An Accidental Blueprint

The New York Times magazine has a heady article about education reform in the Obama Administration. It presents the "Race to the Top" program as a huge success in using just $4 billion in federal funds to create massive reform throughout the states.

By late March, when the first round of the Race ended, it was clear that [reformist advisor Jon] Schnur’s spin had worked “better than any of us imagined,” he says. Thousands of local news stories across the country speculated about how particular states were faring, some of them breathlessly referring to the “March Madness” as governors, state legislators and bureaucrats rushed to consider reforms that might improve their chances. Forty states and the District of Columbia entered the first round. Fifteen, including such union strongholds as California, Ohio and Michigan, passed laws or revised regulations aimed at boosting their chances. Before Duncan had dispensed a nickel, the country had seen more school reform than it had in decades. And still more is being debated as the deadline for a second round of proposals looms next week and states, including New York, Connecticut and New Jersey, hustle to do more to boost their scores.

Just as labor market competition makes better teachers, interstate competition creates better institutions. Governor Chris Christie convinced voters that New Jersey had become uncompetitive and was losing out to its neighbors. He's focused on reforming New Jersey's institutions.

At the Federal level, Schnur and Arne Duncan's "Race to the Top" has accidentally shown how powerful Federal dollars can be - if they are deployed competitively. Right now, earmarked projects for states are doled out on the basis of seniority and influence of each state's representatives. That's promotes incumbency and cronyism. Suppose comprehensive earmark reform took place. Federal projects would still need to take place somewhere, and it's not inconceivable that bids to host expanded Federal installations could be evaluated rigorously according to a formula that takes reforms and improvements into account and pushes states to adopt better institutions.

Of course, this approach could be abused: Federal power is only as incorrupt as those wielding it. The amazing results of Race to the Top really speak to the qualities of Schnur, Duncan at all, which the Times Magazine article is right to focus on. The best institutional approach would be to kick more and more aspects of government back down from the Federal to the State level, where they belong. That should start with earmark reform.