Feature: Michigan's Emerging Market for Schooling
Will school choice improve or destroy public education in Michigan? Researchers at MSU can shed light on this important but passionately divisive policy issue.
As Gov. John Engler has pointed out on many occasions, “the smart state wins” in the new American economy. The state with the best-educated workforce will attract the high-technology manufacturing and service industries that will dominate the next century. Michigan will only prosper in this intensely competitive economic environment if our state’s young people receive an excellent education. These new realities have put education at the top of the policy agenda, and not just in Michigan. President Bush campaigned on a promise to “leave no child behind,” and his first legislative proposals called for an ambitious set of school reforms. Governors around the country have pursued education policies aimed at giving their states a competitive edge in the new economy.
There is wide agreement on many of the steps that we need to take to improve our education system. Politicians in Washington and Lansing have proposed increased support for school readiness and early learning, incentives to increase the supply of talented teachers, and policies to raise standards and hold schools accountable for student achievement. Not all reform strategies enjoy universal support, though.
One that has been especially controversial is school choice. Policies that introduce competition into the public school system, including vouchers, charter schools, and educational tax credits arouse passionate support and equally intense opposition. Advocates of school choice policies argue that increasing the competitive pressure on public schools is the best if not the only way to force these sluggish bureaucracies to improve the quality of education they provide to young people. Opponents of choice policies argue that expanding choice will drain resources from the public school system, damaging the educational opportunities and life chances of Michigan’s children. Who’s right? How are choice and competition changing Michigan’s education system? Is the move to create a market for schooling a positive development, or not?
THE EMERGING MARKET FOR SCHOOLING
Michigan has the most market-friendly education system in the United States, because of the way we finance our schools. Under Michigan’s old finance system, most educational revenues were obtained from local property taxes, which “belonged” to the local school district. The amount of money that districts spent on their schools was based mainly on the value of local property. When districts wanted to increase spending they asked local voters to raise the property tax rate. Since the approval of Proposal A in 1994, though, schools and school districts have received almost all their educational revenues from the state.
The amount of money that schools receive depends on the number of students they enroll. When enrollment rises, they receive more money. When enrollment falls, they receive less. The only way that districts can increase their spending is by attracting more students. In Michigan’s emerging market for schooling parents enjoy a number of choices. They can choose to send their kids to charter schools, or to public schools in a neighboring school district. High school students can take courses in community colleges and universities, or take courses on-line. The main restriction, reaffirmed by the voters’ defeat of Proposal 1 in November 2000, is that they cannot take public funds to private or religious schools. When children move between public schools, though, their state appropriation moves too. Together, the impacts of Proposal A and Michigan’s new school choice policies have fundamentally changed Michigan’s public school system.
The traditional system was a monopoly, in which publicly-funded education was the exclusive responsibility of the local school district, and often of the neighborhood school. Dissatisfied parents could change schools only at great trouble and expense—by moving to another school district, or by paying for private schooling. Michigan’s new school choice policies introduce powerful new forces into our public school system. Michigan families are now free to leave schools they dislike for schools they prefer, at virtually no cost to themselves. And when they change schools, they take their state appropriation with them. Because parents can now “vote with their feet,” schools find that they must be more responsive to parents’ concerns. Schools and school districts must compete for students and the state revenues that they bring. Those that are successful in this competition enjoy growing enrollments and growing revenues. Those that are not lose students and revenue, and may ultimately go out of business.
HOW DOES THE MARKET FOR SCHOOLING WORK?
The introduction of market forces into the public school system is a big change. Like any big change, it has had both positive and negative consequences. On the bright side, giving parents more choices about the schools their children attend has made public schools more accountable, and more responsive to families. Parents like being able to choose among schools, and the parents who move are typically very happy with their new schools. Many charter schools have long waiting lists. In response to the new options available to parents, traditional public schools have made serious efforts to provide the kinds of programs and services that families want.
Even more important, they have changed the ways in which they relate to parents. Since parents are free to leave, administrators and teachers have tried to make their schools more responsive to parents and more attractive to prospective students. In Lansing, for example, district administrators have launched a number of initiatives including magnet schools, all-day kindergarten, and an aggressive marketing campaign to win students back from charter schools. Other districts have even chartered their own schools.
On the down side, though, there is little evidence that school choice policies are leading to improvement in the quality of education that Michigan youngsters receive. Choice policies have allowed some children to move from less successful to more successful schools, and these children are clearly better off. In general, though, charter schools perform about as well or somewhat worse than traditional schools in the communities where they are located. Choice encourages schools to be responsive to parents, but so far this has not produced much change or improvement in the quality of instruction that they provide.
In addition, Michigan’s school choice policies make some children worse off. By drawing away students and revenues, choice forces schools and school districts to meet the challenges they face with fewer resources. The resulting cuts in programs and services make it attractive for more families to leave. Unless the state takes action to make needed changes in these schools and school districts, they will be pushed into an accelerating downward spiral. The students who are left behind in these schools are the big losers from Michigan’s school choice policies.
THE SMART STATE WINS
Markets can be a powerful force for good, in education as in other areas of our lives. Giving parents choices and providing incentives for schools to respond to parents’ preferences can produce real improvements in Michigan’s education system, if we are careful to get the rules right. The citizens of California have learned what kind of damage a badly structured market for electricity can do. The citizens of Michigan need to be sure that we organize our emerging market for schooling so that it improves the educational opportunities available for all Michigan children, and not just some.