In practical terms how would a system of competition and choice work?

In an ideal world, one where a new system of public education could be created from scratch and previous systems were of no consequence, a system of competition and choice would utilize educational vouchers or scholarships. The government would still fully fund education with tax revenues, but the money would be distributed to students and their parents, in the form of vouchers or scholarships, and not distributed to the schools. The schools would receive their funds when they cashed in the vouchers from the students they were able to attract to their school. Beyond acting as a public education bank of sorts, the government's direct role in the system would be limited. The government would establish the criteria that a school would have to meet in order to qualify for vouchers – obviously, racial non-discrimination in admissions, and probably basic accreditation standards having to do with course offerings and graduation requirements. But most of the rest of the decisions – about curricula, personnel, discipline, instructional methods, priorities, etc. – would be made by the schools themselves – teachers and principals – responding to their clients. While the government might want to be more involved in decisionmaking for schools, and might well get more involved, the government would be under strong pressure from most schools and parents, for whom competition and choice would be working effectively, not to intervene.

Unfortunately, we do not live in an ideal world where we can organize public education anew. This means that we may need to employ less sweeping reforms than vouchers to implement competition and choice. The leading alternatives include district- or state-wide open enrollment systems and magnet schools. These practical alternatives to vouchers can work. Mechanisms other than vouchers can bring about many of the changes in school organization and performance generally promoted by competition and choice. But if the practical alternatives to vouchers are to make a significant difference in school performance they too must make basic changes in the way our systems of education are currently organized.They must make substantial changes on the demand side and the supply side of public education.

On the demand side the changes are straightforward, Parents and students must be given the right to choose the school that the student will attend. Students must not be assigned to schools on the basis of geographic proximity or for other strictlyadministrative reasons. All students should attend schools that they have chosen. This is not to say that all students will attend the school that is their first choice. Schools for which there is excess demand will have to turn some students away. But those students who are unable to have their first choice should not automatically be consigned to the school closest to their home, or to any other school they have not chosen. Students who lose out on their first choice should have the chance to attend the school that is their second choice – or third or fourth choice, if necessary. If students are denied the right to make more than one choice, the system will not work for those students who are not accepted at the school they most prefer. Magnet school programs generally have this defect. Students who win acceptance to the magnet schools are made better off; students who are not accepted are left behind, sometimes worse off, in their neighborhood schools.

The shortcoming of magnet school programs points up a deeper problem in grafting a system of competition and choice onto an established educational system. That is, while it is relatively easy for a school system to restructure its demand side – to provide parents and students with some choice – it is very hard for a school system to restructure its supply side. Unfortunately, if the supply side of public education is not restructured, changes on the demand side will not generate many benefits.

For a market to work properly, there must be enough suppliers, and enough potential for the entry of new suppliers into the market, so that suppliers cannot dictate to consumers. If there are too few established suppliers, and no prospect of new suppliers, consumers will have no choice but to take what existing suppliers provide (assuming the good or service has no substitutes – is a necessity – which is true of education). In a system effectively controlled by suppliers – a monopoly or oligopoly – the consumer is not sovereign; the demands of consumers are not driving the production of the good or service. The very point of crating a system of educational competition and choice, however, is to change the system of control – to increase the influence of the consumers of education and to decrease the influence of the monopoly suppliers. This cannot occur if parents and students are given the right to choose schools, but the schools from which they must choose are tightly controlled by a single authority.

So, how must the supply of schools be changed? To begin with, no school should be entitled to students. Schools that are not chosen by students – say as a first, second, or third choice – should be closed. No student should be forced to attend a school that is so bad that no parent would voluntarily have his child attend it. Closed schools could then be reopened under new management, with new objectives, new programs, and perhaps even a new teaching staff. Of course, this raises the question of what should be done with the principals and teachers in schools that students reject and that therefore are not entitled to financial support. In a private market, the employees of a failed business must seek employment elsewhere. In a public school system, where tenure and other rules negotiated by unions protect the jobs of teachers according to seniority, many of the staff of closed schools are likely to be reassigned to successful schools, however unwelcome those staff may be. It a school system maintains all of tile rules of job protection established prior to the installation of competition and choice, the supply of schools will ultimately fall far short of satisfying parent and student demand, and of raising system performance. This has been a problem in magnet school programs where the most talented teachers win assignments to the magnet schools and the less talented teachers are permitted to continue toiling in the traditional schools.

An obvious way around this kind of rigidity in the supply system, the kind that may force students to attend undesirable schools, is to allow teachers, principals, or any qualified entrepreneurs, including parents, to start schools on their own. If the only schools that are created are the ones that central educational authorities permit to be created, the sovereignty of parents and students will be undermined. If, on the other hand, schools are free to be created by any educational entrepreneurs that can win parental support (and meet governmental standards of eligibility as a school of choice), the demand for the kinds of schools that are wanted will ultimately be satisfied.

So-called entrepreneurial schools might exist within established educational systems and therefore be subject to the same personnel rules as other schools. But if this were so, the kinds of rules – for example, tenure and seniority – that can impede the efforts of principals and teachers to organize effectively would come under strong pressure for change. If entrepreneurial schools operated outside of established systems, the staff in those schools would have the right to vote to bargain collectively for the same job protection. But chances are the staff of autonomous entrepreneurial schools would not want or need the kinds of personnel rules found in public school systems. In any case, once students are not forced to attend schools they have not chosen, and educators are permitted to create schools that they believe students will choose, the key changes in the supply of public education will have been made.

There is one other important change in the supply of education that should accompany basic changes in the structure of educational supply and demand. Decisionmaking about school personnel and policy should be delegated to the school itself. Where truly basic changes have been made, decentralization will tend to occur naturally. Competition induces decentralization. In public systems of educational choice where basic changes in the structure of supply and demand have not been made, decentralization will not be as strongly encouraged, but it will be vigorously pursued nonetheless. In a system where schools know that their resources are dependent on their ability to attract students, schools will insist that they have the authority to organize and operate according to their best judgments of what students want and need. Central authorities will be hard pressed to retain control over many of the matters that they now dictate.

The sooner central authorities recognize that only decentralized decisionmaking – school autonomy – is consistent with the new kind of accountability provided by competition and choice, the better the chances a new system will have to work. In a competitive system of relatively autonomous schools, central authorities will still be able to contribute. They will be able to learn from the market who the weak principals and the less competent teachers are, and which schools are ineffective. Authorities can then use this information to work constructively with – or ultimately to eliminate – problem personnel, and to preserve the autonomy of successful teachers and principals. Systems of open enrollment could readily operate with central authorities performing in this new capacity.