This essay is based on the Heritage Foundation’s study, Agenda for Progress: Examining Federal Spending (1981), which “is an attempt to display the virtues of a market approach to federal spending.” The essay was adapted for publication in Education Week by its author, with the permission of the Heritage Foundation.
At a time when the proper role of the federal government in education is being debated in political circles, it seems useful to consider in some detail exactly what the effects of a strong federal role in education are. Actions by former President Carter in 1979 gave an implicit stamp of approval to an active federal role in education. He did this, of course, by establishing the federal Department of Education. According to both educators and the Carter Administration, the establishment of the Department of Education would increase efficiency. They argued it would do this by coordinating programs previously scattered throughout various federal agencies and thus, would result in a consistent set of federal policies regarding education. Whether increased efficiency was the actual goal of the educators cannot be determined in the absence of mind-reading devices. But regardless of the objective, the effects of a stronger role for the federal government in education will be of a different nature. Less competition between schools will be the outcome. The decreased competition will benefit educators, but consumers of education will lose.
It is essential to recognize that a more pronounced federal role in educational matters does not simply entail providing aid to states and local school districts. With the provision of money comes the power to specify how the money will be spent. Initially, from the local school district’s perspective, this may seem a small price to pay. Problems arise only later, when the one restriction on spending multiplies into numerous criteria that apply uniformly to all states.
Federal officials actually benefit from making policy for schools in the 50 states. The reason for this lies in the very structure of administrative decision-making. As in the case of individuals in private firms, the actions chosen by bureaucrats are determined largely by the constraints they face. The nonprofit nature of government requires bureaucrats to seek rewards through activities other than monetary profit-seeking. A bureaucrat dealing with education gains more status, prestige, and perhaps even a higher salary with the increased responsibility of his or her agency. He has an incentive, therefore, to expand the rules and regulations that go with financial aid. En route to satisfaction of their own goals, the bureaucrats and their agencies gain more control and power over the general provision of education.
To assess the effects of greater federal control, consider first the situation that exists without any federal financing. Suppose local governments finance their own schools and thus possess the power to set their own educational policies. In this case, each local government must provide the schooling most desired by its constituents. If it does not, families will collectively vote out the local school board or will individually move to other school districts. In this framework, competition between school districts increases the likelihood of consumer satisfaction.
Now consider the case in which the federal government finances and controls programs provided by the schools. Since federal bureaucrats are unable to gear their specific policies to different schools, a national policy on education will emerge. As more and more financial control accrues to the federal government, its policy-making powers grow. The effect will be standardized education throughout the states. Consumers who are dissatisfied with the product of their own school district will have few alternatives, because all districts will be similar. Federal control in education is the deliberate creation of a monopoly in an industry that has a profound impact on the the nation’s human capital.
To a great extent, a decrease in competition among schools has already occurred, for in each state, a department of education exercises a considerable amount of decision-making power. When the state departments of education were initially established, they were small and often informally organized. At that time, their main purpose was the gathering, compilation, and publication of educational statistics. To this, the exercise of regulatory functions was added and, increasingly, the assumption of direct power over policies. Today, these departments, to varying degrees, serve as the locus of considerable pre-emptive power over education in formulating specific regulations, in allocating federal and state funds to local districts, or in executing the more detailed functions of day-to-day decision-making.
As the federal government has become more involved in education, its actions have tended to reinforce this shift in control from local to state agencies. Much of the federal legislation, such as the Title I program, implicitly gave the states’ agencies more power to determine where money flows within their states. One piece of legislation, Title V of the Elementary and Secondary Education Act (ESEA) was geared explicitly toward strengthening state departments of education. Forty percent of the funding accompanying this bill had no relationship to income but was apportioned equally among the states to be spent as the state education agencies desired.
Precisely who has benefited from this trend away from local control over education? The evidence certainly does not suggest that it has been consumers. Dissatisfaction with the public-school system is one of the major social issues of the day. Evidence of the displeasure is expressed in newspaper editorials, feature articles in magazines, and in television commentaries. The statistics on test scores and on numbers of students opting out of the public-school system for more expensive, private ones also indicate that students have not been winners in this move to greater centralization.
At the same time, however, educators seem to have fared quite nicely. For example, from 1971-76, per-pupil spending rose in the public schools by 58 percent. Student enrollments over this same period declined by 4 percent. Professional staffs during this time grew by 8 percent. An earlier period shows this same trend; from 1968-73, as enrollments declined by 1 percent, the total number of professional staff members increased by 15 percent, the number of teachers by 14 percent, and the number of supervisors by 44 percent. Only an unthinking person can buy the educators’ argument that the increase in personnel is necessary for better quality schools.
But the loss of local control over education in the preceding decade and a half (since the ESEA in 1965) is probably mild compared to that which can be expected over the next few years. Federal funding has been relatively small and thus, as suggested earlier, rather than bringing about federal control explicitly, has worked to enhance the power of state agencies. This has happened only because there has not been a single federal agency to administer the funds; now, however, as state agencies have developed, educational special interests have become more organized and have lobbied successfully for a federal Department of Education. The path being followed is exactly opposite that which would give consumers what they want. The only way consumers can be satisfied is if they are given free choice to select the type of education they desire.
A competitive market in the provision of education would establish a setting for consumer choice. In such a setting, consumers would control the educational output as they choose the schools proving most satisfactory to them. How can actions by the federal government result in an approximation of this competitive outcome? It can do so only through the promotion of competition, for competition is the surest method of requiring schools to perform satisfactorily. But the actions taken by a federal Department of Education can succeed only in prohibiting competition. For this reason, the gradual removal of federal control is absolutely necessary; this won’t be accomplished as long as we have either a Department of Education or, the latest idea, an education foundation. Only if individual schools can make their own decisions will the school system be able to provide the quality education so vital for a better future for all.
