NCPA - National Center for Policy Analysis

Let the Dollars Follow the Child

May 8, 2012

Fiscal federalism argues that government services are most efficiently delivered if provided closest to the taxpayers or consumers receiving them, and that competition among local governments for residents and taxpayers will improve those services, says Grover J. Whitehurst, a member of the Koret Task Force on K-12 Education and director of the Brown Center on Education Policy at the Brookings Institution.

When we apply this principle to public education, we find that schools respond to competition more than federal, top-down programs.  If the government can allow schools to innovate and create school-unique solutions, better outcomes can be achieved for students.

  • The federal government should absolve itself of many of its funding priorities in education and instead provide this money directly to schools.
  • Those schools would then compete to attract students, seeking the federal funds that would follow the student by raising standards and hiring competitive staff.
  • This will allow schools to adapt to area-specific circumstances, providing services that would likely have been ignored had policy been determined by the state or federal government.

This system of school choice functions well because it precludes the top-down emphasis and instead allows schools to pursue their own educational model.  It would, however, require the government to maintain control of four basic provisions for administering an education system. 

  • Gathering and disseminating information -- consumers (parents) will need information about various schools' performance if they are going to make informed decisions about their child's education.
  • Civil rights -- the federal government must exercise substantial oversight over autonomous schools in order to ensure that civil rights are maintained.
  • Compensatory funding -- federal funding levels would have to provide premiums for schools that take on the tutelage of disabled students, as they are typically more expensive and would risk exclusion from the market if the government-provided rate was not higher.
  • Guarantee choice as a means to competition -- schools cannot compete for students if students are restricted in their choices, and the federal government in this case would have to ensure that parents had the ability to send their child to whatever school they thought best.

By valuing choice and minimizing the federal government's impact, this mechanism will best take advantage of fiscal federalism and will hopefully yield superior educational outcomes for students based on area-specific teaching styles.

Source: Grover J. Whitehurst, "Let the Dollars Follow the Child," Education Next, Spring 2012.

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