Global Trend

School Vouchers Will Transform Education

In a country that insists on market-driven free enterprise solutions in virtually every aspect of life, it’s ironic that we continue to allow our schools to operate as state-run monopolies. But an increasing number of Americans are beginning to recognize this irony and want to do something about it.

They foresee a marketplace of competing, accredited educational alternatives, primarily funded with vouchers representing each pupil’s share of total education funding, as a viable alternative to the state-funded monopoly. Or, as former President George H.W. Bush once put it, they want to “Let the dollar follow the scholar.”

If properly explained, this seems like a sure winner at the ballot box. Having a choice in schools for one’s children would seem to be at least as important as having a choice of airlines, automobiles, or restaurants. In fact, along with religion and nutrition, education is one of the most fundamental resources that parents provide for their children. Chip Mellor, President and Founder of the Institute for Justice, goes further; he has defined the movement for parental choice in education as the civil rights issue of the 21st Century.

In our era of customization and product proliferation, the one-size-fits-all state monopoly we call “public education” seems like a costly and inefficient anachronism. Just to cite one example, the St. Louis City Public Schools currently spend an average of $11,600 per student per year. Local private school tuition there averages about $5,000.

This inconsistency is true to one degree or another for every state. Citing several recent studies, the renowned African-American economist at UCLA, Professor Thomas Sowell, noted that black students were two or three years behind in some public schools, and those schools were spending $10,000 to $15,000 per pupil. At the same time, private schools were available nearby for half to a third of that cost, with students reading at, or above, grade level.

An objective business mind would conclude that every state should want to give its children a better education at a lower price through parental freedom of choice. Yet, amazingly, the debate over this fundamental issue of freedom not only continues, but gets more contentious each day.

To understand this better, let’s look back at the history of the debate over school choice.

Back in the late 1950s, the National Education Association helped write the first federal education funding bill, the so-called Murray-Metcalfe Bill. It proposed taking tax dollars intended for children in all U.S. schools and sharing them only among children in public schools.

Taken aback by the brazen injustice of what they called the “Teacher’s Pet” Law, eight concerned citizens got together in the kitchen of a home in St. Louis in 1959, and formed Citizens for Educational Freedom to promote the principle of “A Fair Share for Every Child.”

Their thinking on the matter was: Treat everyone the same, and give a fair share to each person. They pointed out that one of the big problems with our current system of education is the monopoly it holds, particularly in rural areas and the inner cities, where private education options are few and often expensive. With a captive audience and no real competition, public schools have become fat, lazy and slow to change, as highlighted recently in The Dallas Morning News.

In fact, the precedent for what Citizens for Educational Freedom was trying to do went all the way back to a 1925 Supreme Court decision known as Pierce v. Society of Sisters. This case came about because the state of Oregon had passed a law making attendance at public schools compulsory, in effect outlawing private schools. In striking down the law, the U.S. Supreme Court ruled:

“The fundamental theory of liberty upon which all governments in this Union repose excludes any general power of the state to standardize its children by forcing them to accept instruction from public teachers only. The child is not the mere creature of the state; those who nurture him and direct his destiny have the right, coupled with the high duty, to recognize and prepare him for additional obligations.”

In other words, education is - or should be - a “mom and pop” business, not a government monopoly.

But another Supreme Court decision is at issue here, too, and it’s a much more famous one: Brown v. Board of Education. That decision mandated equal education for black and white children in the public schools. But the programs it generated - forced busing for desegregation, and huge expenditures for improving schools for minority children - have not achieved the hoped-for goals.

In fact, those whose relative performance has suffered the most during these 50 years of public school experimentation are the very minority students Brown was supposed to help. Why? Because the government school monopoly has restricted these students to public schools with steadily declining performance.

Another key U.S. Supreme Court case supporting the child benefit rationale for aid to non-government school children was Mueller v. Allen. In this 1983 case, the Court ruled in favor of a Minnesota provision granting a tax deduction to parents for private school tuition, textbooks, and transportation.

In spite of those clear Court decisions, the nation not only has fallen short of providing decent schooling for its most disadvantaged children, but has inadvertently delayed the movement towards social and political equality.

However, after 50 years of little or no movement, the trend is starting to pick up speed. States across the country have been putting in place their own laws to provide market-driven education to all children. In fact, more school-choice legislation is up for vote in more state legislatures this year than ever before. The reasons are political, economic, and moral.

Let’s start with segregation. The lack of parental choice has resulted in a school system nationwide that is more segregated than it was in the 1950s, according to a recent article in The Herald. Department of Education data show that 55 percent of public school 12th-graders nationwide are in racially segregated classrooms, compared to just 41 percent in private schools.

This issue has heated up the parental choice debate in South Carolina, whose record on race, justice, and equality has been weak. In one school district, which is well over 90 percent black, some 95 percent of eighth graders can’t read or write at their grade level. The schools in one whole county, Allendale, are 95 percent black, with only 3 percent of its students able to qualify for the state’s scholarship program due to low test scores.

Nationwide, the Department of Health and Human Services reports that 42 percent of 17-year-old blacks are functionally illiterate. And the African-American community is not pleased with these results. According to a Gallup poll on attitudes toward public education, more than 30 percent of inner-city residents gave the public schools either a “D” or “F” rating.

In response to this crisis, a group of North Carolina pastors formed a group called Clergy for Educational Options to establish their own schools - 49 so far - with high academic standards and tight discipline. The results are showing what parental choice can do. These independent, black-run schools are thriving throughout the state, despite harsh opposition from public education special interest groups.

Among the larger states, Florida has been the clear leader in this trend. Its first school voucher law is set to be tested in the state Supreme Court this coming June. The 1999 law, which allows children at failing public schools to transfer at state expense to private and parochial schools, was deemed unconstitutional by the First District Court of Appeal in Florida. That court ruled that the law violated the separation of church and state.

Nearly 700 children now attend private schools under this program, and there are numerous other voucher programs in Florida that might be at risk if the law is struck down. For example, nearly 14,000 students attend private schools on McKay scholarships for children with disabilities. Another 10,000 attend private schools on scholarships funded by businesses that get tax credits from the state.

Also at risk are the popular Bright Futures college scholarship and a law that provides funding for children in private pre-kindergarten programs, according to a report from the Associated Press Newswires. Advocates of school choice intend to fight back; another voucher bill has recently passed through committee in the Florida House that seeks to circumvent the type of challenge now before the Court.

According to an article in the South Florida Sun-Sentinel, this new education reform package will give vouchers to 350,000 students while limiting class size and increasing teacher pay in public schools. In addition, the “Reading Compact Scholarship Program,” which Governor Jeb Bush proposed earlier this year, would allow Florida public school students with failing reading scores to use vouchers to attend private schools. The Florida House Choice and Innovation Committee overwhelmingly endorsed both bills, putting Florida in the forefront in the fight for parental education choice.

Arizona represents another example. In mid-March 2005, the state Senate passed a bill that would give qualifying families up to $4,500 to send their child to a private school. However, the bill appeared doomed to fall a few votes short in the state House of Representatives. Nevertheless, its proponents have vowed to make the voucher an issue the next time Arizona’s voters go to the polls in 2006.

The last election cycle put numerous pro-school-choice governors and legislators into office. Utah’s Governor, for example, signed a school choice bill this year that his predecessor had vetoed last year.

All told, there are opportunities in 11 states to pass legislation this year, and the number of success stories continues to grow, inspiring people in other states to take up the cause.

Based on the preceding assessment of the school choice trend, we offer the following five forecasts for your consideration:

First, in the short term, there will be intense debate and acrimony in the 11 states now considering school voucher programs of one sort or another. However, the momentum of the parental choice movement has now reached a critical point after decades of laying the groundwork for market-driven school reform. This is bound to reap incremental benefits in many areas of the country, including those 11 states. Courts are likely to remove the last barriers to the use of vouchers in church-run schools within the next three years. Expect pilot programs in at least 25 states by 2009.

Second, as the success of those programs proves the value of this system, not only will the movement expand, but legislators will be hard pressed to maintain the status quo. Economic, as well as common-sense pressures will move school voucher legislation front and center on the agendas of many states across diverse political realms.

Third, in the mid-term, even with heavy teachers’ union influence, such as New York, the pressures from the inner city will weigh heavily in the balance, as parents, taxpayers, and law makers assess the value of keeping an outmoded school system in place. The cost of the state-monopoly system alone, when compared with a voucher program, will make it the obvious choice. The consistent failure of the public school system to address the needs of all students effectively will force a decision.

Fourth, like tumbling dominoes, virtually every state will have to enact at least some form of choice into the school system by 2020. This promises a fast-moving future for school choice, as state after state adopts the scholarship-voucher system to end the public school monopoly in education. Holdouts in the old system will find themselves increasingly penalized by natural forces, such as business and industry refusing to locate in their areas because workers refuse to live there. Meanwhile, those states with enlightened school systems will experience an economic upswing, as industry moves in and attracts workers with families. In 25 years, we’ll look back on today’s state-run public education monopoly and wonder why it took so long for a new system to appear.

Fifth, as voucher funding spreads to all K-12 students, it will open up many opportunities for astute entrepreneurs and investors. For-profit school operators, such as Edison Schools, have cut their teeth running schools under contracts from the state-run monopoly; Philadelphia is the largest example. Although their track record has been mixed, it has enabled them to build core competencies that are likely to serve them well in the new market-driven environment. Expect to see these firms, and a host of new entrants, gradually taking over the administration of most existing public schools, as well as launching “for-profit” schools on a green-field basis. Expect post-secondary education firms like DeVry and University of Phoenix to move into the high school market. In each of these arenas, they will find themselves going head-to-head with private, not-for-profit schools that already offer a great product at a low cost. With all of these changes, State and Federal educational standards will play a crucial role by ensuring that education is not jeopardized. It’s hard to predict who will win or lose over the long haul. However, it’s safe to say that the “beaten down” stocks of today’s for-profit education firms will certainly rise dramatically as the industry expands. It’s also safe to say that the NEA and other teachers unions will be totally transformed as market forces shake up their insulated world. For good teachers, this will be a challenging, but rewarding, opportunity; for others it could be devastating. While it’s unclear exactly how home-schoolers will be treated in this brave new world of education, it’s certain that they will get more resources than they do today. This will be good for home school support firms like Bill Bennet’s company K-12, Inc. It could also lead to a real boom for tutoring services like Sylvan Learning Centers. Now is the time for smart investors and entrepreneurs to examine the threats and opportunities.

References List :
1. The Dallas Morning News, April 18, 2005, “School Market Isnt Closing Lousy Charters,” by Kent Fischer. ⓒ Copyright 2005 by The Dallas Morning News Co. All rights reserved.2. The Herald, April 16, 2005, “Excellence for All Children,” by Rev. Maurice Revell. ⓒ Copyright 2005 by The Herald, a division of The McClatchy Company. All rights reserved.3. Associated Press, January 24, 2005, “Minister, Children, Parents Demonstrate for School Vouchers,” by Jackie Hallifax. ⓒ Copyright 2005 by The Associated Press. All rights reserved.4. South Florida Sun-Sentinel, March 16, 2005, “Expanded Voucher Plan Passes First Test,” by Linda Kleindienst. ⓒ Copyright 2005 by Sun-Sentinel Co. All rights reserved.