Educational choice advocates have urged caution amid early reports that show, so far, Nevada’s new, near-universal education savings account program seems to be attracting families who are relatively well-off.
They’re right to note these participation numbers reflect the “earliest of the early adopters.” It will take time for outreach efforts to inform low-income families about their new options, and to allow a new education marketplace to develop in the Silver State.
But the early participation data, and the debate swirling around it, also show why it’s important for the educational choice movement to cultivate support among people, especially those on the political left, who may be skeptical of the market forces ESA backers hope to unleash.
Supporters hope education savings accounts will allow new providers into the education system, while also allowing families to economize, thereby forcing schools to compete on price.
The hope is that market forces will ultimately propel a cycle of innovation that, even if it doesn’t draw large numbers of the most disadvantaged families into the program in the early days, will benefit them over time. Jason Bedrick of the Cato Institute notes this is what happened with a number of consumer goods, including smartphones.
Higher-income individuals were the early adopters of the iPhone and other smartphones. They paid a premium which allowed tech companies to recoup their investment in research and development and earn a significant profit. Those profits created incentives for them to expand production and for other companies to follow suit. Over time, real prices fell even as quality improved dramatically. The original iPhone models sold for $499 to $599 but later generations already sell for much less, making them accessible to the poor. Indeed, even as of 2012, more than half of American 18- to 24-year-olds earning less than $15,000 per year owned a smartphone. At just $10 a piece, smartphones will be ubiquitous.
Of course, the wealthy still have access to better quality (and much more expensive) smartphones with the latest and greatest features. But as Michael McShane of the American Enterprise Institute has explained, “markets work when the spectrum of relative quality drives improvements in absolute quality.” [Emphasis added.] Wealthier individuals continue to pay a premium for the cutting-edge technology, which later becomes standard and more affordable for everyone.
History is full of examples of market forces working as Bedrick describes, and he’s hardly the only one looking for new approaches to education that might follow the smartphone’s trajectory. The Silicon Valley startup AltSchool might be running pricey private schools now, but its backers say they hope to lower their costs, and eventually create an operating system that can power personalized learning in public schools, or lower-cost private ones.
But there are advocates who see limits to this kind of market-based thinking. It may be fine to let the rich shell out $700 for smartphones, and see benefits gradually trickle down to low-income consumers in the form of high-tech $10 handsets. But what if schools are different? Should the education system tolerate that kind of inequality in the name of spurring innovation?
Those who argue “no” might argue programs like Nevada’s should be means-tested, so they’re reserved for students who have the most to gain from new options. Or they might argue the accounts should provide more money to low-income and special-needs students, who now only receive about $600 more than their better-off peers.
To the extent Nevada’s ESAs fail to offer enough benefits to disadvantaged families, though, it’s not exactly right-wingers who are to blame. As Matthew Ladner explained on a redefinED podcast earlier this year, Nevada’s education savings accounts are capped at less than $6,000 per child mainly because backers felt they needed to avoid drawing more money away from public schools.
Ladner and others looking to harness market forces have proposed sliding-scale funding schemes for ESAs that would be far more generous for disadvantaged children. They’ve also noted that even Nevada’s imperfect program is more equitable than the existing funding schemes in many school districts.
Imagine if some more left-leaning advocates had actually been at the table, rather than fighting the program. They could have pushed for a more meaningful sliding scale, ensuring the scholarships would better meet the needs of disadvantaged students. Or they could have insisted on a higher cap for the state’s new tax credit scholarship program — which offers a potential avenue for low-income families to supplement their ESAs — that was higher than a measly $5 million.
Making choice programs like Nevada’s truly equitable is going to require more political muscle than the right can deliver on its own. It’s going to need backing from the political left — a group naturally disposed to take up the cause of equity. Sadly, right now, too many of those people, in Nevada and elsewhere, are focused on stopping these programs before they start.
This is the year of educational choice, with a record number of new programs created, and this trend is heading in one direction. We don’t read much about these programs being repealed. Children will benefit if more progressives stop their futile efforts to derail this train, and instead get on board and help guide it toward a better destination.
