Excessive Regulation and the Law of Unintended Consequences

It goes without saying that we all want students to succeed academically. In private school choice programs, however, policymakers must be especially cautious not to inadvertently harm students by overregulating in the name of ensuring school quality. Corey DeAngelis, a policy analyst at the Cato Institute, reminds us of this paradox in a column for the Washington Examiner.

Most private parental choice programs require that scholarship students take at least one norm-referenced assessment per year to track academic performance. In some cases, like Florida, results of these tests are compiled, analyzed, and reported publicly. This type of arrangement ensures that schools evaluate students’ progress each year and that state officials can see how well the program is meeting those students’ academic needs.

Sometimes, though, elected officials decide that heavier regulation is needed to “ensure quality.” By tightening standards and restrictions, they reason, the state can prevent disadvantaged families from picking bad schools. For instance, policymakers can force state testing in private schools, modify admissions policies, require that every teacher hold a state license, or set other restrictions for participating private schools.

But is this approach effective? No, for one very important and often overlooked reason: Private schools do not have to participate in choice programs. If a private school is already successful and financially stable outside of a scholarship program, its leaders may well decide that the additional regulation is not worth the extra revenue. Less stable schools, on the other hand, may not have the luxury of declining that revenue.

This theory is supported by DeAngelis’s recent study on heavily regulated choice programs in Milwauke and Ohio, in which he finds that high levels of regulation lead better-rated and more expensive schools to decline participation at a higher rate than other private schools. These findings mirror those of an earlier study using similar methods to examine private school participation in Washington, D.C., Indiana, and Louisiana.

Encouraging stable, successful schools not to participate while incentivizing less stable schools to take the plunge can result in a supply of schools skewed heavily toward the lower end of the performance spectrum. And, naturally, such a skewed supply of schools can severely impact student performance.

The first negative results ever found in an American private school choice program emerged in 2015 from Louisiana’s voucher program (notably distinct from the Tuition Donation Credit Program, in which ACE participates). When researchers dug deeper, they found that in Louisiana’s program, which boasts some of the heaviest regulation in the country, participating private schools tended to have low tuition and declining enrollment—both signs of schools in distress. Roughly two-thirds of the state’s private schools choose to stay away from the program, presumably because they can afford to do so.

The evidence seems clear: We cannot regulate our way to higher-quality schools in private school choice programs. We can, however, do whatever we can to incentivize successful private schools to participate in these programs and trust parents to make the right decisions for their children.