Domestic Policy

More money hasn't made public schools better

by Russell Roberts

July 11, 2002

So education vouchers are constitutional after all. At least that's what the Supreme Court says, and they're the only ones that count. So forget about the legal issues for now and focus on the educational impact of voucher programs. Are they going to be good or bad for students?

Voucher opponents advance a powerful logic in making the case against vouchers. Here's how a New York Times editorial put it: "What is holding the public schools back is the resources to succeed. Voucher programs like Cleveland's siphon off public dollars, leaving struggling urban systems with less money for skilled teachers, textbooks and computers."

The Times has a point. Wouldn't it be better to give public schools more money rather than less? Unfortunately, money does not appear to be the problem facing public schools. I say unfortunately, because the world would be a lot better place if we could simply solve the last four decades of poor public school performance by spending money. Over the last four decades, expenditures per pupil in America's public schools have more than tripled. That's corrected for inflation. Public schools have more than three times the resources to spend on each student than they had 40 years ago.

Sadly, there is no indication that spending more money produced any improvement in America's public schools. It meant smaller classes. It meant better paid teachers. It meant more administrators. A lot more administrators. Yet it did not mean better student performance as measured by test scores or other objective measures. Study after study has failed to find a positive impact of these changes on student performance. How can that be? One answer is that other factors outside the school, such as students' home life and street life have overwhelmed the positive effects of increased spending.

Perhaps. But I'm drawn to another explanation. Spending money is not the same as spending money wisely. Without incentives to spend money wisely, money will be spent in ways that may be unrelated to educational outcomes. When parents have few if any realistic alternatives to their local public school, then the local public school will not necessarily serve them or their children well.

Consider an analogy with the automobile market. We're often told to buy American. After all, every dollar spent on a foreign car reduces the money available to American car makers to improve quality. Yet banning foreign car sales so that American car makers could have more money would reduce the quality of American cars. Giving people the option to buy foreign cars actually increases the quality of American cars. It was the threat of Japanese competition that forced Detroit in the 1980s to improve. Having to match the quality of the Honda Accord created the Ford Taurus and other American successes. Insulating Detroit from competition is the road to mediocrity.

Detroit tried to prevent Americans from having a wider array of choices. That's understandable. Having to compete with Japan and other nations means working harder and accepting more risk and uncertainty.

So I understand why the teachers unions and the school boards are so upset with the Supreme Court decision. Their lives may become more challenging. But ultimately, a world where vouchers are an option means that public schools will have to do more to please their customers. That will be a tougher world for school boards and administrators and a better world for students.

A school is not a car factory. But everyone responds to incentives. When public schools have less money, they may actually do a better job because of the incentives they face in a world of vouchers. School boards and principals will be motivated to do a better job. Teacher pay may become based on performance rather than years on the job. And there is the possibility of innovation in the classroom rather than the dreary status quo.

You might be skeptical about the beneficial effects of competition. But the current recipe for success—the recipe of spend more money and hope it does some good—has failed two generations of students, particularly in the inner city. Isn't it time to try a different approach?