Thursday, July 23, 2015

Freedom of Choice In Public Education and Housing Values

'Why is my house appreciating in value now that
new charter/private school is right next door?
We recently saw an academic research paper that was published by 2 NC State Ph.Ds and a Texas Tech researcher that caught our eye.

Simply titled School Choice: The Impacts on Housing Values* this paper examines various places where school choice has been implemented and comes to the conclusion that school choice leads to an equalization of housing values between poor and rich neighborhoods, mostly by lifting the property values of the poorer neighborhoods since they are no longer locked into low-performing assigned public schools.

The research paper is written as a research paper after all but it is worth reading and noting some important things about how school choice affects local housing values as well as noting some of the differences between public education in many states versus others where school choice is more widely spread than say in North Carolina.

Know how Vermont is always cited as one of the top, if not the top, public school education systems in the nation?

Well, for one thing, Vermont is a very tiny state with not a whole lot of diversity and the challenges larger populations present. If the entire state of Vermont was a congressional district, it would be about the size of the 9th Congressional District in North Carolina around Charlotte. Without the challenges that Charlotte faces today with their growth and wide economic disparities along economic and racial lines.

Did you know that Vermont was one of the first states to adopt school choice and vouchers, mostly as a way to get students from very rural remote areas to a school of any kind so they could get educated? 1869 to be exact. 146 years ago today. That is when Vermont started their school choice options and apparently, have never looked back.
'Vermont operates one of the longest running tuition voucher programs in the United States. Dating back to 1869, the state legislators passed a bill granting residents living in an area without a public school system a way to provide their children with an education. Using tuition vouchers, parents can send their children to any public school at no cost, or to non-religious private schools for a significant discount, with the subsidy coming from the sending town. In the case of an independent (private) school, the amount of the tuition voucher equals the average tuition for the (public) primary (grades: K-6) or secondary schools (grades: 7-12) within Vermont. Unlike many other state tuition voucher programs, Vermont’s system was not established to address a failing inner-city school system.

Instead, it was developed to ensure that the residents had access to an education. 
The tuition voucher program has several unique characteristics. First, the opportunity set of schools is not constrained to the state. Parents can choose a state school, an out-of-state school, and even a school outside the country (notably in Canada!). However, this school choice option only applies to areas (including cities, towns, unincorporated areas and gores) that do not operate traditional public schools. Each district can have either the tuition voucher system or locally operated public schools, but not both. For this reason, the vast majority of towns participating in the voucher system are in rural areas, and subsequently titled “tuition towns.” Lastly, the tuition voucher program does not restrict enrollment based on the resident’s income. The only requirement is that the family lives in a district without an assigned public school.'
Talk about 'freedom of choice' when it comes to public education! A Vermont schoolkid can go to a school in Canada and get public assistance for it. We have trouble in America talking about a schoolkid getting public assistance to go to a private school across the street from where they live!

Any state that can elect a self-avowed socialist as their Senator, and now Democratic Presidential Candidate Bernie Sanders, and allow a robust voucher and school choice plan in their state as Vermont has done, certainly paves the way for the rest of the United States to adopt school choice and voucher programs in their state.

The authors go on to cite places such as Paris, France which we visited last year and came to find out that we were staying right next to one of the most elite 'magnet' or preparatory schools in the Paris public education system where virtually all of their elected and business leaders were trained and educated from the 8th grade on through high school. Paris has a large public education system to be sure, BUT they also provide a strong element of choice and selective placement throughout their system of public and private, mostly religious Catholic, schools.
'The French education system is predominantly administered through public schools, with some private schools. This system is based on a 12-year curriculum where children attend primary school from ages six to ten, middle school from eleven to fourteen, and high school from fifteen to seventeen.
At the primary (secondary) level, public schools educate 86% (79%) of the populace, whereas private schools educate 14% (21%) of the students. For public schools, France utilizes school catchment areas, based on the student’s home address, to allocate both students and resources efficiently.
Municipalities establish the school district boundaries for the primary schools, and the Local Education Authorities (LEAs) determine the boundaries for the secondary schools. For many years, each municipality or LEA would publish a booklet describing the school catchment areas. Beginning in 2000, the information became publicly available online.
While public schools adhere to strict zoning restrictions, private schools follow a geographically open enrollment system. The private schools in France exhibit several interesting characteristics that are not common in the United States. First, the vast majority of the private schools are religious (predominantly Catholic). While religious in nature, admission to the private schools does not necessarily depend on the pupil’s faith or that of the attended primary school. Next, private schools can either be state-supervised or independent. State-supervised private schools deliver the same curriculum as the public schools, whereas the independent schools are permitted to develop their own program of study. Similar to the public schools, the state supervised private schools are publicly funded by the central government, ...The state also regulates the private school market by limiting the number of new teacher positions offered each year, and by restricting the number of new private schools that open each year.
Last, and most important of all, the admission guidelines for public middle schools and private middle schools are significantly different. Middle school may be one of the important periods in a student’s educational development, especially, in France. At the end of the third year of middle school, students that underperform are directed toward vocational studies, while the remaining pupils continue on the path toward graduation. 
More importantly, in Paris, France the admission to a specific high school can depend on the specific middle school the student attended, as well as their academic performance. Paris has slightly different admission rules for entering high school. While middle schools have strict catchment areas, parents have more options when it comes to sending their children to high school. The LEA allows parents to submit applications to a broad set of high schools within a much wider catchment area. Ultimately the admittance into a “good” high school depends on the pupil’s academic performance, as well as the quality of the middle school. Thus, the choice of a middle school is extremely important because the quality of middle school may improve the chances of admission into a “good” high school.
Parents have two outlets for getting around the strict middle school zoning restrictions. First, they can ask the LEA for an exemption to attend a school located outside the current zone. This workaround has a high rejection rate, and only about 8% of the requests are granted each year. A more viable alternative would be to exercise the option to send the pupil to a subsidized private middle school. In France, the subsidies work very similarly to U.S. tuition vouchers. The vast majority of the expenses are paid by the government, and parents will only incur negligible costs. Because private schools are not constrained geographically, the option to send the child to an outside private school offers parents a relatively cheaper alternative compared to having to relocate to a better school district. Not surprisingly, the number of students attending private middle schools is higher than the number of students attending private primary schools and private high schools.
The core of this research paper is focused on identifying the connection between having school choice and rising property values in poor neighborhoods. Here's what they found: 
'...(W)hat is striking is the comparison between the “no vouchers” case and the “full vouchers” case within districts. When vouchers are introduced, on average home values appreciate in the bad district (from 0.5859 to 0.7595), but depreciate in both other districts.
Consistent with the decline in home values in the two higher-priced districts, Exhibit 2 shows that once universal vouchers are introduced, the average income in poor district increases. Incomes are shown in tens of thousands of 1990’s dollars, and they rise from $32,973 to $47,000 in the poor area. 
However, income levels in the other two districts decline. Taken together, the evidence suggests that as private schools begin to open in low-income districts, average income increases in the district due to the migration of middle- and high-income families, who move to the district to take advantage of the relatively cheap housing prices (due to the poor quality of their public school system). As a result, home prices in poor districts are bid up. These migrating families move from the better school districts where house values capitalize the public school quality to the poorer school district to makeuse of the voucher system
Did you notice that? Not only did they find that housing values AND average income increases in the district around the new private or choice school, but housing values AND average income decreases in the more affluent neighborhoods.

Bet that is something you have never heard on the evening news.

That doesn't mean that every poor family all of a sudden experiences a financial windfall in their annual income simply because someone of more means moves in right next to them. But it does mean that their home, if they own it, does increase in value thereby increasing overall family wealth which provides them a means of support to finance further education for themselves or their children or whatever they want to do with their new-found wealth.

Why are so many affluent people so eager to expand school choice and voucher options if it means that their home values will diminish vis-a-vis these other less affluent neighborhoods? Aren't they the ones who should be most offended by such an outcome, as tangential as it might be to the whole serious and emotional issue of public education?

It might have something to do with this core basic American value: We all want everyone to be able to get as great of an education as possible, wherever it may come from and however it may be delivered.

If we were convinced by the data and factual empirical evidence that making kids stand on their heads for 15 minutes every day while reciting the periodic tables and the Gettysburg Address would increase their reading comprehension and math and science retention by 5%, we would be all for it. Whatever it takes to help our next generations get better educated, we should all support.

The fact that housing values and relative incomes tend to equalize out over time in areas with school choice and vouchers is incidental to the critical issue of helping the student receive a better educational experience along their life journey.

But it is one more favorable argument in favor of school choice and voucher reforms that you may not have heard before, yes?

* full text here if you have trouble downloading from the SSRN website for some reason.
**Nechyba study for more in-depth academic research information about the relationship between vouchers, public choice and housing values

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