Education’s Enron

Robert Alt

February 1, 2002

We are undoubtedly familiar with the events by now: with the operation teetering on the brink of collapse, insiders continued to profit, seeking additional investment to prop up the floundering behemoth. The rank-and-file—most of whom did not have viable exit options—saw their futures sacrificed in exchange for false promises. When the bottom finally did fall out, legislative and legal action predictably followed. The failure of an energy giant? No, the Cleveland school choice case scheduled to be argued before the United States Supreme Court this week—a case which has far more in common with recent corporate misfortunes than you might think.

The Cleveland school choice case arose in 1995, when the Ohio legislature began offering partial tuition vouchers in response to a federal court order requiring the state to take control of the school district. The situation in Cleveland public schools leading up to the court order was dire: Despite spending significantly more per student, Cleveland public schools had a dropout rate that was twice the state average. Those who did stay in school had little to show for it: only 9% of ninth graders passed proficiency exams, and only 7% graduated and passed the 12th grade proficiency exam. Perhaps most troubling is the fact that students were statistically more likely to become the victim of a crime at school than of actually graduating on time with 12th grade-level proficiency. Given these conditions, the Ohio legislature passed the Pilot Program, providing tuition assistance for low-income parents which could be used at participating private religious and nonreligious schools.

The response to the Pilot Program was phenomenal. In its first year, more than 6,400 parents applied for 1,700 vouchers. New schools—religious and non-religious alike—were formed to participate in the program, and philanthropists such as the Wal-Mart Foundation contributed half-a-million dollars to support these new ventures. Opponents warned that the schools would skim off the best students, but many of the schools opened their doors to all-comers, taking in the poorest and most educationally disadvantaged students in the district. Even with these open door policies, studies by Jay P. Greene and his colleagues at Harvard’s Program on Education Policy and Governance found that these schools had improved student test scores, greater parental satisfaction, and higher levels of racial integration than their public school counterparts.

Parents were happy, students were learning, and the schools were better integrated—it was only a matter of time before someone brought a lawsuit. Indeed, no sooner was the ink dry on the legislation than a collection of special interests led by the teachers’ unions sued challenging the program as a violation of the Establishment Clause of the Constitution.

Unions claim that public funds spent for religious schools violate the separation of church and state. In reality, however, union opposition to religious schools is less about nuanced and unsettled legal questions, and more about settled law which exempts church run schools from the statutory requirements of collective bargaining. To put it more plainly, union opposition to school choice is aimed at reducing competition, not protecting the Constitution. For example, in 1996 the Jersey City Teacher’s Association threatened a boycott of Pepsi products because the company offered scholarships for low-income students to attend public schools. There was no constitutional question here—Pepsi is not the “state” and can support religion all it wants without raising constitutional questions—but the union still fought tooth-and-nail to defeat the philanthropy and to protect their monopoly at the expense of the students. Another common theory used to explain union opposition is that choice schools are not “common schools,” or are somehow inferior to public schools. Again, this does not appear to accurately reflect the motivations of the unions: in a State of the Union address prior to his death, former American Federation of Teachers President Al Shanker stated that charter schools could indeed get union blessing, so long as they were open to unionization. Unlike the sometimes murky tests used by the courts, the unions’ test is perfectly clear: if the choice schools add to union coffers, they are permissible; but if choice schools add competition to the union, they should be forbidden.

While there is certainly no prohibition against profiting from constitutional claims, the position of the unions is unabashedly self-serving and contrary to the public interest. To better illustrate this point, imagine that Arthur Andersen brings a complex constitutional challenge to legislation aimed at cleaning up accounting laws in the wake of Enron bankruptcy, claiming all the while that they are acting in the public interest. Undoubtedly, the public would be skeptical. If, however, Andersen claimed that the legislation would be unlawful because it would permit more efficient firms to provide better service at a cheaper price for consumers, then skepticism would turn to outrage. Yet this is precisely what is happening in the school choice case. The lower court accepted the theory that the Pilot Program was impermissible because the religious schools operate more cheaply and therefore are more capable of participating in the program under the restrictive budget caps. Thus, the program was undone because the private schools did not suffer from the high, unionized public school costs.

Thankfully, the question for Establishment Clause purposes is not whether religious schools are too competitive or too successful, but whether the government program is neutral regarding religion, and whether the government funds are used for religious education as the result of the parental choice. This test applies even when the schools in question teach religion as part of their curricula, for the Supreme Court has previously upheld the use of government funds to train pastors and missionaries, where the decision to spend the money at the seminary is the recipient’s and not the government’s. Applying this test, the Pilot Program is clearly neutral: religious and non-religious schools can and do participate. Furthermore, parents have genuine choice: not a single parent who sought to send their child to a non-religious private school in the program was turned away.

The sole counter-argument offered is that the level of religious school participation and the number of students at religious schools is too high to represent individual choice. This assertion contains a none-too-subtle hostility to religion, but is weak on facts. This claim assumes without foundation that parents on average will not choose religious schools if they have other options. There is simply no empirical basis for this claim (indeed the actual results in Cleveland suggest otherwise) and the constitutionality of the Pilot Program should not rest on such assumptions.

After years of suffering in failing school system, low-income parents finally have a choice which provides their children genuine educational opportunity. For the unions, however, the solution to public school failure is the same as the one offered by Enron executives before the crash: trust us, invest more money in the failing system, and don’t worry about the little people who can’t get out. We shouldn’t have trusted Enron, and we shouldn’t trust the unions either.

Robert Alt is an Adjunct Fellow at the John M. Ashbrook Center for Public Affairs at Ashland University, Ashland, Ohio.