Does regulation protect kids and improves outcomes from choice?

October 5, 2015

In my last piece in this series against the high-regulation approach to school choice, I observed that accountability to the government does not automatically follow from receiving government funds.  In fact, most government programs, including Food Stamps, Social Security, Pell Grants, and the Day Care Tuition Tax Credit, have no requirements for performance accountability to the state.

Even if government accountability is not the norm for government programs, some people may still favor requiring choice schools to take the state test and comply with other components of the high-regulation approach to school choice, such as mandating that schools accept voucher amounts as payment in full, prohibiting schools from applying their own admissions requirements, and focusing programs on low-income students in low-performing schools.  Some people, including many of the most powerful backers of school choice, seem to believe that these regulations help protect kids and improve outcomes.

Let’s leave aside for now discussion of whether this set of heavy regulation negatively affects the quality of participating schools.  And let’s also leave aside whether these regulations are even effective in promoting equity of access to participating schools for disadvantaged students.  The real problem is that heavy regulation dramatically reduces the number of participating schools.  Arizona’s choice programs have light regulation and near-universal participation among private schools.  Florida’s tax credit program has more regulation, although it does not require taking the state test.  It has almost two-thirds of private schools willing to take students.  But in Indiana’s heavy-regulation program the private school participation rate drops to around 50%.  At least in Indiana, many private schools were accustomed to administering the state test as a requirement for participating in inter-scholastic athletics.  In Louisiana, where the heavy regulation and state-testing requirement were new, only about 1/3 of private schools are willing to participate in the voucher program.  Survey research by Brian Kisida, Pat Wolf, and Evan Rhinesmith confirms that heavy regulation is driving private schools away from these programs.

The only equity of access that is promoted by the heavy-regulation approach is that everyone is equally unable to access schools that refuse to participate in the programs.  In their desire to protect disadvantaged students, the backers of this heavy-regulation approach have ironically done serious harm to these students by driving away most of the supply.  And the minority of private schools that are willing to participate are likely to include many of the lower quality schools.  Who is most likely to be willing to abandon control over their admissions, accept tiny voucher amounts as payment in full for serving the lowest achieving students, and is willing to take the state achievement tests?  Financially desperate private schools with a lot of empty seats are likely to be first in line to accept these terms.  High-quality private schools may at most make a token number of seats available.  Rather than protecting access and ensuring quality, heavy regulation is having the opposite effect.  Heavy regulations are eliminating the bulk of options and especially driving away the highest-quality private schools.

It should come as no surprise to anyone if we see some very disappointing academic outcomes in Louisiana’s voucher program.  A heavy regulation program that some major backers of school choice believe represents the “ideal” approach is actually designed to give us the worst outcomes.  If we do see bad results, the first impulse of the backers of heavy regulation will be to double-down on regulation.  They’ll wonder who the bad schools are and call for regulators to remove them from the program.

If education reform could be accomplished simply by identifying and closing bad schools while expanding good ones, everything could be fixed already without any need for school choice.  We would just issue regulations to forbid bad schools and to mandate good ones.  See?  Problem solved.  But real education reform requires using the power of choice and competition to provide incentives to create more good and to reduce bad.  The whole problem with the high-regulation approach is that it falsely believes regulators can define, identify, and require good outcomes.  If that were in fact possible, we would have already solved the problem and we could have done so without any school choice.  The enduring troubles of the traditional public system tell me that is not possible.

Some of the truths we cling to depend greatly upon our point of view…

October 3, 2015

(Guest Post by Matthew Ladner)

…especially if they have to do with per student funding in Arizona public schools, as I had the chance to explain in today’s Arizona Republic.


Scenes from the Great Education Stagnation

October 2, 2015

(Guest Post by Matthew Ladner)

If a picture is worth a thousand words, here are 3,000 for you. First American manufacturing does more with fewer people (HT: AEI’s Mark J. Perry):

Okay good- ready for the next one? Heritage chart showing that the American education massively increases employment relative to the student count:


But it’s all fine because the kids are learning so much surrounded by so many adults compared to the past right? Er, no:



Protecting School Choice from the State

October 2, 2015

[Guest Post by Jason Bedrick]

As economists have understood for more than half a century, government agencies charged with regulating industries are often subject to regulatory capture. Rather than protect consumers from bad actors in the industries they were created to oversee, regulators too often develop cozy relationships with industry leaders and work at their behest to advance their interests. In Free to Choose, Milton and Rose Friedman detailed a particularly egregious example: the Interstate Commerce Commission (ICC).

Established in 1887, the ICC’s mission was to regulate the powerful railroad industry, which critics accused of engaging in cartel-like price fixing and market sharing. Instead, the railroad industry took almost immediate control of the ICC. The ICC’s first commissioner, Thomas Cooley, was a lawyer who had long represented the railroads and, as the Friedmans explained, many of the agency’s the bureaucrats “were drawn from the railroad industry, their day-to-day business tended to be with railroad people, and their chief hope of a lucrative future was with railroads.”

Rather than protect the consumers from the railroads, the ICC primarily protected the railroads. The ICC raised prices on consumers, shielded the railroads from state and local regulations, and even protected the railroads from outside competition. In the 1920s, the nascent trucking industry was emerging as the railroads’ most serious competitors. Like Uber against the taxi cartel, the lower-cost trucking industry benefited from the artificially high prices of the railroad cartel. And also like the taxi cartel, rather than seek deregulation, the railroad cartel turned to their friends in government to put the brakes on their “unregulated” competition. The bureaucrats all-too-happily complied. In 1933, the Motor Carrier Act gave the ICC authority over the trucking industry, which it used to limit the number of trucks that could operate on the roads and otherwise constrain the trucking industry. Fortunately, the railroad industry was significantly deregulated in the early 1980s and the ICC was abolished in 1995.

If regulatory capture is a common problem among the regulators of private industries, it can be even more acute when one government agency is overseeing other agencies. Bureaucrats at the various state departments of education tend to identify with the district schools they oversee and seek to protect them from outside competition. Lawmakers who support greater educational choice should keep this in mind when crafting choice policies. It is unwise to give an agency the power to regulate the primary competition to its core constituency.

Examples of state education agencies trying to undermine school choice initiatives abound. In Wisconsin, home to the nation’s first school voucher program, the Department of Public Instruction is currently subjecting private schools accepting vouchers to intrusive audits:

“I’ve been a CPA for 25 years and I’ve never seen anything like DPI’s approach to the audits of choice schools,” Noel Williams told Wisconsin Watchdog.

Williams, managing partner of Williams CPA in Milwaukee, has worked as an auditor for MPCP schools for 10 years. […]

“Although the law does allow DPI to follow-up with the auditor to clarify things that weren’t clear, in my opinion, DPI has grossly abused that power. Every one of the audit firms I’m acquainted with has gotten countless phone calls and emails on every audit report, requesting copies of data, clarification as to how they arrived at a conclusion.”

“It seems DPI’s intent has been to make it difficult and unpleasant to work with choice schools,” Williams said.

Indeed, the Wisconsin Institute for Law & Liberty and EAG News issued a report in 2013 detailing the Wisconsin DPI’s history of abuses against choice schools, including the use of audits to “harass and intimidate” them, withholding funding intended for private schools, forcing applicants to jump through hoops and provide lots of information and documentation not required by law, and more.

This summer, the Mississippi Department of Education initially limited the application period for the state’s new education savings account program to just 10 days in a move choice supporters called “unworkable” and “inconsistent with the law” which not only imposed no such application window, but actually stated that applications must be accepted on a rolling basis. The department eventually relented due to public outcry, but it’s unlikely to be the last of the DOE’s shenanigans.

Meanwhile, the New Hampshire Department of Education is trying to eliminate the town tuitioning program created by the village of Croydon (population 764). The village is too small to maintain its own school system so after 4th grade, it contracts with neighboring towns to provide schooling. In 2007, as its contract neared expiration, the village school board decided to pay for students to attend the district or private school of their family’s choice, similar to arrangements in nearby Vermont and Maine. However, the state DOE demanded that they cease and desist last fall. The town’s attorney, former NH supreme court justice Charles Douglas, argues that the state’s attempt to terminate the program is on shaky legal grounds. After nearly a year of negotiations, the state issued an ultimatum: terminate the program or the state will withhold its funding. The village is now trying to crowdfund a legal defense fund.

There are exceptions to the rule. The Florida Department of Education has a strong track record of supporting the state’s school choice programs. However, that could change as the political pendulum swings, as Indiana has demonstrated. And even where the top official at a state education agency support educational choice, there is no guarantee that the bureaucrats who preceded him or her will share that view or competently manage choice programs. Under John Huppenthal, Arizona’s DOE was ostensibly pro-school choice yet the agency repeatedly botched implementation of the state’s education savings account program.

Where some regulation or state program implementation is necessary, wise lawmakers have invested that authority in the state department of revenue, where the green-eyeshade bureaucrats are less likely to have an axe to grind against school choice than the state education establishment. Several states have already taken this approach, particularly for scholarship tax credit laws. Likewise, Nevada’s new education savings account is administered by the State Treasurer.

In “Fiddler on the Roof,” someone asks the town’s rabbi if there is a proper blessing for the tsar. “Of course!” replies the rabbi, “May G-d bless and keep the tsar… far away from us!” Educational choice policies should be similarly blessed.

[Originally posted at Cato-at-Liberty.]

Do state funds require accountability to the state for performance?

October 2, 2015

Yesterday I promised to rebut the case for high-regulation of school choice programs over a series of posts.  In this first post of that series I address the argument that state funding of programs requires accountability to the state for performance.  It’s the taxpayers’ money, the argument goes, so the public deserves to know if students are doing well.  That’s the price — if you take the government’s money, you are accountable to the government.

Unfortunately, the people who make this argument are just repeating a political slogan.  If they bothered to think about it, even for a few minutes, they would quickly realize that the vast majority of government programs do not require accountability to the government for performance.  When the government provides food stamps it does not require recipients to submit BMI measurements or other indicators of adequate nutrition.  Yes, food stamps have some restriction on the items that may be purchased, but the program does not require accountability for performance.  Social Security was developed to ensure that senior citizens would be able to buy necessities, like housing and food.  But we do not demand an accounting from seniors of the use of those funds.  If they want to blow it at the casino and not pay their rent or buy groceries, they are free to do so.

Even in the area of education, government funds do not typically require accountability for performance.  We do not require recipients of Pell Grants to take a state test.  Beneficiaries of the Day Care Tuition Tax Credit similarly do not have to demonstrate progress toward school readiness in exchange for the government subsidy.  Repeating that government funds require accountability to the government is just mindless sloganeering, not an accurate description of how government programs typically operate.

Why do most government programs not require accountability for performance?  The simple answer is that in most cases we trust that the private interests of program participants are aligned with the public interest in providing them with the benefit.  We trust that food stamp recipients want to avoid being malnourished, which is why we provide them with this assistance.  We trust that seniors don’t want to be homeless or go hungry, so are unlikely to blow their money at the casino if a rent payment is due.  We trust that college students want an education.  And we trust that families with children in pre-school want them to be prepared for later schooling.

We don’t demand performance accountability in any of these programs because we believe that people are likely to use funds in ways that are consistent with the public purpose in providing them with assistance.  Of course, that is not always true.  Some people would rather trade food stamps for drugs and go hungry.  Some people will spend their Social Security checks foolishly and fail to pay the rent.  Some college students would rather embark on an alcohol-fueled journey of self-discovery than receive an education.  And some families just want their pre-schoolers to be warehoused conveniently somewhere while they go to work rather than improve their children’s school-readiness.

While we are fully aware that some people will abuse these programs and fail to use the funds efficiently in a way that is aligned with the public interest, we recognize that demanding performance measures would undermine the public purpose of these programs even more.  Requiring performance measures distorts and narrows the behavior of program participants.  It is also costly, burdensome, and highly intrusive.

The same is true for school choice programs.  As long as we believe that most program participants have interests that are aligned with those of the taxpayer, let’s design school choice programs like we design most government programs — without performance accountability requirements.



The High-Regulation Approach to School Choice

October 1, 2015

Many of the most powerful backers of school choice are embracing a high-regulation approach.  Their interests have shifted from promoting choice as the goal to using choice as a mechanism for obtaining more quality schools.  They don’t trust that choice produces quality.  They want a fairly heavy dose of regulation to prevent bad schools from being included among the options available to families.  They want to control key aspects of school operations to prevent schools from becoming bad.  And they want a powerful regulator — a portfolio manager or harbor master — who will identify and remove bad schools from choice programs.

I think this approach is deeply flawed.  I understand that political reality requires some amount of reasonable regulation.  But the view that regulation, not choice itself, is the main driver of quality improvement is completely wrong.  My fear is that just when school choice is achieving escape velocity as a self-sustaining and expanding policy, the love for high-regulation may do serious harm to these programs and the children they intend to help.

Over a series of blog posts I intend to describe the arguments folks have for high-regulation and why I think those arguments are mistaken.  First let me describe the high-regulation approach to school choice.  Their ideal model has the following central features:

  1. Choice programs should not allow private schools to use their regular admissions standards and procedures.  Instead, they should be requires to accept all applicants or use a lottery if over-subscribed.
  2. Participating schools should be required to accept the voucher amount as payment in full even though that amount is almost always less than their regular tuition, less than their cost to educate each student, and far less than what is provided to students in traditional public schools.
  3. Choice programs should focus on low-income students in low-performing public schools.
  4. Participating private schools should be required to administer and report results from the state achievement tests.

This model is not a program that powerful backers of school choice would be willing to accept.  It is their ideal.  It is the starting point for their political negotiations, not what they would be willing to accept after compromises to win political support.

Why do they favor all of these regulations?  I think they have four main arguments:

  1. State funds require accountability to the state for performance.
  2. Regulation protects kids and improves outcomes from choice.
  3. Regulation improves the political prospects for choice.
  4. Achievement tests are a reasonable proxy for school quality that a regulator could use to decide which schools should be included or excluded from the set of options available to parents.

I think all four of these arguments are mistaken.  In subsequent posts I’ll consider and rebut each of them.

Choose Families, Choose Choice

September 30, 2015


(Guest post by Greg Forster)

The new OCPA Perspective carries my argument that the government monopoly on schools undermines the institution of the family, and school choice would strengthen the family:

Are schools an extension of the family, helping parents raise their children the way the parents want them raised? Or are schools an autonomous branch of the technocratic state, answering not to parents but to professional experts who know how children ought to be raised better than parents do?

The creation of the government school monopoly was one part of a general inversion of the social order going on in the 19th century:

In the 18th and 19th centuries, the family had been understood as the primary unit of society; larger political and economic structures existed to mediate relations between households, not between individuals as such. Relations between individuals within a household—such as the work of childrearing—were the family’s business, except in extreme cases. All that was now gone. The family was no longer primary; the technocratic state was primary.

The failure of the school monopoly has reoped the question of whom schools work for:

School choice and federal centralization of power are both responses to this failure. Some are seeking to reverse course, hoping that the moribund school system can be revitalized by putting parents back in charge. Others are seeking a stronger technocracy that will be more capable of achieving its goals.

I close with the reflection that social conservatives could bring something important to the school choice coalition not currently provided by the two factions that now dominate it, progressives and libertarians. As always, your comments are most welcome!


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