Offer school choice to all city children

John O. Norquist
Milwaukee Journal Sentinel
Oct. 12, 2002

I have supported the Milwaukee school choice program for over a decade.

It's good for this city's poor children. It's good for all of this city's schools - Milwaukee Public Schools and charter schools and private schools. And it's good for the community.

Some public school supporters complained about the competition, but most MPS schools and administrators rolled up their sleeves and decided to - of all things - compete. Responding to expanded school choice, MPS administrators negotiated with their teachers union a new program to "counsel out" problem teachers; they gave individual schools much of the responsibility for teacher hiring, school budgeting and curriculum; they expanded specialty programs, such as Montessori programs, that historically turned students away because of space shortages; they approved a neighborhood school initiative that will increase the number of schools that students can walk to; they converted half-time K-4 kindergarten to full-time; they embarked on a major expansion of before- and after-school child care; they approved a record number of charter schools; and they launched a massive citywide effort to publicize its successes and new programs to prospective and current parents.

Choice opponents often claim that vouchers hurt public schools as the price of helping private ones.

The Milwaukee story proves them wrong.

Harvard economist Caroline M. Hoxby investigated the impact of vouchers on public schools in Milwaukee. Her peer-reviewed conclusion: "Overall, an evaluation of Milwaukee suggests that public schools have a strong, positive response to competition from vouchers."

I also want to make it clear that I would never, ever support a school choice program that does not advantage poor people. And I have been convinced that, in the final analysis, the best way to help the poor is not through means-tested programs that are limited to the poor, but through universal programs that include them and also include the middle class (and even the wealthy).

I believe that means-tested programs do not help the poor as much as universal programs. First, means-tested programs attach a degree of stigma to the poor. They are badges of poverty. This is perhaps a minor point, but it's worth noting. Second, means-tested programs require the poor to apply for help. They compel the poor to be supplicants to government. Third, means-tested programs create enormous disincentives to work, to form families and to get married.

Why should it be the case that when a low-income worker earns more money (whether by working more hours taking an extra job, or accepting a pay increase), and moves from 174.9999% of the poverty line to 175.00001% of the poverty line, that the worker then loses her or his $5,500 school voucher for each child?

Does it make any sense to have a policy under which, when a low-income parent of a child getting a voucher goes ahead and marries another low-income parent, and their joint marital income crosses the 175% of poverty mark, the parent and child are stripped of the voucher and may have to leave the school of their choice? In my view, government should never punish the poor for working or for getting married. Yet, unintentionally, this is what a means-tested school voucher system - like any other means-tested program - inevitably does.

Fourth, the current means-tested school voucher program's disincentive to work creates an inducement to commit fraud: to lie to the government about their income. For the poorest of the poor, perhaps, this problem doesn't arise. But there are a lot of poor and near-poor people whose incomes float between 150% and 200% of the poverty line. There are a lot of low-income workers earning below 175% for whom getting an income above 175% is a real possibility, something that will actually happen.

The current program creates a powerful incentive for them to lie about their income, in order to keep the $5,500 per child voucher without which they cannot possibly afford to send their children to the private schools they prefer.

I have no doubt that, since the Wisconsin program's inceptions, some voucher recipients have told exactly such lies. Not because they're vicious or sneaky by nature, but for the exact opposite reason: because they love their children so much.

But why should we create a government program that forces poor people to do this? We should end income requirements for school choice. If that's not achievable, then the work and marriage penalties can be diminished, and the fraud incentive reduced somewhat, by replacing a flat income cut-off (at 175% of poverty or some other measure) with a policy that reduces the value of the voucher as income rises above a defined income level until the value eventually declines to zero.

This is how the earned income tax credit works: Between roughly $12,000 and $32,000, it declines (at different rates for a parent with one child vs. a parent with two or more children) from a fairly large amount (about $2,500 for one child, about $3,500 for two or more) to zero. By $32,000, it has disappeared.

One could construct school vouchers in the same manner. Alternatively, one could ask school voucher recipients above a certain income level to make a co-payment to obtain the full value of the voucher, i.e., pay a fixed percent of their income, which would be a rising dollar amount up to the value of the voucher itself, in order to "buy" the voucher from the government.

Both of these approaches would eliminate the current "cliff" effect (at 174.9999% of poverty you get the full voucher, but at 175.00001% you get nothing). Both approaches would also ameliorate the current arrangement's stark work disincentive and marriage penalty (for example, why work yourself "over" 175%? Why marry "over" 175%?).

And both approaches would, at the same time, diminish the incentive to commit fraud. But these so-called solutions are quite complicated. They would require even more paper work, and more bureaucrats, to make sure everyone was following the complicated rules. And in the end, they'd only reduce the work, marriage and fraud problems. They wouldn't truly eliminate the work and marriage penalties or the incentive to commit fraud.

Indeed, means-tested programs that reduce the value of the benefit as income rises, whether by actually reducing the benefit amount itself or imposing on recipients a rising co-pay, still create a substantial penalty for working and for marriage, which, in turn, creates a powerful incentive to commit fraud.

Another approach, which school choice advocates have proposed in the past, is to "grandfather" voucher recipients who originally received a voucher because their income started out below 175% of poverty but who now have risen to incomes above 175% of poverty. This certainly solves the work and marriage penalty problem and eliminates the incentive for fraud for them.

But it is terribly unfair to the thousands of low-income workers whose incomes are just above 175% of poverty. How do you say to a woman with three children who's earning 180% of poverty that she gets no vouchers, while her neighbor with three children who started out at 170% and is now at 250% is getting vouchers worth more than $15,0000 and, more significantly, is able to choose where her children attend school? What rationale can one come up with to explain why the less well-off parent should get no choice while the now more well-off parent gets full choice? The horizontal equity problem is enormous.

Also, a new perverse incentive arises. The woman making 180% is crazy not to let her income temporarily slip below 175%, qualify for the voucher and then go back to her 180% and rising income.

Fifth, I'd like to make the political argument that means-tested programs that help only the poor are less politically secure than are non-means-tested, universal programs that include the poor and near-poor but also include the middle class and even the wealthy.

No program has done more good for the poor black, brown or white person than Medicare or Social Security. The process of applying is not humiliating. Hardly anyone is turned away. Once you're in, you're in. The benefits are generous. Public opinion is always on your side. Indeed, the public generally wants to expand these programs - hence, the current debate over adding a drug benefit to Medicare.

Yet these programs, which have done so much for the poor, are not means-tested poverty programs. They're universal. And they are overwhelmingly popular. The only political issue is how to expand them. Isn't this what we want for school choice: no stigma, no perverse incentives, no incentive to commit fraud and overwhelming popular support?

Sixth, I believe that it would be strategically advantageous for the school choice movement - that it would be in the school choice movement's own self-interest - to widen and deepen the support that school choice receives from middle-class Americans by giving school choice to middle-class American children.

School choice will be more secure if the school choice movement relies not merely on the middle class' sense of justice but on its own self-interest.

Much can be accomplished with the aid of middle America's sense of justice. Without it, the Civil War and emancipation would not have happened. Nor would the civil rights movement have gone very far. Nor the labor movement, and some others.

But if one can legitimately go beyond an appeal to justice to a direct appeal to self-interest - if the two are compatible - why not do so? The environmental movement has made some progress, in large measure, because of this. In the end, even the civil rights movement advanced because business leaders realized it was in their self-interest to clean up America's image and take advantage of this nation's vast pool of untapped or underutilized minority talent.

I would never support a course of action solely because it does something for the middle class. But where a policy like universal vouchers is not only good on its merits but is also something that benefits the middle class, and would help enlist much broader middle-class support and votes for our cause, why not go for it? Why not lock in the benefits of school choice for the poor by adding the middle class to the school choice movement?

Finally, from the so-called non-educational perspective of building Milwaukee and strengthening America's cities in general, there is yet another reason for expanding school choice to all children.

Cities need to retain and attract the middle class to be successful. They need to attract a share of the wealthy to be successful. Reasonable property tax rates; donations to organizations that serve the poor; contributions to church and synagogue and mosque and temple; support for cultural and civic causes - all depend on a large, committed middle class, black and Hispanic and white, that lives in the city, owns homes in the city and invests in the city.

Every opinion poll I've ever seen, however, and thousands of conversations with Milwaukeeans from all walks of life, have convinced me that the lack of school choice is the single biggest factor that drives the middle class out of the city.

So I favor expanding school choice to all of Milwaukee's children to retain - even expand - this city's middle class. My sole motive in viewing universal school choice for all of Milwaukee's children as a way of expanding the city's middle class is the value of a large, diverse middle class to the city.

A city composed only of the poor will inevitably be an impoverished city - its basic services slowly declining because it can't afford to pay for them, its tax rate rapidly rising as its tax base withers.

A city that retains and expands the middle class is another story altogether. It has a good shot at keeping municipal service levels - services the poor depend on - at a high level. It has a good chance of keeping the property tax in check.

A city with a large and vibrant middle class is likely to be a large and vibrant city in general, a city with jobs that help the poor get out of poverty, a city flowing with non-governmental resources that help enrich civic life.

As mayor, as a parent, I would like to see universal school choice because it offers the middle class a good reason - a positive pro-family choice - to select the city.

John O. Norquist is mayor of Milwaukee and co-chairman of AdTI's advisory board.