The Special Needs of School Choice

Sarah Palin and her husband are experts in how parents can best care for a child with special needs in a way that I can never equal. At the same time, Sarah Palin is not an expert in how markets can best care for those with special needs. In a speech on special needs children yesterday she stated:

Like John McCain, I am a believer in providing more school choice for families.
The responsibility for the welfare of children rests ultimately with mothers and
fathers, and the power to choose should be theirs as well.

Most children with special needs cost far more than average to educate. While there may be advantages from school choice, the likely losers are children with special needs. With widespread school choice, we expect private schools respond to market incentives and accept applicants with lower expected cost of education. The result is that public schools will disproportionately be left with the expensive-to-educate and a shrinking budget.

The specific proposal Palin discussed yesterday is not as disadvantageous to children with special needs as universal school choice. She proposed: “We'll make explicit that when state funds are portable, federal funds are fully portable.” If state and federal funds for children with special needs were accurate measures of the additional cost of educating such children, such a policy could work without further disadvantaging the already-disadvantaged.

Unfortunately, the correlation between funding and need is not very strong. Our systems for classifying children’s needs remain quite inaccurate. The result is that children whose parents understand the system often receive more funding than more disadvantaged children.

If funding followed the child to a private school, incentives for gaming the system would grow stronger. Many parents would be happy to have their child diagnosed with a minor learning disability so the government paid their private school tuition.

School choice is an important policy option that should be explored. Such exploration will need well-conceived regulations to minimize private schools cherry-picking cheap-to-educate students and parents gaming systems of government-paid tuition at private schools. It is hard to believe Sarah Paliun’s party of deregulation will somehow get the regulations right in this domain.