Tag: South Carolina

Which State Will Expand School Choice Next?

With over 150,000 participating students in 12 states, scholarship tax credit (STC) programs constitute the largest and most popular form of private school choice. STC programs have expanded rapidly in recent years with six states adopting them since 2011, including Alabama this year. So which state will be next? After yesterday’s disappointing defeat in South Carolina, the answer may lie on the opposite side of the continent.

Earlier this week, Rep. Liz Pike introduced an STC bill to the Washington state legislature. The bill would provide tax credits to corporations donating to state-approved scholarship organizations that fund children from low-income families and children with disabilities attending the schools of their choice.

Like the STC program that New Hampshire enacted last year, the WA legislation follows the best practices from STC programs around the nation and avoids the flaws of the recent bills in Virginia and Alabama. Washington’s proposed STC program would be capped at $100 million in the first year and includes an “escalator” so that the program will grow over time to meet demand and it eschews unnecessary new regulations. The $5,000 cap on scholarships is high enough to benefit low-income families but low enough that the state still has the potential to save money, as shown in this chart from the Freedom Foundation comparing the maximum scholarship size to Washington state’s total public school spending per pupil: 

How Tax Credits Result in Savings. Image courtesy of the Freedom Foundation.

The bill could go farther still by expanding the use of the scholarships to include educational expenses beyond just private school tuition. For example, under New Hampshire’s STC program, scholarships can cover expenses such as tutoring, textbooks, homeschool curricula, and online learning. Adding a similar provision would move the bill from school choice to educational choice, which would foster greater customization and innovation in the delivery of education.

But even without such provisions, school choice programs have been proven effective at improving student outcomes and adopting one would be a great leap forward for Washington’s education system.

Lobbyist Writes Fact & Evidence-Free Op-ed, Analyst Not Shocked At All

I recently gave testimony on the merits of an education tax credit bill that’s being considered in South Carolina. Molly Spearman, executive director of the S.C. Association of School Administrators, a public school lobbying group, denounces both the bill and my testimony today in The State newspaper.

Ms. Spearman’s comments reveal either a complete disregard for the basic facts and research findings, or an ignorance of those facts, resulting in errors big and small.

On the small side, she refers to me as a “paid consultant from the Virginia-based Cato Institute” when in reality I’m a policy analyst at the Cato Institute, which is based in Washington D.C. And while I am, unsurprisingly, paid a salary by my employer, I received no compensation of any kind in return for my testimony in the South Carolina legislature.

More concerning, Ms. Spearman claims that an education tax credit program like the one proposed in SC “has no research-based support that is works.” Her review of the research on credit programs appears to have consisted of calling someone in the Florida Department of [Public] Education to ask them why they thought academic achievement in Florida has increased.

Ms. Spearman apparently missed the official government study, conducted by academic researcher David Figlio at Northwestern University, which found the credit program significantly improved the academic achievement of public school students. That’s not surprising, since it’s consistent with the seventeen other studies that find private school choice programs improve public school performance.

Ms. Spearman also dismisses the state savings expected from the program based on a shocking misunderstanding of education funding. State savings are based on the amount of the credit and the amount of state funding that changes when a student leaves public school; fixed classroom costs have nothing to do with it. The state will save about $500 per student under this program.

The school districts will save much more; about $5,500 in additional funds for every student who leaves even after subtracting fixed costs. Ms. Spearman acts as if almost no money is saved when a student leaves. Here’s a question; then why do public school demand full funding for each additional new student? It works both ways … if one fewer student saved little money, then one more would add little cost. In fact, an academic study has found that only about 20 percent of student funding in South Carolina is fixed in the short term. In the long-term, there are no fixed costs at all.

Again, this is no surprise; an official government analysis found Florida’s credit saved about $1.50 for ever dollar in credits while improving the academic achievement of public school students. Numerous studies demonstrate large actual and potential savings from private choice programs.

There are more errors in other areas, which is remarkable for a piece under 700 words, but I’ll close with Ms. Spearman’s final thought; “We are falling behind our neighbors in North Carolina and Georgia. We cannot gamble on this legislation.”

How ironic … Georgia adopted  a relatively large education tax credit program in 2008, while North Carolina is seriously considering a tax credit proposal of it’s own this year. South Carolina can’t afford not to adopt education tax credit reform.

Had Ms. Spearman done her due diligence on this education issue, or had she called me and asked, she could have avoided these embarrassing errors.

Ms. Spearman’s article is all the more concerning because she is a former schoolteacher and now leads the S.C. Association of School Administrators. South Carolina’s children and taxpayers deserve far better from their leaders in public education

What if We Ran a Public School System… and No-One Came?

The New Jersey Office of Legislative Services, which estimates the budgetary impact of proposed laws, has just released its analysis of a private school choice bill called the “Opportunity Scholarship Act.” The most remarkable thing about its report is the amount of money it assumes that districts would save for each student they no longer have to teach: $0.

On that assumption, if every student were to leave for the private sector tomorrow, districts would keep right on spending exactly the same amount they spend today. Inefficient though it is, not even state-run monopoly schooling is that bad.

The OLS report does not explain why it assumes that the per pupil savings for students leaving public schools (the “marginal cost”) would be $0. It states that this figure is “indeterminate,” but by not counting it at all is effectively treating it as zero.

In fact, the marginal cost of public schooling is not “indeterminate” at all. Economists “determine” it all the time, and it’s quite easy to do. You simply observe how district spending actually rises and falls with enrollment, using a time-series regression, as I did in 2009 to calculate the marginal cost of public schooling in Nevada (see Appendix A).

Even if the NJ OLS does not conduct a marginal cost estimate specific to New Jersey, they could have done–and should still do–the next best thing: take the marginal cost estimates for other states as a rough guide and estimate the NJ district savings from them. I estimated that Nevada district spending falls by 85% of average per-pupil spending when a student leaves, and Grecu and Lindsay, a couple of years earlier, estimated the figure at 80% for South Carolina.

If they want to be conservative, the NJ OLS could use the lower of these figures, and perhaps also run the numbers for estimates 10% higher and 10% lower.

Any of the above options is preferable to the logical impossibility of their current analysis, which effectively treats the marginal cost of public schooling as $0.

Wisconsin: Post-Mortem & Predictions

Last night’s vote by the Wisconsin-based portion of the Wisconsin Senate has received enormous attention. The scope of collective bargaining by school district and other government employees has been narrowed, and the state will no longer automatically garnish workers’ wages to pay union dues.

This was the right thing to do. But how much of a difference will these changes actually make to the state’s bottom line? As I’ve noted, the presence or absence of collective bargaining is not strongly correlated with school district spending. Instead, unions have won their massively (42%) above- market compensation through well-funded political action; which brings us to the question of automatic paycheck deduction of union dues.

Without automatic dues withdrawals, will public school unions still be able to afford their fantastically successful political activities? There’s no reason to doubt it. Given the huge compensation premium public school employees enjoy over their private sector counterparts, they have a powerful incentive to voluntarily keep funding the political action that helped win it.

Indeed, we can see this already in right-to-work states like South Carolina. Public school employees there have no collective bargaining rights and there is no automatic union dues withdrawal, but the Palmetto State nevertheless has a teachers’ union and an administrators’ association that have spent large sums of money on political action. It’s worked. Despite not being the wealthiest of states, South Carolina still spends roughly $12,000  per pupil on its public schools, and its public school teachers earn more than the state’s median household income. The teacher and administrator groups have also successfully defeated every legislative effort thus far to open up the state’s education system to private sector competition and parental choice.

The only way to rein-in out-of-control public school spending is thus to give both families and taxpayers an alternative to the government monopoly status quo. Cut taxes on folks who pay for their own children’s education, or who donate to non-profit scholarship organizations that subsidize private school tuition for the poor. Many states are doing this already on a small scale. By so doing so on a larger scale, families will have much greater choices and taxpayers will reap enormous savings.

Gambling Raid in Baltimore

The Baltimore police must have solved the city’s violent crime problem. They’ve shifted resources to illegal gambling:

Baltimore County police arrested five men after an undercover detective infiltrated an illegal high-stakes poker game in Edgemere, records show.

Police say “Texas Hold ‘Em” games were held regularly at the Lynch Point Social Club in the 3100 block of Roger Road, where organizers were making as much as $1,500 in profit a night, according to charging documents.

After receiving a tip, officers conducted surveillance at the club and later sent an undercover detective inside, who participated in a game with a $65 buy-in. The detective played for hours — leaving after he lost all his chips, records show.

A tactical unit conducted a raid on the club Feb. 11, seizing poker chips, electronic gambling machines and a surveillance system, among other items. Forty-one people were inside at the time of the raid.

Posted at the Raidmap, where you can find similar “isolated incidents.” A December gambling raid in South Carolina turned into a gun fight when poker players mistook a SWAT team for armed robbers. The family of Sal Culosi, the Virginia optometrist killed in a 2006 gambling raid, just settled its lawsuit against Fairfax County for $2 million. Radley Balko has more on that tragedy here.

If They Gave Out Awards for Good Policy Design…

…the folks in South Carolina would be top contenders for the gold.

Here’s the thing: all the evidence shows that educators are human beings like the rest of us and that education benefits from the same market freedoms and incentives that have driven progress in every other field. So how do you unleash those market forces so that our kids have the best shot at fulfilling their potentials? For a start:

  • You minimize regulation on what and how teachers teach.
  • You make it easy for families to choose whichever schools (or homeschooling) they deem best for their kids.
  • You encourage people to pay directly for their own children’s education to the greatest extent possible, reserving third-party payment (which is inherently problematic) to an as-needed basis

As a result, schools compete for the privilege of serving each and every child and they are attentive to parents’ demands because otherwise their livelihoods will suffer. Parents, in turn, become more invested in their children’s education—both literally and figuratively—because suddenly they have the power to exercise their educational responsibilities, and they expect to get value for the money they spend.

There are already a few school choice programs around the country that move in this direction, but a bill under consideration in South Carolina would do a better job than any of them. First, it offers tax cuts to parents who personally shoulder the cost of their own kids’ education, and those cuts are more meaningful in size than the ones currently offered in Illinois and Iowa. As Milton Friedman (and Pliny the Younger) rightly said: people are most careful spending their own money on their own families. Second, it extends its benefits to homeschoolers, which few other choice programs do. Third, it provides tuition assistance to low-income families through nonprofit scholarship organizations (SGOs) that are funded by private tax-creditable donations—better than any other system of third-party education aid.

If enacted, this program will not only provide a wonderful new range of educational options to South Carolina families, it will save taxpayers millions due to the tremendous inefficiency of the existing state-run monopoly school system. That combination of improved education options and reduced tax burden will in turn attract new businesses to the state, spurring economic growth. All in all, a pretty darn good deal.

South Carolina Gov Race: What’s Haley Thinking on School Choice?

Nikki Haley promises to be a star governor if–most likely when–she’s elected this fall by South Carolina voters. Word is she’s a committed fiscal conservative, and her background is steeped in a successful family business, not large corporations, so she should have an intuitive grasp of what makes our economy grow.

And Haley has a long, solid record of supporting school choice through education tax credits in South Carolina. As recently as August 19th, Haley was reported as saying, “like Sanford, she would veto a bill to expand public education options unless it included help with private tuition. She agreed with Sanford that it must be all or nothing, saying otherwise the Legislature won’t return to the debate.”

Now that’s the stuff.

But Haley has recently put out some concerning and confusing statements on school choice. “Haley said approving private-school choice, which would provide tax credits or vouchers to pay private-school tuition, was not a priority. ‘That is not my focus; my focus is the school funding formula,’ Haley said.”

Changing the funding formula is all well and good. It might save some money. But it will NOT improve education in South Carolina. Education tax credits will improve performance and save much more than any public school reform. School choice should be Haley’s only education issue.

Why is she backing away all of a sudden? Sure, the primary is over, but Haley is leading comfortably in the polls. Education tax credits pull down serious majority support across nearly every single demographic in South Carolina. White voters, black voters, old and young, Republicans and even Democrats. This is a great issue. And backtracking on a signature issue could tarnish her fresh, reformer image.

Most important, school choice is the right policy. Haley always seemed to have a deep understanding that only an education tax credit program can substantively improve education in South Carolina.

Senator Jim DeMint has a great short video plug for school choice out … let’s hope Haley takes a look at this, remembers what reform really matters, and does the right thing in office.