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A Question of Capacity

by Steven Hayward
Friday, January 1, 1999

How many children can vouchers really help?

The current demand for inner-city private scholarships is just the first sounding of a national cry for school choice. Across the country there are three times as many low-income children waiting in line to attend the private school of their choice as there are scholarships available to place those children in school. In New York City alone over 22,000 children want a shot at one of the 1,200 grants now offered by the School Choice Scholarships Foundation. While the demand is staggering, at least three times as many private school seats are available as there are children waiting in line to fill them. Limits in capacity are not an obstacle to school choice at its current level. In fact, there’s evidence that increased capacity is on the way.

For now the private voucher movement has room to grow. This is forbidding news for many opponents of school choice. No other initiative so highlights the failure of public education as the independent effort to provide private schooling for low-income children in the inner city. What remains to be seen is how many children vouchers can ultimately help. There is some hidden capacity available at the moment. When that runs out—will we have fixed the system in time?

How bad is it?

This year the total public and private school enrollment rose to a record 52.7 million students and is expected to increase every year through 2006 to a projected 54.4 million children. This spike in population, known as the baby boom echo, has prompted the Secretary of Education each year for the last three years to publish a special report on the national need for new school facilities, building renovations, and additional teachers.

While much of the growth in our nation’s schools is suburban in nature, Secretary Riley’s latest report estimates that our high-poverty urban and rural communities face some of the greatest pressures. The New York City school system, with a total enrollment of more than one million students, increased by 121,803 students between 1985 and 1995. In the same period, Dade County School District, which educates the immigrant populations of Miami, Florida, took in an additional 97,690 students, representing a 41 percent increase in total enrollment. With numbers like these in store for the next few years, people have been asking: where are all of these children going to go?

In suburban areas the answer to this last question is simple—further out. The Clark County School District in Las Vegas is now an area larger than the state of New Jersey. With $3.5 billion in construction bonds recently approved, the district plans to build 88 schools over the next decade, or roughly one every six weeks.

Fulton County School District, which includes Atlanta, is projecting an enrollment increase of 3,500 students a year for the next several years, an increase that is 32 percent higher than expected capacity. This last figure is calculated after the district has built 18 new schools in the last decade and includes its plans to build 17 more over the next five years. The public school system in Fulton County still requires 327 trailers as classrooms. No matter how much real estate you have available, classroom capacity sets a natural limit on the number of children you can serve.

Our cities are also in trouble. Poor, decrepit, and riddled with violence, many inner-city schools have become warehouses of our country’s neediest children. Despite the fact that these schools have little academic merit, are physically dangerous, or both, thousands of children—who have no choice but to attend their local public school—have filled them to the rafters.

Indeed overcrowding in large, central-city school districts is one of the gravest concerns of public educators. In a recent study of 22 urban areas with overcrowded public schools, two thirds of them have overcrowding in at least 25 percent of their institutions. In some districts, like Dade County and Milwaukee, more than 85 percent of their schools are overcrowded. Although responses to overcrowding vary from place to place, students in overcrowded schools invariably attend classes in substandard space, enjoy fewer course offerings, and experience little academic supervision.

It is into this environment that school choice advocates first promoted privately-funded vouchers for low-income children in the inner city. While wealthier families can send their children to private schools or move to better districts, the poor have no choice but to endure whatever schools are left behind. Advocates of these programs are unequivocal: inner-city children have already been abandoned—only if we get them into better schools will their chances of survival improve.

The availability of private-school seating is thus often cited as an obvious constraint on the potential impact of privately-funded vouchers: few extra seats are available, so the real help vouchers promise is minuscule. Upon closer inspection, however, the existing capacity of private and parochial schools in the inner city is sufficient to relieve some overcrowding and free thousands of children from the despair of their failed local school.

Where can they go?

Across 37 cities and three states, this April the Children’s Scholarship Fund (CSF) will issue grants to 35,000 low-income children who wish to attend private schools starting in the Fall of 1999. The program has an estimated worth of $150 million and promises to continue for at least four years.

The cities selected for this program were chosen on the basis of need, their ability to match the donated funds, and the available seating capacity of private schools in the surrounding areas. This last factor is critical. Many cities were not chosen, because the population is too spread out, or, as we’ve seen in Las Vegas, spreading out too fast. But in all 40 cities and states now in the program, there are seats available to match the number of scholarships offered. In fact, there are many more than that.

The most recent numbers come from the U.S. Department of Education. According to a report entitled Barriers, Benefits, and Costs of Using Private Schools to Alleviate Overcrowding in Public Schools, there are over 3,100 private schools serving the 22 urban communities with the most overcrowded public school systems. With a full third of these private schools now operating below 70 percent of their full capacity, the report estimates that there are between 150,000 and 185,000 private spaces available in these urban districts alone. All 22 of these communities but one are participating in the CSF program. By the most conservative estimates, more than 220,000 spaces are now open in the 37 cities selected for the 35,000 scholarships.

Evidently, there is room for voucher programs to grow.

Ronald Valenti, Superintendent of Catholic Schools in the Archdiocese of Baltimore, says he could add 1,200-1,500 students to his inner city schools without taxing the current system. "We welcome the opportunity of a voucher program in Baltimore," says Valenti. "Any program that enhances the power of parents to make a choice is going to strengthen education across the board." CSF is bringing 500 scholarships to Baltimore in 1999.

Like Baltimore, Philadelphia has also been identified as having one of the 22 most overcrowded urban public school systems in the country. In such an environment who has room for more scholarship children? According to Msgr. Philip J. Cribben, Secretary for Catholic Education in Philadelphia, he has. In Philadelphia, 80 percent of the private schools are Catholic. In 1970 the archdiocese enrolled over 100,000 K-8 students. Today, the 96 parish elementary schools in the city enroll just 40,000 children. While some schools have closed, Msgr. Cribben estimates that 20,000 students could be added without changing the existing infrastructure. CSF is bringing 1,250 scholarships to Philly in 1999.

There is some hidden private school capacity at the moment. When that runs out—will we have fixed the system in time?

As the twin evils of overcrowding and failed instruction drive more students to private schools, however, this new found capacity is sure to dry up quickly.

One of the older programs in the business, the Washington Scholarship Fund (WSF), placed 1,300 students in private schools this year. In October 1997 the Fund executed a capacity survey locating 4,000 private seats in the Washington metro area—2,000 of which were in the center city. This year 96 percent of WSF scholarships went to those inner city schools. Is a capacity problem then already looming for the older or more successful programs? "Theoretically, we’re going to hit a wall at some point," says Patrick Purtill, executive director of the Fund, "but our goal is to give every low-income child in the District of Columbia who wants to go to a private school the opportunity to do so."

It is this desire of private voucher programs to provide greater opportunities for all poor children that makes capacity an issue to be reckoned with. Ted Forstmann, one of the CSF co-founders, was quoted in the Los Angeles Times saying his program is "bounded not so much by our generosity or our money, but by the appropriate capacity of private-school classrooms." Forstmann knows the numbers. Four times the size of his present program probably isn’t enough for him. He wants a system that encourages growth.

Jerome Porath, Los Angeles Superintendent of Catholic Schools, explains this point: "Our problem with vouchers, public or private, is that unless and until they are large enough to include space costs, they will never be sufficient to let us meet the demand."

Small privately-funded vouchers don’t increase capacity—and they won’t until they command more buying power. The size of a scholarship program is always a function of funding. The more funds are raised, the more children have a choice. While it is good news that seats are available for many more scholarships, scholarships alone won’t educate the two million children soon to enter the system or the ten million poor now in its very worst schools.

A $1,200 scholarship can give a child a choice, but it can’t build a new classroom. Catholic schools are the most affordable private schools in the inner city, in part, because they are the most heavily subsidized. The national average Catholic tuition of $1,499 covers only 62 percent of the total cost of that education. The rest is paid for by the Church, either at the parish or diocesan level. At these rates, no new schools will be built anytime soon. So what sized voucher could increase capacity?

Porath has run the numbers. To build a typical parish elementary school for 300 students costs between $8 and $10 million. A bond issue at 6 percent on $9 million amortized over 30 years, divided by the number of students, gives you the cost to acquire the space. In order to cover the $654,000 mortgage, a voucher would need a $2,180 price hike. Not bad news really: publicly-funded vouchers between $3,500 and $4,000 just might encourage such spending.

What’s the solution?

America needs a competitive education industry where no one limits the supply. Privately-funded voucher programs have already proven the demand side of the equation: if you give people a choice, they’ll take it. Now we need a system that delivers an equally simple message to public and private schools alike—educate our children, or go out of business. While vouchers are a good start in this direction, we need a system where the public funding of education can follow the child to her school of choice. Each year Americans make a massive investment in education. Through choice we can channel that spending to schools that work. Where added capacity is needed, choice will best make that known.

Since Cleveland started its publicly-funded voucher program two new schools have opened. The voucher in Cleveland averages $2,250. In Milwaukee, enrollment fluctuations indicate a dynamic market at work: overall enrollment in the city’s 32 private high schools actually declined one percent last year, while individual schools saw 16 and even 33 percent increases. Voucher student transfers account for most of this movement. The voucher in Milwaukee averages $4,900. It should not be long before some schools in this city are encouraged to expand while others are put out of work.

In the wake of suburban flight, massive resources have been left behind. Not only Catholic and other Christian schools, but community centers, meeting halls, theaters, churches, chapels, and municipal buildings of every sort. No one is calculating how these resources might be converted into useable classroom space. And, under normal circumstances, no one in an abandoned neighborhood is encouraged to do so. For the first time, however, the entrepreneurial spirit that fuels the private voucher movement is bringing creative solutions to bear on the problems of the urban poor.

A $1,200 scholarship can give a child a choice, but it can’t build a classroom. In order to build new schools, vouchers need a price hike.

Pat Rooney, the pioneer in privately-funded vouchers, is now developing a model that will enable inner city churches to open new schools at rock bottom prices. Already five of these "safe haven" schools have opened in Indianapolis and there are seven more around the country. Following the Rooney model, a man named Bernie Miller has already opened a Safe Haven School in Chattanooga in an abandoned church he leases from the Methodists. Next year in Chattanooga, through the generosity of the MacLellan Foundation, three new schools will open in community centers outside of urban housing projects.

The CEO America Horizon project in San Antonio should encourage similar innovation and adaptation. Over the next ten years, up to 14,000 low-income children in San Antonio’s Edgewood school district may use vouchers worth up to $4,000 to attend the school of their choice. Already two new schools have been created by the program and some existing schools have opened up new classrooms. As in Milwaukee and Cleveland, more development is happening in a shorter time frame here, because the voucher enjoys real buying power and the open market includes both public and private schools. According to Robert Aguirre, director of the Horizon project, "any recognized school under Texas law" qualifies for the program. "We trust the marketplace will find its own level."

Brother Stanley Culotta, the principal of Holy Cross Academy, is concerned that the west side of San Antonio has no Catholic girls’ school. He’s looking at possibly building one for 600 girls. In 1999 his boys’ school will be at maximum capacity. Already he’s acquired additional land for $200,000 and expects to spend $10 million building on it. Now that his school has gained a reputation for excellence in the area, he is looking to the community to help him with this expansion.

The Horizon project in San Antonio is the only district-wide private voucher program in the country. It is a harbinger of things to come. On average we spend $6,500 a year per pupil on public education. If tomorrow we were free to spend that money on private as well as public schools, today we could solve our capacity problems.

The "Neighborhood Effect"
of School Choice

Most people who leave the central cities for the suburbs cite three main reasons for their move: crime, the quality of life, and the quality of the public schools. Cities have been getting the upper hand on crime in recent years, while redevelopment efforts have made many central city neighborhoods more attractive places to live and work. But it will be necessary to restore all three aspects of city life before central cities can hope to reverse the exodus of middle class families.

"Good schools are the lifeblood of our cities," says education researcher Denis Doyle, "save the schools and we save our cities." Young families with children are the demographic group that is fleeing the central cities in the highest numbers. "The people leaving the city are those the city needs most to retain its vitality, namely, working- and middle-class families with children," says Doyle. "Cities that lose families with children are in trouble." Most cities are trying to fix their schools with more of the same ingredients that have already failed—more money and greater centralized control. It is time, Doyle argues, to try school choice as an urban renewal strategy instead.

The evidence in favor of such a strategy is growing. A Calvert Institute survey of people who had moved out of Baltimore, for example, found that among families with school-age children, the poor quality of the schools was a primary reason to leave for more than half of them. 82 percent expressed some dissatisfaction with the Baltimore public school system. Perhaps most significant is the finding that of those who cited poor schools as a reason for leaving Baltimore, 51 percent might have stayed in the central city if full school choice were available.

Urban scholars David P. Varady and Jeffrey A. Raffel, authors of Selling Cities: Attracting Homebuyers Through Schools and Housing Programs, offer corroborating evidence. Varady and Raffel note that Cincinnati has been more successful than other Ohio cities in stemming the exodus of middle class families because it embraced magnet schools instead of forced-busing to achieve desegregation. But even more significant, Varady and Raffel think, has been the role of Catholic parochial schools. "The Catholic schools are important for the city because they serve as ‘neighborhood anchors,’" they write. "The [Catholic] schools serve to promote a high quality of life, particularly for parents who are neighborhood-oriented. St. Catherine School and Nativity School are examples of quality schools that are helping to maintain racially integrated neighborhoods."

Some of the early experiences of pilot school choice programs in central city neighborhoods are encouraging. On Cleveland’s lower income east side, a voucher-supported Hope Academy that opened three years ago has contributed significantly to the revitalization of the surrounding neighborhood. At the time the school opened, an abandoned building located across the street attracted indigents, drunks, and prostitutes, and a nearby bar operated 20 hours a day. But the Hope Academy, said John Morris, who provides management services to the school, "became an anchor for the local community, leading to a community effort among people who didn’t even have children in the school. It pulled the neighborhood together to eradicate the bad stuff that had been going on."

First, the neighborhood convinced the bar owner to reduce his hours, which led to an immediate decline in public drunkenness and prostitution. The police, who hadn’t been much help at first ("They wanted to see if we’d stick around," said Morris), began patrolling more frequently and making more arrests. In the three years since the Hope Academy opened, there have been no auto thefts and only one burglary. There are no longer any bars on the school’s windows. "The revival of the neighborhood is a byproduct we hadn’t counted upon," said Morris.

A similar story comes from Pacoima, California, where Yvonne Chan, founder of the Vaughn Learning Center (a charter school where the mostly minority student body is required to wear uniforms), repeatedly asked the police to shut down a crack house located adjacent to the school. Frustrated by inaction, Chan ultimately bought the crack house for $8,000—with savings achieved by contracting out certain school services—and held a "bulldozing party." Neighbors cheered as the crack house was demolished and a new learning center was built on the site. Because California’s charter school law allows contracting out and exempts charter schools from the Davis-Bacon prevailing wage requirements, Chan was able to give the building contract to a neighborhood contractor and so further support the local area’s growth.

Sociologists have long studied the deleterious "neighborhood effects" of bars, liquor stores, card rooms, and corner drug dealers. The prospect of dozens of small schools that would emerge spontaneously with widespread school choice suggests that the "neighborhood effects" of school choice might go a long way toward revitalizing our central cities.

—Steven Hayward