings draw heavily on test scores, the effect of coloring certain schools red is to disinvest in moderate income communities by discouraging home buyers… This ignores the obvious, that many dimensions contribute to school quality, and… metrics can only begin to describe it.”  And, according to Day, “GreatSchools makes money by licensing its ratings to third parties like Zillow. It also apparently makes money by linking its viewers to Zillow.”

What do the ratings miss?  “GreatSchools’ ratings are simplistic.  They are almost useless for determining a school’s overall quality or its suitability for a particular child.  They do not begin to capture a school’s activities and specializations that matter to children and parents.  Furthermore, by focusing only on the average score, GreatSchools obscures the fact that a group of students may be doing very well, another group may be greatly improving (high value added), or that students in a specialized subject area are quite strong.”

Zillow’s invitation to home seekers that they look to buy in a school district with a “green” rating and avoid schools rated “red” surely exacerbates growing residential segregation by income across America’s metropolitan areas, a trend documented by Stanford University sociologist Sean Reardon.  Reardon has shown that the proportion of families in major metropolitan areas living in either very poor or very affluent neighborhoods increased from 15 percent in 1970 to 33 percent by 2009, and the proportion of families living in middle income neighborhoods declined from 65 percent in 1970 to 42 percent in 2009.

Heights Community Congress declares: “HCC realizes that the best defense against misinformation is an educated public… HCC believes that GreatSchools, its supporting foundations, and Zillow have a civic responsibility to refrain from actions that harm communities… GreatSchools must abandon the use of red, yellow, green colors… Zillow must clearly disclose how the ratings are calculated and what they mean… Zillow must state that there is no such thing as a single measure of school quality… Zillow must stop making judgments about school systems and drawing comparisons among school districts, actions that are inappropriate for a real estate business with no experience or expertise in education.”

In a speech at the Cleveland City Club last February, Richard Rothstein of the Economic Policy Institute explained how—because test scores reflect primarily the aggregate economic level of the families in a community—rating and ranking schools drives segregation by income.  Rothstein speaks of the “A” through “F” letter grades that are frequently these days assigned to schools as they are rated and compared.  The “A” through “F” school “grades” function similarly to the red, yellow and green rankings used by GreatSchools and Zillow: “These rating systems really just describe the social class of the students in the schools. And the high ratings don’t necessarily mean they’re better schools. Many of these schools that are rated ‘A’ because they happen to have a lot of middle class children with highly educated parents may add less value to their students than schools rated ‘F,’ where parents may be working the kind of contingent schedules I described earlier. Those ‘F’ schools may actually be better schools in terms of what they add to students than the ‘A’ schools, but most people don’t understand that. And so if you label schools with ‘A’-‘F’ ratings, people who attend a ‘C’ school, which may be integrated, are going to want to move their children to an ‘A’ school.  This will increase the segregation of schools by convincing people that these ‘A’-‘F’ ratings accurately reflect the quality of the school.”

I urge you to read and consider HCC’s new report on educational redlining. Think about the report in the context of demographic trends you can observe across a metropolitan area with which you are familiar.

Income Inequality Tears the Social Fabric and Undermines School Achievement

Inequality, Unbelievably, Gets Worse,” declared Steven Rattner two weeks ago on the op ed pages of the NY Times.  He points to data released by the Federal Reserve documenting that, “Inflation-adjusted earnings of the bottom 90 percent of Americans fell between 2010 and 2013, with those near the bottom dropping the most.  Meanwhile, incomes in the top decile rose.”  Rattner attributes much of the problem to our tax laws: “And income taxes for the highest-earning Americans have fallen sharply, contributing meaningfully to the income inequality problem.  In 1995, the 400 taxpayers with the biggest incomes paid an average of 30 percent in taxes; by 2009, the tax rate of those Americans had dropped to 20 percent.

Rattner worries that dropping tax rates on the citizens with the greatest capacity to pay are tearing the fabric of our society: “Lower taxes means less for government to spend on programs to help those near the bottom… The United States, which is the only developed country without a national paid parental leave policy, also has no mandated paid holidays or annual vacation; in Europe, workers are guaranteed at least 20 days and as many as 35 days of paid leave.”  Rattner notes that even the International Monetary Fund has “suggested that a more equal distribution of income could… raise the growth rate because of the added access to education, health care and other opportunities.”

When people with the means to pay taxes are excused from that civic responsibility it does mean less spent on public education.  As the Center on Budget and Policy Priorities continues to remind us, 30 states are, in inflation-adjusted dollars, still spending less on public schools than before the 2008 recession.  There is also substantial evidence that the growing divide between families with means and those in dire need is affecting public school achievement in other ways.

For one thing residential housing patterns track the growing income divide.  Stanford University sociologist Sean Reardon, who studies housing segregation, has documented that by 2009 the proportion of families in major metropolitan areas living in either very poor or very affluent neighborhoods had increased—to 33 percent (from 15 percent in 1970) and the proportion of families living in middle income neighborhoods had declined to 42 percent in 2009 (from 65 percent in 1970), with increased segregation at both ends of the income distribution.  Both high-and low-income families became increasingly residentially isolated in the 2000s, resulting in greater polarization of neighborhoods by income.  The strongest trend is the increasing residential isolation of the rich.

Reardon has also demonstrated  that along with growing residential inequality is a rapidly growing income-inequality school achievement gap between the children in richest ten percent and the children in the poorest ten percent, a gap that is 30-40 percent wider among children born in 2001 than those born in 1975.  Today the income inequality achievement gap is twice as large as the black-white achievement gap.  Greg Duncan and Richard Murnane, who have studied the educational consequences of income inequality add that, “Among children growing up in relatively affluent families, the four-year college graduation rate of those who were teenagers in the mid-1990s was 18 percentage points higher than the rate for those who were teenagers in the late 1970s.  In contrast, among children from low-income families, the graduation rate was only 4 percentage points higher for the later cohort than for the earlier one.”  Duncan and Murnane conclude: “By widening the gap in educational opportunities between children from low-and higher-income families, increasing income inequality jeopardizes the upward socioeconomic mobility that has long held our pluralistic democracy together.  Improving educational outcomes for children growing up in low-income families is therefore critical to the national’s future and requires a combination of policies that support low-income families and measures to improve the quality of schools that low-income children attend.”

In a Thanksgiving message on his blog at Chicago Theological Seminary the Rev. John Thomas, retired general minister and president of the United Church of Christ, lists some of the economic policies that have contributed to growing inequality and that could be adjusted to help those struggling at the bottom of our economy:  “The list of sins is long: Trade policy that moved jobs out of the U.S., refusal to raise the minimum wage to a living wage, deregulation of financial institutions that led, in significant measure, to the Great Recession, stripping rights from public employee unions and scaling back benefits of retirees to pay for the misdeeds of politicians who grossly underfunded pensions, the refusal of policy makers to provide adequate job stimulus or address the housing foreclosure crisis while bailing out large financial institutions, the explosive growth of the influence of money in politics…, the radical inequality of public school funding, tax codes that benefit investors over wage earners, corporations over individuals, the refusal of many states to expand Medicaid, and the continuing assault on the Affordable Care Act…  The descent of the working class into near or complete poverty is no accident.  It is willful policy and willful indifference—private and governmental—and as its corrosive effects creep across our economy the health of our democratic society is increasingly challenged.”