Investigate The Real Cartel

Idaho’s Attorney General Lawrence Wasden ordered five oil companies to explain why they sold their products in Idaho at “extraordinarily high prices.” While gas prices dipped in below $2.50 in some parts of the country, people in Idaho are still paying around $3.00 a gallon.

If the Attorney General really wants to investigate a price-fixing cartel, he ought to be looking at Idaho’s public school monopoly. According to the Idaho State Department of Education, taxpayers are charged over $8,000 per student per year. In contrast, Idaho’s private schools are providing the service for around $4,000 a year. Given that K-12 public education is a $2 billion dollar a year industry, it looks like Idaho taxpayers are being overcharged $1 billion dollars a year. Idaho has around 470,000 households. If taxpayers could keep this billion dollars, each household would have an extra $2,127 to spend each year.

So what is the real cartel problem: being overcharged 50 cents on a gallon of gas, or $4,000 on tuition? Fortunately, gas prices are subject to competitive markets and reflect relative supply and demand. Unfortunately for taxpayers, public schools are protected from economic or political pressure. This is why spending increased 48 percent while enrollment increased only 4.8 percent over the past eight years.

If the Attorney General really cares about protecting Idahoans from price gouging, he should let the market take care of gas prices and focus his attention and taxpayer resources on eliminating the public school cartel.

Where Did $2.2 Billion Dollars Go?

Over the past eight years, public school K-12 spending has grown ten-times faster than student enrollment. While student enrollment increased 4.8 percent, spending grew 48 percent.

If Idaho’s public schools had simply stayed as productive as they were eight years ago, taxpayers would have saved over $2.2 billion dollars. What justifies this additional cost? Academic achievement has not improved. If present trends continue for another eight years, Idaho taxpayers will be spending around $11,000 per student ADA per year. If this increase were paid for with sales taxes, the rate would have to be increased to around 12 percent.

Who’s in favor of this increase? Idaho must face the very real problem of productivity in public education. We continue to spend more and get less. Our best hope is to implement proven reforms that create incentives to be productive.

These reforms include offering vouchers and tax credits, recognizing the right of parents to choose the best school for their children, and inviting the private sector to participate. These reforms have proven to improve academic achievement and reduce costs wherever they have been implemented.

Otherwise, Idahoans better get ready to pay a lot more in taxes.

A Simple Solution to School Overcrowding

Many Treasure Valley Schools are experiencing significant growth in student enrollment. Although Idaho reported average cost per student ADA in 2004-2005 at $8,071, the marginal cost, or cost to add a new student was $26,815! In financial terms, the Districts are suffering huge diseconomies of scale. The Districts have responded to this new growth by levying enormous new property tax bonds.

The good news for taxpayers and parents is that there are many excellent private schools that charge less than $4,000 per year in tuition. Idaho could do what has been done in Florida and other states and give parents vouchers to attend these other schools and not increase property taxes at all.

Overcrowded school districts could make room by simply offering vouchers to current and new students and let parents choose what school is best for their children. The Districts could keep raising the value of the voucher until the classrooms are at their target levels. This kind of economizing is frequently done in the airline and other industries.

Wouldn’t the fiscally responsible choice be to save taxpayers $22,815 per student by offering vouchers? It’s time to give school choice a chance at improving public education and lowering taxes.