Tag: school choice

Tax Credit Policy Design for School Choice: A Response to John Kirtley

There are few people with whom I am so much in agreement on the goals of education policy as John Kirtley. To the extent that we differ, it’s chiefly about the best ways of achieving those shared goals. With that in mind, here are my thoughts on his recent post on Education RedefinEd.

Regulation of Private Schools under Education Tax Credit Programs

I’ve no reason to think that the customary financial reporting requirements imposed on scholarship-granting organizations (SGOs) are problematic, but the same cannot be said about regulations imposed on the private schools themselves. In response to an earlier post by Adam Schaeffer, John writes that “Adam is absolutely correct that you can only drive so much excellence through top-down accountability.” But Adam actually goes further, arguing that there is no evidence you can drive any excellence through “top-down accountability” (read: “government regulations”) on private schools. The purpose of noting the corruption in state schools (e.g., in Florida and Atlanta) is to show that even the vast array of government regulations imposed on public schools fails to curtail such defects. And, as I found in reviewing the worldwide literature comparing different types of government, pseudo-market, and market education systems, it is the least regulated, most market-like systems that consistently do the best job of serving families across all measured outcomes.

If there were compelling evidence that government regulations on schools could reduce corruption or boost academic achievement, there might be a case for such regulations being added to tax credit programs. But no such evidence exists to the best of my knowledge. In addition to failing to achieve its intended goals, regulation inhibits the educational freedom and diversity that are responsible for the market’s efficiency and responsiveness to families—undermining the whole purpose of a choice program.

The one and only empirically defensible argument in favor of regulations of schools under tax credit programs is political: in some states, it may not be possible to enact tax credit programs without such regulations. In that case, a judgment call has to be made on whether the regulations are so bad as to compromise the program and make it unworthy of passage, because it would fail to produce positive results and give the movement a black eye that would mistakenly be carried over to better, freer programs.

But that argument does not apply to states that have already enacted relatively free school choice programs, by definition: the bills have already passed, so the regs weren’t politically necessary.

Multi-SGO vs. Single SGO Tax Credit Program

 John also argues that a proliferation of SGOs increases the risk of a financial or other SGO scandal in any given year. It’s a plausible argument. If the probability of a scandal breaking out at any one SGO is fixed, and that probability is equal to x, then the probability of a scandal breaking out at any one of a group of SGOs would be = 1 – (1 – x)^N, where N is the number of SGOs. As N goes up, so does the likelihood of at least one scandal occurring.

On the other hand, it seems likely that the probability of a scandal breaking out at an SGO is not fixed, but rather is proportional to the number of people the SGO employs. Hiring more people raises the chance that you eventually hire someone crooked. Tempting as it is to develop a full-blown mathematical model for scandal risk based on the number and size of the SGOs, it seems sufficient to say that the two factors probably cancel each other out to a considerable extent. In other words, it is not obvious that scandal risk would be appreciably different in single SGO vs. multi-SGO environments.

But the absolutely crucial factor that the above discussion omits is that the impact of a scandal also varies with respect to the number of SGOs. If you have 200 SGOs, each of limited size, and one of them has a scandal, it’s no big deal. Donors will just stop giving to that SGO and it will go out of business unless it manages the Herculean task of convincing the public it has mended its ways. Parents that had gotten scholarships from it will then seek scholarships from one of the SGOs that is now receiving the donations that the corrupt one used to get. In fact, this is just what would have happened in the case of the errant donation that John mentions, whether or not any new regulations were imposed.

Indeed, we see this with charities in general. Charitable giving is hugely popular in the United States, but every year some charities are found to be fraudulent or mismanaged. This has had little or no effect on the popularity of charitable giving over time. The system has proven extremely resilient as former donors to the fallen charities have simply shifted their giving to better-run institutions. There has been no move to winnow down America’s charitable landscape either overtly or indirectly (such as by drastically limiting the share of donations that can be used for operational overhead, and thereby driving most institutions out of business).

John likens the probability of a scandal at an SGO in a multi-SGO tax credit program to “giving the enemy a hand grenade.” Extending that simile, the single SGO model is like giving opponents a nuclear time bomb. What happens if there is only one SGO that accepts all the donations in a state and it succumbs to a scandal? Donors have nowhere else to turn. Many will likely stop donating and poor families who were depending on those scholarships will suffer. That, in turn, will not sit well with legislators or the public, who would likely act to re-open the flow of funds to those families.

But how would they go about trying to do that on short notice? One way would be for the state to take over the corrupt SGO and promise to set it aright. As we’ve seen, state control of education does not prevent scandals, so that won’t work—but it would destroy the independence of the program. Another alternative would be for the state to create its own SGO alongside the corrupt one, with much the same effect. Yet another option would be for the state to impose a passel of new regulations on the corrupt SGO, promising that these would solve the problem—which, as we’ve seen, they’d be highly unlikely to do. And finally, the state could simply shut the program down entirely, forcing all those families back into the state school monopoly, which they had deliberately chosen to flee. Every one of those outcomes is far worse than the outcome in a state with many SGOs. Indeed, even without a scandal, a single-SGO system represents a vastly easier and more tempting target for a state takeover than a distributed, multi-SGO system.

I am both very happy and very relieved to grant that John’s organization, Step Up for Students, is impeccably run and is not likely to suffer a scandal in the foreseeable future. But, as Adam asks, what happens if/when John and the organization’s current top executives are gone? And similarly, what happens in states that don’t have a John Kirtley to create and brilliantly staff and oversee their one and only SGO? I’ve been around long enough to know that John Kirtleys do not grow on trees. The school choice movement is astonishingly lucky to have him as one of its leading lights. And because of the rarity of his invaluable qualities, it is unwise to design a policy that relies on similarly exceptional individuals to lead every SGO in every state in perpetuity.

Some SGOs will inevitably be overseen by less experienced, capable and honorable people (just as some public school districts are today) and so our education policies must systematically minimize the damage that mismanagement and corruption can do. Giving donors real choice among a panoply of different SGOs is the only mechanism yet suggested to accomplish this task, and one that has proven its value for generations in the broader charitable sector.

Preserving Parental Choice

There is another important reason to prefer the multi-SGO model, a goal that John and I deeply share: preserving real parental choice. A central conclusion of my journey through education history from classical Greece to modern America, England, Canada and Japan was that parents generally make better choices for their own children than even “expert” third parties make on their behalf. That is true whether the third parties are government bureaucracies or private institutions. And in my reading of that history I failed to find a single education system in which third parties who were paying for children’s education indefinitely restrained themselves from shaping what or how those children were taught. Ultimately, the money came with strings attached. (The G.I. Bill, sometimes presented as a counterfactual to this observation, is actually not relevant, since the pattern I’m describing is for elementary and secondary education. It is when children are young and their minds most malleable that the temptation is greatest to shape them in whatever image the third party wishes.)

We’d be wise to expect that pattern to continue. But if all third party payment ultimately comes with strings, how do you preserve the maximum level of parental choice? You prevent any single individual or organization from gaining a monopoly in third party education subsidies. By ensuring that a multiplicity of funding sources exists, you make it possible for parents to seek assistance from whichever organization most closely comports with their needs and preferences.

The freedom of donors to give to different SGOs that match their different educational ideals thus offers unique protection to families against being forced to accept strings they object to.

The alternative John suggests, legislatively forbidding SGOs from attaching any conditions to their scholarships, is unlikely to achieve its intended aim in the long run. Certainly there is no precedent for it, and it is easy to think of cases that would undermine it. What happens when schools begin to open that refuse to serve gay students? Or that exclusively serve them? What about Wiccan schools? What about “Marx’s Manifesto Middle School”? What about “Hayek High”? For each one of these schools, there is a distinct and sizable constituency that would deeply object to funding it. So what happens if all SGOs have to fund all of them? Do angry, coerced donor/taxpayers roll over and go gently into that good night of compulsion? No. They demand that their representatives impose restrictions on the eligibility criteria for private schools. But since we live in a pluralistic society, that ultimately will result in a gradual accretion of homogenizing restrictions on the kinds of education schools can offer, winnowing down the range of choices available to families—precisely the opposite of the intended goal.

Nor is this merely a hypothetical. I suspected this phenomenon would exist based on my research for Market Education: The Unknown History, but recently tested it statistically by comparing the level of regulation imposed on private schools under voucher versus education tax credit programs. Under vouchers, every taxpayer is compelled to pay for every government-approved private school. Under tax credit programs (with the partial exception of Florida’s) donors have very broad latitude in choosing the kind of SGO they will support, and SGOs have similar latitude. So, based on my theory, we would expect vouchers programs to result in more heavily regulated private schools than tax credit programs because of the compulsion that vouchers perpetuate but tax credits avoid. After crunching the numbers using two different statistical methods and allowing for thousands of different randomized ways of measuring regulatory burden, I found that vouchers do impose a large and statistically significant extra burden of regulation on private schools that tax credits do not. This evidence is not dispositive, but it is consistent with the analysis outlined above, and it’s the only evidence we have. I suggest that we ignore it not so much at our own peril as at the peril of the children we seek to serve.

One Model to Rule Them All?

In any discussion of the “best” policy, I think it’s wise to consider the possibility that any one of us (or even all of us) could be wrong. Education policy is hard. We can of course do our best to collect the widest possible body of relevant evidence, and to test our recommendations empirically whenever possible. We can and should have more discussions like this one, which are hugely valuable. But after all that, we could still be missing something.

Given that reality, there is one other step we can consider to maximize our chances of getting education policy right: we can let different models coexist side by side for a few decades and watch how well they perform, rather than trying to homogenize them up front. If one program doesn’t work quite as well as another, we will see that and be able to learn from it. But if we insist on conformity in the short term, we may never learn those important lessons. And if we settle on a fundamentally flawed model, the results could fall very far short of our hopes and expectations.

Of course, in any state that is just adopting a school choice program for the first time, there has to be a decision as to which program is best. But in states where programs have already been implemented, it seems far wiser to allow them to mature independently rather than to try to “fix” them or even supplant them with new and different programs simply because we believe that they may suffer shortcomings in the future.

Almost anything is better than the status quo monopoly, and yet we’ve had this awful monopoly for a century and a half. It’s hard to correct mistakes once a policy monoculture has established itself and crowded out the alternatives.

NYT Channels Monty Python’s Black Knight

America’s growing school choice movement is a bridge to educational freedom—an escape from our failing state school monopolies. And with all the tenacity (and veracity) of Monty Python’s Black Knight, the New York Times stands athwart that bridge, declaring: “None shall pass.”

The Times’ latest attempt to parry the thrust for educational freedom is this story attacking education tax credit school choice programs: “Public Money Finds Back Door to Private Schools.” No doubt this story has legs…but not for long.

Let’s begin with the title, which claims that private donations to private scholarship organizations are “public money” because they qualify for a tax credit. It’s a simple claim that is simply not true. As has been recently reported:

the genius of [tax credit programs] was that the money would never go into public accounts, making it less susceptible to court challenges…. As predicted, tax credits have thus far withstood legal challenges, most recently when the Supreme Court upheld Arizona’s program last year.

Perhaps the editors of the NYT were simply unaware of the report above—and unaware of the Supreme Court decision it cites (ACSTO v. Winn) explicitly stating that tax credited donations are not public money. But here’s the thing, the quote above is actually from the same story on which the Times slapped the “Public Money…” headline. So either the NYT’s editors don’t read their own stories, or they’re knowingly presenting a false statement to their readers in big, bold type. I can understand someone not wanting to read the NYT every day, but surely they’ve managed to find editors willing to do so?

Next, let’s talk about the story’s lede….

This is where a paper puts the bit that they expect to rouse the most reader interest or indignation. What we have is an anecdote about a single Georgia scholarship granting organization (SGO) that just might be allocating donations in a way that donors would not approve of. But here’s the thing: there are a lot of different SGOs. If you decide that you don’t like the way one SGO is using your donations… you can stop donating to it. You can then look at other SGOs to find one you think is well run. You can even stop donating to SGOs entirely if you don’t find a single one that meets your standards. The system is quite responsive to the donor/taxpayer’s concerns.

Now let’s compare that to the status quo in America, under which every taxpayer must pay for the state school monopoly in their area regardless of its performance, efficiency, or institutional ethics. How’s that workin’ out? Since we’re talking about Georgia, surely it’s relevant to bring up the epic cheating scandal that exploded in the Atlanta Public School District less than a year ago. The Georgia Bureau of Investigation found that 178 teachers and administrators had systematically defrauded children of an education by falsifying the students’ state test sheets to make it look as though they were really learning. Can taxpayers cut off their funding to the district? No. Can they expect swift and complete justice? Nope. Even though 82 of the perps had already confessed last July, only one had been fired as of 8 weeks ago.

So which system is better equipped to deal with inevitable human frailties; the one that lets donors pull funding as soon as they have the first hint of concern, or the one that they have to keep funding no matter how suffused with corruption it becomes? Hmm?

Next, the Times demonstrates remarkable cruelty to animals by trotting out the rhetorical jade that we live in a “time of deep cutbacks in public schools.” Perhaps they felt safe making this claim knowing that the federal government’s education statistics are usually 3 or more years out of date, and hence don’t cover the most recent years of our economic downturn. If so, they must have thought no one would give credence to the up-to-date numbers published by a well-known private organization: nominal public school spending increased every single year between 2001-02 and 2011-12—both in the aggregate and per-pupil. Even after the Great Recession, even after adjusting for inflation, we’re still spending 10.6% more per pupil than we were when we had just crested the tech boom back in 2001-02. What right-wing group came up with these astonishing numbers? Was it the left’s current bête-noire, ALEC? Actually, it was the N. E. A.

Finally, some paragraphs into the piece, the Times comes up with a concern that almost has merit: some private schools that serve scholarship-receiving students have a pedagogical emphasis that some taxpayers might disagree with. The examples offered are sports and religion, but many others could no doubt be suggested. And a strong case could be made that taxpayers in a free society should not be compelled to pay for the teaching of ideas they find objectionable. In fact, such a case was already made over two hundred years ago by Thomas Jefferson, who wrote that “to compel a man to furnish contributions of money for the propagation of opinions which he disbelieves… is sinful and tyrannical.” That quote comes from the Virginia Act Establishing Religious Freedom, enacted in 1786 and subsequently used as the model for state constitutional clauses all over the country banning such “compelled support.”

So why do I say that the Times’ concern “almost” has merit? Because it doesn’t apply to education tax credits. No one is compelled to support any SGO, and those who do choose to make a donation get to select the SGO that receives their money. What the Times seems not to have realized is that this concern actually does apply to… the public school system it is trying so ineptly to defend. Taxpayers’ options under state schooling are to keep funding the system or go to jail, but it is not hard to imagine that some taxpayers may disbelieve the ideas taught by public schooling. Consider the story from just a few days ago about the public school teacher who taught her students that they could be arrested for speaking ill of the President. Or consider the Times’ evident disdain for private schools that focus on sports to the perceived detriment of academics. No one has to fund such schools under an education tax credit system, but we all have to fund them under the government monopoly status quo. Is this news (that didn’t fit) to the New York Times?

Next, the Times laments that SGOs cost money to operate. “Hundreds of thousands of dollars… in some cases”! Let’s say, for the sake of argument, that you are a fiscal hawk just like the New York Times, and that you’re desperately concerned about the efficiency with which your education dollars are spent. Which system should you prefer, tax credits or the public school monopoly? As it happens, Florida’s k-12 scholarship tax credit is raising academic achievement at less than half the per pupil cost of the traditional state-run schools.

According to a statistical study commissioned by the Florida legislature and authored by David Figlio, students accepting scholarships to attend private schools under the state’s tax credit program enjoy improved academic achievement. According to a second study co-authored by Figlio and Cassandra Hart, the program also improves achievement of students who remain in public schools [see previous link].

Of course the Times story mentions that Figlio has studied Florida’s tax credit program… but it doesn’t report what he found. Apparently, a significant positive academic impact is not relevant to a NYT education story if it comes from a program outside the control of the state monopoly school system. Print readers are left entirely in the dark about these facts. The online NYT version of the article links to a .pdf file of one of the studies without comment, but even the subset of Web readers who take the time to click through and read it will only get half the story. Those who read the Times’ story on other on-line sites that lack links won’t get even that.

But what of the charge that “some of the programs have become enmeshed in politics.” Even coming from the NYT this line of argument is difficult to believe. Has it not occurred to them that state schooling has been soaking in politics since its inception? Are they unaware that the public school employee unions—whose funding comes entirely from compulsory taxation—spend more on federal politics than Chevron, Exxon Mobil, the NRA, and Lockheed Martin combined? Or that between 93 and 99 percent of those political contributions have gone to Democrats? Surely they must be aware of news coverage like this:

 If unions are the Democratic Party’s base, then teachers’ unions are the base of the base. The two national teachers’ unions — the American Federation of Teachers and the larger National Education Association — together have more than 4.6 million members. That is roughly a quarter of all the union members in the country. Teachers are the best field troops in local elections. Ten percent of the delegates to the 2008 Democratic National Convention were teachers’ union members.

But then again, maybe they haven’t read it. After all, it ran in the New York Times Magazine.

Against public schooling’s multi-generation legacy of arch political partisanship, the Times complains that businesses might endear themselves to politicians by… helping poor kids get a good education. They present no evidence of an illegal quid pro quo—just the haunting specter that someone in political office might be gratified if a business helps kids learn. They have it precisely backwards. The real problem is that there are so many in political office who would not be gratified by such an act, because their own political lives depend on teachers’ union donations coercively squeezed out of taxpayers thanks to the government-protected monopoly on k-12 schooling.

Years ago, we were told that the legacy media were distinguished by their “multiple layers of fact checking”. This NYT article, like most NYT articles on education, is certainly comprised of multiple layers of something… but it doesn’t smell like fact checking.

The Making and Breaking of Education Policy

Matt Ladner does a good job of explaining how his beliefs shape his education policy recommendations. It’s a quality that he shares with Horace Mann, who persuaded the people of Massachusetts to adopt a fully tax-funded state school system based on his own beliefs about how a just society should educate its children.

More than a century and a half later, we are still struggling to replace Mann’s unresponsive, divisive, ineffective, wasteful, and often cruel system with one that actually works. So, as we reflect on exactly what to replace Mann’s system with, we have to ask: how did he get it so very, very wrong, and how can we avoid the same fate?

I suggest that Mann’s great mistake was to base his policy recommendations on his belief system. To avoid sentencing future generations to a similarly dysfunctional education, we must base our conclusions on a broad and systematic analysis of the evidence. We should study school systems historically and internationally to understand what works, what doesn’t, and why. We should make predictions about how different policies will unfold and then try to test those predictions empirically. We should observe how different policies play out across states rather than rushing to homogenize them before their effects can be compared.

At least that seems to me our greatest hope of avoiding Mann’s tragic mistake. And if the policy conclusions we reach do not happen to be the easiest to implement, we can take comfort in the fact that Mann succeeded in promoting a system that had no basis in reason or evidence despite strong and longstanding opposition. If a radical bad idea could triumph, why not a radical good one?

Universal Dependence or Universal Access?

There’s a rift within the U.S. school choice movement as to whether private school choice programs should cover every child or focus only on the poor. Fortunately, the cause of this disagreement is not so much that the two sides have different goals but that they have different assumptions about what will achieve those goals. And the nice thing about assumptions is that they can very often be tested against the real-world evidence. What actually works better: universal access to the education marketplace, or universal dependence on a government program? That’s the question I try to answer over at the RedefinEd blog today, in a post responding to veteran voucher campaigner Howard Fuller.

Power Yes, Trigger No

There is little question that parents have too little power in elementary and secondary education. In fact, they have almost no power: they can vote, but are otherwise usually relegated to being class moms, or holding bake sales, or some other fluffy “involvement” that gives them no real say over how their children are educated. Adding insult to injury, that doesn’t often stop professional educators from blaming parents when students don’t do so well.

To remedy the problem, the trendy thing seems to be “parent trigger” laws that would, generally speaking, allow a majority of parents at a school declare that they want to fire the staff, or bring in a private management company, or some other transformation. It’s been the spark behind some especially heated conflicts in California, as unions and parents of different stripes have been doing battle with each other. It is also the subject of a New York TimesRoom for Debate” exchange today.

While I sympathize—obviously—with those who advocate giving parents more power, I cannot help but conclude that the parent trigger is a very poor way to do this. For one thing, it is inherently divisive: what about the 49 percent, or 30 percent, or whatever percent of parents who don’t want the changes the majority demands? They’ve got no choice but to fight it out with their neighbors. It is also inefficient: individual children need all sorts of options to best meet their unique needs and abilities, but the trigger would just exchange one monolithic school model for another.

The trigger, quite simply, is no substitute for real educational freedom: giving parents control of education funds, giving educators freedom to establish myriad options, and letting freedom, competition and specialization rein.

There is, however, one gratifying thing about the parent trigger: it has made historian Diane Ravitch—who constantly decries the destruction of “democracy” were we to have educational freedom—express outrage about ”51 percent of people using a public service hav[ing] the power to privatize it.”

Um, isn’t majority rule what democracy is all about? Or do government schooling defenders really just invoke the term because it sounds so nice and is such a potent rhetorical club?

The answer, it seems, is getting more clear.

A Soft Surrender to Low Expectations

There is a problem in the school choice community … let’s call it a soft surrender to low expectations.

We are witnessing a race to the bottom on education policy, and the latest case comes from my own state of Virginia. The legislature passed an education tax credit program this week, soon to be signed by the Governor, which means I should be celebrating. Unfortunately, the Virginia tax credit program is a mockery of education reform.

I will lay out my basic list of criticisms, which include some of the program’s  inadequacies along with its grave debilitations. Read more here.

  1. It is a 65% credit, which is terrible policy and will cripple the program (see more on this issue).
  2. It places the program administration and control, including approval of SOs and schools under the state DOE rather than the proper authority for administering a tax credit program, the Dpt. of Revenue.
  3. It exempts the DOE from the Administrative Process Act, which provides for appeal and review of decisions, and explicitly states that all decisions by the DOE and Superintendent are “final and not subject to review or appeal.” In other words, they have been given a blank check of regulatory authority over the program and schools.
  4. The bill will force schools to collect and report detailed student information to the DOE.
  5. The cap is only $25 million, and has no growth provision.
  6. No personal-use credits so that families can use their own money for their own children … they must beg for charity if they are eligible.
  7. No homeschooling or non-traditional education.
  8. And the kicker … the whole thing sunsets in 2018, five years from now (see section 58.1-439.26 A, “beginning on or after January 1, 2013, but before January 1, 2018 …”).

I would celebrate the last provision, a sunset clause, as a chance for Virginia to get it right the second time, if not for the much greater probability that the looming demise of the program will enable choice opponents to make the program even worse in trade for a stay of execution.

If we will accept this, we will accept anything. It will not do what we expect or need in terms of expanding choice and freedom, and the hope that it will be appreciably improved in the next five years is slim at best.

Often, when I insist on higher standards in school choice policy, I am told that we must voice support because it will help some children now. Few seem to consider the hundreds of thousands of children who will not be helped in decades to come, indeed may well be harmed, because of this inadequate policy. Opportunity costs must be considered. All the children yet to be born must play into our utilitarian calculus if that is the measure we use to judge public policy.

And we should not pretend that obviously inadequate programs are bold reforms; it  only serves to encourage yet more inadequate policy. We should push the conversation and educate leaders and citizens about real reform. Instead, the issue of school choice will be set aside for at least four years, as politicians point to their “accomplishment” that will help so few and provide no foundation for future reform. A roadblock to real education reform has just been passed in Virginia, and it is labeled SB 131.