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Betsy DeVos: School Choice or School Privatization?

“Should we put more funding back into public schools or should we move towards the school choice movement, emphasizing voucher programs and charter schools? Betsy Devos’ recent nomination as Secretary of Education brings this debate to national spotlight.”

By Andres Rodriguez Brauer

     It is no secret that the 2016 presidential campaign failed to emphasize policy discussion, as the historically unpopular personalities of Donald Trump and Hillary Clinton headlined the race. Across the campaign, the voucher school debate was nowhere to be seen. However, after Donald Trump’s victory this past November, his nomination of Betsy DeVos for Secretary of Education has propelled the issue into the forefront.


Practical Issues with School Choice

Mrs. DeVos is a self-identified member of the school choice movement. The movement wishes to give parents the ability to choose where they send their children, rather than being locked to their district. One way to achieve this goal, as Betsy DeVos has favored, would be to provide grants to students, allowing them to study for free in whichever school they wish. A more moderate approach is that of charter schools, which allows private organizations to manage government owned schools that would compete against already existing public schools. However, opponents of the movement believe that these plans entail privatization and would be ill-advised due to a rise of predatory for-profit schools and the creation of a two-tiered system.

     Without proper regulation, the concerns over a “two-tiered education system” are certainly valid; there are market failures in the education market that could threaten the principle of equal opportunity and quality of education as well as some very serious issues regarding information asymmetry. Sadly, right wing ideologues often ignore these issues and fight back against attempts to address them. Often times, parents don’t have readily accessible information about the quality of the schools. Even when the parents have the information available, they tend to make decisions based off of other aspects, such as how nice the professors and facilities are. Too lax of a regulatory framework can result in a flood of for-profit schools who prey on uninformed parents and cash in on the vouchers. Furthermore, unless the government imposes strict regulations, public schools will likely be left with children with disciplinary issues, special needs and those which parents fail to make an active choice. If the public schools are not modified to address the above concerns, the students that are left stranded in the public schools will most likely be worst off. In addition to a decreasing pool of resources, the schools would be significantly underfunded and left with a large amount of fixed costs and the students with the highest amount of marginal costs.

     Unlike most sectors in which government is involved, the education market does not have the same shortcomings and market failures to require its control. Education does not have the same amount of barriers to entry and economies of scale issues that exist in the police departments, prisons, and transportation systems, meaning that an effective market can (and does) exist. Additionally, the potential for human rights abuses that exists in the prison and police departments are also non-existent in the education market, meaning private management will likely be effective. Therefore, there is no theoretical issue for why it must be government owned, except for the potential issues in information asymmetry, most of the issues highlighted above can definitely be solved with a proper regulatory framework.

     We have already seen these issues in practice, and thus have both theoretical and empirical validity. We have seen predatory schools in the university market, where for-profit colleges are created and provide useless degrees to take advantage of the college subsidies provided by the federal government. This issue has also already been seen inside Milwaukee’s voucher market, leading to underwhelming results, performing statistically identical to traditional public schools. The idea that vouchers will merely emphasize cost-cutting rather than educational improvement also has some empirical evidence. Results from Chile’s own voucher program suggests that voucher programs incentivize schools to cut costs, rather than boosting educational achievement, where the effects of the program is ambiguous. In the United States, the effects of the school choice inspired programs have been underwhelming. Empirical studies have been ambiguous over the total impact of all programs, with little evidence of improvement due to the implementation of charter and voucher schools.


Upsides to School Choice

     Nonetheless, the core concept of the school choice movement has some very significant merits. Currently each public school has a monopoly over all students in their zip code, giving them the ability to charge higher prices and offer lower quality, as there is no threat of defection. This is especially true in a market where consumption is required, such as the public school, with significant minimums in place for when children are allowed to stop attending. If the option to find a better alternative doesn’t exist, the school has zero incentive to improve. In the case of government organizations, these hold soft-budget constraints. Therefore, whenever they spend more than they have, they can expect the government to cover their shortcomings, thus dissuading efficiency. Breaking the monopolistic nature of the current school system would be incredibly beneficial, regardless of any change in distribution and management. Allowing parents to choose whichever public school they wished to attend would have a very significant positive impact in and of itself. Overall, competition incentivizes all schools to improve and would increase the quality of already existing public schools.

     The current voucher and charter programs in the United States are not subject to all federal regulations at this point, which is a significant cause for a lot of the shortcomings mentioned earlier. Being more selective in distributing voucher and charter privileges as well as being more active in shutting down and removing privileges from under-performing charter schools and voucher schools will greatly limit the extent of which cost-cutting will be the focus. It is also essential to create guidelines to aid parents in selection as well as making academic performance data readily available for all schools so parents can utilize the information to easily compare and contrast different schools around their area, decreasing information asymmetries and incentivizing schools to improve their educational standards. Furthermore, bans on for-profit schools from receiving vouchers and charter schools can also be a helpful. We have already seen the ability to regulate these markets effectively in the Obama administration, where for-profit colleges were imposed deeper academic standard regulations. This presents a possible framework to solve the issue of predatory schools in voucher and charter programs.  

     Under a voucher program, schools might create divisions focused on treating children with special needs. Additionally, the amount of schools directly focused on these students might also increase in quantity. If these are still not enough to solve the issue, a shift in focus for these public schools towards aiding this niche type of students is certainly likely to help. In the case of charter schools, the worries are also lessened, since they could easily be forced to abide by the same rules as public schools, thus solving the selection problem. Parents who fail to make an active choice will cause their children to be left behind only if we make public schools the default option. If parents are left with no default option and are legally required to choose a school, all parents will have to make an active choice, likely decreasing the magnitude of the issue.

     The implementation of these programs does not necessarily imply a defunding of public schools. Less resources might be coming in, but educators will also be teaching less students, which would compensate for a large part of the loss in income. Furthermore, the competition in schools will likely pressure schools to be more cost-efficient, thus using the already existing resources more efficiently. These effects, plus the increased competition in achievement, can lead to public schools to be in a better condition after the programs, rather than worse. As of now, empirical evidence appears to be ambiguous, with most studies showing statistically insignificant effects.

     While the school choice track record has been questionable, well-regulated programs have had far better results, such as Boston, New York City and New Orleans. In the case of Massachusetts, empirical studies have found large and statistically significant gains in academic proficiency for children attending charter schools, with these positive effects being noticeable in their competitiveness in the college admissions process. Empirical evidence has found positive results for all of these programs, in contrast to those which leave their charter schools unaccountable.


Opposition from the Left

     Some members of the left also express an unhelpful concern over the idea of privatization itself. Left wing ideologues hold blanket opposition to the reforms; a position as troubling as the anti-regulatory position of right wing ideologues. After all, what should matter is the quality and accessibility of the education, not who controls or manages it. In theory, it is certainly possible to implement an effective voucher and charter school programs. In practice we have seen that the empirical evidence is most definitely ambiguous, despite the fact that implementation has usually been lackluster due to an insufficient amount of regulations targeted at reducing the previously mentioned market failures. However, in programs that managed to implement an effective regulatory framework, such as in the Massachusetts charter school program, the empirical data has been supportive of the benefits of the program.

     This brings us back to the person who helped bring this debate back to the forefront: the new Secretary of Education, Betsy DeVos. Aside from the policy controversy in itself, DeVos had a remarkably terrible showing during her confirmation hearing. When questioned by Senator Al Franken, she seemed completely uninformed about Senator Tom Harkin’s Individuals with Disabilities Education Act (IDEA). Surprisingly, or maybe not, her track record is honestly as bad as her hearing performance was. As the Economist highlights, test scores have declined over the last 10 years in her state and 80% of charter schools are below the state average in math and reading.  

     Betsy Devos lobbied for voucher schools in the state of Michigan, where she displayed a lot of the same harmful tendencies that the right wing ideologues fall into. She promoted a massively unregulated system, making it easy for almost anyone to open a charter or voucher school, in order to expand competition. However, the lack of standards for opening schools led towards the creation a lot of profit-oriented lackluster schools coming in. In theory these schools will lose out on customers and go out of business, but these facts are often not seen until much later, after kids and families already lost their investments. The information asymmetry also makes it questionable if future families will even realize the perverse notion of the school, maintaining them in business. To make matters worse, she has also lobbied to allow failing programs to expand, under her naive belief that the market will naturally take care of it; totally ignoring its failure in this situation. Betsy DeVos has supported some regulations, such as requiring that schools ranking in the bottom 5% for three straight years to be closed. However, the delicacy of the issue and the importance of regulation in it makes DeVos a dangerous figure, given her natural skepticism of government intervention.


Is the Investment Worth it?

     Regardless of ideological belief, school choice has the potential to improve academic performance in the United States. However, it has to be done right. Former President Barack Obama himself spoke positively of charter school programs, but expressed strong instincts for regulation and oversight.  Sadly, under Betsy Devos, educational policy will continue to fall victim to ideological extremes and will continue to promote her failed vision of what our public education system should look like.



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