Category Archives: Education Savings Accounts

Why don’t we have a 10x better school?

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There’s a Silicon Valley mantra that your need new product needs to be 10x better than the incumbent in order for you to displace them and have a shot at a market monopoly.

Uber, for example, is a 10x product. It vastly better than taxis on so many dimensions (price, easy of use, consistency, service, etc.).

In education, it’s unclear to me that we’ve built a schools that are 10x better than the median traditional district school.

We have built schools that are 10x better than failing urban schools, and it’s no surprise that this is where the entrepreneurial sector has seen so much success.

Why haven’t we built a bunch of schools that are 10x better than an average school?

I’m not sure, but some reflections below.

1. Educators are trying to be 10x at the wrong thing 

Great tech companies usually initially succeed because their technology – not their operations – is 10x better than their competitors.

Often times, technology can be built by smallish group of highly talented people and then scaled at little marginal effort or cost.

So far, school operators have not been able to replicate this model of technological advancement and scale. This way of thinking is not in their DNA. They are still trying to squeeze 10x improvements out of areas such as program design, human resources, and operations.

It will be interesting to see if Summit, Alt School, Khan Academy and others can utilize a 100x tech backbone to scale an instructional program that, over time, evolves into a 10x better school.

2. There’s no profit motive

Perhaps. With companies like Bridge Academies, we are seeing interesting attempts at 10x breakthroughs in the for-profit international market.

On the other hand, there’s plenty of for-profit K12 and university operators in this country, and they aren’t launching 10x better schools that are displacing government and non-profit operators.

3. The education sector is over-regulated

Perhaps regulation is stifling innovation.

I’m sure that this is at least partially true, but the most in demand private schools are not very innovative. Rather, they tend to be highly selective, academically rigorous, extracurricular rich, and culturally strong.

And they also cost $30,000 a year.

So, to date, the private side of things is not exactly delivering a bunch of breakthrough innovations.

Maybe an expansion of education savings accounts will unleash some 10x products, but it’s hard to say this with great confidence.

4. The industry culture is risk averse 

Education may be attracting and retaining professionals who are generally not willing to take the risks needed to achieve 10x products.

In some sense, given that children are involved, this culture is to some extent warranted.

But maybe it needs to be loosened up a bit.

5. This is (mostly) as good as it gets

Not everything can be made better. The fork I ate my dinner with today is not that much better than a fork from the 1970s.

Perhaps this is about as good as schooling gets.

My guess? 

I don’t yet have opinions that are strong enough to warrant action beyond the work I’m already doing.

But I want to keep thinking about this.

School supply or regulatory change – what should the Trump administration incentivize?

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Andy Smarick has a good short paper out where he gives advice to the new Trump administration.

He proposes a $250 million program that would fund “high-quality, high demand, highly accountable programs.”

In short, Andy proposes a federal fun to increase the supply of things like course choice, education savings accounts providers, voucher-based private schools – as well as the creation of innovative regulatory regimes that can monitor the performance of these entities.

I really like Andy’s suggestion that the federal government continue to invest in the creation of great providers for the following reasons:

Launching new schools and courses costs money, and given that most providers are non-profit organizations, they need funding in advance of receiving regular per-pupil revenue.

The federal government lacks knowledge of what local communities need; by funding entrepreneurs, the feds are backing those who can only succeed if they meet local demand, thereby reducing the risk that funds will work against local needs.

Innovation has positive externalities: it’s well known that, in the private sector, entrepreneurs rarely capture the full value of their innovations. The same holds true in the public sector: great non-profits do not capture all of the social good they create; rather, it leaks into the full  system over time (i.e., Teach Like a Champion).

I’m a little more skeptical that the government should incentivize the creation of new accountability policies. Whatever you think of Common Core or teacher evaluations, it’s unclear that the federal governments involvement has been a long-term net benefit for the sustainability or effectiveness of these policies.

Yes, Andy’s suggestion is much less heavy-handed. He’s only arguing that the federal government should fund accountability pilots.

But I worry that this is simply reinforcing a bad habit.

My current thinking is that the federal government should focus solely on research, information transparency, supply, and civil rights.

Of these four, supply is currently the most under-appreciated and underfunded, and Andy is right to call for an increase in funding here.

My Post on Fordham’s Wonk-A-Thon: The Price is Not Right (Yet)

See here for my submission to Fordham’s Wonk-A-Thon on Nevada’s school choice legislation.

My argument is mostly based on this data:

To get some back-of-the-envelope numbers for the Las Vegas market, I looked at this list of thirty-five private schools. Some of the prices were given in ranges, but quick number crunching put the median cost at around $7,000 and the average cost at $10,500.

The Nevada ESA is worth ~5-6K.

You can imagine where I go from there.

Thanks to Mike and team for allowing me to participate.

What Happens in Vegas Stays in Vegas – or Not?

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Nevada’s legislature just passed legislation to launch the nation’s most expansive Education Savings Account program.

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Pascal-Emmanuel Gobry recently wrote an article in the National Review entitled: “The Way Forward for School Choice — It’s Not Vouchers.”

What is the way forward according to Gobry? Education Savings Accounts.

He writes:

But the bottom line is that true school choice involves not just your choice of school, but your choice of schooling. Vouchers would change what a school would look like. K–12 spending accounts would change what schooling would look like.

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We don’t know if Education Savings Accounts will work. They might or they might not. But I’d like to find out.

So my advice to leaders in Nevada is simple: beware of fuck-ups that will derail the program.

Perhaps the greatest threats to deregulation are high-profile mishaps that turn public opinion against the effort.

While there’s much I like about Education Savings Accounts, it’s not difficult for me to come up with a story where Education Savings Accounts are a total disaster.

Leaders in Nevada need to understand this. They need to sweat implementation. They need to protect against worst case scenarios.

Even the most ardent libertarians should understand that policies are not judged by their potential or actual utility; they are judged by the theater of public opinion.

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Here’s some details of the funding of Nevada’s Education Savings Account program:

  • For children with disabilities or students from families with incomes less than 185 percent of the federal poverty level ($44,863 for a family of four), students will receive 100 percent of the statewide per-pupil, or around $5,700.
  • For families with incomes exceeding 185 percent of the federal poverty level, the funding amount is 90 percent of the statewide average basic support per pupil, or around $5,100.

The funding can be used for just about anything education related, including:

  • Tuition and fees at an approved private school;
  • Tutoring or other services provided by a tutor or tutoring facility that is a participating entity;
  • Tuition and fees for a distance learning program;
  • Fees for any special instruction or special services if the child is a pupil with a disability;
  • Fees and tuition for a college or university in Nevada if that student utilizes those expenses for dual credit.

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Another way to think about the roll-out of an Education Savings Account program is that is a race between educators and charlatans.

Charlatans can move quickly. They can create tutoring programs with fancy websites, a great sales team, and a terrible product.

Educators, especially in an immature market without provider capacity, will move slower. It will take time for educators to become entrepreneurs, to take risks, to iterate their way into creating education products that can work under the new policy regime.

My strong prediction is that over the long-term educators will create incredibly innovative methods of schooling that can harness the flexibility of Education Savings Accounts.

But if they lose the race to charlatans, they might never have the chance to create these products: public backlash could kill the program; consumer stickiness could make it very difficult to recapture market share; weak information could make it difficult to distinguish between good and mediocre products.

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Another way to think about Education Savings Account is that they pit consumer irrationality versus government inefficiency.

I’ve had many, many conversations with parents about education and they are often very wrong about issues where there is a strong research base that points in one direction.

I’ve also witnessed many, many school districts that make incredibly poor decisions about resources, time, and instruction.

In the short-term, there is no Nirvana here. This is, in part, why I’ve been drawn to charters: they allow for both educational expertise (charter founders) and choice (families selecting schools).

However, charters are still a tightly regulated and narrowly defined educational vehicle, and I understand their limitations.

This is why I’m excited about Education Savings Accounts.

Over time, I’m fairly confident that families will become better consumers faster than government monopolies will become excellent providers of education.

But you’re fooling yourself if you think either side is starting from a great place.

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To summarize the above: regulate your deregulation.

Nevada has a chance to be a part moving our nation forward by creating the educational sector of the future.

But they need to get the early years right.