Can Arnie and the legislature figure this out?

California's state government budget teeters on the edge of a precipice. Public school elementary and secondary education is a $50 billion section of that $119b budget (which includes a $42b deficit). It is the pink elephant in the room. It is what costs the State the most, and, as the teachers' unions in California would have you believe, it must remain fiscally sacrosanct. Public schools are doing a dismal job, and especially in this state. There is just no factual countervailing argument. And you simply do not reward bad performance with higher pay or funding. The problem is not a lack of funding. In fact, the problem is too much funding, and a reduction in funding will result in a corresponding improvement in eduation. I will explain.

California's taxpayers pay $8594 per student per year for education under this model. Their children get very little in return. The main reason is that the model is bureaucratic and monopolistic. In other words, it is highly inefficient, with an inbelieveably massive, bloated lethargic bureacracy, and it has no competition. There is a simple fix for this. It is not politically easy, but it is simple. Make private education an option of the public funding of education. Offer to all who are legal residents of this state, and the parents or legal guardians of elementary or secondary school students, the option to receive a $5000 voucher per student, per year, to be used at a private school of their choosing. Such a voucher would be used to pay for some or all of a private school education; let the parents/guardians figure that out (this is also known as letting the market decide). For each student that is pulled out of the public school system, and enters into the voucher system, the State would save $3,594. If 20% of the students in the State move into this system, that would save the State $3.6b. The dollar amount does not have to be $5,000, but it has to be reasonable and realistic. Private schools handily provide a consistently dramatically superior education when compared to public schools, and do so at far less per student. So I figure somewhere in the range of $3,500-$5,000 will be sufficient to allow market forces to work, and work they will. This is what will happen.

Poor performing schools and school districts will see their enrollments drop, anywhere from incrementally to dramatically, depending on the aggregate student capacity of alternative private schools in that locality, and on the ability of the public schools and their leadership to dramatically change their organizations, their behaviors, and their cost structures. Some school districts will eventually be forced to consolidate, and to close and sell school properties to reduce and regroup. Private schools (with increased facility demands) and other interests will purchase those properties and repurpose them. Public school teachers unions, instead of changing and responding to market changes, will dig their heels in and try more of the same: demand more money, fight against vouchers with shrill protests, and strike. School districts and county offices of education will be forced to further consolidate, to reduce their administrator-to-student ratios (also known as reducing unproductive payroll), to contract out non-education services like landscaping and facilities management. A byproduct opportunity in this consolidation is that public school districts can simply sell older facilities, and consolidate into newer ones. Instead of having to engage in expensive building retrofits and remodelings, the properties can be sold for cold hard cash. 

Meanwhile, the percentage of students in private schools will continue to swell to the available capacity of local private schools, moving more and more funding from public schools to private schools. This increased demand will strengthen the efficiency and effectiveness of the private school "industry" in California. Private school chains and franchises will arise, and the more innovative and opportunistic among them will target weak and ineffective school districts. This will further the demise of ineffective public schools. This will shine a very bright light on the fact that public schools cannot compete with private schools. The "market" will consistently choose private education over public education, because of the contrast in quality. People will vote with their dollars.

The demand for teachers in private schools will steadily climb. Private school teacher pay will incrementally climb, as a direct result of the increased demand. A larger percentage of the better teachers will walk away from the unions, and take jobs with private schools, which will offer more immediate cash rewards such as signing bonuses, performance bonuses, and merit increases. Private school teachers have always worked harder than public school teachers. Some innovative private institutions will offer profit bonuses to their teachers as part of their compensation, giving them a financial stake in the efficiency and effectiveness of that institution. Private schools are not bound by tenure rules and union constraints. If a teacher does not perform, regardless, he or she is subject to disciplinary action and termination. 

Test scores will incrementally improve on the whole, but only insomuch as the percentage of private school enrollments swell. This will be simply evidence of the provision of a better education. A better educated student populace will directly result in a correspondingly larger percentage of students pursuing higher education, which will result in a more valuable, competitive, and productive work force, which will result in a stronger state economy, and eventually an incrementally higher tax revenue base for the State's coffers. 

So the government will see, over the long run, a tangible benefit to its financial structure, by steadily divesting itself of largely ineffective costs (public education), while taking meaningful steps to bolster the underpinnings of the state's economy: an educated workforce. Like I once heard said, when your outgo exceeds your income, then your upkeep becomes your downfall. Um, that's happening in California. It takes brave and bold steps like this to produce lasting and effective change. I hope Arnie and the legislature can figure this out, but something tells me they will not.

A detailed and thorough analysis of this premise, approached on a national level, can be found here. It has the hard facts, and is worth the read, particularly if you care about this topic. 

Thanks for playing.

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