Betsy DeVos will be a disaster for your property values

Our Imbecile President nominated fellow billionaire and imbecile Elizabeth ‘Betsy’ DeVos for the position of Secretary of Education. DeVos is woefully unqualified for the post. Nobody in her family has ever attended public school and she lacks experience, displayed an inability to grasp educational concepts, and proved complete ignorance about federal laws that apply to education. DeVos’ pet cause is “school choice,” a euphemism coined by republicans for cutting funding to the public school system. The dogma goes something like this for the free-market republicans, “If we privatize education, the free market will magically fix everything.” For the more cynical ones it goes something like, “Why should my property taxes (the public school system in the United States is primarily funded through property taxes) be going to public schools when my children are attending a private school?” What they want is a “voucher,” which is a euphemism for a check. Essentially, they want the state to give them a money for each child they have which they can use to then send their kids to a different (private, religious, charter) school or to home-school their kids, with the local school district losing that funding. (Government giving you checks for each kid you have… I feel like that same side has attacked the same idea before…)

The problems are numerous, but I’m not an expert on education and and the complexities of the education system (e.g. collective bargaining, effective racial & economic segregation, quality of education, access to students with special needs). What I know as someone that is involved in the mortgage space is that “good schools” is one of the best determinants of property value deviation from the regional median. Places with “good schools” have higher property values, which lead to higher property tax revenues, which lead to higher funding for the schools, which makes the area more desirable to live in. Funding for schools varies state by state but about 8.5% is provided by the federal government while the rest is typically split between the state and local governments. (One problem should be obvious: higher property values price-out poorer residents, many of which rent and are therefore more sensitive to changes in property values. Poorer people move to less expensive places where property tax receipts are lower and school funding is lower.)

A voucher plan would allow funds to be diverted from pubic schools to private schools, reducing the overall funding for schools. Like most economic activities, education has both fixed (e.g. the building) and variable (per-student e.g. textbook)costs and there is certain economies of scale. Hijacking that scale by reducing the economic barrier to private schooling would lead to reductions in funding that could exceed the average cost per pupil, leaving a school weaker and potentially initiating or accelerating a downward spiral in which funding reductions lead to more parents opting to send their children elsewhere, causing more funding declines. “School Choice” would immediately reduce funding to public schools because, suddenly, every student currently enrolled in a private school would mean a diversion of funds from public to private school, immediately reducing the resources of the public school or public school system that that student would have otherwise been a part of. It would also suddenly shift the demand curve for private schooling or home schooling sharply to the right due to the dramatic decrease in cost. All of those potential declines in enrollment would translate immediately into lower funding and potentially lower enrollment. While lower enrollment may be a benefit in overcrowded schools, it would be a big hit to any school where reduced enrollment would reduce the viability of non-core programs. Facing lower funding and tougher economics, governments would be forced to decide between higher property taxes to make-up the gap or reductions in school quality. Neither of those two outcomes are positive for property values and, as we know, as property values go, so does funding for schools. If you live in a wealthy area with a good school where a lot of your neighbors send their kids to private schools, you are particularly at risk of higher property taxes. If you live in a middle-income area where few people send their kids to private school and the local schools are about average in quality and not suffering from acute overcrowding, you are particularly at risk of your local schools collapsing.

If that doesn’t sound like something you want, call your elected representatives and tell them to vote against DeVos’s confirmation.

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