We continue our discussion of Education Tax Credit Scholarships (Part I, Part II, Part III) with a further review of “The Public Education Tax Credit” December 5, 2007 by Adam B. Schaeffer, Cato Institute.

Many school choice supporters prefer targeted programs over broad-based programs for one, or both, of two reasons. Some believe that starting with targeted programs is the best or only way of getting bigger, more inclusive programs in the future. Others support targeted programs because they are concerned only with helping those who have the fewest options and are served most poorly under our government-run school system.  Still others hold some combination of these views, desiring bigger programs but convinced that helping low-income families first through targeted programs makes political and moral sense.  Principles of politics, common sense, and real-world experience show that supporting targeted choice programs for these reasons is not advantageous.

Passage of the Milwaukee Parental Choice Program was a landmark success, crystallizing and energizing the school choice movement in 1990. After 17 years, however, this first targeted program still covers less than a quarter of all low-income Milwaukee children and serves none of the children trapped in failing schools elsewhere across the state. It took five years for the program to grow from 1.5 percent of Milwaukee students to 15 percent.  It took another 11 years to expand the cap to cover 20 percent of Milwaukee students, 22,500 students total. At this rate, it will take at least another 4 years—or 21 years from the program’s inception—before all low-income Milwaukee children have school choice.  Even then, the Milwaukee voucher program would do nothing for the rest of Wisconsin’s needy children or for the middle-class families who struggle to find and finance a good education for their children.

Targeted voucher programs in other states have spread slowly as well, and most of them cover very specific student populations, such as children with disabilities or children in foster care.

Programs that target only low-income families or children in failing schools do not create the market forces or build the political power necessary to transform our education system.

However, voters will likely perceive tax credits as less radical than vouchers, whether or not that is in fact the case, because credits are a common and unremarkable method of encouraging certain types of spending.

Finally, many supporters of targeted programs claim that such programs soften the legislative ground and make expanding choice programs and broadening their reach easier in the future. This is a possible outcome; however, focusing on targeted programs first runs the risk of compartmentalizing school choice as a special solution to special problems for special populations. A targeted focus encourages legislators and voters to think of choice as a stop-gap solution that should only be used on a small scale, rather than a general education reform.  That approach runs the risk of increasing the difficulty of convincing legislators and voters to support a broad-based program after choice supporters have worked for years  to  advance  the  targeted  argument and mobilize the targeted rather than broad constituency.

Certain kinds of choice not only fail to beget more choice but may actually make expanding choice in a meaningful way more difficult.  Targeted programs have proven easy to contain both programmatically and conceptually, as Wisconsin and Ohio appear to demonstrate.  Where is the rising demand for broad-based choice coverage in these states? Shouldn’t it be evident by now, after 17 and 12 years of targeted programs, respectively?  If not, why not?  After years of arguing for choice in targeted  terms, mobilizing the targeted constituency, alienating middle-class interest groups and constituencies, releasing  some  pressure  from  the  system  by opening an escape valve for those served most poorly by the system, why expect it to be easier, rather than more difficult, to expand choice to the middle class or even to  all  of  the  working poor? Is a legislator who grudgingly supported a tiny, inexpensive targeted charity program more likely to support covering all low-income families or the middle class? The arguments and calculus that led a reluctant legislator to support a targeted program are likely to be very different from those necessary to secure a vote for broad-based programs.

In the meantime, few arguments have been formulated or constituencies mobilized to convince legislators to come along with a broad-based program. What has been gained long-term?  What has the effort built?  What opportunity costs has the choice movement paid?  Some choice doesn’t necessarily beget choice on a meaningful scale.

Targeted school choice programs cannot create effective markets in education services. In the worst case scenario, small numbers of eligible children are scattered all over a state, creating so little new demand, and at so low a concentration,  that  the  program  would  not lead to the creation of even a single new school.  More generally, the tiny customer base created by most targeted  choice  programs  means  that  few  new providers will arise, and those that do will have little ability or incentive  to invest in research and  innovation.  Heavy research and development investment presupposes the prospect for substantial market growth if effective new techniques and products are developed.  Narrowly targeted programs provide no such growth potential, and hence, at the outset, eliminate the core mechanism by which markets drive costs down and quality up.

Market efficiency relies on the informed choices of consumers compelling producers to offer better and better services at lower and lower costs.  Any given consumer may be ill informed about some, most, or even all details about the quality or cost-effectiveness of a particular provider’s services. But in large markets, the effect of these limits on individual consumers’ knowledge is modest, because enough consumers know enough about some providers’ services to pressure all providers to raise quality and lower costs.  The  larger the number of consumers in a given market, the less any one consumer needs to know about quality and cost-effectiveness  in  order  to  be assured of receiving a good service at a good price.  Limiting school choice programs to a small fraction of the population thus undermines a key benefit of markets.  Limiting choice programs to subpopulations who themselves have less educational experience than the public at large (a likely effect of programs targeted at disadvantaged children) may be particularly harmful, robbing them of the beneficial market effects that result from the choices of highly educated consumers.

Choice programs of limited size also allow little room for schools to specialize and tailor their educational environment to students with particular needs.  The demand for specialized services in any category is always smaller than the demand for general services.  And because the overall customer base under targeted programs is already very small, it is unlikely that there will be enough customers with the same specialized demands to support schools that cater to those special needs.

These policy problems lead directly to political problems. The public and politicians may easily but mistakenly come to think of severely restricted school choice programs as examples of true education markets.  The sometimes underwhelming effects of targeted programs can thereby undermine support for large-scale programs and impede the prospects for the expansion of targeted programs themselves.

Targeted school choice programs do not build a politically effective constituency for school choice. The importance of this consideration should not be underestimated. Opponents of school choice are powerful, and success requires the largest possible pool of support. In addition, the passage of legislation is only the end of a battle, not the end of the war.  An organized and politically powerful constituency is vital for the defense and expansion of a program after its initial passage.

Because the school reform opposition is the status-quo power, its representatives have long-standing relationships with individuals in all of the relevant venues:  the legislature, courts, and government agencies. School choice opponents are typically better organized and funded than reformers. Following the passage of legislation,  they  can  therefore  mount  a  counter-attack  that  is  difficult  if  not  impossible  for reform elements to match in the aftermath of a  hard-fought  victory.  To  counter  such  long-standing strengths, school choice proponents need  to  build  permanent  institutions  with  a direct and powerful interest in defending and expanding  reform.  This is necessary for successful implementation, survival, and expansion. Targeted vouchers do not encourage the development of these institutions.  Furthermore, the only individuals directly benefiting from most targeted voucher policies are low-income parents and their children.  These individuals have the fewest resources to spare for political activity and therefore have a low degree of political influence.  The  organizations  most active  in  representing  the  interests  of  low-income  and  urban  individuals  and  communities are typically the most active opponents of school choice. The Urban League, the NAACP, much  of  the  Democratic  Party  establishment, and  other  organizations  with  a  reputation  for and  an  organizational  focus  on  low-income, urban, and minority issues are staunch foes of private  school  choice—despite  the  overwhelming support for school choice among the populations for whom they claim to speak.

A large number of private schools, private-school parents, and homeschoolers, however, receive no direct benefits from targeted programs and so will only weakly support targeted choice efforts, if they support them at all. Promises of future expansion and the “camel’s nose under the  tent” theory are abstract and distant promises that ring increasingly  hollow with each passing year.

Programs covering all children are much more popular among school choice supporters and the general public than are those that cover only low-income children (Figure 2).

Republicans, Democrats, and Independents all prefer universal programs to targeted ones.  Controversial reform issues like school choice require the largest and most energized coalition possible.  Targeted programs needlessly shrink and enervate the school choice coalition.

Broad-based programs can certainly raise concerns among legislators about the potential impact of large programs, but these  can  be addressed without eliminating allies or permanently hobbling the program.  The easiest and most effective way to address these concerns is by pointing out the savings involved with the switch of each student from government-run to independent schools.  Fiscal worries that make targeted programs seem less risky can be turned to advantage.  The more students enrolled in a choice program, the more the state saves by avoiding the need for new or expanded schools, allowing  school staff reductions, or avoiding tax increases while class sizes and per-pupil spending increase. Staff reductions, it seems reasonable to speculate, most likely will be concentrated among the ballooning administrative ranks in the government system—which act as a drag on performance—rather than among teachers who directly provide the service.

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We wrap up our series tomorrow in Part V with a final review of “The Public Education Tax Credit” December 5, 2007 by Adam B. Schaeffer, Cato Institute and a short review of “Do Vouchers and Tax Credits Increase Private School Regulation?” October 4, 2010 a working paper by Andrew J. Coulson, Cato Institute.

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