Vouchers Without Competition
by Frederick M. Hess
THIS SPRING will see a milestone in American public education: The nation's first federally supported voucher program will be launched in Washington, D.C. The program will offer school vouchers worth up to $7,500 to about 2,000 students in the District of Columbia schools. Thrilled at this breakthrough after a decade of stop-and-start efforts, voucher advocates have rendered grand pronouncements about its likely impact on D.C. public schools.
Sorry to spoil the party, but these claims smack of Great Society-era wishful thinking. In truth, the D.C. program is unlikely to drive systemic improvement, which was always the ultimate promise of vouchers. The idea is that school choice not only benefits individual students by allowing them to move to better schools, but also unleashes competitive pressures that will force entire school systems to improve. The first claim is incontestable; the second is deceptively utopian.
The trouble is, school systems can't bear to subject themselves to true competition. Sure enough, the D.C. program is choice without consequences, "competition" as soft political slogan rather than hard economic reality. This is not only because the program is capped at about 3 percent of public school students and rewards the public schools with $13 million in new funding. More fundamentally, the program ensures that public schools have nothing to lose--and maybe something to gain--when students depart for private schools.
But competition only works when it hurts--when people have something to lose. Markets yield efficiencies precisely because they are unforgiving of failure. This harshness can make an unflinching embrace of markets difficult for reformers primarily interested in expanding parents' choices. For many voucher or charter-school proponents, "competition" is more a rhetorical device than a serious tool to promote educational excellence.
In the private sector, when competition is genuinely threatening--as when American automakers and electronics manufacturers were almost wiped out by Japanese competitors in the 1980s--firms either reinvent themselves or yield to more productive competitors. Unions make painful concessions or watch jobs vanish.
The absence of competition means that public schools, like other government agencies, typically are not subjected to this kind of discipline. No matter how inefficient, employees have little to fear. Subjecting school systems to real competition would indeed produce more effective schools --and other benefits as well. It would provide quality control beyond that afforded by standardized testing, empower entrepreneurial educators to offer alternatives to reigning orthodoxies, and permit good schools to multiply without waiting for permission from resistant district leaders.
Imagine the Wal-Mart manager who was told that losing customers would have no impact on her salary, evaluation, or job security and that attracting new customers would require her to hire more employees, assume greater responsibilities, and perhaps erect a trailer in the parking lot to handle the added business, all without extra compensation or recognition. In such an environment, only the clueless would strive to compete.
But this is exactly how schools--even most "choice" schools--compete today. Take the principal of a typical elementary school in Washington, D.C., that was built to house 400 students and currently enrolls 375 students. What happens if that principal loses 75 students to charter schools, or would happen if she were to lose 75 to the new voucher program?
Typically, three retiring teachers are not replaced, three classrooms are freed up, and the school loses a tiny amount of discretionary money. In short, the principal's job gets a little easier. Her salary and professional prospects are unaffected, yet she has fewer teachers to lead, fewer students to monitor, and a less crowded school.
But if the same principal moves aggressively to boost enrollment, prompting the school to add 75 students, she must take on responsibility for three new teachers, squeeze students into classrooms, add two trailers out back to serve as additional classrooms, crowd the school's cafeteria and corridors, and manage two teachers and 50 families unhappy about holding class in a trailer. In return for these headaches, the "successful" principal receives, at best, a small pool of discretionary money, usually less than $50 a student, but no extra recognition or pay.
Under these circumstances, no rational principal could be expected to compete in more than a token fashion. To achieve real competition--and reap its educational benefits--choice-based reforms alone are wildly insufficient. Here are five steps necessary to unleash real competition.
First, the sine qua non of educational competition is that parents' choices must deny resources to poor schools and bestow resources on good schools. The funds to educate a given student must follow the child to the new school. The political conceit that choice will spur public school systems to remake themselves even if they get more money for serving fewer students is false.
Second, principals whose schools attract students should be rewarded accordingly--even as safeguards are set up to ensure, for example, that popular schools are also producing adequate performance.
Third, principals and superintendents need the freedom to hire, fire, promote, and reward employees. Reducing the obstacles erected by regulations, professional norms, and contractual provisions will press employees to accept management direction to a much greater extent, even where workers are protected by strong contracts.
Fourth, it is necessary to overhaul rigid contractual arrangements that stifle potential entrepreneurs. Salary schedules based on seniority and pension plans based on continuous service penalize longtime educators who leave their position for a new opportunity.
Fifth, if competition is to threaten the status quo, the number of choice schools and the number of students they serve must rise. Many barriers, formal and informal, now curb the growth of choice options. The educators who open "mom and pop" charter schools or run private schools are unlikely to drive significant expansion. Most of them want to run small, familial schools and evince little interest in maximizing enrollment, running multiple schools, or managing a bureaucratic operation.
If choice schools are to serve more children, these entrepreneurs need to be enticed with money, prestige, and perks to trade the joys of their small enterprise for the headaches of expansion. Crucially, a significant increase in the number of choices requires the participation of for-profit operators, who have the capacity to dramatically increase the pool of capital available to support new schools.
It is these measures that will foster competition worthy of the name. In the 1970s, at the height of the Communist reign in the old Soviet Union, ordinary Moscow shoppers could choose from innumerable grocery stores, all of them equally grim. Neither producers' nor employees' job security, compensation, or promotion was much affected by how well or poorly they ran their stores. Transforming choice into the kind of competition that raises standards requires attaching consequences to behavior. For the public schools in Washington, D.C., to experience competition more vibrant than that of the old Soviet groceries, choice by itself is not enough.