The disconnect between costs and needs
If ESAs are to catalyze disruptive innovation, there’s one aspect of this disruption phenomenon that we need to keep in mind. The priorities that shape the improvement trajectories of new schooling models—and whether they benefit all students—will depend on the incentives set by state ESA policies.
Often with disruptive innovation, the improvements that companies are motivated to pursue are those that help them move upmarket, reaching more customers and earning higher profit margins. In most markets, the more demanding customer tiers will pay a premium for higher-quality products. This is why Netflix expanded from DVD rentals to streaming, and why Amazon evolved from shipping just books at book rate to offering one-day delivery of practically everything.
But in education, there’s a problem with this pattern. Education’s “most demanding customers”—those with greater needs and more challenging circumstances—are often not those who can afford to pay higher prices for improved services.
Consider special education. Learning challenges do not fall disproportionately on the children of the wealthy. In fact, children from low-income families are more likely to have special needs. But greater need doesn’t equate to a greater ability to pay. If ESA policies don’t offer a premium to providers that serve students with special needs, innovative new models of schooling will largely pass on serving those students—except those from wealthy families who can supplement their ESA dollars with money out of pocket. State mandates requiring providers to serve students with special needs won’t solve the problem given that special education’s average cost per student exceeds ESA allocations. Providers in low-income communities will just go out of business.
Now consider circumstances other than special education. Many of today’s microschools are built on some basic assumptions about the families they serve. For example, they assume that families can provide their own transportation and meals, arrange childcare that complements a shorter school day, supplement their microschool experiences with extracurriculars that the school doesn’t provide, and pay for things like therapy or educational specialists on their own. These assumptions make microschooling an unworkable option for some of the families that could benefit the most from an alternative to conventional schooling. But with the right incentives, some microschools will work to figure out how to serve students they can’t serve well right now.
States need sliding-scale ESAs to ensure these students aren’t overlooked. Without additional revenue to offset the higher costs associated with higher needs, providers won’t invest in the improvements necessary to support high-need students. Innovative providers must have a business case for serving students with greater needs and lesser means.
