Thursday, December 21, 2017

State ESAs: The Gold Standard for School Choice

The tax bill heading for a final vote would greatly expand tax-advantaged education savings programs. Under current law, these Section 529 plans (named after the enabling provision in the IRS code) can be used only to pay college expenses, but the new legislation would permit tax-exempt savings for K-12 education spending—up to $10,000 a year for tuition at private or parochial schools. This is great news for those families who can afford to sock away money for their children’s education. However, the expansion of 529 plans is no substitute for creating K-12 education savings account programs with universal eligibility. State ESAs remain the new gold standard for school choice.

ESAs help parents pay for their children’s private education—11,000 kids in Arizona, Florida, Mississippi, and Tennessee already participate in them. ESA legislation was also introduced to 21 other states in this year, according to Independent Institute Research Fellow Vicki E. Alger in an op-ed for the Washington Times. Most ESA programs fund the child’s accounts using public money that other otherwise go to his or her local public school, but Arkansas, Missouri, New Hampshire and Wyoming are considering programs that are privately managed or funded, much like a tax-credit scholarship program.

“California could readily enact this kind of ESA Program,” Alger writes. “It has nearly 190,000 tax-exempt charitable organizations, along with a well-established regulatory and oversight infrastructure.” Not only does it have the groundwork already in place, but as Alger first showed in her 52-page report Customized Learning for California, a tax-credit ESA program could be structured to pay for itself even if as few as one or two percent of California’s K-12 students participated. More importantly, it would vastly improve the educational opportunities for children in the nation’s most populous state.


Perverse Sex Ed in the UK

Secondary schools in the United Kingdom will soon be required by law to teach sex education using a now-undefined, government-mandated curriculum.

The curriculum has yet to be defined but is likely to incorporate homosexuality and transgenderism.

The new sex education curriculum will take effect in September 2019. It will include so-called "relationship education" for primary schools and an updated sexual education curriculum for secondary schools.

The current curriculum standards have gone largely unchanged for almost 20 years. This has caused some on the Left to trash the curriculum, with one report calling it "'too biological' at the expense of a focus on children's rights, equity, emotions and relationships — and too negative and risk-focused, at the expense of the affirmative and positive aspects of relationships and sexuality."

A Sky News report explains, "The update to statutory guidance follows concerns that current advice, last set in 2000, is out-of-date and does not address 'sexting,' online safety and cyber-bullying, as well as mental well-being and LGBT issues."

The report quotes U.K. Secretary of State for Education Justine Greening as saying, "I think we need to speak to parents and teachers in particular. And of course, young people."

She also claimed, "I met with some young people in Parliament about a month ago, and they were staggered that no government has updated the guidance since 2000, so I think there is a general consensus that we need to improve things and that it is what we are making a start on today."

Earlier this year, Greening was responsible for making so-called sex and relationship education mandatory in all U.K. schools.

Sex education has been a hot-button issue in Britain for the past decade or two. For example, in 2008 so-called relationship education was mandatory for schoolchildren as young as five. While some of the intention was to prevent sexual abuse of children and to discourage porn addiction, critics felt that it introduced explicit materials to ridiculously young ages.

Furthermore, a study in Britain earlier this year found that budget cuts which reduced access to free contraception actually resulted in fewer teen pregnancies.

Currently, Greening's Twitter page is full of links to surveys, forums and other ways for parents and students to express their opinion on sex education and hopefully impact the new curriculum still under development.

One of the issues that the new curriculum is likely to address is internet pornography. One of the reasons the Greening gave for updating the curriculum is "the huge amount of inappropriate material that is on the internet."

But there is some concern that they will address this grave sin in a falsely positive light. This is especially troubling, as the new government-mandated standards will apply even to Catholic schools.


Lack of Financial Literacy Remains Historic American Challenge

A new analysis published by Martha Brown Menard, who conducts financial services user experience research for Questis, dissects both successful and unsuccessful financial education programs, with an aim at discovering what approaches work best in what circumstances.

Setting the stage for her recommendations, Menard suggests financial stress among U.S. employees is reaching “epidemic proportions.” She cites survey data to the effect that 75% or more live paycheck to paycheck, personal savings rates are at their lowest since 2007, and non-mortgage debt levels are higher now than during the Great Recession.

“It’s no wonder so many people feel unable to pay off their consumer debt or save adequately for retirement, which only makes the situation worse. Because stressed employees bring these financial distractions to the workplace, it seems like a good idea for employers to provide some type of education, perhaps a seminar or lunch and learn, so that employees can become better informed about how to manage their personal finances,” Menard explains.

But for a variety of reasons, this kind of one-size-fits-all financial education has been demonstrated to have little to no effect on changing real-world financial behaviors. Indeed, as Menard lays out, a meta-analysis of more than 200 relevant studies found that workplace educational interventions explained only a tiny fraction of the downstream financial behavior changes studied.

Menard’s research takes a striking look back at the recent and not-so-recent development of workplace financial education in the United States. Quotes from figures throughout history show how the problem of poor financial literacy have been around since the beginning of the American Republic. She quotes early American president John Adams, who warned that “all the perplexities, confusion, and distress in America arise not from defects in their Constitution or Confederation, nor from want or honor or virtue, so much as the downright ignorance of the nature of coin, credit, and circulation.” In 1849, Menard observes, Victorian bank manager James Gilbart promoted financial education as a way to help potential customers of his London & County Bank feel comfortable by knowing what to expect when opening an account. Again in the U.S., the Smith-Lever Act of 1914 established the funding that land-grant colleges still use to teach cooperative extension courses in personal finance.

More recently, Congress modernized some of these educational efforts and in 2003 established the Financial Literacy and Education Commission, which subsequently released a national strategy for financial education. “Thanks to Congress, since 2004 Americans have celebrated April as National Financial Literacy Awareness Month,” Menard observes. “And President George W. Bush signed an order in January 2008 that created an advisory council on financial literacy.”

And yet with all this awareness of the problem—and literally centuries of discussion among thought leaders—have Americans, broadly speaking, improved their financial literacy? The evidence is at best mixed, Menard warns.

“Is general financial education effective? It certainly doesn’t look that way once we analyze the body of research to date,” Menard says. “Multiple academic studies have shown that claims of a cause and effect relationship between financial education and improved financial behaviors have very little evidence to support them. When examined more recently by a team of researchers conducting a meta-analysis of 90 previous studies, the correlations between financial education and improved financial behaviors were better explained by other individual difference factors that were not measured in the prior studies, such as familiarity with numerical concepts, financial confidence, and willingness to take risks.”

Menard’s observations continue: “Previous research evaluating the effectiveness of financial education often conflates two different kinds of studies: those that measure the degree to which a person is already financially literate, and those that measure whether and to what extent an educational intervention has increased a person’s financial knowledge. But neither pre-existing financial literacy nor educational interventions have been demonstrated to improve actual financial behaviors. Financial education explained only one tenth of one percent (.001) of downstream financial behaviors in the 90 studies that were aggregated, and the authors note that financial literacy is highly correlated with other individual differences or personality traits, such as self-efficacy, that can explain positive financial behaviors and outcomes. As in so many other areas of life, just because we know we should do something doesn’t mean we actually follow through and do it.”

The analysis goes on to suggest that behavioral psychology can be helpful in understanding this failure in education. Menard suggests those who receive financial education often fail to act because they are discounting the potential of future suffering, feeling overconfident about their future ability to take corrective action and worrying about potential losses. These are the same symptoms that cripple people from making better decisions across all facets of life, independent of their level of awareness on a given topic/challenge.

Menard’s analysis concludes that the lessons of behavioral finance are only just being absorbed into the domain of financial education—and she expects that over time the efficacy of educational programming could finally (and dramatically) improve. In the most simplistic terms, she says financial education “must be easy, by removing barriers or reducing friction; attractive, by offering the right incentive; social, by promoting a sense of positive belonging; and timely, by linking it to a current situation and an individual outlook.”


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