Response to:
"School choice is too timid and inflexible to give educators real
freedom or
give parents real choice. Worse than that, the extension of government
funding to private schools would eventually compromise their independence,
expanding rather than limiting the state's existing education monopoly."
SCHOOL
CHOICE: AGENT OF CHANGE
By John
Merrifield[1]
October,
2000
'School
choice' is an agent of change, but not necessarily enough, or the right kind.
The changes that result from the expansion of parental choice depend on the ability and incentive to
relentlessly pursue improvement and diversify the schooling options through
specialization. The accessibility of
those options is also a key issue.
There are huge differences between the proposals that bear the 'school
choice' label. There are four general
possibilities. 1.) Public school
choice means access to public schools other than the assigned neighborhood
school; perhaps a charter school. 2.) Private
school choice means continued government funding of public schools, plus
government assistance for some private school users; usually much less per
student than the funding of public schools, and usually limited to poor
families or victims of the worst public schools. 3.) Milton Friedman proposed complete voucherization of public
K-12 funding. Since the voucher payment
mechanism is okay, but not necessary - choice-based direct payment or tax
credits are okay too - I'll call that 100% child-based funding. 4.) Market education means no government-run
schools. Public funding might support
schooling of poor children.
PUBLIC SCHOOL CHOICE
Since
the current practice of assigning children to schools through attendance zones
precludes specialization, open enrollment among government-run schools would
slightly increase educators' ability to respond to the existing weak incentives
to specialize. School principals'
inability to adjust prices, reap profits, reproduce successful practices in
other locations, or use controversial materials or methods will greatly limit
specialization and innovation. Parents'
choices won't change much.[2] Open enrollment will not create any
additional incentive to pursue improvement.
However,
even modest specialization by public schools will place the private sector in even
greater financial jeopardy. Charter and
magnet schools recruit many children that would otherwise attend private
schools. The increased financial strain
sometimes forces independent schools to come under the government regulatory
umbrella as charter schools.[3] Even in the states with 'strong' charter
laws, charter schools are still subject to significant regulation.[4] The resulting decline in the size of the
private sector may offset the modest improvements in the public schools.
PRIVATE SCHOOL CHOICE
Private
school choice typically allows a small number of poor families, or children
enrolled in the worst schools, to use public funds to pay private school
tuition. Permanent programs involving a
very large share of the K-12 population that permit parents to supplement a
voucher with their own money ('add-on') could prompt significant improvement
and diversification of parents' choices.
Unfortunately, the existing publicly funded programs (Milwaukee,
Cleveland, Florida, Vermont, and Maine) lack at least two of those three
characteristics. Even though those
programs are too limited to significantly change the school system, they are
widely touted as important experiments.
But studying the effect of moving children among existing schools is
nearly pointless in a nation that desperately needs system transformation. Calling restriction-laden programs
'experiments' threatens to make parental choice politically irrelevant.
Increased
access to existing private schools for a few families entails some risks. States derive their authority to regulate
private schools from compulsory attendance laws, but new restrictions could
accompany the rise in public funding.
There appears to be little risk that burdensome rules will follow government
funds allocated by parents,[5]
but restriction-laden programs maximize that risk, and minimize the potential
gain. A little-changed public system
remains as a huge constituency for increased regulation. And for that risk, we'd only help a small
share of public school users. Because
private school choice supports choosers at a much lower level than public
school users, it does little to help private schools expand or improve, or even
eliminate the severe financial duress typical of so many private schools.[6]
Programs like Houston's 'Private School Plan' are a worst
case scenario. Houston students can use
public funds to pay tuition only if they are failing in a low-performing
school, or to reduce overcrowding. To
receive public funds, private schools must accept the district payment of $3575
as full payment, "meet state accreditation standards, abide by state laws governing public schools [emphasis added], and
accept all students, regardless of conduct and academic performance;"[7]
basically become a public school.
Financial duress will force many private schools to trade their
independence for survival. Parental
choice as a modest add-on to the current system can eliminate choices in the
private sector without changing the choices in the public schools.
The Houston Plan also contains another common, but not
widely recognized threat to private school diversity and quality. The Milwaukee, Houston, and Florida programs
require private schools to accept the public funds as full payment. The ban on private money 'add-ons' acts like
a price control. The devastating
effects of price controls are well documented.
The stories are standard fare in basic economics textbooks. Consider the Houston number of $3575 per
child. The Faustian bargain with the
Houston District limits existing and potential school operators to services
that they can produce for less than $3575 per child. Without the ban on add-ons, the private sector would offer
parents a much larger and more diverse menu of schooling options. Because many widely available services
originate as pricey luxuries purchased by the wealthy, price controls stifle
innovation.[8]
100% CHILD-BASED FUNDING
The allocation of all public K-12
funding through parental choices would dramatically increase the incentive and
ability to specialize and pursue improvement.
The comparison of risks and potential gains would differ significantly
from private school choice. When every
school gets its public funds through parental choice, the regulatory risk is
lower because public school officials will no longer try to attach debilitating
conditions to the money. And vouchers
and tax credits reduce the probability of federal interventions. "By diminishing the role of central
state authorities, it [choice through vouchers or tax credits] would lessen federal
capacity to intrude via such state agencies."[9]
The small remaining risk to the 10% of K-12 children
currently in private schools pales in comparison with the certain consequences
of failing to transform the current system.
The potential benefits - to the 90% in public schools or home schooled and to current private school users -
are huge. The people that oppose every
parental choice plan that involves tax dollars "display a fundamental lack
of proportion in assessing degrees of risk and immediate vs. remote
dangers."[10] Independence is not in much jeopardy, and
many private schools are much more concerned about their survival[11]
than minor threats to their independence.
Independence is useless without adequate funding. Child-based funding would significantly
increase the per pupil funds of the vast majority of private schools.
100%
child-based funding increases the importance of add-ons. If parents cannot supplement public funds
with their own money, there is a virtual price ceiling at the per pupil public
funding level. A voucher worth, say
$4000, would reduce the private sector to two categories of schools: $4000
tuition private schools, and elite prep schools. Schooling costing slightly more than $4000 would vanish.
MARKET EDUCATION
Complete
privatization maximizes the ability and incentive to specialize and
improve. The K-12 menu would be
extremely diverse, but access to the menu would be a contentious issue. Without subsidies, poor families have little
or no access to schooling. Philanthropists
will certainly provide some subsidies as they have done in the past,[12]
and tax credits can enlarge that source.
If voters are not willing to leave the education of the poor to charity,
the use of direct public subsidies would raise the risk of increased regulation
of private schools back to the low level associated with 100% child-based
funding. Also, recall that compulsory attendance laws can produce regulation
without public subsidies for the poor.
However, the new regulations that could arise through compulsory
attendance laws would surely pale in comparison to the public school
regulations that complete privatization would eliminate.
CONCLUSION
Public
school choice and private school choice cannot effect much beneficial systemic
change, but either could undermine the current fragile private sector, and the
political feasibility of a 100% child-based funding system and a market
education system. The choice between
100% child-based funding and a market education system is largely a matter of
faith and political judgement. With
either 100% child-based funding, or a market education system with public
subsidies for the poor, will the government continue to attach only minimal
conditions to subsidies like vouchers allocated by consumers?[13] Would a market education system without
public subsidies for the poor spawn adequate philanthropic funding to educate
poor children? It has in the past,[14]
so perhaps the most critical question is whether the electorate will vote for
something that outright eliminates the public school system and leaves poor
children in the hands of charity. I
doubt it. Since 100% child-based
funding does neither, I believe it’s the best choice.
100%
child-based funding could evolve into a market education system. With current K-12 public funding levels
(about $7000 per child) plus private add-ons, 100% child-based funding would
produce an entrepreneurial explosion.
Significant excess capacity is a likely early effect. The presence of significant excess capacity
will make it difficult for anyone to push for increased funding. Given the intense competition for public
funds, I predict little change in public K-12 spending, which would mean a
decline in the real (inflation-corrected) value of taxpayer support per child.[15] Parents would assume a growing share of
educational expenses; at some point, perhaps 100%. If education charities once again arise to help the poor, a
market education system will have been achieved. I believe that if there is a politically feasible road to a market
education system, that 100% child-based funding is part of that road.
[1] University of Texas at San Antonio Division of Economics and Finance and author of The School Choice Wars
(Lanham, MD: Scarecrow Education Press, 2001).
[2]
Examine the effects of public school choice in Minnesota (David Durenberger [US Senator, D-MN], “Education
Choices
and the Generational Compact: The Minnesota Experience.” Vital Speeches of the Day [February 1,
1990]: 226-232), Cambridge, Massachusetts (E.R. Fiske, Smart Schools, Smart Kids: Why Do Some Schools Work?
[New
York, NY: Simon and Schuster, 1991]), and New Zealand (Edward B. Fiske and
Helen F. Ladd, When
Schools Compete: A Cautionary Tale [Washington, DC: Brookings Institution Press, 2000]).
[3] See the November, 1998 School Reform News (p 12).
[4] Sarah Tantillo, founder of the Charter School Resource Center, said "I have yet to meet a regulation that charters
are free from (Leslie G. Pfaff, "The Right to Choose," New Jersey Monthly (September 15, 2000). Harvard's
Caroline Hoxby concluded that charters are like new school districts (“What Do America’s Traditional Forms of
School Choice Teach Us About School Choice Reforms,” FRBNY Economic Policy Review 4 [March, 1998]: 47-
59). Indeed, in New Jersey "the state has
defined each charter school as a kind of district unto itself (New Jersey
Monthly, 9/15/00)."
[5] Joseph L.
Bast and David Harmer, “Vouchers and
Educational Freedom: A Debate.” Policy
Analysis
Monograph #269, The Cato Institute (1997): p 6 and their endnote 15, and David Kirkpatrick, School Choice:
The Idea that Will Not Die (Mesa, AZ Bluebird Publishing, 1997): 97. The key point is that new regulation is
minimized by allocating public K-12 funds only to parents. As Bast and Harmer point out, regulation is minimal
where government money goes to consumers, but significant when it goes directly to producers. For that reason,
universal, refundable tax credits are somewhat superior to vouchers.
[6] Quentin Quade, "Must Tax Dollars Kill School Independence?" Blum Center Website (www.marquette.edu/ blum/taxkill.html), and Quentin Quade, Financing Education (New Brunswick: Transaction Publishers, 1996): 2.
[7] School Reform News, "Houston School District OKs Private School Plan," (June, 1998): 11.
[8] For a discussion of that issue, see Andrew Coulson, Market Education (New Brunswick, NJ: Transaction
Publishers, 1999): p. 343.
[9] Quentin Quade, "Must Tax Dollars Kill School Independence?" Blum Center Website
(www.marquette.edu/blum/taxkill.html, accessed 8/8/00).
[10] Quentin Quade, "Must Tax Dollars Kill School Independence?" Blum Center Website
(www.marquette.edu/blum/taxkill.html, accessed 8/8/00).
[11] Quentin Quade, Strap on the Armor and Go: Never Give In!" School Reform News (June, 1998): 20, 16.
[12] Andrew Coulson, Market Education (New Brunswick, NJ: Transaction Publishers, 1999).
[13] Joseph L.
Bast and David Harmer, “Vouchers and
Educational Freedom: A Debate.” Policy
Analysis
Monograph #269, The Cato Institute (1997): p 6 and their endnote 15, and David Kirkpatrick, School Choice:
The Idea that Will Not Die (Mesa, AZ Bluebird Publishing, 1997): 97, and Quentin Quade, "Must Tax Dollars Kill
School Independence?" Blum Center Website (www.marquette.edu/blum/taxkill.html).
[14] Andrew Coulson, Market Education (New Brunswick, NJ: Transaction Publishers, 1999).
[15] John
Merrifield. "The School Choice Choices," The Independent Review 5, #2 (Fall, 2000): 189-
207.