RALEIGH -- A new report by the Foundation for Educational Choice paves the way for $26 million to $33 million in annual savings for North Carolina public schools and provides welcome new options for low-income families.
The report argues for an alternative to President Barack Obama's "Race to the Top" initiative, and while the report's replacement program, called School Passport, is not likely to be taken seriously by lawmakers in Washington, it does deserve a look by Gov. Beverly Perdue and the General Assembly.
The state is facing a $3.7 billion budget shortfall, and Perdue has already asked state agencies for budget cut proposals of 5 percent, 10 percent and 15 percent. Public education is North Carolina's largest expense, at $7.35 billion. While Perdue's cuts seem drastic, 5 percent is not insurmountable, especially if North Carolina considers the School Passport idea.
First, with federal assistance, the Passport program would generate $26 million in annual savings by providing scholarship assistance to families who wish to pursue private school alternatives. And if the state were to implement the plan on its own, savings may exceed $33 million annually.
Essentially the plan calls for per-pupil reductions in public school funding to be diverted to scholarships for students who wish to attend private schools. The cost savings are fairly evident. North Carolina currently provides an average of $5,500 per student, but the Passport proposal would provide $2,000 scholarships to students who opted for private education. The cost savings per student is $3,500.
Second, the Passport program provides choice for families. Currently private education is reserved mostly for those who can afford it on their own. In Wake County, private school tuition fees range from $5,000 to $17,000 yearly; this is prohibitive for lower-income families. However, a $2,000 subsidy for students who wish to enroll in one of the less expensive private schools amounts to a nearly 50 percent discount on private education. This makes private schools more affordable for those families who want options but have trouble affording them.
Third, the Passport program injects competition into the educational market. Currently, schooling in North Carolina is a near monopoly, with the public school system as the dominant "firm" in the market. While private schools do exist, they are reserved mostly for the upper middle class and the rich, who can afford their services. The Passport program will provide more families with choice, which in turn will increase competition.
Market structure theory in economics dictates that perfectly competitive markets (those with many sellers) drive costs down and innovation up, both of which should be met with open arms by those who care about education.
Fourth, the Passport program is designed to be flexible. States can set their own standards for scholarships, which means that high-income families may not be eligible to receive scholarship money. The state may also limit scholarships to accredited private schools and/or other limitations deemed to be socially just by the state.
The program could be further expanded to include public school-to-public school competition, which essentially means that parents could be offered the scholarships to take to the public schools of their choice and pay the difference in the per-student subsidy already given by the state. This internal competition among public schools would likely lead to increased innovations in the public model.
However, the fundamental question that the Foundation for Educational Choice raises is who should decide where a child must attend school. While the Passport proposal does not fully implement a voucher program, it is a good first step in providing parents choices for their children, decisions that are now reserved mostly for bureaucrats and school boards. Parents generally know what is best for their children, including where to send them to school.
Perdue and the General Assembly should review the Passport Program as yet another alternative to our state's budget woes. Any idea that saves $33 million is at least worth a few minutes of consideration.
