The Economics of Public Education in the Marketplace

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April 7, 2016; American Prospect

Giving parents the power to choose the schools their children attend is a key element of the nationwide effort to radically change the nature of American public education. Theoretically, a vibrant market would result in better schools replacing struggling ones, to the benefit of every child, and schools that compete will drive for efficiencies and operate at lower costs. For more than two decades, state legislatures and the U.S. government have fueled the growth of charter schools and tuition voucher programs in order to create local educational marketplaces to provide a wide range of educational options for parents to consider.

So, we continue to ask, how is this educational experiment going? While many recent studies have pointed to the limited evidence that the market-based reforms are providing improved education, a recent look by the American Prospect at Massachusetts’ experience give us a sobering look at the economic impact of building the educational marketplace.

Massachusetts launched its move toward a competition-based public educational system with the highest of purposes.

Charter schools in Massachusetts were established under the 1993 Education Reform Act. That act was passed in the wake of a ruling by the Supreme Judicial Court, the state’s highest court, which found that Massachusetts had failed to educate “all its children, rich and poor, in every city and town of the Commonwealth at the public school level.”

But building the market to serve “all children” has proven to pose unanticipated challenges. Paul Reville, an educational policy and administration professor at Harvard’s Graduate School of Education described the situation and its surprises.

Those who introduced [competition] for the most part claimed that it would spawn a virtuous cycle, and it has some virtuous aspects to it, but it has also spawned a competition between the charter schools and the mainstream schools for scarce public resources. If we are going to have an extended experiment with making competition available in this space, I think that’s how you have to do it. People want to have competition without pain; well, pain is what drives competition.

Public school districts are responsible for educating every child. By their very nature, charter schools, while part of the state’s public school system, are responsible only for the children who they enroll. If a charter school fails, the traditional (non-charter) public school is the backstop and must have the capability of serving every child who chooses to enroll, whenever they need to enroll.

“Charters filter out certain kids,” says Christopher Lubienski, a University of Illinois education professor. Low-income students who attend charters “tend to be the advantaged of the disadvantaged,” he says. “The poorest kids and the kids with the costliest special needs still go to public schools.”

The differences between school populations can be glaring.

The public schools in the central Massachusetts city of Fitchburg serve about 5,000 students; nearly 50 percent are Latino. […] Students whose first language was not English comprised more than 30 percent of the district’s students, the three charters that accepted Fitchburg students served lower percentages of those children, ranging from a high of nearly 20…to just 3.1 percent. […] The Fitchburg charters also enroll far fewer economically disadvantaged students: More than 50 percent of Fitchburg students fall into this category in the current academic year…[while the charters range from] about 30 percent…[to]…3 percent.

Traditional school districts are left with the mandate to teach children whose needs are expensive to fill without the resources to pay the bills. Efforts to address this through improved funding mechanisms do not work when the overall level of school funding remains well below what is required. In a 2011 report, the Massachusetts Budget and Policy Center estimated that the state’s public schools are underfunded by at least $2 billion. The assumption that the marketplace will be more efficient and would bring cost savings as well as educational improvement is undercut by this reality. As long as we remain committed to ensuring that every child receives the education they need, more competition may result in more, not less, cost.

As NPQ has observed, those advocating the marketplace as the best framework for American education need to address how they will deal with this period of transition. Are they advocating that those children left behind in underfunded traditional schools be considered collateral damage, the unavoidable human cost of building a better system? Or are they willing to step up and address the high cost of ensuring that all children have the education they need and deserve?—Martin Levine