Monday, July 25, 2011

A Market Based Approach to Publicly Supported Education ... Vouchers and Incentives Just Might Work

Public education spending for grades K-12 accounts for 20% of the average state's budget. Approximately $150,000 per student has been spent by taxpayers at the conclusion of the student's high school years.

{In addition the average state spends another 10% of its budget on state colleges and universities.}

Since an informed electorate is essential to a well functioning democracy, our society's commitment with respect to equal educational opportunity for all is a given. $150,000 per student represents that public commitment in a meaningful and measurable way.

That said, our educational system isn't working well for the money being expended. It's time to consider alternatives, even though the educational establishment, and especially the unions, won't welcome any attempts to introduce market economics into the existing monopolistic system of government and union control.

As an alternative to today's woefully inadequate system, it's proposed that we support public education through a system of individual "input" vouchers coupled with "output" incentives for both students and educators.

In an individual "input" voucher payment system, the parent from time to time would freely and without restriction choose how and where to educate the child. The child would attend whatever institution, if any, selected. At regular intervals, the student's academic progress would be validated by using a standardized testing methodology such as the various achievement tests now in use. If the child is deemed to be "on track", funds would be released as appropriate.

As an illustrative example, we'll assume that $150,000 represents the average per student total "input costs", and that the desired "output" is the successful completion of high school. Successful completion means that the student has been fully prepared for entering college or trade school, as the case may be.

Upon "graduation" from 12th grade, the remainder from the initial $150,000 educational voucher, less cumulative input costs along the way, would be made available to the child and his family. Accordingly, any remaining funds in the "account" from the beginning $150,000 could be used for college or whatever else the student and his family would choose.

Through this voucher and cash upon completion approach, the child and his family would be incentivized to achieve high levels of educational attainment rapidly and in the least costly manner. Educators, whether acting as entrepreneurial individuals or as members of selected institutions, would be motivated appropriately as well. A meeting of the minds between the student buyer and the teacher seller about the importance of the individual's education would be the result.

If for whatever reason the child did not attain on track achievement levels at periodic checkpoints, no funds would be made available for disbursement other than to the educators for previous efforts. As an example, assuming the child is several grade levels behind upon reaching the age of 16, he and his family could either elect to pick up the pace or drop out, as the case may be. If the child did drop out before achieving college preparedness or its trade school equivalent, no funds would be "earned" by the student.

This approach would properly incentivize the child and his family to do the academic work in a serious manner in order to prepare for success at college or a trade school. When adequately prepared, the student could further choose between attending college, trade school or receiving a cash payment representing "earnings". The "earned" amount, whether it be used for college, trade school or otherwise, would be $150,000 less the cumulative expenses incurred.

Of course, there are perhaps many problems with the recommended free choice and incentive based methodology. That said, a free market, family friendly approach to education makes sense to me. But then, I don't have a vested interest in perpetuating the status quo.

While using a market centric formula for education versus the central command methodology that's in effect today would represent a totally different way of doing things, what we've been doing all these years simply hasn't worked. In my view, it's time to try something new, and a market based approach just might work. It's time to innovate, and it's very much the time to slay some sacred cows. We'd be doing it for the well-being of the future taxpayers of America, aka the kids of today.

Thanks. Bob.

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