Cato Renounces School Vouchers

My wife and I moved into our house on Capitol Hill almost seven years ago. At first, we got a lot of mail addressed to the previous residents. But over time, people figured out that the old owners had moved to Bethesda so their kids could go to school in Montgomery County (this drives roughly 95% of all home sales in my neighborhood). Gradually, the volume of misaddressed letters and magazines trickled to a stop. As of now, there are only two organizations left that are still sending me someone else's mail. One is a seed catalogue based in the Midwest, which keeps offering free samples of sunflowers and begonias. The other is the Cato Institute.

But I don't mind, because it keeps me up to date with what extremist libertarians say when they think they're talking to one another. For example, today I learned that Greg Anrig was right -- conservatives really are abandoning vouchers. Unfortunately, they're abandoning them for something even worse. From the new Cato's Letter, here's an excerpt from an "interview" with Andrew Coulson, the Director of Cato's Center for Educational Freedom:

In your view, what is the most promising proposal for reform in education policy?
The best realistic policy we've developed is a combination of personal use tax credits and scholarship donation tax credits. Basically, if you pay for the education of your own or someone else's children, we cut your taxes. Cato published model legislation along these lines last December and we'll soon be releasing a tool that estimates its fiscal impact. In all five states we've looked at so far, this proposal would generate substantial savings.

Why are tax credits superior to vouchers?
The key benefit of tax credits is that they reduce compulsion. Under vouchers, everyone has to fund every kind of school; that produces battles over what kinds of schools should get vouchers--for instance over the voucher funding of conversative Islamic schools in the Netherlands. With tax credits, people are either spending their own money on their own children, or they are choosing the scholarship organization that gets their donation. No one has to pay for education they find objectionable.

"Substantial savings," is, of course, Cato-speak for "substantial disinvestment in public education." And the problem with tax credits is that they only help people who make enough money to pay taxes. Cato's model legislation includes a credit against sales taxes, but that's still a tiny amount, less than $200 for a family with an income below $20,000 living in DC. So I assume that with this policy shift, Cato will no longer be claiming the moral high ground in this debate by asserting that they're just trying to help poor inner-city children escape the dysfunctional public school system. Their only defense is to assume that some kind of massive, tax credit-financed infrastructure of "scholarship"-granting charities will emerge from the ether to help students in need.

This policy would be slightly better if the tax credit were refundable (it's not; that's how you get the "substantial savings"). But that still wouldn't help a poor family that needs to write a tuition check in August and wouldn't get their tax refund until February. Of course, one could envision some kind of advance-refund system, where the check comes in August--but wait, that's exactly the same thing as a voucher, isn't it?

The political rationale for the policy, meanwhile, rests on the fiction that there's a difference between the government handing you a dollar and the government not making you pay a dollar you would have otherwise owed in taxes. In other words, some conservatives are concerned that parents, exercising their freedom and personal liberty, would use their vouchers to support schools with non-conservative values. The solution? Lie and pretend that tax credits aren't the same thing.

Frankly, I prefer the begonias.

Update: Non-extremist libertarian Megan McArdle offers some smart critiques of tax credits here, while Matt Yglesias notes the futility of attempting to craft good public policy from an essentially anti-government stance here.

School Funding's Tragic Flaw

Public education costs a lot of money -- over $500 billion per year. Over the last century, there have been huge changes in where that money comes from and how it's spent. In 1930, only 17 percent of school funding came from state sources, and virtually none came from the federal government. Today, the state / local / federal split is roughly 50/40/10 (individual states vary). People still say all the time that "most" school funding comes from local property taxes, but that hasn't actually been true since the mid-1970s.

On the whole, this change has been of tremendous benefit to disadvantaged students. As states have assumed the primary role in funding education, they've tended to distribute money in ways that are, on the whole, more equitable. The same is true for federal funding, most of which is spent on behalf of poor students and students with disabilities. (This works because taxpayers have a weird psychological relationship with their tax dollars. Rationally, people should view every dollar they pay in taxes and receive in services as equal, regardless of the basis of taxation or the source of the services. But they don't. People feel very strongly that locally-generated property taxes should be spent locally, while they feel less ownership over state taxes and even less over federal dollars. As a result, they'll tear their hair out if you propose transferring 10 percent of their local property tax dollars to a low-income district across the state, but they're far more sanguine if you propose a state school funding formula with precisely the same net result in terms of the taxes they pay and the dollars their local school district receives. It doesn't make sense, but that's okay, because this irrational jurisdiction-dependent selflessness is what allows for the redistributionist school funding policies that poor students depend on to get a decent education.)

However, there's still a lot of work to do. The transition to more equitable, rational set of school funding policies is far from complete. There is still a basic flaw running through policies at the federal, state, and local levels: money follows money. Students and jurisdictions that have more money still get more. Those that have less still get less. It's not as bad as it used to be, but it's still a major problem. To explore this in more depth, I've co-written a paper with Marguerite Roza, a professor at the University of Washington and senior scholar at the Center for Reinventing Public Education. You can read it here. It shows how these flawed policies cascade through multiple levels of government to produce vastly different funding results for two essentially similar high-poverty elementary schools, one in Virginia and the other in North Carolina.

Let me also say, by way of further self-promotion, that if you have some interest in school funding equity, but can't imagine wading through mind-numbingly boring scholarly treatises or tables of fine-print numbers, then this is the paper for you. I am willing to state with confidence that this is one of the least boring school funding equity papers out there, and it provides a good general overview of how these policies work and fit together. I'm not promising Entertaiment Weekly here, but if you'd been meaning to learn more about this but don't want to spend more than an hour doing so, this is your lucky day.

Milestones

Greg Maddux won his 350th career game over the weekend. I don't know why people aren't making more of a big deal about it. Only eight other pitchers have done this. Six of them pitched their last game before 1931, long before live balls, modern bullpens, and five-man rotations. Heck, John McCain wasn't even alive back then. One apparently only did it with the help of massive quantities of illegal pharmaceuticals and encouragement from underage country and western stars. Cal Ripken became a national hero just for showing up for work every day. 300 wins usually merits sports page headlines at the very least and occurs at about the same frequency as 500 career homeruns. But 600 homeruns is an even bigger deal, and 700 even more than that. Why the indifference to 350? It's almost as if it's always seemed so unlikely that anyone would ever pull it off that now that it's happened,  people don't quite know what to say. The only other person in the modern era to reach this level cleanly was the immortal Warren Spahn, and he averaged nearly 40 starts a year from 1947 to 1961. The most starts Maddux ever got in a season was 37, and a typical year was closer to 34. So this almost without precedent, a combination of sustained brilliance and unusual longevity that we may never see again. 

Activism, Schmactivism

Via Russo, Education Week reports($) that Senator McCain has cited a 2002 9th Circuit Court decision finding the Pledge of Allegiance to be unconstitutional, due to the part about "under God," as the kind of "judicial activism" his appointees will eschew.

This is nonsense. The First Amendment says that "Congress shall make no law respecting an establishment of religion." Historically, the courts have interpreted the establishment clause broadly, to the point that the bleeding edge of First Amendment jurisprudence tends to center on questions like "Can the city council of East Podunk spend $75 to place a nativity scene on the lawn in the town square before Christmas, and if not, would including a plastic Santa Claus make it better?"

But this is a case where Congress made a law, in 1954, specifically adding the words "under God." This made the Pledge so clearly unconstitutional that the Supreme Court's only recourse was to throw the case out on a highly dubious technicality (that the plaintiff, who was suing on behalf of his school-age daughter, lacked standing to sue, because he was divorced and didn't have custody).

In other words, McCain is saying "My judges will rule based on popular sentiment and cultural sympathies, constitutional law be damned." That's the definition of judicial activism.

Politics and Student Loans

In today's Washington Post, Kevin Burns, the Executive Director of America’s Student Loan Providers, which represents dozens of student loan companies, takes issue with a May 5th Washington Post editorial supporting the Direct Loan program. It’s not surprising that the leader of an organization dedicated to supporting private student loan companies wouldn’t like an editorial promoting government involvement in the federal student loan program. But Burns doesn't argue for less government involvement--instead, he wants more involvement in the form of higher federal subsidies going to student loan companies.

Burns starts off by scolding The Post for publishing the editorial in the wake of “potentially serious problems facing families in obtaining student loans for the fall” and goes on to fuel the panic by citing that 75 lenders have pulled out of the federal loan program.

The Post editorial actually sought to reassure parents and students by stating, “The Education Department has taken steps to ensure that its direct lending program can fill the gap. The House of Representatives and the Senate have passed bills that would also allow the department to buy federally guaranteed loans from private lenders, a concept President Bush has endorsed.” But somehow The Post editorial, according to Burns, “failed to support efforts by Congress and the Bush administration to avert a crisis.” So The Post, by highlighting recent legislation intended to help students get access to loans, wasn’t supporting Congress or the White House? I’m confused.

Actually, I’m not at all confused. Burns was scolding The Post, not because it didn’t support Congress and the White House or because it was being irresponsible in light of problems in the student loan market, but because it said something other than “Congress should restore the high student loan subsidies lenders received before the College Cost Reduction and Access Act of 2007”—legislation which eliminated $20 billion in student loan company subsidies.

Burns continues in his letter to make the case for a return to higher subsidies. First, he claims that “President Bush’s fiscal 2009 budget confirms that guaranteed loans are more cost-effective.” The 2009 budget was published after the subsidy cuts, and these cuts are a primary reason the FFELP program became more cost-effective than the Direct Loan program (although these estimates are much debated). Burns then argues that because the FFELP program is more cost-effective, Congress should revisit "last fall's budget cuts", i.e. reverse the subsidy cuts that made the FFELP program more cost-effective in the first place.

This is precisely the type of head-spinning rhetoric that has led to a confusing, complicated, and often corrupted student loan program. This isn’t to say that the FFELP program should be eliminated—it has provided the choice, innovation and service, that Burns talks about in his letter. But the subsidy rates that encourage lenders to participate in the program need to be removed from the political process.

Recently, Fed chairman Ben Bernanke (via New America Foundation) stated that, “a more market-sensitive approach--flexible enough to provide a wider spread during times of market stress and a narrower one during normal times--could provide a more robust structure” than the fixed subsidy rate that is currently set by Congress. Proposals for using student loan auctions to determine subsidy rates are still new (although all parent (PLUS) loans will be issued using auctions starting in 2009), but they hold some promise for moving the process for setting loan subsidies away from politics.

Finally, Burns states that “the case for a strong private-sector program is as compelling today as it was when President Lyndon Johnson created the program.” But while we’re talking about the past, I think it’s useful to revisit the 1979 comments of Alfred B. Fitt, the general counsel to the then newly-established Congressional Budget Office:

Viewed originally as an ingenious and inexpensive way to attract private sector capital to the student loan business, the GSL program [the former name of the FFELP program] has gone through piecemeal alterations that have transformed it into a system much more costly than a direct federal loan program, with the higher costs not redounding to the benefit of student borrowers, but rather to the benefit of the financial institutions that make the loans.

Thirty years later we’re still tinkering with the program, trying to fix this.

Cruel, But Not a Hoax

There's a good higher education article in the The Atlantic this month titled "In The Basement of the Ivory Tower." It's written by an anonymous "Professor X," an adjunct English instructor at both a small private college and a community college in the northeast. The gist is that many of his students are woefully unprepared for even the introductory courses he teaches. So he must fail them, exposing, in the words splashed across The Atlantic's cover, "Higher Education's Cruelest Hoax." Either that or, as the article's blurb puts it, the "destructive myth" that "a university education is for everyone."

One thing's for certain: this piece will be catnip for those who like to adopt the contrarian too-many-people-are-going-to-college-these-days position. This is an especially attractive stance for elitists and/or people who spend a lot of time searching for opportunities to loudly begin sentences with some variation of the phrase "I know it's not politically correct to say this, but..." as if this denotes intellectual bravery of some kind. The article's sad story of one Ms. L, who says she was "so proud of myself for having written a college paper," only to be crushed by a grade of "F," will be used as evidence that we are not doing people any favors by letting them into college. Charles Murray has apparently written a whole book about this--adorned with blurbs from Jonah Goldberg, Bill Bennett, P.J. O'Rourke, and Tom Wolfe no less--to be published later this year.

Needless to say, I disagree. Not with Professor X's contention that his classes reveal disturbing truths about higher education. He's right about that. "Remarkably few of my students do well in these classes," he writes. "Students routinely fail; some fail multiple times, and some will never pass, because they cannot write a coherent sentence." Yet neither of his employers seems to give a damn, because:

Adult education, nontraditional education, education for returning students--whatever you want to call it--is a substantial profit center for many colleges. Like factory owners, school administrators are delighted with this idea of mounting a second shift of learning in their classrooms, in the evenings, when the full-time students are busy with such regular extracurricular pursuits of higher education as reading Facebook and playing beer pong. If colleges could find a way to mount a third, graveyard shift, as Henry Ford's Willow Run did at the height of the Second World War, I believe they would."

Adjuncts like Professor X get paid squat, while his students pay the same tuition as everyone else. This generates enormous excess revenues for universities, which are used to subsidize research, graduate programs, fat administrative salaries, money-losing sports programs, etc., etc.

No, my disagreement is with the prescription. The promise of higher education neither a "hoax" nor a "myth" (in fairness to Professors X, these words don't do justice to the more thoughtful tone of his piece). After all, without college, what are Ms. L and her struggling classmates supposed to do? Live out the rest of their lives hardly able to read and write? Find some menial job quietly providing service to the likes of Murray, Bennett, and Wolfe, who enjoy three PhDs and a J.D. between them? Everyone in this story is getting screwed, including Professor X. (Who apparently isn't comforted by being the world's greatest telepath. When failing students, that probably makes things worse.)

This is a common problem in education, both K-12 and higher, wherein we take the students with the greatest educational needs, give them the fewest resources and the worst education, and then call their failure inevitable. Here are some alternative suggestions:

How about not shunting the Ms. L's of the world into, in Prof. X's words, the "colleges of last resort" ? He talks of "the adjunct instructor, who by the nature of his job teaches the worst students." How about that not being the nature of his job? He says "the rooms in which we study have been used all day, and are filthy." How about cleaning them? How about not using adult education as a profit center, and instead investing that money in better adult education? Professor X says of his department chairpersons, "They don't mention all those students who have failed my courses, and I don't bring them up." How about mentioning them? How about bringing them up?

In one of Professors X's two classes, English 102, "we read short stories, poetry, and Hamlet." How about not reading poetry and Hamlet? I have nothing against Shakespeare, but Hamlet was written over 400 years ago and isn't easy to read. How about picking some high-quality prose from the last century, or even this one, which is available for free in abundant supply from publications like The Atlantic, and use that to teach the course?

Professor X is right to call attention to his class. For at least the past half century, we, as a nation, having been trying to implement mass higher education on the cheap. As more and more students go to college--because they need college, because in the information age, access to opportunity is dramatically curtailed without the knowledge and skills it provides--we've put lower-income students, first-generation students, disadvantaged students, working students, immigrant students, minority students, older students, disabled students, students from often dismal high schools, in the colleges of last resort. In the dirty classrooms, with the underpaid professors, teaching the wrong curriculum. And when they fail, we say, hey, we gave you a chance at a college. If we say anything at all.

How about we do something else?