by Fergus Hodgson
Director of Fiscal Policy Studies
As the Rocky Mount Telegram and Carolina Journal noted this morning, North Carolina legislators are considering “educational access” options for “non-public education.” This legislation would allow corporations to divert up to $40 million of their taxes to nonprofits that would grant scholarships to children of low-income families to attend private schools.
Although one may wish to see less reliance on public education, in favor of superior quality private education, this initiative would backfire. To understand why, one needs to consider what these words “private” and “public” mean in education.
The problem is that these words confuse the spectrum. One would better characterize the distinction as between government education and independent education. On the one hand you have schooling, funded by taxation and controlled by government officials. On the other, you have a variety of forms of education accountable to parents and funded by the customer.
With that understood, regulation and funding from government make schools “private” in name only. Unfortunately, legislators and government officials have used school vouchers and tax credits to do just that—although vouchers are worse in this regard. In fact, once taxpayer money gets involved, counterproductive regulation is inevitable.
This negative outcome associated with “school choice” programs came to my attention while working as a reporter in Louisiana. Although the state had a host of charter schools, a voucher program, and a similar tax credit to the one proposed here in North Carolina, I soon learnt that these schools were hardly independent from government.
As Andrew Coulson, director of the Cato Institute’s Center for Educational Freedom, has noted, “when [he] reviewed the worldwide historical evidence on this question, [he] was not able to find a single large-scale system of government funding of private elementary or secondary schooling that had escaped heavy regulation.”
“Taxpayers want to know what they are getting for their money, and the only way for a government to do that is to impose regulations. So basically it’s an attempt at creating accountability for taxpayers [which unfortunately undoes the stated goal of more people in independent education]. That’s why government-funded schools around the world tend to be much more heavily regulated than independently funded, private schools.”
Listen to my interview with Andrew Coulson here. (I hope you like the jazz intro. It makes me reminisce the New Orleans soul.)[audio:http://cdn.statehousemedia.com/louisiana/2010-10-20/AndrewCoulsonInterview.mp3]
Coulson identified two categories of regulation as particularly counter to market forces for schools and educators: barriers to entry and price controls. “They really suppress a lot of the forces that are responsible for the success of free markets in other fields.” In the context of education, barriers to entry refer to requirements that impede the opening of a new school and on whom a school may hire. Price controls refer to constraints on what schools are permitted to charge and how they may compensate their teachers.
Coulson still believes that tax credits are superior in this regard, because the money goes between the funder and the nonprofit, as opposed to through a government agency. However, Alan Schaeffer, president of the Alliance for Separation of School and State, cautions against both vouchers and credits. His organization’s mission is to help others “restore educational sovereignty to families and individuals.”
Schaeffer wants to like tax credits – since they are so much less involved in tax-funding, regulation, and compulsory attendance – and he describes them as “a well-intentioned effort in the right direction.” He also is willing to acknowledge that “there is a significantly decreased regulatory burden, especially when compared to vouchers.” However, he predicts one of two less favorable outcomes, and with good reason.
“One is that tax credits will be marginally accepted or implemented. The other is that if tax credits are widely accepted or implemented they will begin to be widely regulated as well… If children are actually moving in large enough numbers that we would all call it a success, the regulatory bodies, because they are ‘accountable’ for these dollars, will begin to impose conditions on these arrangements, which, at the end of the day, exist with the permission and graces of these government regulators.”
Schaeffer points to two examples from Coulson’s research “where some small degree of regulation did follow the money. We really don’t know what will happen in the future, but what this means to me is that more regulation can certainly be expected.”