Friday, August 11, 2017

Right and Wrong about Spending Cuts, Part 2

I sometimes receive news tips and other suggestions for articles from you readers. I want to thank you all for this - I value them all. As best I can, I try to work them into my regular writing schedule. Sometimes, though, I just don't get around to a particular topic within reasonable time, but please do not think that this means I don't appreciate your suggestion. I always make a note of it, and more often than not those notes come in handy at a later point in time.

I would also like to recognize you for sending in suggestions. However, some readers want to remain unknown, so to speak, and in order to avoid misunderstandings on this matter I never attribute an article idea to anyone. This is not ideal, but it is the safest policy with regard to protecting the privacy of blog readers.

Thank you for understanding. Now, on to today's article (actually based on two different reader tips) which is about education reform. This topic is hugely important here in Wyoming, where the education lobby is putting up a real fight for higher taxes. They are not winning as comfortably as they first thought they would; the outcry from Wyoming taxpayers has significantly raised the bar for tax hikes. But it is also important to keep in mind that the education lobby and their tax-hiking legislator friends have not given up their fight for higher taxes. Not by a long shot.

Part of the problem with advancing the case for educational freedom is that many people do not see the connection between parental choice and lower education costs. In fact, lower costs are often tied to the traditional form of budget cuts, namely a reduction in appropriations without changes to the underlying government promise, i.e., the spending program itself. In reality, what matters is just that: to replace a government promise with the ability of parents - in the case of education reform - to care for their children's education on their own terms. This is done not through slash-and-burn cuts, but by means of real, structural spending cuts

The confusion is understandable. Even as we grasp the concept of structural cuts in theory, it is not always easy to transform that theory into practice. To facilitate the transition from theory to practice, let us look at a practical example of spending cuts, as reported by John Malmberg in an editorial for the Cody Enterprise:
Park County School District No. 6 and the Park County Commissioners each took a necessary step recently in curbing spending and getting their budgets in line. The school district cut the activities department budget by $83,000. 
Assuming that Malmberg's reporting tells the complete story of that budget cut, this represents the first kind of spending reductions, namely a simple reduction in the allotted amount of money. Government - in this case the school district - still promises to deliver what the program was set up for. The cut in appropriated money forces them to make do with less without any change to the underlying government promise.

The next reported cut is different in kind:
The commissioners are looking at making the Park County Public Library’s Biblio Bistro a private business. That decision has not yet been finalized, but planning is underway. ... By taking the Biblio Bistro private, the county would stop losing between $40,000 and $50,000 per year. In our opinion, if a private entrepreneur cannot be found to run the library cafe, the cafe should be shut down.
This is a good microeconomic example of a budget cut that is structurally sound. It terminates a promise that local government has been making - in the form of a government provided bistro - and would, if executed properly, allow the private sector to replace the government promise with its own offering.

Educational freedom works the same way, but the order of action, so to speak, would be the opposite. First, government terminates its de facto monopoly on K-12 education, allowing private entrepreneurs to enter; then, as some families choose private schools over public, government scales back public schooling capacity. 

In the bistro example, this would be like allowing competitors to set up bistros adjacent to the existing, government-run one. In the case of a library bistro, this might be a bit silly (how big is the market?) but in the case of K-12 education, the order in which the steps are taken makes perfect sense.

Over time, comprehensive parental choice in K-12 schooling saves money through competition and more stringent budget governance. But there is already an alternative to public schools that saves quite a bit or money - money that school districts de facto can pocket. Those savings, which should be recognized in any effort toward educational-freedom reforms, are produced by home schoolers. Explains Annie Holmquist of Intellectual Takeout:
Compared to public school students, studies suggest that homeschoolers perform up to 30 percentile points better on standardized tests, have higher college GPAs and completion rates, and may even be better adjusted socially. Judging from these numbers, it would seem that homeschooling definitely benefits the individual student.
She goes on to explain how much states save on home schooling, citing a Pioneer Institute report that estimates savings accrued by home schoolers nationwide to $22 billion per year. Her own article suggests that Wyoming, by conservative estimate, cuts education costs by $44 million, thanks to home schoolers. 

These savings must be taken into account in any debate over educational freedom. If home schooling is encouraged by our legislature, as part of a package to further parental choice, then there is a direct link between a structural change to the government promise of education, and reductions in the cost of education to taxpayers. 

In fact, home schooling is likely to increase significantly with school choice, with parents forming new - or buying into existing - social and educational networks for home schoolers. Together with the innovative ingenuity that is the spirit of America, this will greatly benefit Wyoming taxpayers in the future. 

Parental choice in K-12 education is an example of a good spending reform. As mentioned, it is the macroeconomic version of the "library bistro". Instead of cutting spending on public schools while maintaining their monopoly, our legislature should go for the structural, permanent alternative and give Wyoming families a comprehensive school-choice program. 

1 comment:

  1. So long as public monies do not go towards private education either directly or indirectly, then this is very much worth exploring. While I willingly pay taxes in support of education that benefits all (thinking the grade schooler who may become my physician in 25 years), I Would not be willing to do the same for home school or charter schools. That also applies for others being exempt from taxes for individually deciding to not use that public system for their children while garnering the benefits from those who do.