Celebrating the “Christopher Columbus” of School Choice, Milton Friedman

School choice has entered a new world. Because Americans are increasingly vocal about providing parents with the ability to choose their children’s schools, states are adopting broad-based school choice initiatives. Those successes can be attributed to various individuals, groups, and campaigns nationwide. However, it is school choice’s “Christopher Columbus” who deserves recognition for starting this movement more than 60 years ago.

In 1955, the yet-to-be Nobel Prize winning economist Milton Friedman introduced his vision of school choice as a way to improve the quality of American education. His idea was simple: Give parents access to their children’s public education funding, rather than require they attend the government (public) schools nearest their homes.

“Governments could require a minimum level of education which they could finance by giving parents vouchers redeemable for a specified maximum sum per child per year if spent on ‘approved’ educational services,” Friedman wrote in 1955. “Parents would then be free to spend this sum and any additional sum on purchasing educational services from an ‘approved’ institution of their own choice. The educational services could be rendered by private enterprises operated for profit, or by non-profit institutions of various kinds. The role of the government would be limited to assuring that the schools met certain minimum standards such as the inclusion of a minimum common content in their programs, much as it now inspects restaurants to assure that they maintain minimum sanitary standards.”

Because of vested interests in the education arena, including powerful public school teachers unions, Friedman’s suggestions were ignored. And, as a result, the cost of public education doubled while its academic performance stayed the same. As Friedman noted, that should come as no surprise because that’s exactly what monopolies do: They offer a product of similar, if not worse, value at a higher price than normally would be allowed if they had to compete in the free market.

But those days are over. Many states are broke, preventing them from dropping more money out of airplanes over public schools. And many parents are fed up, wondering why their kids are underperforming or unmotivated in K-12 schools and unprepared for their college courses and future careers.

Because of that sentiment and cash crunch, according to the Friedman Foundation for Educational Choice, named after Milton and his wife Rose, we now see over half the states with one or more school choice programs, consisting of vouchers, tax-credit scholarships, individual tax credits and deductions, and Education Savings Accounts.

Oregon is behind the curve, with no significant private school choice programs―yet. But widening charter school and online school options hopefully will soon lead to more school choice for all Oregon children. The most promising possibility here involves an update of Friedman’s original voucher idea, now seen as the “rotary phone” of the school choice movement. The school choice “smart phone” is now Education Savings Accounts. ESAs give parents and students even more choices, while replacing the old “use it or lose it” funding mechanisms with a market system. This system allows parents to shop for educational services and use their savings toward future educational needs of their children.

Limited Education Savings Account programs now exist in several states, and Nevada is on the verge of implementing a near universal ESA program that soon could be available to all its K-12 students. If achieved, this will be seen as the realization of Milton Friedman’s 60-year-old vision of full school choice for every child, at least in one state with more to follow.

But Friedman’s vision was not for school choice to be just another government program. He wanted to see school choice fundamentally change the way public education operates from its current structure that supports government schools and the adults who work in them, to a better model that empowers parents. He argued that if both rich families and poor ones could receive government funding when their kids use public schools, then both rich and poor should be able to receive that same funding to make educational choices outside the government school system.

It took America more than 60 years to reach today’s environment in which parent empowerment in education is celebrated more than ridiculed. Moving forward, around the country and especially here in Oregon, we should celebrate the new world that the school choice movement’s “Christopher Columbus” opened up for us.

Milton Friedman died in 2006. For the ten years since, Cascade Policy Institute and more than one hundred other organizations around the world have celebrated what has become known as Friedman Legacy Day each year on or around his birthday, July 31. This year marks the last such formal celebration. The Friedman Foundation for Educational Choice, which has sponsored these events to honor and reflect on the life and legacy of its founder, has announced that on the day of this year’s final formal celebration, Friday, July 29, it will unveil its new name and new strategic plan designed to move Milton Friedman’s school choice vision even more effectively into the future. Please join us as we celebrate both the man and his vision, and as we look forward to many more children getting the quality educations they have been so long denied in our one-size-fits-all government school system.


A version of this Commentary first appeared in Cascade Business News on what would have been Milton Friedman’s 100th birthday, July 31, 2012. Steve Buckstein wrote about Friedman’s ties to Portland in The Oregonian the day after he died in 2006.

Oregon Teens Discover Their “Lightbulb Moment” at Young Entrepreneurs Business Week

Your average high school students may not be able to explain a fictional company’s dividends to a lecture hall full of adults from the business world. But after five days at Young Entrepreneurs Business Week, they could.

YEBW is a nonprofit annual summer camp founded in 2005 by young Oregon entrepreneurs Nick and Maurissa Fisher, hosted on the campuses of the University of Portland, Oregon State University, and University of Oregon. From 75 students on one campus during its first year, YEBW has grown to more than 400 participants on three campuses in 2016.

YEBW’s founders shared a concern that young people of all educational and economic backgrounds often leave high school with no practical business knowledge, hindering their ability to innovate, create, and produce the kinds of goods and services key to Oregon communities’ growth and success. They sought to fill the gap by drawing together curriculum developers, business professionals, educators, and successful youth-focused program leaders to launch an innovative educational program for high school students.

Participants spend one week on the UP, OSU, or UO campus and are exposed to a challenging curriculum designed to teach students that business can be fun and exciting, not to mention understandable and interesting. Students leave the camp possessing relevant, basic financial and business skills to apply to whatever goals they set for themselves. YEBW board chair Jeff Gaus says, “For some, YEBW is that lightbulb moment when they realize who they are and what they want to do in life.”

During the program, students are divided into student-led companies, guided by volunteers from the business community who share their knowledge and expertise throughout the week. The curriculum provides students with the financial literacy, business fundamentals, and confidence they need to be self-sufficient and successful.

During the first-year program, Business Week, students form mock companies where they create management teams, develop mission statements, invent a product, and conduct actual operation of their own business by competing in business simulations. Designed to broaden the practical skill sets of each student, the program incorporates professional speakers and other interactive learning exercises like mock interviews and networking events.

For returning students, Investing Week gives students the opportunity to learn about basic investment vehicles, the principles of evaluating a potential investment, and understanding the personal and business effects of the financial market system. Entrepreneur Week provides the chance to learn what it is like to start and run a business. Students prepare a full business plan, run an on-campus business as a team, and present their individual work to a panel of judges acting as potential company “investors.”

It’s not all “head knowledge,” either. YEBW fosters professional interpersonal skills. Students learn the art of the handshake, eye contact, introductions, proper business and evening attire, and table manners, so they can navigate job interviews and networking events with confidence.

Young Entrepreneurs Business Week teaches teens that “there is a business side to every occupation.” Likewise, every Oregon occupation would benefit from having more business-savvy graduates of YEBW. The young people who attend the first-year program mostly come with no prior business knowledge or experience, but they leave with well-earned confidence in their abilities and potential as tomorrow’s successful professional adults. A nonprofit program like YEBW, spearheaded by enthusiastic young business leaders, is truly a bright light for the future of the entrepreneurial spirit in Oregon.

Portland Schools Need More Than a New Superintendent

Portland school superintendent Carole Smith announced her resignation this week after nine years on the job.

The next steps are predictable: The school board will conduct a national search for a successor and eventually sign someone to an expensive contract. After a short honeymoon, the new leader will sink into the bureaucratic quagmire and leave after a short and forgettable tenure.

Management experts know that if system results are disappointing, you need to change the system, not the people. The single most important change Portland could make would be to redesign how the money flows.

Right now, tax dollars go to school bureaucracies, regardless of results. Students are assigned to schools like widgets in a factory, and few families have a “Plan B” if they are unhappy.

A better option would be to enact Educational Savings Accounts (ESAs). This would allow every family to have their share of per-student revenue diverted from the bureaucracy to the student’s ESA, where alternative services could be purchased. Families would instantly have dozens of exciting options.

Equally important, ESAs would incentivize school administrators to make each school perform at a high level, thereby benefiting all students, including those not using ESAs.

Carole Smith made her share of mistakes, but the Portland school district needs institutional change more than it needs a charismatic new leader.

Trust Lands Should Be Auctioned to High Bidder to Benefit Schools

In his recent guest column in The Oregonian, Director of the Oregon Department of State Lands Jim Paul summarizes the history of the Elliott State Forest. He correctly notes that the Common School Trust lands within the Elliott must be managed as an endowment asset for public schools.

Since the Elliott is now a net liability instead of an asset due to environmental litigation, the State Land Board has appropriately concluded that the Trust Lands should be sold.

Unfortunately, the sale will not take place through competitive bidding, because this is not an auction. On July 27, the Land Board will announce the results of an appraisal and set the sale price as the appraised price. If you dare to offer even one dollar more, your bid will be set aside by state lawyers as “nonresponsive.”

The three Land Board members – the Governor, the Secretary of State, and the Treasurer – do not want prospective purchasers to compete on price. They want them to compete on four non-financial variables, which will greatly complicate the sale process.

All offers must include at least the following set of “public benefits”: (1) at least 50 percent of the timberland must remain open for public recreational use even after it is transferred to new owners; (2) 120-foot no-cut buffers on each side of fish-bearing streams must be left permanently untouched; (3) at least 25% of the older stands of trees must be left standing; and (4) at least 40 full-time jobs annually must be provided over the first ten years of ownership.

If there are multiple offers at the same mandated price, the tie will be broken by the strongest package of these public benefits. But that turns the process into a beauty contest. There is no objective way to compare an offer with 130-foot buffers with another offer that has only 120-foot buffers but proposes to employ 50 people each year rather than 40.

Public school students, parents, and employees deserve to receive fair market value for surrendering this asset. An “appraisal” is not the same as market value.

Evidence of this is everywhere. For example, almost everyone selling a home in Portland right now knows that the final sale price is likely to be higher than the listed price, because the Portland market is red-hot.

When the State of Indiana decided to lease the operations of the state turnpike to a private vendor in 2006, the “experts” estimated that it might be worth $2 billion. In fact, the winning bid from a Spanish-Australian consortium was $3.8 billion.

In 1984 the Portland Trail Blazers famously appraised the value of Michael Jordan to be lower than that of Sam Bowie. Subsequent events proved that the Trail Blazers had made one of the worst talent “appraisals” in pro sports history.

And just last month, a Chinese investor paid $3.4 million for one lunch with investor Warren Buffet (the purchaser gets to bring seven of his closest friends). How many of us, if asked on the street, would have appraised a single lunch with anyone as being worth $3.4 million?

But that’s the point of competitive bidding. Only the market knows the value of an asset. If even one person in the world is willing to pay millions for a single lunch, then that is exactly what the lunch is worth. If we don’t allow a market to set the price of Elliott State Forest timberland, we’ll never know its true value.

There is a simple fix to this problem. The Land Board should require that all offers for the Elliott Trust Lands include the mandated four public benefits, and then select the highest responsible bid.

School beneficiaries such as local school boards, employee associations, and parent booster groups should prepare now to sue the Land Board for breach of fiduciary trust if the Board continues with its absurd plan to give away Common School Trust Lands without competitive bidding. The appraised value announced on July 27 should be the starting point for competitive offers, not the end point.


A version of this article originally appeared in The Oregonian on July 14, 2016.

Children’s Scholarship Fund Closes the Achievement Gap for Low-Income Kids

Since 1999, the nonprofit Children’s Scholarship Fund has empowered more than 152,000 low-income children nationwide to receive a quality education in private and parochial grade schools through privately funded partial-tuition scholarships.

Children’s Scholarship Fund parents value high-quality education as the way out of poverty for their children and sacrifice financially to give them that opportunity. It is a feature of the CSF program that all families pay part of their tuition bill themselves, ensuring a family commitment to education.

The investments of both parents and scholarship benefactors are reaping great rewards. Over time, studies of college enrollment and graduation rates of scholarship alumni are showing that, despite coming from socioeconomic backgrounds associated with lower rates of college enrollment, CSF alumni enroll in college at an average rate that is similar to or higher than the general population.

In other words, these students’ education in private and parochial grade schools, made possible by a relatively modest level of financial assistance, is closing the achievement gap for kids from less advantaged backgrounds.

Children’s Scholarship Fund-Portland is a “hand up” here in our state that helps Oregon kids to reach for success in school and in life. If you would like to help a lower-income Oregon child to get a better education today, contact the Children’s Scholarship Fund-Portland at Cascade Policy Institute.

Portland Schools Schedule Book-Burning Party

The Portland Public School board recently voted to prohibit textbooks or classroom materials questioning the mainstream thinking about climate change.

The decision has sparked an outpouring of commentary, with many writers supportive of the School Board.

However, the wording of the Board resolution should greatly concern parents of Portland public school students. Resolution No. 5272 is two pages long, but the most chilling part is the final sentence:

“[Portland Public Schools] will abandon the use of any adopted text material that is found to express doubt about the severity of the climate crisis or its root in human activities.”

The primary purpose of education is to teach students how to be critical thinkers. Now that the School Board has declared that expressions of doubt about complex scientific topics will be banned, what is the point of going to school?

Regardless of the subject we should encourage students to be skeptical. The more questioning, the better. They will be poorly prepared for adult living if they spend their childhood years being spoon-fed in schools where skepticism is prohibited.

Public education already faces a growing challenge from private schools, online learning, and home-based education. If Resolution 5272 is upheld, Portland Public Schools will give parents one more reason to leave.

New Orleans’ Miracle School District

Ten years ago, Hurricane Katrina devastated the southeastern United States, displacing more than 372,000 school-aged children. Today, New Orleans’ school population has returned to more than two-thirds its pre-storm level, but a lot has changed for the better in the public school district.

Before Katrina, a Louisiana state legislator called New Orleans “one of the worst-run public school systems in America.” Almost two-thirds of students attended a “failing school.” After Katrina, the state legislature transferred more than 100 low-performing Orleans Parish schools to the Recovery School District. Now, the district has 57 charter schools operating under nonprofit charter management organizations.

According to The Washington Examiner, barely more than half of New Orleans public school students graduated before Katrina. Today, almost all New Orleans students attend charter schools. In the 2013-14 school year, three out of four students graduated on time, and fewer than seven percent attend a “failing school.”

This amazing turnaround is due to the hard work of teachers, administrators, local and state leaders, and parents who rebuilt New Orleans’ public school system from the ground-up, with the vision and determination to create “an all-choice school district with high-quality schools.” The unprecedented success of New Orleans’ Recovery School District serves as a model for education reform efforts across the country. Parental choice, flexibility for educators, and innovation in management really can achieve the impossible.


This article was originally published August 26, 2015.

 

Washington, D.C. Charters Called a Laboratory for Innovation in Public Education

Did you know that almost half of Washington, D.C.’s public school children attend charter schools? In fact, our nation’s capital now has 115 charters, run by 62 nonprofit organizations.

President Bill Clinton signed the legislation authorizing D.C.’s charter schools twenty years ago this spring. Since then, D.C. charter school students have made significant academic gains. A recent study on urban charter schools by the Center for Research on Education Outcomes at Stanford University found that D.C. charter students are learning the equivalent of 96 more days in math and 70 more days in reading than their peers in traditional public schools.

David Osborne, director of the project Reinventing America’s Schools at the Progressive Policy Institute, has called D.C. “the nation’s most interesting laboratory” for public education. In an article for U.S. News and World Report, Osborne compares the traditional public school system with a Model T trying to compete on a racetrack with 21st century cars. “…[F]or those with greater needs,” he writes, “schools need innovative designs and extraordinary commitment from theirs staffs.”

Charter schools’ entrepreneurial governance model allows them to innovate, adapt, and specialize to meet the particular needs of students. Their successes in educating children who face the greatest challenges to academic achievement is fueling an even greater demand for the kind of choice in education that charter schools have come to represent.

Why is the State Land Board selling the Elliott State Forest without competitive bidding?

In August 2015 the Oregon Land Board (Governor Kate Brown, Secretary of State Jeanne Atkins, and Treasurer Ted Wheeler) voted to sell roughly 82,450 acres of “Common School Trust Lands” within the Elliott State Forest because the state was losing money on those lands. Under Oregon law, School Trust Lands are supposed to make money for schools.

Given the ongoing losses, the Board reached the correct decision. Unfortunately, the sale protocol adopted by the Board is bizarre. The Board will establish a price for the land based on appraisals, and that will be the only price accepted. If you dare to offer $1 more, your offer will be declared “non-responsive.”

How can this make sense when Trust Lands serve an as an endowment for public schools? Trustees of any endowment have a fiduciary obligation to make decisions in the best interest of beneficiaries. The 82,450 acres of timberland being sold in the Elliott may be worth anywhere from $300 million to more than $400 million, but no one knows the exact value. Setting a non-negotiable price through appraisals means that potentially vast amounts of money could be left on the table.

Anyone who has been to a charity fundraising auction knows that the estimated value of something frequently turns out to be wrong—by a lot. That’s why we have competitive bidding.

The same is true in business transactions. Just last month, for example, Alaska Airlines bought Virgin Airlines for $2.6 billion, or $57/share—a price that was 80% higher than what the shares had been trading for prior to the sale.

Instead of bidding on price, the Land Board plans to pick a winning offer based on which prospective purchaser has the best package of “public benefits.” The minimum level of benefits has been defined by the Board as the following: (1) at least 50 percent of the purchased timberland must remain open for public recreational use; (2) no-cut buffers of 120 feet on each side of fish-bearing streams must be left permanently untouched; (3) at least 25% of the older stands of trees must be left intact; and (4) at least 40 full-time jobs annually must be provided over the first 10 years of new ownership.

These benefits may have merit, but using them as the way to choose the best offer will turn the sale protocol into a beauty contest. There is no objective way to compare an offer including 130-foot buffers with another offer that has only 120-foot buffers but proposes to employ 50 people each year rather than 40.

This protocol is going to create a nightmarish decision process for the three Land Board members, while violating their fiduciary obligations to schools.

There is an easy solution to this problem: Simply make the four public benefits a minimum requirement, and then pick the highest-price offer meeting those requirements. Maybe we’ll find out that the Elliott is worth a lot more than it’s been appraised for.

Anyone who works at a public school, serves on a school board, or has a child enrolled at a public school should be outraged at this giveaway.


This article originally appeared in the Salem Statesman Journal on April 30, 2016.

Flexibility Is Key: The Next Generation of Parental Choice Solutions

Families in five states now have access to a special program called Educational Savings Accounts.

Educational Savings Accounts, or ESAs, allow parents to take money the state otherwise would spend on their children in the public system and put it on a restricted use debit card. Parents can spend this money on a wide variety of approved educational options, including private school, individual tutoring, online classes, and other services. Any money not used is rolled over for parents to spend in the future.

The Friedman Foundation for Educational Choice surveyed Arizona families to see how they are choosing to spend the resources allocated for their kids. The survey found that more than a third of participating families used ESAs for multiple educational purposes, not just private school tuition. It also found that families saved a significant amount of their ESA money for future expenses.

This indicates that ESAs not only expand the learning options available to individual children, but they also encourage fiscal discipline within education spending.

Parents and lawmakers in nearly a dozen states, including Oregon, are working to make this flexible learning option available to more children. The next generation of education reform in America needs to embrace flexibility to meet the needs of every child, and Educational Savings Accounts are proving to be a simple but powerful way to do just that.

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