Tuesday, September 16, 2014

Choice Finance Fantasies (Part II)

I love the internet. In particular, I love the way it allows for conversations to break out between people who would never meet or interact in real life. This is one of those conversations.

First, I wrote this piece about what I see as some fallacies in the ideas behind choice financing. Soon afterwards, Neerav Kingsland wrote this response at the blog Relinquishment. Kingsland is the former CEO of New Schools for New Orleans, so it is safe to say that we come at these issues from widely different perspectives. But here I am responding to his response, because, yay, internet.

Kingsland suggests that I've fallen into "accounting like a state," in which "finances are viewed through the lens of government program solvency, not outcomes." Or, if I understand correctly, institutions can become more worried about their own continue existence than about making sure their missions are accomplished. I agree that's a thing.

Kingsland restates my argument thus:
  1. Public education benefits from economies of scale; specifically, charter schools are highly inefficient and they end up reducing teacher salaries and pensions to make up for these inefficiencies.
  1. Public school districts have a high fixed costs, so when funds “follow” the student, districts often lose more in revenue than they can save in costs.
  1. Public accountability over taxpayer funds for education is best accomplished through elected school boards (where all citizens can vote for societal ends) rather than choice (where public school parents pursue their own individual ends).
I'd quibble with #1-- I wouldn't call it inefficiency so much as simply large aggregate expense. And I also mention that the gap can be closed by fundraising, contributions, and tuitions. But otherwise, that's about right.

Here are Kingsland responses:

1. I didn't consider academic outcomes. If charters do a better job with less funds, that's something. Kingsland suggests there's evidence that they do, and a mountain of problems with what anybody means by "better." I'm unconvinced that the evidence is even sort of conclusive.

2. Kingsland observes that state pension systems are a fantasy fueled mess verging on insolvency. This is, in many cases, the result of serious state level mismanagement, and in other cases, the result of mis-stating the actual level of crisis.

3. Schools have fixed costs. So do lots of businesses. Schools should develop business plans that keep students from jumping ship. That assumes that schools can best compete by doing a good job.

4. Accountability can be achieved many ways, including non-profits providing school services under the control of an elected board. I don't disagree with this.

Kingsland (and a couple of writers in the comments section) help crystalize for me where one of the big conflicts between choice fans of economic school reforminess clash with (for lack of a better word) traditionalists. Both want to operate inefficient systems. Both insist that their inefficient system will work just fine as long as they can have access to That Pile of Money Over There. But Kingsland et al want the pile of money to include tax dollars that are already being spent on other things; in particularly, they would like the pile to include money that is being spent on teacher salaries and pensions. Traditionalists want access to tax revenues.

Kingsland makes the point that charters have to balance their books (as if traditional public schools somehow do not). The implication is that charters are more fiscally responsible or efficient, but charters balance the books by transferring expenses back to the public school system, including the expenses of educating more costly-to-educate students and even, in cases like the Moskowitz schools, the costs of owning and maintaining the building itself. Charters are, at times, like a college student who is proud of supporting himself and Living Within His Means while his parents are still paying all his tuition, room and board bills.

It's not that I believe public school systems are a model of financial efficiency for all the world to follow. It's that I think choice systems are almost always going to be worse. If you could run turn a public system into a public/non-profit hybrid system without having to spend a single dollar more or cut a single service, I would not squawk a bit. And I believe that such a system is probably theoretically possible in a select few places. But mostly it can't be done, and even Kingsland and his boosters are saying they could totally do it-- if you just gave them access to that pile of money over there. And that desire to drain salary and benefit funding in order to make the system work means you must now convince me that you can somehow maintain a quality teaching force with a fast food style compensation structure. That's an argument for another day, but I'm more likely to become convinced that rainbow-pooping unicorns exist.

More importantly, I'm pretty sure that financial efficiency is not a worthwhile goal for a school system. Not that I think it should be disregarded. But it can't be the goal. Efficiency is not excellence.

Kingsland suggests I'm laboring under four fantasies.
  1. School districts are efficient because they use economies of scale to deliver a strong educational experience for students.
  1. States funded teacher pension systems are based on sober predictions of market returns.
  1. The high fixed cost of operating a school district is a good reason to prevent competition.
     4. Democratic accountability is incompatible with giving choice to the users of government services

#1 is beside the point. Public schools must educate all students who show up. The moment you accept that as part of the mission, you can kiss efficiency goodbye. Kingsland says productivity is important in figuring efficiency, and that's true, but some students will always really hurt your numbers-- they still get an education. Providing a one-size-fits-most product is also good for efficiency, but it's not what schools are for.

#2 Unfortunately, state teacher pension funds are based on political buffoonery, and currently they are still suffering the effects of the economic crash that all those sober economists and bankers and regulators saddled us with six or seven years ago.

#3 No. It's a good reason to prevent fake competition. The charter systems being tried around the country are not anything like a real free and open market, even if they start with the premise that every student is a customer with a cost-per-pupil stipend to "spend" at the school of his choice (a premise that my first essay was written to address). There are other big problems with market forces in education, but we're already running long here.

#4 Probably not. But what charter and non-profit (which, c'mon-- "non-profit" just means "we don't have to share our income with shareholders) seem to want is a system without any such oversight. Remember Reed Hastings explaining that schools would work so much better if we did away with school boards? That would seem to be the choice ideal.

Elected school boards are ugly and messy and political (unlike corporate boards which never have those problems). And they are often forced to respond to exactly the community concerns that make schools less efficient. But that's the gig.

This is another area where we find some pretty fundamental differences of opinion about schools. I believe that schools are meant to represent the will of the entire community, and to educate each child as best they can without breaking the bank, but without writing off any children either. I don't believe that they are meant to be engines of business-style efficiency, because that creates a host of economic pressures that run counter to the mission and are eventually bad for students. And I believe that, even though their intentions may in some cases be pure, choice advocates are not being honest about the true costs of a choice based system.


  1. Boy, this would be an interesting argument if schools had been invented in 2008, or if the United States was the only country in the world! The burden of proof should be heavily on Kingsland, though, because there are plenty of examples of successful "traditional" education systems around the world and across history. Large scale success stories in universal choice systems? Hm? Chile? Sweden? Milwaukee? New Orleans? It isn't like it hasn't been tried.

  2. Then we have the third world countries. Surely this argument can be an interesting one but it holds a lot of open ended question. financial consulting team