Keep It Local

There are many reasons that potentially favor heavier federal involvement in education, but there are also powerful reasons for favoring local control of K-12 public schools. The most compelling reason centers around economics.

Schools that are controlled locally and funded by locally-collected property taxes have more incentive to be effective and efficient. Caroline Hoxby, an education economics professor at Harvard, makes this argument in a series of theoretical and empirical papers, where she finds that districts with strong control over their schools are more efficient than those without.

When education is financed by property taxes that are disbursed by some local governing body, there are two useful feedback cycles that get started.

First, residents have incentives to monitor the local governing body. Residents’ home values increase when schools improve because of increased demand in local property,  and fall when they gets worse. Residents therefore have reason to elect able administrators and raise complaints when wasteful mistakes are made. This incentive applies to all the residents of a district and not just those with school-age children. Since everyone in a good school district benefits from rising home values, everyone wants to ensure local schools are improving.

A good counterargument would be that many factors influence home prices, making it difficult for residents to identify higher or lower home values with particular school administrator decisions. But, I think schooling actually is the most salient and oft-blamed factor for changes in neighborhood value. People often move to neighborhoods “for the schools” and schools are the first culprits for shifts in residential value.

Second, administrators have incentives to behave better. If administrators implement successful policies, then property values in the district will rise, and if tax rates remain the same, the school’s budget will increase. Good administrators are rewarded with more money, while poor administrators are punished with automatically smaller budgets.

Still, there could be a role for the federal government to play, but the role could involve further strengthening these types of incentives rather than supplanting them. For instance, the government holds research competitions to spur technology development, and why couldn't they do the same with education? Rather than awarding prize money for the best robot or missile design, the federal government would award money to the state or locality that builds a better educational system.

States experiment with many policy positions, and in the absence of the right incentives, they can make mistakes or worse, “race to the bottom.” If states are rewarded for doing well by the federal government, then their different policy positions are motivated by the desire to succeed. States will truly be “laboratories” that are working to overcome a problem rather than exploiting differences in funding and policies among their neighbors.

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