School Choice Fosters Students’ “Profound Gratitude,” Author Says

Students everywhere are back in school, including grade school children from low-income families who are attending Oregon private schools thanks to the Children’s Scholarship Fund-Portland.

New York Post columnist Naomi Schaefer Riley recently interviewed a diverse group of students who have graduated from Children’s Scholarship Fund programs across the country. Her book, Opportunity and Hope: Transforming Children’s Lives through Scholarships, shows what a good education means to young people who have a better chance in life because of private scholarships, and she makes a compelling case for the power of school choice. The scholarship alumni profiled in the book are representative of thousands of others, including more than 650 students who have received scholarships here in Oregon.

Riley wrote: “The recurring themes I heard…were ones of improved academic outcomes, solid foundations for high school, college, and beyond, and a profound gratitude and desire to give back….Together, these children will ensure that the next generation gets its shot at the middle class.”

For many children in America, one-size-fits-all public schools fail to let them truly learn and excel; and many low-income parents want access to schools that match their children’s needs. Children’s Scholarship Fund students are living proof of what is possible when families are empowered to choose the schools that are right for their children. For more information about real-world education solutions that are getting results for kids, visit SchoolChoiceForOregon.com.

Kathryn Hickok is Publications Director and Director of the Children’s Scholarship Fund-Portland program at Cascade Policy Institute.

Why Literature Lovers Hate Common Core

Please join us for Cascade’s monthly Policy Picnic led by publications director Kathryn Hickok on September 17, at noon.

Kathryn will discuss reasons many teachers say the Common Core State Standards are taking the language out of language arts and the love out of literacy. Common Core supporters argue the new standards will improve students’ literacy, but will they do the opposite instead? What can parents do about it?

Admission is free. Please bring your own lunch. Coffee and cookies will be served. Space is limited to sixteen guests on a first come, first served basis, so sign up early.

Sponsored By

The Votes Are In: Small Scholarships Have a Big Impact

The Children’s Scholarship Fund is a nationally recognized, privately funded scholarship program which has helped more than 139,000 low-income children attend tuition-based elementary schools nationwide since 1998. The program recently surveyed scholarship families in New York about their experiences. The results include:

• 98.5 percent said their CSF scholarships help them make the best educational choices for their child.

• 73.1 percent reported they could not afford to send their child to their chosen school without a CSF scholarship.

• 70.3 percent noticed an improvement in their child’s academic performance and/or engagement since enrolling in their current school.

While New York City public schools spend about $20,000 per student, an average CSF scholarship grant of $1,600 is enough to empower these low-income parents to obtain a private school education for their kids.

Cascade Policy Institute runs the Oregon partner program of the Children’s Scholarship Fund. The New York program’s poll results are consistent with the informal feedback Cascade receives from scholarship parents here. “I wish that the education system could understand that not every child fits into the same sized box, and everyone needs to do what is right for their family,” said one Portland-area CSF parent.

Programs like the Children’s Scholarship Fund respect the decision-making processes of families and support parents in directing their children’s education. School choice programs like CSF prove that good things happen when parents can vote with their feet on behalf of their own kids.


 

Kathryn Hickok is Publications Director and Director of the Children’s Scholarship Fund-Portland program at Cascade Policy Institute.

Will Parent Rebellion Spell Doom for Common Core?

By Lance Izumi

If one asked most people a couple years ago about the Common Core national education standards, the response would have been a blank stare. Now, Common Core is a front-burner political issue because parents are discovering that their children are struggling under the new standards.

Common Core is a set of national math and English standards, which most states, including Oregon and California, have adopted because of the funding incentives and strong-arm tactics used by the Obama Administration. There have been many “big picture” criticisms of Common Core: the lack of transparency and public input when Common Core was developed, the middling quality of Common Core, the high cost of implementing Common Core, and nationalization of education under Common Core. Yet, these critiques are now being overshadowed by the anger of parents at how Common Core is negatively affecting the learning of their children.

Columnist and former Reagan speechwriter Peggy Noonan has written that Common Core’s Achilles heel is implementation: “implementation―how a thing is done day by day in the real world―is everything.” Take, for example, new Common Core-aligned curricula and associated teaching methods.

Core Connections is a Common Core-aligned math curriculum that is starting to be implemented in classrooms and which emphasizes the use of cooperative learning. The curriculum tells the student: “Learning math [through cooperative teamwork] has an advantage: as long as you actively participate, make sure everyone in your study team is involved, and ask good questions, you will find yourself understanding mathematics at a deeper level than ever before.” While such utopian pronouncements sound impressive, the reality is quite different.

Bryce is a sixth grader at a public school in Northern California. He is a very bright student, achieving several perfect scores on the state’s math exam and consistently receiving A+ grades in math. Yet, Core Connections has had a discernible negative impact on Bryce.

Under Core Connections, Bryce and his fellow students are organized into teams of three to four students. Bryce says that there is unequal participation among team members, with more advanced students being more involved and carrying more of the work.

Further, not all the groups finish at the same time. Those that finish early can’t go on to harder problems, but have to wait until other teams finish. Oddly, Bryce says that his teacher doesn’t want early finishers to read because that’s English language arts, and not math.

Since the teamwork method started, the class usually doesn’t finish math lessons in time, and sometime it cuts into their science time or the math is simply not completed. Bryce emphasized that this situation happens a lot. When asked if the class starts the next day where they left off the day before, he answers “no,” saying that the class simply goes on to the next new concept.

When asked his thoughts on the new teamwork method, Bryce said that he thought that working in teams was distracting: different ideas were talked about at the same time; there was too much noise from other groups; and, worst of all, much of the conversations were not about math.

Whereas his prior math curriculum allowed him to do math at his own pace, so he was doing eighth-grade math while still a fifth grader, now Bryce says he has to spend a lot of time explaining his answers and go at the same pace as his team.

Bryce’s frustrations with the new Common Core curriculum are having a negative impact on his achievement. According to his mother, for the first time Bryce’s grades are starting to falter, which is worrying her greatly.

Bryce’s problems with the new Common Core curriculum are not unique. Children and parents across the nation are up in arms over the confusion inherent in Common Core curricula. A recent PACE/University of Southern California poll found that 41 percent of Californians surveyed were opposed to Common Core, while only 32 percent supported it, a flip from the poll numbers recorded last year.

As Peggy Noonan observes: “Life isn’t lived in some abstract universe; it’s lived on the ground, in this case with harried parents trying, to the degree they can or are willing, to help the kids with homework and study for tests.” Parents seeing their children struggle under Common Core’s liberal teaching methods and philosophy are rebelling, and that rebellion likely spells eventual doom for Common Core.


 

Lance Izumi is Koret senior fellow and senior director of education studies at the Pacific Research Institute and a guest contributor for Cascade Policy Institute.

Is There a More Flexible Way for Students to Invest in Themselves?

By Joel Grey

State Treasurer Ted Wheeler has proposed a new program intended to help Oregon students go to college in spite of the quickly ballooning cost of tuition. Under the proposed “Oregon Opportunity Initiative,” the state of Oregon could borrow money by selling general obligation bonds and then invest the proceeds. Students could receive grants or other subsidies from the earnings on this investment each year, while taxpayers would be responsible for paying back the bonds. The state must use all discretionary spending necessary to pay back bondholders with interest over thirty years. Bonds issued for this purpose likely would reduce the opportunity to bond for other critical needs of the state such as roads and bridges.

This proposal is potentially a costly mistake for Oregon and fails to prevent the inflated cost of education from growing even faster.

Even with the increased cost of college, higher education can still be a good investment for individual students. People with bachelor’s degrees likely will see their incomes increase by more than the cost of attendance over their careers. Because of this, it is unwise to eliminate part of the cost to the student by having taxpayers help fund their education. Students should pay for their own education, even if they are not paying at the time they are enrolled.

If the cost of college to the student is reduced, it creates a third-party payer problem: Because they are not directly affected by cost increases, students will worry less about the price of college, allowing it to inflate more over time. Conversely, if students are expected to pay for their education, they are more cautious about expenses and debt.

Even traditional loans have a third-party payer problem because costs are externalized to the future. Students have to pay eventually, but they don’t necessarily fully consider this because it is a long-term issue. While traditional loans lead to problematic student debt, there are other ways of financing education that don’t lead to third-party payer problems.

One viable solution to student debt was proposed almost sixty years ago by Milton Friedman: human capital contracts. A private person or institution, such as a bank or investment firm, pays for a student’s education. In exchange, the student pays a fixed percentage of income over a certain period of time. Human capital contracts would be more flexible than traditional loans. As a percentage of income rather than a fixed dollar amount, they would be less likely to be financially burdensome to the borrower and would thereby lower the rate of default.

Human capital contracts are also more flexible for the lender. Current federal loans treat all students equally in rates and borrowing limits. Private institutions could offer lower or higher rates based on an individual student’s career path or academic performance, allowing certain students to receive lower rates while riskier students are given higher rates.

Human capital contracts are likely to benefit lower-income students the most. It is very unlikely that those students could afford to pay for college up front, but they would have the same earning potential as anyone else in their field upon graduating. Human capital contracts would allow them to use these future earnings to make college attainable in the present.

While human capital contracts are also a third-party payer system, the private nature of the funding gives lenders an incentive to control their costs. They will need to ensure that students can pay back what they borrowed. The federal government doesn’t have the same incentive with its student loans because it doesn’t need to earn a profit.

Human capital contracts are not a silver bullet; nothing is. For example, they likely wouldn’t be useful for students who only intend to work part time or to become stay-at-home parents because lenders couldn’t recoup their investments. However, human capital contracts are a better choice overall for students and Oregonians when compared with the taxpayer-funded Oregon Opportunity Initiative. They would eliminate many problems of current loans, provide an incentive to view education as an investment, and control costs. All of this would help manage the expense of college long-term while still allowing students from any income bracket to attend college.

Joel Grey is a research associate at Cascade Policy Institute, Oregon’s free market public policy research organization.

Portland Public Schools’ New Ombudsman Should Be Independent

By Joel Grey

In response to parent complaints, Portland Public Schools will create a new ombudsman position. An ombudsman is a person within an organization who provides accountability and investigates complaints.

It’s a good thing for public schools to have an ombudsman. An ombudsman is dedicated to listening to parents’ concerns and preventing abuses within the system. Accountability is important because people will often get away with whatever they are able to, and an ombudsman makes it harder to escape independent oversight.

The problem here is that the school district has placed the ombudsman within the public relations department, reporting directly to chief of community involvement and public affairs, rather than to the superintendent. The job of public relations isn’t to investigate and stop abuses within the system; it’s to improve the public’s view of the schools. Placing an ombudsman in a PR department makes it appear to parents that the position is just for show.

An ombudsman should be as independent as possible and report to the highest level of an organization―in this case, directly to the superintendent. This is what Newark Public Schools does, and it is a common practice. Without independence, the ombudsman may appear to parents to be simply a tool to placate their criticisms without effecting real reform.

Joel Grey is a research associate at Cascade Policy Institute, Oregon’s free market public policy research organization.

Private Lenders Could “Pay-It-Forward” in Oregon

By Everet Rummel

The Oregon Higher Education Coordinating Commission is proposing a pilot program called “Pay-It-Forward.” Oregon residents could attend an in-state public university or community college tuition-free in exchange for paying a portion of their income annually for 20 years after graduation. The program, set to cover 1,000 students, is projected to cost the state between $5 million and $20 million per year for the next 20 years before becoming self-sustaining.

Proponents of “Pay-It-Forward” want to alleviate the problem of overwhelming student debt loads and make a college education more affordable. But should taxpayers cover students’ tuition when they are already directly funding public universities and student aid programs? Instead of microscopic pilot programs that throw more public money at the problem of rapidly rising tuition, there is a potential private solution to help finance higher education.

Milton Friedman originally proposed the concept of human capital contracts (HCCs) for the purpose of financing higher education. HCCs are privately funded financial instruments through which students receive funding for their tuition. In exchange, they pledge to pay a set percentage of their income annually for a set period of time after graduation. If they are ever unemployed or unable to pay, then they pay nothing until they have an income. If the payback period ends before the student has paid back the entirety of the sum loaned, the rest of the debt is forgiven. HCCs would go far beyond publicly funded “Pay-It-Forward”-type programs and traditional student loans by incentivizing informed educational decisions, forcing institutions to compete by controlling costs, and transferring financial risk to those who are better able to bear it.

HCC rates, the percentage of income that students must pay annually, and funds loaned would vary by the school attended, program of study, and academic achievement. Students attending schools and programs whose graduates tend to do poorly in the labor market would face lower rates but fewer funds. Students with lower academic achievement may have access to less funding. Those attending more expensive schools would receive more funds and higher rates only if their expected earnings are high relative to the costs of the education. Thus, rates and funds would incentivize students to seek more bang for their buck. Institutions, no longer reliant on seemingly unlimited government (taxpayer-funded) aid, would have to rein in costs and focus on improving academic quality. In sum, the availability of HCCs alone would tell consumers a lot about the economic value of various degree programs.

Most importantly, risk and financial burden would be borne by borrowers and lenders, not the state and taxpayers. The majority of the risk would be transferred to lenders, who are in a better position than student borrowers to bear it. Meanwhile, students would be free to pursue their chosen career paths without worrying about fixed monthly payments that could ruin their future financial prospects. The risk of default would be arguably lower than what we face now. These points should be remembered as policymakers in Oregon and across the country consider the crisis of higher education debt. Perhaps the market―not the government―has  solutions. Human capital contracts may be one of them.


 

Everet Rummel is a research associate at Cascade Policy Institute, Oregon’s free market public policy research organization.

“Pay-It-Forward” Is a Step Back

By Joel Grey

The Oregon Higher Education Coordinating Commission is considering a proposal called “Pay-It-Forward.” This pilot program would give free tuition at a state university to one thousand high school graduates each year, beginning in 2016. In exchange for free tuition, students would cede 3-5% of their paychecks over a twenty-year period. Although the program is intended to become self-sustaining, it would cost between $6.5 and $20 million each year for the first twenty years until that happened.

This is an example of a government proposal that is not well thought out. Yale tried a similar experiment in the 1970s and eventually forgave much of the debt years later. Many students overpaid for their education, while 20% defaulted. Oregon shouldn’t repeat Yale’s mistake.

Furthermore, having a third-party payer for college reduces students’ incentive to decide whether to attend college or to pursue other options, like technical schools. It also makes students less sensitive to the prices of institutions, likely increasing the cost of college over the long run.

Education should be an investment, but students and their families should invest and then reap the benefits. That way, talented students can succeed based on merit, rather than government funding students at great cost to taxpayers, with no guarantee a pilot program like “Pay-It-Forward” will work as intended.

Government simply can’t make decisions as well as the individuals who are affected by those decisions.

Joel Grey is a research associate at Cascade Policy Institute, Oregon’s free market public policy research organization.

Just Say No to the Oregon Opportunity Initiative

The cost of obtaining a college degree is rising rapidly, leading some people to advocate that taxpayers subsidize even more of the cost. They assume that the state will benefit economically if more of its citizens obtain higher educations.

And yet, as one researcher puts it, “One of America’s most durable myths is that the more people who graduate from college, the more the economy will grow.”[1] In fact, that conclusion may depend on how those educations are paid for. Richard Vedder, author of the book Going Broke by Degree,[2] found evidence that states which provide more higher education funding actually have slightly lower economic growth rates than states which provide less.[3] That is likely because individuals know their needs better than politicians do, so leaving the money in private hands produces better results.

Professor Vedder also concludes that higher education prices are rising rapidly because of the predominant role of third-party payments, including federal and state support for institutions and students: “When some[one] else is paying a lot of the bills, students are less sensitive to the price, thus allowing the colleges to care less about keeping prices under control.”[4] This leads to even higher overall costs, just as it does in K-12 education and health care, both of which rely on a growing amount of funding from governments, rather than from consumers of the services.

Oregonians will vote on such a proposal this November. The Opportunity Initiative [Measure 86] was referred to voters by the state legislature at the request of State Treasurer Ted Wheeler.[5] It is a Constitutional Amendment allowing the state to issue General Obligation Bonds to create a permanent fund to subsidize student higher education costs. Principal and interest on the bonds will be paid back over 30 years out of the state General Fund, which means primarily out of the pockets of individual income tax payers. The fund will be invested, presumably at higher rates of return than the interest rate on the bonds, and the returns will be used to provide some form of student subsidies.

When first proposed in 2012, the initial “ask” of the legislature would have been to borrow $500 million.  The fund would be projected to grow to $6 billion in 30 years, primarily through investment earnings and some future borrowing. That “ask” has since been pared down to a possible $100 million in the first biennium.

Putting the questionable investment assumptions aside for now, this proposal is flawed for another reason. It assumes higher education costs will continue to rise into the foreseeable future. The recent housing bubble should remind us that, as good investment advisors warn, “trees don’t grow to the sky.” America’s large, growing student debt load may very well be the next great bubble. As more than one noted scholar says, America’s higher education industry “…is showing every indication of a bubble that is about to burst.”[6]

If the higher education bubble is about to burst, why should Oregon taxpayers be saddled with repaying perhaps $100 million or more in bond debt, plus interest, over the next thirty years?

What would make this bubble burst? There is a combination of possibilities, but one of the most intriguing is suggested by Opportunity Initiative chief sponsor Ted Wheeler himself. During a public talk last October, Treasurer Wheeler was asked if large donations to our universities for sports programs are properly used, and by inference if the money from the Opportunity Initiative would be properly used.[7]

The Treasurer first responded that if wealthy alumni want to donate to build sports stadiums, and the universities say they need them, he thinks that’s fine. Then, he said this:

“That said, I do criticize the university system for being very slow to adapt the opportunities around technology. There’s a lot of institutional inertia in the university system, just as there is in Salem. And, all of these new technologies have opened up new windows to learning that do not require a student to even be in the same state.

[Pulling out his smartphone] “I have an entire program on my phone called iTunes University and I can listen to lectures from all around the world from some of the most noted academics in the world, and it doesn’t cost me a cent. All I have to do is have a long commute, which I do.

“And this is one example of—and I hate to use the word game-changer too much—but this undercuts the entire economic model of the university system as it currently exists today.”

To repeat, “this undercuts the entire economic model of the university system as it currently exists today.” This answer seems to undercut Treasurer Wheeler’s own arguments in favor of the measure. iTunes University is just one of many online higher education options available today, and more are coming tomorrow. [8],[9] If this technology will drive down higher education costs for students, why saddle Oregon taxpayers with perhaps $100 million or more of debt to subsidize the old, high-cost economic model? The answer is we shouldn’t.

Steve Buckstein is Founder and Senior Policy Analyst at Cascade Policy Institute, Oregon’s free market public policy research organization.


 

[1]George Leef, “Higher Education: The Conventional Wisdom Is Wrong,” Forbes.com, 10-13-2013, forbes.com/sites/georgeleef/2013/10/17/higher-education-the-conventional-wisdom-is-wrong/

[2] Frank Donoghue, Richard Vedder on the Ills of Higher Education,” The Chronicle of Higher Education, 2-25-2011, chronicle.com/blogs/innovations/richard-vedder-on-the-ills-of-higher-education/28716

[3] Richard Vedder, “Going Broke by Degree:Why College Costs Too Much,”2004, pp 128-145, amazon.com/Going-Broke-Degree-College-Costs/dp/0844741973

[4]Richard Vedder and Matthew Denhart,“Why does college cost so much?”,CNN.com, 12-2-2011, cnn.com/2011/12/02/opinion/vedder-college-costs/

[5] Ted Wheeler, Oregon State Treasurer, “The Opportunity Initiative,” oregon.gov/treasury/AboutTreasury/Pages/Opportunity-Initiative.aspx

[6] Arthur C. Brooks, “My Valuable, Cheap College Degree,” New Your Times, 1-31-2013, nytimes.com/2013/02/01/opinion/my-valuable-cheap-college-degree.html

[7] Ted Wheeler, Washington County Public Affairs Forum, October 28, 2013. 59-second answer: youtube.com/watch?v=ZMPMtmEyieg. Entire hour-long presentation with Q&A: youtube dot com/watch?v=l1hYXGA3CLA. Relevant question starts at 52:16.

[8] iTunes University, apple.com/education/ipad/itunes-u/

[9]“Massive open online forces,” The Economist, 2-8-2014, economist.com/news/finance-and-economics/21595901-rise-online-instruction-will-upend-economics-higher-education-massive

There’s a Sucker Born Every Minute

Last month, Oregon’s first commercial “wave energy” project near Reedsport was officially abandoned.

The lead developer, New Jersey-based Ocean Power Technologies, had been promoting a utility-scale power project featuring 100 buoys, each weighing 260 tons. That plan was downsized to 10 buoys―and then to none.

The company had previously received a subsidy of $430,000 in Oregon lottery funds, along with millions more from the federal government. Apparently, this wasn’t enough; the company announced plans to move its operations to Australia, where it has been promised $62 million in handouts by the government.

This is just the latest in a string of Oregon fiscal blunders. The state wasted more than $200 million on a non-functioning health insurance website. Another $180 million disappeared in planning studies for a bridge over the Columbia River than never got built. And Governor Kitzhaber hired an “education czar” who was compensated some $400,000 before taking off for New York after less than a year on the job.

Investors all over the world understand that Oregon is the place to come for easy money. The business plan is simple: Profits flow to private companies, while losses are bone by Oregon taxpayers.

A 19th-century circus impresario once remarked, “There’s a sucker born every minute.” He wasn’t talking about Oregon, but maybe this should be our new state slogan.

John A. Charles, Jr. is President and CEO of Cascade Policy Institute, Oregon’s free market public policy research organization.

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