Rethinking the Welfare State: The prospects for ... - e-Library

Primary and secondary education 161
seeking institutions. Bradford and Shaviro claim that non-profit supply seems to be most
successful in areas of traditional contract failure, for example where supplier performance
is so hard to monitor that the profit motive reduces, rather than increases, consumer
trust. 158 With a strong system for monitoring schools and disseminating results (see the
discussion of government’s post-design role below), however, it is unlikely (but not
impossible) that for-profit schools would mortgage their reputations and their futures by
chiselling on costs in the short-run. 159
It is important to note that not all cream-skimming is socially undesirable. If the goal
is to provide an elite education to the most talented students, or perhaps even better than
average students, then some element of “cream-skimming” in admissions will be
necessary. This would allow for specialized learning adapted to the needs of different
sorts of students. On the other hand, it may obviously undermine the values embodied in
the “citizenship” model of education. Moreover, this strategy may not work effectively
For example, if gifted students require higher-cost programs to reach their full potential,
the incentives presented by a voucher regime may dissuade schools from providing these
programs. What may occur is that suppliers will target above-average and gifted students
for admission and then deliver their programs at the most cost-effective level. In doing
so, providers could reap the benefits of an appearance of a strong program because of the
strong results of the gifted students without having to invest additional resources in
programs that would push the gifted students to truly excel.
Closely related to the problem of cream-skimming is the problem of extra billing—
should we allow education providers to charge an extra fee on top of the face value of the
voucher? Extra billing seems to guarantee good-quality education to those who can pay
for it, rather than to those who can most benefit from it, which is likely inefficient. 160
Further, allowing those with greater resources to purchase the best educational
opportunities undermines equity concerns. It does, however, preserve the autonomy of
those who have the resources and are willing to pay for a better education. 161 Moreover,
prohibiting extra billing suppresses the price system as both a signal of and reward for
differential quality.
Allowing extra billing is likely to prove most problematic with respect to the question
of whether to permit vouchers to be used as a credit towards tuition fees charged by
schools that are now private. As discussed earlier, one problem with this option is that it
might dilute the quality of publicly financed education by spreading the present public
education budget more thinly across a larger cohort of students. 162 In addition, it will be
argued that allowing vouchers to count as a credit towards private school tuition fees is
regressive and may exacerbate inequalities in access to educational opportunities—or at
least not change the status quo, which is a main motivation of voucher supporters. In fact,
this appears to be what would probably have occurred in the Cleveland voucher program
if there had not been any controls on who could receive vouchers. A cap of 25 percent of
the number of vouchers—first come, first served—was set for current private school
students so as to limit the regressive nature of the universality of the program in
Cleveland. This limited proportion of vouchers allotted to current private school students
was taken up almost immediately. Interestingly, 80 percent of these recipients simply
continued on in the same private school that they attended in the previous year, this time
with public support. 163