The real estate crash of September 2008 provided a powerful lesson about the nature of government oversight. After federal regulators failed to rigorously manage the real estate industry, a pool of bad loans caused a housing bubble that nearly destroyed the world economy.
While schools are much different than houses, education reformers should take note of the value of government oversight because the core lesson remains the same. Markets function better when government plays a strong role, and education policymakers should help to inform consumer decisions and police bad actors.
The debate over the role of government in education is a pressing one. A study released last month in the National Bureau of Economic Research found that parents often have a hard time choosing effective schools. Indeed, parents often choose schools based on demographics rather than actual evidence of student achievement. Rather than allowing parent demand and satisfaction alone to determine the supply of public schools, the government should play a role in identifying promising schools and helping bad schools improve.
Secretary DeVos encourages improper education oversight
Still, current U.S. Secretary of Education Betsy DeVos has been leading the charge for expanding school choice while advocating for a minimal or relatively meaningless role of government in K-12 education. Indeed, DeVos doesn’t want to close bad schools, help governments provide robust achievement data, or even really have any government management over public schools at all. This is an approach that will almost certainly lead to a public school crash, which will hurt the nation’s public school students.
The pitfalls of her vision of choice can be seen across the country, where unregulated charters and weak practices flourish and, not surprisingly, these areas have charters with weaker results. For instance, in Ohio, bad actors misspent massive amounts of money in the charter space, many of which are run by for-profit companies. In Arizona, a state with relatively relaxed charter oversight, some charter networks have spent exorbitant amounts on administration, and for-profit companies have exhibited some troubling business practices.
Additionally, in her advocacy for unregulated choice, Secretary DeVos often argues that schools should only be held accountable to parents. In an effort to score political points, she has stated that schools “should be held accountable, but they should be directly accountable to parents and communities, not to Washington, DC bureaucrats.”
But relying on parents alone is not enough. In other industries, such as food service, policymakers don’t rely solely on the experience of the user. There are health and safety inspections as well as nutrition labels. The nation’s approach to schooling shouldn’t be different, and state governments also need to help regulate the industry by providing proper oversight; requiring transparent, comparable information about quality; and ensuring that only effective charters can flourish. Research supports this idea, and study after study has shown that the type of charter authorizer and accountability structure has a significant impact on potential student outcomes.
The effects of poor regulation
Despite this, advocates such as DeVos push for an unregulated authorization process instead of a rigorous and accountable system. This leads to weak management practices, including frivolous spending. For instance, in Michigan, there was an explosion of for-profit charters as a result of policies backed by Secretary DeVos. Today, about 80 percent of charters in the state are run by for-profits, and the sector is riddled with spending problems, including one school that spent millions on swampland.
A charter school system with weak standards also creates weak student outcomes, and for-profits keep low-performing schools open. Look again, for example, at DeVos’ home state of Michigan. In the state, an explosion of authorizers has led to situations such as Bay Mills Community College (BMCC) in Northern Michigan. The BMCC rarely closes charter schools because it collects a 3 percent cut out of the schools’ per-pupil state funding.
Private school vouchers take the problem of an unregulated market even further, and it’s clear that DeVos wants voucher programs to operate without almost any government oversight. In the most robust recent studies of vouchers in Louisiana, Indiana, and the District of Columbia, the programs have produced negative academic results.
These are not small negative impacts either. In Washington, D.C., for example, students who used the vouchers scored a whopping 7.3 percent lower in math than their peers who did not participate. A study of the Louisiana program found that an average public school declined from the 50th to the 34th percentile in math within just one year of using a voucher.
Good regulation can support school choice
Guardrails in choice can actually be the catalyst for gains. States such as Massachusetts and New York have a rigorous bar for entry into new charter schools, for instance, and the states engage in meaningful oversight. Furthermore, each has real consequences, including closure, for schools that don’t measure up. Other states, such as Arizona and Ohio, have weaker charter school laws and don’t do enough to regulate the area.
Interestingly, outcomes among charter management organizations (CMOs) are often better over time in states with strong guardrails. For example, CMOs in Arizona and Ohio perform much worse in math and reading than CMOs in New York or Massachusetts.
Of course, there remains vivid debate over what good regulation looks like in the education space, and government regulation related to choice can go too far. Arbitrary caps on charters can prevent good schools from being able to expand to serve more students as well as force them to fight for expansion opportunity. Unnecessarily complex charter school applications can also limit innovation.
While regulation-related issues such as poor authorization practices need to be worked out, it’s clear that the government must be involved in supporting school choice. Education reformers should advocate for strong charter authorization policies and practices instead of advocating for voucher programs. In this regard, the lessons of the real estate crisis still reverberate today—a situation where a rapid expansion of an uncontrolled system created a bubble that burst and hurt the most vulnerable populations. Policymakers and educators need to make sure that the same doesn’t happen to the nation’s schools.
Ulrich Boser is a senior fellow at the Center for American Progress. Danny Schwaber is the former special assistant for the K-12 Education team at the Center.