Allow Schools to Succeed or to Fail

One reason many public schools achieve poor academic results is that they are neither free to succeed nor free to fail. Schools that succeed against the odds are often penalized by losing supplemental grants or their best personnel to schools that “need help.” Schools that fail to achieve satisfactory results often receive more funding as elected officials and the school bureaucracy attempt to fix the problem (Sykes 1995).

Reward Success and Penalize Failure

The inability to recognize and reward success and penalize failure cannot be addressed by passing accountability legislation, holding annual awards ceremonies, or even mandating frequent achievement tests with real consequences for students and school personnel. The problem, as described above (see Principle 3 – “Schools should compete”), is inherent in public schools so long as they are government agencies accountable to distant officials rather than directly to the parents of their students.

The solution is to allow parents to choose schools and require schools to compete for students. When the money follows the student, schools that fail to satisfy parents lose income and either shrink or close. Schools that parents find attractive grow in enrollment and justify a premium price from parents, allowing them to use the additional funds to improve further and enabling their staffs to benefit financially from the schools’ success. There is no need for thick manuals filled with regulations or layers of bureaucracy to “manage change.”

Many Educators Are Eager to Become Entrepreneurs

School choice works only if school leaders and teachers can organize and operate their schools as they see fit, subject to the discipline of market competition and parental choice. This must include rewards for success and penalties for failure, which in turn require the freedom to create new schools and expand successful ones as well as a genuine risk of closure in the event of failure (Merrifield 2001).
The private sector injects new ideas and resources into K-12 schooling. Teachers across the country are forming “private practices” and offering their services to schools or directly to parents the way lawyers, doctors, and other professionals do (Zuelke 1996; Leisey and Lavaroni 2000). The Education Industry Association, a trade association, represents some 400 companies that already supply services to and often compete directly with public schools (Seibert 2004). Groups such as PAVE (Partners Advancing Values in Education), a nonprofit organization in Milwaukee, are helping voucher and charter schools “write business plans, understand the financing of multi-million-dollar projects, and place schools in the context of being a neighborhood resource” (Sweet 2003).

The Fate of Failing Schools

In a system of expanded school choice, the number of children needing to be educated would remain the same, so educators will be as much in demand after the plan takes effect as before. Good teachers and skillful administrators may face the inconvenience of taking new positions at different schools, but otherwise they should not fear a competitive marketplace. Unlike the present system, better performers would be rewarded with higher compensation.

John E. Coons’ original voucher proposal provided guaranteed loans and similar assistance to community groups that founded voucher schools (Coons 1971). A revolving loan fund for such a purpose could be established with the funds earned from the sale or lease of public school space. Richard Vedder has proposed profit-sharing and an employee stock ownership plan (ESOP) that would enable public school teachers to own their schools and subjecting them to the rewards and risks that would entail (Vedder 2000).

A new public policy idea called the “Parent Trigger” would empower parents to demand that their public school be closed, converted into a charter school, or that parents be given vouchers to enroll their children in nearby private schools (Bast et al. 2010). Failing schools in this case could become charter schools or be leased to teachers or entrepreneurs to become voucher schools.

Recommended reading: M. Sweet, “The Supply Side of Educational Choice,” Report, Wisconsin Policy Research Institute, 2003; R. Vedder, Can Teachers Own Their Own Schools? (Oakland, CA: The Independent Institute, 2000).