How the NEA and AFT play Monopoly with your kids.
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When I reviewed the scholarly evidence on this question for the Cato Journal last year, I was surprised to discover that the answer is: not much. Depending on the study, the existence of collective bargaining has little or no impact on school district spending. The real mechanism by which unions have driven up their membership and compensation has been lobbying in state and federal legislatures and packing school boards with their supporters.
The public school employee unions have been the single biggest political contributors at the federal level over the past 20 years. The $56 million they’ve spent is roughly equal to the combined contributions of Chevron, Exxon Mobil, the NRA, and Lockheed Martin.
But it is at the state level that their lobbying efforts are focused, because that is the level at which the nation’s public school monopolies are legally enshrined. So long as they protect that monopoly on roughly $600 billion in tax dollars, they will face no meaningful competition, and so long as they are without competition, they will be able to secure wages, benefits, and staffing levels far above what a competitive market would bear.
In New York State, for example, teachers unions spent $6.6 million on political activities in 2008. The year before, they paid $571,012 to a single luxury hotel, the Desmond, in the state capital of Albany, to facilitate their lobbying efforts. Those efforts have sought to limit competition from charter and private schools and raise public school spending. They’ve been largely successful. New York is by no means exceptional in this regard: California’s teachers unions accounted for half of the state’s total initiative campaign expenditures in the first five months of 2009.
At the local school board level, teachers union power can be even greater. Education journalist Joe Williams reported that “United Teachers Los Angeles had such a tight grip on its school board in 2004 that union leaders actually instructed [board members] on important policies and made no attempt to hide their hand signals to school board members during meetings.”
Given the fact that political lobbying and the capture of school boards have been the means by which teachers unions have won their above-market concessions, and that collective bargaining per se seems to have played a relatively minor role in their success, it seems unlikely that curtailing collective bargaining will return fiscal sanity to American education.
Others have argued that the balance of power can be restored if states stop automatically garnishing teachers’ paychecks in the amount of compulsory union dues and sending the money to the unions. If unions are forced to collect the money themselves, they reason, it will make it harder for them to raise the vast sums they’ve been spending on political action. This view relies on the improbable assumption that public school employees are ignorant of their own interests. Given their huge wage and benefit advantage over the competitive private sector, union dues are the safest and best investment most public school employees could hope to make. At the moment, dues are returning around 2,000 percent annually (public school teachers enjoy a $17,000 annual compensation premium over their private sector counterparts, and dues run only about $800). Where else could they get a return like that without the use of firearms?
IF CURBS ON collective bargaining and mandatory government dues collection won’t rein in the unions’ budget-busting political action, what will? The answer is to take advantage of the same freedoms and incentives that have prevented unions from going off the rails in the private sector: give parents and taxpayers real choice, and give public schools real competition.
At present, private schools are at a massive disadvantage to state-run schools because the latter have a monopoly on $13,000 per pupil of government spending annually. That makes it hard for parents, and impossible for taxpayers, to seek out private sector alternatives to the state-run schools. And contrary to widespread perception, public schools spend roughly 50 percent more, on average, than do private schools-including all sources of revenue, not just tuition.
The simplest way to simultaneously give taxpayers and parents educational choice is to cut the taxes on families that pay for their own children’s education. Such cuts, called “direct” or “personal use” education tax credits, already exist on a small scale in Iowa and Illinois. If adopted in other states and increased in value they would bring the option of independent, privately operated schools within reach of most Americans. And since the credits need not cover the full cost of private school tuition, the migration from public to independent schools would save taxpayers a great deal of money.
Effective as they are, such direct credits have an obvious limitation: they can only help parents with non-negligible state/local tax liabilities. Most lower-income families owe little in taxes and so wouldn’t benefit, leaving them stuck in the deficient, inefficient, state schools. Fortunately, there is a simple solution: cut taxes on individuals and businesses who pay tuition for other people’s children. Seven states already have such programs, including Arizona, Pennsylvania, and Florida. Called “scholarship donation” tax credits, they cut the taxes on those who donate to non-profit Scholarship Granting Organizations (SGOs). The SGOs, in turn, help families pay for K-12 independent schooling.
What makes scholarship tax credits unique among school choice programs serving low-income children is that they offer choice not just to parents but to taxpayers themselves. No one is compelled to donate to an SGO, and if you choose to do so you select the organization that receives your funds. Think that the organization you’re currently supporting is no longer helping families as effectively as it should? You can send your money elsewhere. This forces the SGOs to compete with one another in terms of efficiency and service to families, just as other charitable organizations must.
Combining these two types of tax credits and allowing them to expand in response to public demand would end the unions’ half-century stranglehold on education funding. As in every other field, the public would finally be able to seek out the best, most cost-effective providers. The result would be the same in education as it has been in other fields: in the presence of efficient markets, salaries and benefits would depend on performance. The best teachers would easily command much larger salaries than the largest any public school teacher enjoys today. In sectors of the education industry that already operate within the free enterprise system, such as the Asian after-school tutoring market, the top teachers reach tens of thousands of students via web lectures and earn millions of dollars a year (yes, millions) thanks to profit sharing with their employers. Schools that charged more than their competitors for a similar or lower-quality education would lose students and fail. With the end of the state school monopoly, unions would no longer be able to bleed taxpayers for above-market compensation.
EDUCATIONAL FREEDOM would thus end the reign of state school employee unions as a powerbroker in American politics. The Democratic Party would be hardest hit. The NEA has given $30 million in federal campaign contributions since 1990, 93 percent of which has gone to Democrats or the Democratic Party. The AFT has contributed $26 million to federal campaigns, of which 99 percent has gone to Democrats.
This perhaps explains why Democratic lawmakers from Indiana and Wisconsin fled their states this spring, in an effort to block legislation that was expected to curb teachers union power. And it perhaps explains why President Obama, Education Secretary Arne Duncan, and congressional Democrats killed a small private school choice program in Washington, D.C. (which was subsequently reinstated by Republicans in April as part of the budget agreement).