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Reason Foundation

Addition and Subtraction

State and Local Regulatory Obstacles to Opening a New Private School

Bahaa Seireg
December 1, 2004

Executive Summary

In California’s 2000 election, when the school voucher proposition failed miserably at the polls, voucher supporters lost a major battle. Their campaign sought reform on the demand side of the schooling market. Today private schools in California are often quite expensive. If given the purchasing power of $4,000 in the form of a voucher (or tax credit), most parents could send their kid to a private school, if prices remained constant and the preferred seat in the existing set of private schools were available.

Yet, parents who want higher-quality education for their children are routinely being turned away or put on waiting lists as private schools fill to capacity and high demand and low supply force prices upward. The battle for better schooling needs to fight a supply-side campaign as well and create more high-quality school capacity. Many stringent regulations prevent entry and impose large costs on those attempting to open new schools. These obstacles “shift back” the supply curve, keeping potential entrepreneurs out of the market, reducing the amount of new school capacity, and raising its price.

Ultimately, for schools to be competitive and performance–based, and for parents and students to have real choices in their education, the supply of private schooling must be dynamic and competitive as well. The battle for better schooling must be fought on both fronts. That means that the challengers of the status quo shift some of their resources to combating the regulatory obstacles to private schooling. This paper mostly discusses private schools, but it is important to note that all the regulations imposed on private schools are also imposed on charter schools. Charter schools create choice for parents and students within the public school system. The charter school movement has its roots in a number of other reform ideas, from alternative schools, to site-based management, magnet schools, public school choice, privatization, and community-parental empowerment. When reading this paper it is essential to realize that charter schools depend on nontraditional buildings and new facilities in order to proliferate within the public school system.

Opening a private school is onerous at best. In addition to meeting education department requirements, one must satisfy four main types of regulation, each of which imposes many hurdles to the private sector and limits the creation of new school capacity:

  1. The State Environmental Quality Act, which imposes several obstacles to acquiring a piece of land or modifying a structure on that land;
  2. City zoning requirements, which impose restrictions on the location of the private school;
  3. City parking requirements; and
  4. State and Local Building Codes, which deal with the school building itself.

The causes behind the excessive restrictions discussed in this paper are many. The education bureaucracy can often get bogged down in issues of control. Administrators might really think that they are enhancing children’s educational experience and that they are making schools safer and more conducive to learning. But the road to hell is paved with good intentions. In reality, they are doing the exact opposite. Adam Smith described the liberal principle best when he wrote:

[E]very individual, it is evident, can, in his local situation, judge much better than any statesman or lawgiver can do for him. The statesman who should attempt to direct private people in what manner they ought to employ their capitals would not only load himself with a most unnecessary attention, but assume an authority which could safely be trusted, not only to no single person, but to no council or senate whatever, and which would nowhere be so dangerous as in the hands of a man who had folly and presumption enough to fancy himself fit to exercise it.

Parents have strong reason to decide for themselves whether a school is appropriate for their child. More than anyone else, parents have both the motivation and the local knowledge to make choices for their children about the school’s bundle of characteristics. Parents and the proprietors themselves will naturally seek assurances against conflagration and building collapse, and nongovernmental forces can attend to this demand in a responsive, intelligent way. Very often, solutions among local parties are self-creating and selfenforcing. They don’t need or want legal authorities to resolve their problems.

Government restrictions make it very hard and very expensive for people to open a private school. These costs are largely passed on to the customer. The high price of private schooling in California today can be traced to a lack of competition, which itself can be traced to government restrictions. Basic economic theory says that, with less supply, the price will go up. The opponents of government schooling are right to focus on making private schooling viable, but almost all the attention has been on demand-side reforms like vouchers and tax credits. Even if demand-side reforms were to succeed, the situation on the supply side would prevent those reforms from succeeding. Ultimately, for schools to be competitive and performance-based and for parents and students to have real choices in their education, the supply of private schooling must be dynamic and competitive as well.

Fostering a competitive market for education where a private school market can flourish and expand the options for many children who desperately need them requires legislators to act. At the local level, zoning, parking and building codes and environmental reviews must be reassessed for merit and streamlined. performance planning approach focusing on end results rather than prescriptive policies would ensure that the goals for which the regulations were created get addressed without bogging the system down with arcane requirements. It determines appropriate uses, parking needs and environmental impact flexibly, built on the fact that the impact of any given use of land upon another has more to do with the intensity of the use than the type of use. It holds landowners accountable for any negative effects of their actions but lets them use their land as they see fit.

This resilient system designs rules and procedures that allow maximum flexibility but cope well with real problems as they arise. It replaces our current system based on anticipation—assuming we know all the potential problems and solutions for present and future land uses and prescribing what we will and will not allow. An approach designed to deal with real and measurable impact would require fewer regulations and less paperwork with a faster and simpler approval process. Some restrictions would still exist, but far fewer than under current approaches and allowing a broader range and mix of uses. Such streamlining would allow parents greater choice in schools and students a greater chance to succeed.


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