Milton Friedman’s case for ESAs from 1995

June 24, 2014

(Guest Post by Matthew Ladner)

Stephanie Linn from the Friedman Foundation with a great piece on ESAs noting that the great Milton Friedman foresaw the ESA design with a proposal for “partial vouchers”

“Vouchers are not an end in themselves,” Friedman wrote. “The purpose of vouchers is to enable parents to have free choice, and the purpose of having free choice is to provide competition and allow the educational industry to get out of the 17th century and get into the 21st century.” 
 
“Why not add partial vouchers?” Friedman asked. “Why not let (parents) spend part of a voucher for math in one place and English or science somewhere else.”
A longer quote from the original Milton Friedman column is well worth consideration:
No one can predict in advance the direction that a truly free market educational system would take. We know from the experience of every other industry how imaginative competitive free enterprise can be, what new products and services can be introduced, how driven it is to satisfy the customers — that is what we need in education. We know how the telephone industry has been revolutionized by opening it to competition; how fax has begun to undermine the postal monopoly in first-class mail; how UPS, Federal Express and many other private enterprises have transformed package and message delivery and, on the strictly private level, how competition from Japan has transformed the domestic automobile industry.

The private schools that 10 percent of children now attend consist of a few elite schools serving at high cost a tiny fraction of the population, and many mostly parochial nonprofit schools able to compete with government schools by charging low fees made possible by the dedicated services of many of the teachers and subsidies from the sponsoring institutions. These private schools do provide a superior education for a small fraction of the children, but they are not in a position to make innovative changes. For that, we need a much larger and more vigorous private enterprise system.

The problem is how to get from here to there. Vouchers are not an end in themselves; they are a means to make a transition from a government to a market system. The deterioration of our school system and the stratification arising out of the new industrial revolution have made privatization of education far more urgent and important than it was 40 years ago.

In other words, it is time for the parental choice movement to include but also look beyond the stock of private schools we have today. Friedman had this figured out long ago, it is time for the rest of us to catch up (as usual).

 


Governor Scott signs Personal Learning Scholarship Accounts law

June 23, 2014

(Guest Post by Matthew Ladner)

Governor Rick Scott has signed the nation’s second account based choice program. Go Team ESA!


Delaware Lawmakers to Debate Broad ESA measure

June 10, 2014

(Guest Post by Matthew Ladner)

Delaware lawmakers are set to debate a broad ESA measure with a sliding scale by income.  The proposal has activated the anti-bodies of the public school establishment, and the sponsors acknowledge in the article that they do not expect the measure to pass this year. NAEP indicates that Delaware has done a good job in improving the public school system in recent years, and it seems likely that parental choice is playing an unsung role in Delaware’s improving scores.

Delaware has the second highest private school attendance rate in the nation (behind only Hawaii) at 20% of students. Note that this percentage dwarfs that in states like Arizona and Florida, whose private choice programs are essentially trying to play catch-up to the old-fashioned checkbook choice widely exercised in states like Delaware. Delaware charter schools have been heading towards a 10% of the market as well, and many Delaware charter schools have waiting lists.

The question for Delaware lawmakers to consider therefore is not whether they should have parental choice.  They already have parental choice.  The question to face: who should be exercise parental choice?  Currently Delaware’s answer to that question is: the wealthy, with others getting a less-diverse form of choice in the form of charter schools or their wait lists.

People prize stability in life, and it is clear that many in Delaware feel acute discomfort from the mere advent of charter schools. Education spending ought however to be the entitlement of the child, not of any system of education. Moreover, the Census Bureau forecasts a 90% increase in Delaware’s elderly population between 2010 and 2030, foretelling a deep battle between health care and education spending in the state. It would be wise for the state to experiment in making parents the voluntary offer of less spending in return for greater control and flexibility. Simply maintaining the status-quo does not represent a viable option even in the medium term. Our experience from other private choice programs demonstrate that there will not be a mass exodus from the public school system.

The Delaware proposal is admirable in giving the most to the children starting with the least. I look forward to the conversation.


How I Learned to Stop Worrying and Love the Demographic Time Bomb

May 22, 2014

Ladner Orlando

(Guest Post by Matthew Ladner)

Yesterday I had the opportunity to present at the American Federation for Children conference in Orlando along with Pat “PDiddy” Wolf, Lance Izumi, refereed by our main man Ed Kirby.  Lance busted out depressing “Not as Good as You Think” evidence on suburban public schools  in California and Illinois.  PDiddy used Bud and Sissy from one of the greatest really bad movies of all time to tell us that school choice research is looking for love in all the wrong places, and even included the great Scott Glenn:

 

Make fun of my transparent muscle shirt and I will put you in the hospital…

I batted clean up with a talk on age demographics. Someone told me that you can save a power point as jpg files, so I gave it a try. Here is the first slide:

Slide1Here is the most relevant middle slide, showing that a number of states are set to get hit with a double challenge of large increases of young and old people by the year 2030 according to Census Bureau estimates, causing all kinds of health care, pension and education challenges:

Slide6

So some of you are wondering what your state looks like. Let me just tell you- it is bad. Stay tuned for a Friedman Foundation with the gory details by state. Oh by the way, the people who will be in their prime earning years in 2030 are in the public school system right now, and only a minority of them are being educated to a high level. Ergo the conclusion:

In short, everything we’ve done up to this point needs to have been baby steps towards what comes next.  What comes next needs to be a far deeper and more powerful policy interventions than incremental policies like our current charter and voucher programs. In an earlier panel, Derrell Bradford related that we used to buy our music at Tower Records, used to buy whole albums in order to get a single song, but that Napster and then iTunes had changed all of that for the better. Gisele Huff then made the point that too much of what we are doing in the school choice movement is dedicated to setting up new record stores.

Or perhaps in getting public funds to add a new wing on to the existing Tower Records.

I don’t want to pick on my friends in Indiana too much, as this idea of using public funds to add existing space onto participating private choice programs would doubtlessly have a higher ROI than much public K-12 spending in Indiana and would provide a better opportunity for thousands of disadvantaged children.  Having said that, it strikes me as a troubling idea. In my opinion the focus should clearly be on how to get many of the 2/3 of Indiana private schools who do not participate in the voucher program to change their minds (**cough**less regulation **cough**).

Next, let’s get the scholarship amount up to something decent, let the colleges and universities into the K-12 space, have blended learning make the jump into private schooling, see if you can get a private tutoring sector to flourish (it worked out really well for Alexander the Great and many of the founder fathers btw) etc.  In other words, let’s give parents control of the money and an incentive to consider opportunity costs and see what they come up with.  This could resolve a number of vexing questions.  For instance, how should technology be used to improve learning? I’m not sure, and if you are sure then you may need to work on humility. Perhaps we should let the parents figure that out through a system of voluntary exchange, let them change, customize and improve it over time.  How much should a digital course cost? I have no idea but we have these demand and supply curves that have a really strong track record in figuring questions like that out.

Right now we have an incrementally expanding charter school sector and few private choice programs capable of spurring new private school creation. Even if we improve our choice programs to spur new private school creation, it will essentially resemble a second charter school program incrementally adding new space year by year. This is both highly desirable and nowhere close to where we urgently need to go.

We need to be in this for the kids and the parents, not for a tiny preexisting stock of private schools. Don’t get me wrong private schools- I do deeply love you- but choice funding is the entitlement of the child not of any system of schools.  Private schools need to be a bigger part of the solution, but we should never mistake them for the entire solution.

“We’ve squeezed everything we can out of a system that was designed a century ago,” Marc Tucker, vice chairman of the New Commission on the Skills of the American Workforce told the Christian Science Monitor in 2006. “We’ve not only put in lots more money and not gotten significantly better results, we’ve also tried every program we can think of and not gotten significantly better results at scale. This is the sign of a system that has reached its limits.”  Personally I can think of some ways to squeeze more out of the current system, but their political sustainability will always have limits and Tucker is basically right in his assessment. “I think we’ve tried to do what we can to improve American schools within the current context,” Jack Jennings told the CSM. “Now we need to think much more daringly.”

Time to change the “current context”

Here is my version of daring- let’s give parents complete control over our K-12 funding within a system of financial oversight and academic transparency and incentives to economize and sit back and marvel as they figure out solutions of how to make the best use of limited resources.  We are going to have far fewer resources to provide in the future due to the looming battle between health care and education spending. We must go faster towards increased return on investment and customization. The Economist magazine said it better than I can after it reviewed the evidence on choice and concluded:

In rich countries, this generation of adults is not doing well by its children. They will have to pay off huge public-sector debts. They will be expected to foot colossal bills for their parents’ pension and health costs. They will compete for jobs with people from emerging countries, many of whom have better education systems despite their lower incomes. The least this generation can do for its children is to try its best to improve its state schools. Giving them more independence can do that at no extra cost. Let there be more of it.

Lots and lots more as fast as possible.

 

 


Florida Creates the Nation’s Second Account Based K-12 Choice Program

May 2, 2014

(Guest Post by Matthew Ladner)

The Florida legislature has passed the nation’s second account based choice program- known as the Florida Personal Learning Scholarship Accounts.  Florida students with disabilities, including those in public, private and home schools can apply to the program, which has multiple allowable uses including private school tuition, therapies, digital learning, curriculum and prepaid college savings. The program will be administered through the preexisting scholarship groups but will be state funded, receiving a $18.4 million appropriation.

BOOOOOOOOOOOOOOOOOOOOOOM!!!!!!!!!!!!!!!

Arizona originated scholarship tax credits and Floridians have documented evidence of the effectiveness of the concept for both participant and competitive effects.   Account based choice programs also originated in Arizona, and the race is now on to see which state can best prove out the concept.  Congratulations to choice advocates in the Sunshine State- and welcome to the party!

Who’s next?

 

 

 


Render Unto Caesar what is Caesar’s

May 1, 2014

St. John's

(Guest Post by Matthew Ladner)

This week I had the opportunity to visit St. John the Evangelist school in Tucson. St. John is one of three Catholic schools on the south side of Tucson that entered into a partnership with the Alliance for Catholic Education at the University of Notre Dame.

It was a deeply gratifying visit.

Greatschools rates the academic performance of nearby public schools as 2 out of 10 stars. St. John’s student body draws from an area of Tucson that is overwhelmingly Hispanic and low-income.  In the capital city of Phoenix, one frequently talk about how the RAND corporation found that if you “control for demographics” that Arizona NAEP scores are middling rather than rock bottom. This of course is a coded way of at least implying that we should not expect students like those filling the halls of St. John’s to learn.

Fortunately the St. John’s children are having none of such nonsense. I walked in to a kindergarten classroom, where I was greeted by a young man with a hand-shake.  He announced to me:

My name is Caesar and I am going to college in 2026!  Today we are studying letters and words.

I’m sure you can guess my reaction, something along the lines of:

!!!!!!!!!!!BOOOOOOOOOOOOOM!!!!!!!!!!!

The staff provided some details on the progress of the school during the partnership period. Through the hard work of the students and the faculty, both scores and enrollment have strongly improved.  The University has leveraged their network to create tax credit resources for the schools.  It is difficult work, but they are on their way.

Christian Dallavis, the Director of Notre Dame Ace Academies, provided the following slide as a part of a presentation at the American Enterprise Institute earlier this year.  The slide is a representation of the decision tree used by Ace Academy folks to discover which of the Arizona choice programs for which students may qualify.

ND Ace Funding

 

If that looks more than a little convoluted, it is only because it is in fact convoluted. During the last session, choice advocates suffered an unfortunate setback in the Arizona House. Choice champion Debbie Lesko attempted to pass a provision to allow children living in high poverty zip codes to participate in the ESA program. Given that the entire state testing system is currently in complete chaos without anyone knowing even what test will be given to students next year, the D/F rated school provision seems more than a little unstable.

Now the alphabet soup groups are seizing upon a drafting error from last session in an effort to turn the minimum funding for general education students from $4,800 to $3,200. Mind you that the districts get around $9,000 per child. The Superintendent of Public Instruction has publicly stated that the legislative intent of the law is clear, but the alphabets blocked clarifying language from passing in the legislature and have threatened to file suit against the department if the Superintendent follows the clear intent of the law.

I know some of these opponents well enough to say with some certainty that they could not possibly see what I had seen, look students like Caesar in the eye, and tell him “Sorry Caesar the dysfunctional system down the street needs you as a funding unit.  I hope that whole 2026 thing works out for you somehow but the needs of the system come first.”  The basic humanity of choice opponents would prevent them from doing such a thing, but the actions of their organizations seek just such an outcome.

Caesar deserves a decent shot to succeed in life.  Arizona policymakers should do everything they can to give it to him. Moreover, we should give thanks that institutions like St. John’s are willing to work so hard to help him achieve his potential.

UPDATE Superintendent of Public Instruction John Huppenthal released a statement today saying that after careful study of the statute and consultation with legal counsel that he has instructed Arizona Department of Education staff to fund the ESA accounts in accordance with the legislative intent of the 2013 statute. Legal action designed to strip additional funding from students like those described above will commence in 5, 4, 3, 2…

 


Governor Brewer signs two small ESA expansions

April 23, 2014

 

(Guest Post by Matthew Ladner)

The 2014 Arizona session is winding up, and Arizona Governor Jan Brewer signed two bills to improve the ESA program today.  Collectively these bills will keep the dependents of military children if their parents are killed in the line of duty, will make it easier for pre-school aged special needs children to enter the program without enrolling in a public school, and will make the siblings of eligible children eligible to participate in order to make it more possible for families to send their children to the same or at least nearby schools. The 2014 session marks the last rodeo for Governor Brewer, who is term limited.

Governor Brewer signed the ESA and a number of improvements into law, several tax credit program improvements into law, called for the creation of A-F school grades and fought hard for an earned promotion policy on literacy. She also vetoed a few choice measures here and there including a small tax credit measure today. She hammered through a temporary three-year sales tax ballot measure to increase to stabilize K-12 funding, but then stayed true to her word and stayed out of it while the alphabet soup groups made a complete hash of trying to create a permanent tax increase. Governor Brewer began Arizona’s first steps towards funding results rather than just seat time.  Let’s hope that further steps will materialize.

It’s been an incredibly difficult and tumultuous five years- the Chinese curse “may you live in interesting times” springs readily to mind. Several of the K-12 initiatives Governor Brewer supported remain a work in progress, making it feel strange to think that someone else will be exercising the duty of governor next year.  There has been a great deal of political blood spilled over some very difficult issues, but in my book, Governor Jan Brewer got far more right than wrong in K-12 reform.


The Empire Strikes Back in 2014

April 18, 2014

(Guest Post by Matthew Ladner)

Score another 2014 win for the bad guys, who defeated an attempt to expand the Arizona ESA program to high-poverty areas of the state yesterday.

The debate on the floor revealed that we choice advocates have a lot of work to do. A pernicious and false idea that came up is one that we are guilty of helping to spread- that we “already have school choice in Arizona.”  Arizona scores relatively well on choice when compared to most other states. We have inter-and intradistrict choice, one of the strongest charter school laws, tuition tax credits and the ESA program.  Arizona is parental choice nirvana, right?

Wrong.

A few years ago I tried to help a woman who lived in south Phoenix find a different school for her children, two of whom had been sent to the hospital as the result of brutal attacks by fellow students.  I put her in touch with a person who has helped parents in her situation for many years.  It was an eye-opening experience.

Let’s start with open enrollment.  This mother found the doors shut in her face.  Let’s just say that it seemed that the fancier districts were not overly interested in kids from south Phoenix and leave it at that.

What about charter schools?  Even South Phoenix charter schools with lousy academics, but where you might hope your daughter might avoid getting a pencil stabbed through the back of her neck, had long waiting lists.  The Great Hearts charter schools alone had a wait list of 10,000 kids last year.

Well you can always apply for a tax credit scholarship.  Except…scholarship groups have thousands more applicants than they can possibly help.

For this mother, it almost may as well been 1993- the year before Arizona passed its charter school law.

The ESA expansion that failed yesterday would have made students living in areas like south Phoenix and south Tucson eligible to participate in the ESA program. The expansion would not have cured the world’s pain nor dried every crying eye, but it could have provided a lifeline to thousands of families like the one described above.

It would be easy to be angry at the people who voted against this expansion, but the truth is that people like me need to look in the mirror and ask how we can do a better job of explaining why this is so important.

 


WSJ on ESA and Jordan Visser

April 17, 2014

(Guest Post by Matthew Ladner)

The Wall Street Journal has a news story on the Arizona Empowerment Accounts program today. Notice especially the intellectual incoherence of the Scottsdale official trying to explain how it hurts the finances of the district to lose special needs students:

School districts say that even though state funding doesn’t cover the costs of special-needs students, they don’t necessarily save that money if a student leaves the district. The Scottsdale district says it pays about $10 million to $12 million more than it gets from the state and federal government to educate its special-needs students.

“If every student with special needs left, then maybe we would save that $12 million, but at the same time, it’s pretty implausible,” said Daniel O’Brien, chief financial officer of the Scottsdale district. He added that the schools would still have students with all kinds of other needs who may not qualify for ESAs, and they would still need to educate those students.

Did you follow that?  Scottsdale says that they use $10m to $12m in general education funds above and beyond what it receives in state and federal funding for special needs children.  I certainly agree that it is utterly implausible that all special needs students will choose to leave the Scottsdale district, but that whole line of thought misses the most important point: if a child leaves with their “inadequate funding” then you have no cause to cry about it.  You still have the $10m to $12m in the bank- now you just have more options with what to do with some of it- you might want to spend more on your remaining special needs kids, you may want to do a slightly smaller transfer from general ed to special ed, but either way the district wins.

Notice also that 90% of what the Scottsdale Unified would have received for Jordan Visser seems to be serving his needs quite well.

For the past three years, Ms. Visser has educated her son, Jordan, who has cerebral palsy, at their Scottsdale, Ariz., home. He has a packed schedule of one-on-one instructional sessions with a specialist, physical-education classes, music lessons, horse-riding therapy and other programs—all of which she pays for through a state-funded program informally known as the “education debit card.”

BOOOOOOOOOOOOOOOOOOOOOOOOM!!!!!!!!!!!!!!!!!!


There are in Fact “Dinosaurs” on this “Dinosaur Tour”

April 15, 2014

 

(Guest Post by Matthew Ladner)

A local Arizona political news service, the Yellow Sheet Report  just happened to stumble across an obscure spreadsheet and discovered that parents have not spent all the money in the ESA program.  Tim Ogle, executive director of the Arizona School Boards Association, told the Yellow Sheet “Now we have these individuals whose education is not being accounted for by the state, and also you’ve got over $2 million of public money unaccounted for, so both educational lack of oversight and financial lack of oversight [exist], and that’s why the empowerment account idea is so flawed philosophically.”  

The Yellow Sheet did note that parents have a number of options in how to spend ESA funds, including rolling funds over from year to year.  The blurb even noted that in the end if you graduate from high-school and fail to spend the funds in a timely fashion on higher education expenses, that the funds revert back to the state. Why they persisted to write about this story at this point might have something to do with an admiration for Mr. Ogle, or his point of view, or might have something to do with the fact that there are only a few days left in the session with some ESA bills still under consideration. Or some combination thereof.  I’m just not sure. In any case, these funds are hardly “unaccounted for” in any sense. They simply have not been spent yet.

Rather than some sort of deep, dark secret uncovered by a sleuthing alphabet souper, Lindsey Burke openly discussed the use of funds in a Friedman Foundation study in August of 2013.  Alphanauts don’t read FF stuff as much as they should, so I’ll try to help out.  The study linked to above has a section called Do Parents Consider Opportunity Costs with ESA Funds? on Page 13. Burke wrote:

Enabling families to save unspent Empowerment Scholarship Account funds provides a powerful financial accountability feature. Whereas traditional school vouchers must be spent in their entirety, ESAs foster demand-side pressure for education providers to offer more cost-efficient educational services by creating an incentive for parents to shop for education services based in part on cost. During the first quarter of Fiscal Year 2013 (the 2012-13 school year), 244 students were awarded ESAs. Of those, 115 students were active ESA participants from the 2011-12 school year, and 187 were active during the first quarter of Fiscal Year 2013, bringing total student ESA enrollment to 302 during the first quarter of the 2012-13 school year. Arizona awarded $1,302,863 to ESA recipients during the first quarter of 2013, of which parents spent $964,991 and saved $337,871. The ADE notes that $1,239,057 will be distributed to participating families during the second quarter of 2013, and estimates total ESA spending to be just short of $5.2 million for the year.

During Fiscal Year 2012, $671,012 in ESA funds remained unspent; during the first quarter of Fiscal Year 2013, approximately $337,871 in ESA funds was unspent. This suggests families are saving and rolling over a significant portion of the ESA funds, in anticipation of either near-term or long-term future education-related expenses.

The law allows parents to save funds in two different ways- first by making a contribution to a Coverdell Savings Account, which can be invested and earn interest under federal guidelines. Second, parents can roll unused funds over, and use them for the child’s K-12 or higher education expenses.  All the allowable uses of ESA funds relate to either K-12 or higher education, all funds are accessed through a use-restricted debit card, and all receipts have been monitored and approved by the Arizona Department of Education officials.  If a parent makes an inappropriate purchase with funds, they can be required to refund the money, find themselves kicked out of the program, or referred to the authorities for criminal prosecution. As mentioned earlier, unused funds eventually revert back to the state.  The program had technical challenges to allowing parents to invest funds in a college savings account program in the first year, but those were eventually overcome, and the amount rolled over from year to year declined.

So if parents “saving” in their “Education Savings Account” is some sort of faux pas, then the fund balances run by Arizona school districts represent an epic level crime against humanity.  The AZ Superintendent of Public Instruction puts out a handy financial report every year, and if you are really nerdy and find the second volume online you’ll find hundreds of millions of dollars of unspent funds in school district accounts.  It appears for instance that the Tucson Unified District received $522 m in the year covered, only spent $507m, and had $80m or so sitting in the bank.

!!!Quelle Horreur!!!

Tucson received $522m in revenue and only spent $126m on teacher salaries.  Plus the reading scores down there deserve to be put on trial in the Hague. Now that I think about it, the state’s preschool program famously had piled up $400 million in the bank before they started furiously buying billboards to tell everyone how great they were when state lawmakers proposed using the money to keep the state’s lights turned on during the housing meltdown. Hmmm, but wait must stay focused could….write….about…this…for…hours!

Policymakers designed the ESA program to allow parents to save money for future education expenses, whether K-12 or higher education related. It’s silly to cry foul when they do so.

 

 

 


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