Fear Versus Fact: The Decline of the Traditional Forms of School Competition

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This is the "Decline of the Traditional Forms of School Competition" segment from Fears versus facts about school choice: An overview of issues surrounding the effects of competition on public education

By John Garen, Ph.D.

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The decline of the traditional forms of school competition


Prior to the growth of charter schools, the traditional form of competition that public schools faced came from – and remains – mobility. Families often choose neighborhoods based on the quality of the local schools.

Historically, localities maintained a great deal of autonomy in determining schools policies. Traditionally, decisions on funding, taxation and programs remained local concerns and could vary substantially depending on the neighborhood. Thus, potential residents might face a reasonable variety of choices regarding public schools depending on where they choose to locate.

The potential loss of students via the mobility option would cause a loss of tax revenue and funding to local education officials and served to some degree, though imperfectly, to penalize poorly performing school districts. The converse would reward those that did well.

Two major trends have served to undermine these aspects of choice and competition among schools.

  • First, the reduction in the number of school districts in the U.S. Chart 5 illustrates the remarkable decline in the number of districts, particularly up to, and throughout, the 1960s.
Chart 5: School Districts in the U.S.[1]

The decline continues, albeit at a slower pace. More than 100,000 school districts operated in the 1930s. That number fell to some 36,000 by the early 1960s; now there are fewer than 15,000. Naturally, the fewer the school districts, the fewer options are available to families.

Chart 6: Percentage of Local Funding of Public Schools in the U.S.
  • Second, the reduction in local control over schools and school districts.

As noted, more local control engenders more variety from which residents can choose while a greater amount of control by state government generates more homogeneous policies. Moving from one locale to another affects the school-policy regime less when state policy dictates both. Thus, mobility provides less choice and also does not serve to reduce tax collections of state government officials who establish poor educational policies, and fails to reward those who promote good ones.

Chart 6 illustrates the time trend of the percent of local funding of total public school spending. Persistent decline through the years leaves us with local funding between 40 percent and 45 percent. For the typical state, more than half the funding for its public schools now comes from state government, shifting the balance of control to state government and further away from effective choices by families. Stripped of its traditional form of competition, it comes as no surprise that the performance of public schools stagnated for quite some time.

Fortunately, two related policy tools are available to stimulate stronger competition: charter schools and voucher programs. However, it remains for many states and localities to use them.

More from Fears Versus Facts About School Choice

You can read more from Fears versus facts about school choice: An overview of issues surrounding the effects of competition on public education in the pages below.


  1. Hoxby, Caroline, “Productivity in Education: The Quintessential Upstream Industry,” Southern Economic Journal, 71(2), 2004.
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