In theory, competition has the potential to boost quality and lower prices. But how is this theory working in education? This report from the Friedman Foundation for Educational Choice provides an overview of the research on competition in American K–12 education and offers suggestions to enhance the competitive environment.
The report finds that competition in the form of charters, vouchers, and tax credits does inspire competitive gains, but these gains are relatively small. An in-depth literature review reveals that forty of the forty-two studies on the impact of competition on public school students’ test scores find neutral-to-moderately-positive effects. These findings run counter to one of the most common arguments against choice programs—namely, that school alternatives do academic harm to those “left behind.”
The report also examines whether school choice’s ability to exert market pressure decreases educational costs. While the answer to that question is unclear, the report did note a discrepancy in the efficiency—defined as effectiveness per dollar—between traditional public and choice options. Charter schools appear to be doing more with less; although they receive about 28 percent less funding per student than local district schools, they are achieving greater student gains. According to a study by Patrick Wolf and his colleagues, charter schools were able to generate seventeen more NAEP points for every $1,000 in spending.
To increase healthy competitive pressures, the report advocates for attaching funding to individual students and allowing families to freely choose where their educational dollars are spent (the concept behind “backpack funding”). This arrangement has the potential to improve the education system as a whole as parents “vote with their feet” and their education dollars favor the most sought-after providers. Meanwhile, providers that cannot attract the support of families will naturally go out of business. The authors suggest that the best way to realize this form of funding flexibility is through the use of educational savings accounts (ESAs). These accounts give parents the ability to spend public dollars toward their children’s education as they see fit. They can also be used to save for higher education tuition, making parents more conscious of educational costs.
ESAs don’t have much by way of accountability for results, though they may increase the market pressures for which the authors advocate. Until it can be determined whether the savings accounts really do boost student achievement, ESA proponents will face worries about lax accountability and lower educational outcomes.
Overall, the report reveals that observed gains to district schools are modest given the current state of competition and calls for greater action to ratchet up competition. The recommendations demand greater innovation, creativity, and flexibility for both district and charter schools—all of which should be taken to heart by policy makers.
SOURCE: Patrick Wolf and Anna Egalite, “Pursuing Innovation: How can Educational Choice Transform K-12 Education in the U.S.?,” Friedman Foundation (April 2016).
