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After the Michigan Legislature's vote to end property tax funding for schools, the Mackinac Center issued this outline of a comprehensive education overhaul for Michigan. It suggests policy changes including parental choice, school-based management, and charter schools. Also included is an explanation of the Mackinac Center's innovative Education Credit Account idea. 7 pages.
Michigan has been blessed with an abundance of outstanding teachers and school administrators. The question is, Why have they not achieved the success they deserve?
A decade ago, those who argued that the system was the problem, that it needed to be opened up to the rigors of the marketplace and customer service, were voices in the wilderness. Today that view predominates, and serious reformers differ only in terms of how far they are willing to go in this direction. The advantages of the market now drive the debate. Those who favor monopoly, centralization, lack of choice, and bureaucracy are confined in number to those who derive benefit as vested interests in the status quo, and have been largely discredited in the eyes of thinking people.
The ultimate goal of reform ought to be full educational choice, a system that does not limit choice only to government schools. Parents who choose private schools, by electing to pay twice for the education of their children, have taken the notion of "parental involvement" literally and often at great sacrifice. They are choosing schools that, with few exceptions, are marked by success at remarkably low cost. Unfortunately, many parents are unable to afford this choice.
Accordingly, the Mackinac Center believes the principal order of business must be to clear the decks of artificial barriers to a full choice system that would involve both public and private schools. Repeal of Article 8, Section 2 of the Michigan Constitution – which prevents any sort of publicly-funded full choice system – is the means to accomplish that.
At the same time, it is important that measures be implemented that will improve the public schools by making them more competitive, responsive and accountable in a way that does no harm to the goal of full choice. This is the backdrop against which the Mackinac Center's following plan is framed.
Organized under four "pillars," the Mackinac Center education reform plan for Michigan seeks to infuse marketplace virtues into the provision of education in our state. Those virtues include parental choice, diversity, competition, accountability, cost containment, privatization of support services, local control via empowered parents and school management, entrepreneurial opportunities for teachers and administrators, decentralization, and the creation of new schools.
Michigan's educational industry costs too much and produces too little. It is resistant to change and bound by excessive bureaucracy. It too often serves the provider, not the customer. Indeed, the message it sends to parents again and again is, the system is more important than the children. Its inherent bias against choice bears striking resemblance to the sentiments expressed by the builders of the Berlin Wall for 30 years: "We can't take the wall down because someone might leave." Any effective reform today will, by definition, move us toward a market-oriented arrangement.
The Mackinac Center plan stands in stark contrast to punitive, top-down, mandate-laden proposals that fail to treat teachers and administrators as the professionals that they are. It does not employ the rhetoric of the school-bashers. It is not saturated with mandates from state or local governments. It does not see teachers or administrators as the problem; rather, it views the system as the problem, with teachers and administrators victims of it almost as often as parents and children. The plan seeks to liberate those who can teach, those who can manage, and those who have children, to achieve their fullest potential in a new system that rewards excellence, innovation, and sound choices.
Following are the four pillars of the Mackinac Center plan, each explained in outline form. Additional technical details for implementation will follow in subsequent presentations.
General Education Certificate.
Parents receive an education scholarship certificate (from the state, from their local school district, or from both, depending upon a finance plan the Legislature has yet to adopt) redeemable at the public school of their choice, anywhere in the state where they find a school with space to accept their child. This method of finance establishes the principle of aiding parents with children, rather than directly aiding schools. Parents would no longer have to secure the release of home district officials before public dollars could follow the student to his or her school of choice.
First Preference.
In this "choice" system, existing public schools would give first preference to children from within existing district lines. Space limitations will, especially in the near-term, act as a barrier to full choice, but measures to free up the supply of schools, such as the creation of charter public schools (see Pillar IV, below), will ameliorate the problem over time.
In Minnesota, statewide public school choice has not lead to massive disruptions or migrations. In fact, less than five percent of parents have availed themselves of the choice option, partly because public schools heretofore had not sought to foster diversity in their offerings. But just as a restaurant does not have to lose all its customers for the chef to get the message to improve the menu, so it is that the prospect of even minor movement within the public school system will prompt needed innovations.
Transportation Certificate.
Parents receive a transportation certificate, which could be used for transportation to any public or private school. This could also be structured as a tax credit.
Special Education Certificate.
Parents of children needing Special Education services would receive a Special Education certificate with which to purchase services depending upon the special needs of the child.
Education Credit Account.
As an incentive to parents who select not only good schools, but cost-efficient schools, an Education Credit Account (ECA) should be established in Lansing whenever a parent chooses a school whose "cost" falls below that parent's total scholarship certificate amount. That difference represents the amount of "unused" certificate and would be credited on the books in Lansing on behalf of the child, accumulating as the child progresses through school.
Credits remaining after completion of high school become tax credits parents may utilize to assist in the funding of their child's college or vocational training at either a public or private institution. The difference between the discounted value of the future tax credit and the amount of the unused certificate in any year represents a savings to the taxpayer in that year.
Parent-Elected Boards.
In Chicago and Detroit, recent policies that encourage parental involvement in the governance of schools are showing promise. The concept should be broadened and extended statewide in Michigan. Existing public schools could then elect to become "empowered" schools, which would give them options to form their own parental governance councils or parent-elected boards of directors, hire their own school principals, and introduce innovations in curricula. Taxing authority would continue to be vested in the local district.
Purchase of District Services.
School "district" organizations currently provide a range of services to individual schools. In at least one state, New York, Intermediate School District (ISD) services are supported not by separate millage but by the "purchase" of those services by schools. We believe Michigan should seriously explore putting some or all school district services on a voluntary purchase basis, maximizing the flexibility of schools to "shop around" (including in the open market) and thereby injecting new incentives for district organizations to manage their costs and enhance the attractiveness of their services.
Privatized Management.
Private management of public schools has shown great promise in Baltimore, Maryland, where Education Alternatives, Inc. of Bloomington, Minnesota now operates nine public schools with approximately 5,000 kindergarten through middle school students. The company's contract with the Baltimore district stipulates everything from the number of computers per student to details regarding staff size and student performance. The company has substantial freedom to introduce private sector management efficiency and it knows that it must produce results or lose the contract.
The Minneapolis School Board in Minnesota may soon put its district under private management. In its search to fill its vacant superintendent post, the Board has included a private consulting firm as one of five "finalists."
Such forward thinking is needed in Michigan. The Mackinac Center suggests that school districts seriously consider private management, following and perhaps even broadening the experience of Baltimore.
Parental Information.
Information for parents should be provided by schools, as to programs, expenditures and student performance. A statewide bench-marking system which simply and precisely measures the effectiveness of schools both at various stages of the educational process and upon graduation should be incorporated into each school's "Report Card." We should encourage the development of private information and testing services and "accrediting" agencies.
Substitution of Merit for Tenure.
In place of the existing, statewide Tenure Act, individual schools should be free to develop their own tenure and seniority systems, or adopt employment-at-will (subject to the same wrongful discharge law that applies in the private sector). This will free schools to reward teachers based on merit.
Classroom Professionalism.
In other parts of the nation, schools are beginning to explore new opportunities for hiring teacher entrepreneurs. At least one private firm based in Birmingham, Michigan is already selling its tutorial services directly to parents. The Reading & Language Arts Center, begun less than two years ago with just two tutors, now employs 20 part-time tutors and is planning to expand to neighboring communities.
Michigan public schools should be encouraged to contract with such firms to help meet their instructional needs. Rather than being bound by district-wide collective bargaining arrangements, schools should feel free to engage the individual teachers or instructional firms of their choosing. This would inject a healthy dose of competition and entrepreneurial thinking into teaching, and provide new opportunities for superior teachers to perform at their best.
At the start of each school year, it seems inevitable that children somewhere in the state will become the pawns of politics as schools are threatened with shutdowns. Teacher strikes are illegal in Michigan, though the law is not enforced. School management should be allowed to fill any positions left vacant by absent teachers, so that education can continue as scheduled. Our children are too important for their education to be dealt with otherwise.
Alternative Certification.
School-based certification should be emphasized and the current state certification rules should be relaxed or eliminated. School administrators should have greater freedom than under current rules to hire people they regard as both knowledgeable and effective teachers, whether or not those people have certain credentials from the state. Currently, it would be illegal for Albert Einstein to teach in a Michigan public school.
This opens the door to individual schools establishing their own "certification" guidelines as to who they will hire, which likely would be tailored to the school's particular needs and make much more sense than state rules.
Wise Use of Resources.
Containment of costs through appropriate privatization of support functions should become a normal business procedure for schools. Food services, custodial work, and transportation are prime candidates for improvements in quality, efficiency, as well as cost control, by contracting out. Schools should adopt an open, competitive bid process that maximizes accountability and other benefits derived from utilizing the marketplace.
Competition for Health Insurance.
Teacher health insurance should also be subject to a competitive bid process. The current arrangement in more than 300 districts, whereby a single provider who refuses to make its actuarial data available makes non-purchase of its service a strike issue, is poor public policy.
Cut State Bureaucracy.
School-based management might be further enhanced by an appropriate downsizing of the state's Department of Education, where three employees presently reside for every one school superintendent in the state. Its function as a distributor of federal funds might be handled by the Department of Management and Budget. The Governor should appoint a blue ribbon commission to study ways to reduce and streamline the state's duties in education, so as to enhance local school autonomy.
The Wayne State University charter public school, opened this academic year, illustrates a concept the state should dramatically expand. More than 5,000 applied for 330 spots – strong evidence of a desire, particular in the inner city, for change and new options. It is vitally necessary to free up the supply side of public education, both to enhance competition and to create new opportunities for children in their respective neighborhoods. Inner city parents want choice, but they do not want to have their children on buses to the suburbs. Charter public schools can help meet the need.
Charter public schools, as defined by the U. S. Department of Education, are "publicly-sponsored autonomous schools, substantially deregulated and free of direct administrative control by the government," but held accountable for achieving results in student performance. They may be initiated by teachers, administrators, parents, other public educational institutions such as universities, community and non-profit organizations, or even private businesses. The Mackinac Center favors an expansive view of possible initiators of charter public schools because removing as many barriers to entry as possible is the best way to replace monopoly with opportunity.
Objective Criteria.
Charter public schools should be eligible to accept the same publicly-funded education certificates referred to above, and be established under state law according to basic, minimal and objective criteria.
The latter point – basic, minimal and objective criteria – is a critical element; other states have erred in their charter school plans by being overly-restrictive, creating a scheme for excessive micromanagement, or granting veto power to existing school districts. Indeed, their operation as substantially unregulated institutions could prove to be a model for deregulation of other, existing public schools.
Charter Authority.
Chartering authorities could include local school boards, intermediate school district boards, the State Board of Education, the Legislature, or other public entities. In any event, new charter schools should not have to locate within the geographic boundaries of their chartering authority.
Conversion of Existing Schools.
There should be minimal barriers for existing public schools to convert to charter school status.
Michigan stands at an historic threshold. An unprecedented opportunity to remake our educational system lies before us. The occasion is not one for timid half-measures or mere tinkering with the status quo. This is a time for creative thought and courageous action. The children of our state represent the future. They are too precious to be sacrificed for the sake of political expediency or the gain of vested interests.
Let us all muster the wisdom and the courage to see our way to a new day for Michigan's children. It is with that in mind that the Mackinac Center for Public Policy offers for public consideration these reforms for education.
As the Governor and Legislature move to restructure public education in Michigan, the word incentive should be uppermost in their minds.
There is a time-honored temptation in government to rely not upon the gentle nudge of incentive but rather, upon the iron fist of mandates. That sort of thinking has appeared already in the current debate and reads as follows: Have a good idea? Let's pass a law that forces the schools to adopt it. Should schools privatize their food services, busing or custodial work to save money? Make them do it. Should districts consolidate? Penalize them if they don't.
Any psychologist worth his salt will affirm that the power of positive reinforcement works more effectively to encourage good behavior than force or punishment. The carrot or the stick: the former activates incentive and builds consensus without stifling creativity, while the other usually elicits grudging acceptance at best and may not even get the intended job done.
Americans are faced with a national crisis in education precisely because our top-down, centrally-planned, monopolistic system of government schools stifles incentives for effective teaching, management and parental participation. The system treats parents and children as if they were hostages, not paying customers. It sends a clear message: "If you love your kids, send money – and stop bothering us with this 'choice' stuff."
Lansing's first order of business should be to create an educational environment in which good things happen because participants in the system have both the freedom and the incentive to bring them about. Schools must become centers of dynamic, educational entrepreneurship. Government cannot simply decree that schools will contain their costs, that teachers will produce better results in the classroom, or that parents will become more involved.
With these principles as a foundation, the Mackinac Center for Public Policy released the foregoing outlines of an education reform plan in early September. It stresses parental choice across public school district lines, school-based management and administrative flexibility, and the creation of new, substantially unregulated "charter public schools." One proposal within the plan – an "Education Credit Account" or ECA – is a particularly good example of putting the power of incentive to work.
The Mackinac Center plan assumes that when the smoke clears on a financing scheme in Lansing, some combination of a state "foundation" grant and local supplemental funding will emerge. Funding from all sources should then be "voucherized" – that is, it should go to parents in the form of a scholarship certificate for each K-12 child. Parents would no longer have to secure approval from their home district to send their children to schools outside district lines, if those schools have the space and are willing to accept them.
Such a system will require incentives for schools to constrain their costs and spend resources wisely. Likewise, parents ought to have good reason to select not only quality schools, but cost-effective ones as well. Empowering parents with choice, because it will foster a more customer-friendly environment, will help us achieve both objectives. But more can be done. That's where the Education Credit Account comes in.
Under the Mackinac plan, when a parent selects a school whose "charge" is less than the value of their education certificate, the difference is recorded in an ECA, to be drawn upon as an actual state income tax credit for college or other education after high school. The tax credit would be "refundable," so that low income people who pay low or no taxes would benefit just as fully as higher income people.
Whether parents could utilize 100% of the account or some portion thereof; what bookkeeping charge the government might want to exact for processing the accounts; or what rules should govern the investment of the "unspent" certificate amounts until parents claim their tax credits in the future – all are secondary matters to rewarding parents for taking an interest in the schools and saving the taxpayers' money.
Schools would feel competitive pressure to get the maximum bang for the taxpayers' bucks. If a school's spending was way out of line with that of nearby schools and if it was not offering a corresponding advantage in quality, parents would have incentive to send their children to a more cost-effective school and "bank" the difference in an Education Credit Account. To those who might suggest that parents would pick lower-cost schools for their own benefit at their child's expense, remember that the only benefit parents derive from the ECA is assistance later for their child's post-secondary education.
It would be foolish for a parent to choose a low-cost school that also did a poor job educating children. What good would a credit for college be if the student graduates from a school that doesn't prepare him to be accepted into college? Moreover, a lower-cost school isn't necessarily an inferior school. Public education spending in Michigan has risen by more than 25 percent after-inflation since 1970, and it hasn't purchased better student performance. Many public schools, and almost all private schools, are yielding superior performance at perhaps half the cost of some of the highest-spending schools.
One Michigan newspaper editorialized against the ECA idea, arguing that "This sort of smart-shopper mentality is fine for tennis shoes and motor oil" but not for education. But if it is wrong for parents to consider cost, then it is wrong for school managers to do so too. They should buy the most expensive pencils and chalk, spare no expense in the hiring of personnel, and generally behave as though money grows on trees when it comes to education.
Does anyone really believe that's some kind of secret path to educational quality? Don't parents who shop for quality and low-cost in private education usually end up with a great deal of both?
A proposal before the New Jersey Legislature suggests some innovative twists on the Education Credit Account concept that could enhance its value. Aside from college or other post-secondary education, proponents would allow parents to draw from their ECA for supplementary educational services (summer school, language or musical arts education), or for a more costly school in the future. The New Jersey plan would dispense funds from the ECA in the form of vouchers instead of as tax credits.
Article 8, Section 2 of the Michigan Constitution prevents any sort of public aid to private K-12 schools. But even parents who choose those schools could accumulate an ECA, so long as a voucher or tax credit was not available for their use until their child enters post-secondary education. Hence, the creation of Education Credit Accounts would comply with the Constitution and not bias the system against private education.
The bottom line of the ECA is this: Through incentive, schools would work harder and smarter, and parents would gain new hope for higher education for their children. Education Credit Accounts deserve a hearing in Lansing as long as our focus is on educating children, not on preserving systems and the status quo.
An unprecedented opportunity to remake our educational system lies before us. This is not an occasion for timid half-measures that rely upon new commands from government. Let us find creative ways to put the power of incentive to work for all of Michigan's parents and children.
