Voucher supporters often say that American public education is run like the command economy that crippled the former Soviet Union, and if it is to improve, it needs to adopt a market system. The key to school improvement, we are told, is competition. When parents have vouchers to spend for education, public schools will be forced to be more responsive to what parents want. Schools whose teachers and administrators are successful at figuring out how to attract customers will flourish. Schools that continue losing customers will eventually fail and go out of business.
Subjecting schools to market competition sounds appealing. However, when you look closely at the analogy between schools and businesses on which this scenario depends, it falls apart. Markets are based on profit and loss, but public schools and almost all private and parochial schools are nonprofit. So even if a school attracts a lot of students, nobody makes any profit on them because each student brings only enough money to educate himself or herself.
There's an old joke that recognizes this situation. It's about a guy who manufactures a product that costs $125 to make and sells for $100. He brings his sales reps together and urges them to increase their sales. When one of the reps points out that they're losing money on each item they sell, he says, "What we lose on the individual items, we'll make up on volume."
The principal and teachers of a popular voucher school would not get more money if the school attracted and admitted more students. All they'd get is a more crowded school. It's true that extra students share in the costs of keeping up the common facilities, so they could be a plus from an administrative point of view. Also, if a school has a sixth-grade class with 20 kids and could accommodate 23, it could admit youngsters to fill these places without having to hire another teacher or principal or provide more heat. But changes like these are marginal, and they don't constitute profit.
Perhaps a few popular schools would try to raise money to expand so they could accommodate more customers, but since there is no profit or loss, most would not--especially at a time when the majority of educational thinkers agree that small schools do a better job than bigger ones.
What vouchers would do is greatly increase the number of students applying to popular schools. So the principal result of vouchers would be to allow popular schools to be more selective than they already are (and perhaps raise tuition).
What about the effect of vouchers on unpopular schools that might lose students? Of course if a school lost all its students, it would close, though in large systems teachers usually have rights to move to another school. That situation wouldn't arise very often. In most cases, parents are not eager to pull kids out of schools the youngsters are familiar with and where their friends are going. If some students did take their vouchers and leave for private or other public schools, that probably would not seriously affect teachers' and administrators' jobs. There are always retirements and teachers going on maternity leave and resignations, so even if there were fewer students, few, if any, people would lose their jobs.
Kids have been leaving our urban schools for the suburban and private schools for years, and you seldom hear about principals and teachers getting together in a state of panic and deciding to call the parents to find out why the students have left or to persuade them to come back. Why? Because nobody on staff has lost anything. Just as the principal and teachers don't get more money because more students enroll in their school, no one in a school that loses students gets less.
In a system where each customer brings a profit, there's no question that businesses compete so they will attract more customers. But in nonprofit systems, like the one proposed in the California voucher initiative, talking about a "market" or "customers" is mere rhetoric.
Some might say that we shouldn't limit voucher systems to nonprofit schools. But we have had substantial experience with government subsidies to for-profit schools, and most of it has been terrible. Under the GI bill, for example, the services provided by many for-profit schools were a bad joke--at the expense of the students. So we know it would take an extensive bureaucracy to monitor a system that included for-profit schools.
What incentives are needed to get people in schools to behave like successful businesses that continuously monitor their performance and try to improve it?--That's what voucher supporters in California and elsewhere are asking. It's the right question, but they have the wrong answer.