Congress Gambles with the Future of D.C.‘s School Choice Program

It's late December, so that means it's time for members of Congress to join together and celebrate around their own massive, legislative Christmas tree--the notorious omnibus--with earmark ornaments for nearly every congressional district. Reason's Peter Suderman explains:

The deal is made of two different elements—a 2,009-page omnibus that folds in 12 appropriations bills and calls for $1.1 trillion in spending, and a separate 233-page tax “extenders” bill that continues about $650 billion worth of supposedly-but-not-really temporary tax cuts. All together, the package is worth about $1.8 trillion. 

Many of the tax breaks in the extenders bill are the sorts of tax “cuts” that are the sort of targeted, incentives-and-behavior altering tax cuts and deductions that are best thought of as spending laundered through the tax code. (This includes the child tax credit, various business expensing provisions, and a credit to help people under 40 pay for tuition expenses, as well as credits for wind and solar power.)

Broadly speaking, that’s the sort of spending that Republicans tend to like. The other part of the package, meanwhile, contains the sort of spending that Democrats tend to like.

There is perhaps no greater annual example of how concentrated benefits and dispersed costs conspire to increase Congressional spending. Moreover, as Jim Harper noted yesterday, the omnibus is also an opportunity to slip in highly controversial policies, like domestic surveillance. And yet conspicuously absent from the awful omnibus was one of the few programs that Congress has the constitutional authority to enact and actually benefits low-income students living in Washington, D.C.: the Opportunity Scholarship Program (OSP). In a sharp editorial yesterday, Wall Street Journal excoriated Congressional GOP leadership: 

The omnibus funds the program for fiscal year 2016 but fails to reauthorize it. This means that 20 years after the program was first debated, 10 years after it started, four years after Mr. Boehner revived it after President Obama had killed it, and a few months after the House passed a bill to reauthorize it, we’ll have to fight the battle all over again.

Worse, no one will explain how Nancy Pelosi prevailed despite Republican majorities in both houses.

Done right, the OSP could have saved money while improving student outcomes. Despite spending nearly $30,000 per pupil in recent years, D.C.'s district schools are consistently ranked among the worst in the nation. By contrast, the OSP's vouchers are less than $9,000 on average and a random-assignment study found that OSP students were 21 percentage points more likely to graduate from high school than the control group. Had Congress allowed the funding to follow the child rather than funding the OSP and district schools out of two separate funds, as they do now, the OSP could have saved more than $20,000 per pupil while still producing better outcomes. And that doesn't even count the significant savings from the increased graduation rate that researchers Patrick Wolf and Michael McShane calculated:

Because a high-school diploma makes an individual less likely to commit crimes, it therefore decreases both the costs incurred by victims of crimes and those borne by the public in administering the justice system. Coupled with the increased tax revenue made on the increased income, this yields an extra benefit for society of over $87,000 per high-school graduate.

Multiplying the number of additional graduates by the value of a high-school diploma yields a total benefit of over $183 million. Over the time of our study, the OSP cost taxpayers $70 million, so dividing the benefits by the cost yields an overall benefit-to-cost ratio of 2.62, or $2.62 for every dollar that was spent.

The omnibus spending bill is a terrible way to do business, and it would be better if the OSP could stand on its own (and even better if Congress transformed it from a voucher into an education savings account). Unfortunately, there is reasonable doubt whether the GOP will be able to persuade the president to sign a standalone bill reauthorizing the OSP. In other words, leaving the OSP out of the omnibus is a big gamble. That is especially concerning because thousands of kids depend on it and it needs stability to run effectively.

So yes, Congress should change the omnibus practice, but they shouldn't make the OSP a test case.