Exploring the Market for School Choice

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Is the rise of publicly funded school choice a triumph for the competitive-market approach to public education, where parents vote for public education with their feet? For market-oriented purists, the experience of Cleveland and Milwaukee suggests the answer is no. The template proposed by one of the intellectual fathers of "choice," economist Milton Friedman, does not fit well on these two programs--currently the only two operational, state-approved choice experiments in the country.

Back in the 1960s, Mr. Friedman discussed a school voucher proposal in his book Capitalism and Freedom. Mr. Friedman's idea was to provide parents with a minimum sum of public money per year, per child, to be spent on approved educational services. Parents would be free to spend this sum and any additional amount of their own on schooling from an approved institution of their choice. This amounted to a universal voucher system which would redefine public education by allowing all parents to make competitive educational choices for their children with public financial support.

In contrast, the Milwaukee and Cleveland choice programs are limited--aimed at a target market and regulated by certain guidelines. The target market is urban, low-income, mostly minority families who are perceived by choice advocates as being trapped into attending educationally deficient public schools in their districts. The rationale is to provide educational choices to low-income families similar to those already open to families with more financial resources.

The choice programs are redistributive, shifting tax dollars from public school systems to low-income parents. The legislation creating the Milwaukee program prohibited any private school participating in choice from charging tuition above what was covered by the amount of the public voucher. The voucher currently is worth $4,700, the equivalent of the state's per-pupil aid given to the Milwaukee school district. This school year the program will offer choice opportunities to up to 15,000 children, who can attend both religious and nonreligious schools.

The legislation for Cleveland limited parents' out-of-pocket payment to between 10 percent to 25 percent of tuition, depending upon family income. The maximum allotment last year was $2,500. Last school year, 3,000 Cleveland children attended 56 religious and nonreligious schools.

These regulations in both communities were designed to ensure that the programs would help those individuals who were least able to afford to leave the public school system.

This kind of choice program is more analogous to a type of economically targeted investing, or ETI, than to a broad free market. Economically targeted investing is defined as investments that try to capture both financial and nonfinancial returns. In some cases, ETIs have been labeled as investments that subordinate rate of return to other, nonfinancial benefits, such as societal needs.

In the case of the choice markets created in Milwaukee and Cleveland, the guidelines controlling the use of the educational vouchers were similar to those accompanying a social-investment fund. The vouchers were given to parents of children who policymakers agreed were being left out of the market.

Why this targeted approach to educational choice rather than the broad free-market concept? It is clear from the political history of the legislation and from the research of the nonprofit Public Policy Forum that a targeted program was necessary in order to garner the needed political support for school choice in Ohio and Wisconsin. In an 18-month study, the Public Policy Forum interviewed 295 parents, educators, and policymakers in Cleveland and Milwaukee. In addition, we conducted a public opinion survey of 771 taxpayers in Ohio and Wisconsin.

There was considerable public support throughout the two states for a market approach to public education. The forum's survey research indicated that 76 percent of the taxpayers in both Wisconsin and Ohio supported choice. Of those surveyed, 23 percent supported choice only for low-income parents. Another 53 percent supported choice for all parents, regardless of income. With a reasonable margin for error, support for choice, regardless of a parent's income, was evenly split among the taxpayers of the two states. Overall support for choice was dependent upon combining those who supported vouchers for low-income families and those who backed vouchers for all parents.

At the same time, the survey results showed that an unfettered market approach to education, including allowing schools to charge what the market would bear, was not supported by the African-American communities in Wisconsin and Ohio. For instance, when asked whether choice schools should be allowed to charge parents more in fees than the publicly financed voucher, only 43 percent of the African-Americans said yes, compared with 71 percent of the whites.

Can open, unrestricted choice survive politically if it is not perceived at the grassroots as providing a level playing field?

In other words, political conservatives who were mainly identified with a market approach to public education had to find allies among political liberals from low-income constituencies in Milwaukee and Cleveland. The latter were not necessarily market advocates. They were legislators and policymakers who in many cases felt that the benefits of market economics traditionally had bypassed their constituents. They supported vouchers for low-income families because they looked to government for a solution to urban public school systems they believed were failing, thus once again leaving their constituents behind.

It was that coalition of conservatives and liberals that has made choice in its current form possible in Milwaukee and Cleveland. The question for the future is whether this coalition is sustainable and can lead to real and lasting educational reform for low-income children.

There are already signs that the coalition is fraying, making it look more like a temporary marriage of convenience, rather than a permanent relationship in support of urban education reform.

In Wisconsin, market-oriented education advocates have won legislation that provides public school choice throughout the state. Parents can now send their children to any public school district as long as the potential receiving district will accept the children and the parents are willing to pay the transportation costs. There are no income restrictions. In addition, the mayor of Milwaukee recently announced that he will be lobbying state officials aggressively to raise or phase out the income cap on the private school choice program.

Charter legislation has also passed, allowing charter schools to be established in Milwaukee by the Milwaukee school district, the Milwaukee Area Technical College, the University of Wisconsin-Milwaukee, and the city itself. Under the law, charter schools are open to all city students. They are not designed specifically to assist low-income families. Further, the state voucher for charter schools is $6,100 per pupil, considerably more than the choice school vouchers.

This has led a number of choice schools to apply for charter status, through which they would receive more money per pupil and have no income restrictions on whom they accept. Fourteen of the 23 operating choice schools in Milwaukee sent letters of intent to become charter schools. The four schools granted charters by the city are choice schools.

All of this has produced a sour taste for some of the ardent supporters of choice within the central city. For instance, Rep. Annette Polly Williams, a black Democratic legislator from an inner-city Milwaukee district who has received national attention for her support of choice, has supported introducing legislation limiting the number of students who can attend choice schools and ensuring that the income guidelines remain. She has also opposed the charter school movement. She is concerned that the needs of minorities and the poor are once again being forgotten.

A similar falling-out has occurred between more conservative, statewide advocates for choice in Ohio and the leading black, grassroots advocate from Cleveland, City Councilwoman Fannie Lewis. As one Ohio state representative said, "Fannie Lewis legitimized the school choice program because of her stature."

This raises the interesting question about the true role of the competitive, market-driven approach to educational reform. Who will benefit most from open, unrestricted choice? Can it survive politically if it is perceived at the grassroots in the inner city as not providing a level playing field of educational opportunity for minorities and the poor?

Emily Van Dunk is the research coordinator at the Public Policy Forum in Milwaukee. She is the author of "School Choice in Cleveland and Milwaukee: What Parents Look For" and "Choice School Accountability: A Consensus of Views in Ohio and Wisconsin."

Vol. 18, Issue 2, Pages 39-40

Published in Print: September 16, 1998, as Exploring the Market for School Choice
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