Directional Investment Is Coming to K-12 Public Education

Big money is moving around in K-12 education, and that means big investment opportunity.  Yet most media commentary is still looking at this flow of funds through a political lens.  For instance, this June 4 Washington Post article, headlined, “Billions in taxpayer dollars now go to religious schools via vouchers.”  The subhead reads, “The rapid expansion of state voucher programs follows court decisions that have eroded the separation between church and state.”   That’s the angle the MSM is fixated on.  

As the article details, vouchers of up to $16,000 are now available in some places.  From the Post: 

In just five states with expansive programs, more than 700,000 students benefited from vouchers this school year. (Those same states had a total of about 935,000 private school students in 2021, the most recent year for which data are available.) An additional 200,000 were subsidized in the rest of the country, according to tracking by EdChoice, a voucher advocacy group. That suggests a substantial share of about 4.7 million students attending private school nationwide are benefiting from vouchers—a number that is expected to grow.

More: 

The programs, popular with conservatives, are rapidly growing in GOP-run states, with a total of 29 states plus D.C. operating some sort of voucher system. Eight states created or expanded voucher programs last year, and this year, Alabama, Georgia and Missouri have approved or expanded voucher-type programs. Some recently enacted plans are just starting to take effect or will be phased in over the next few years.

The Post then runs through the familiar liberal critique of vouchers: that they unconstitutionally aid religion, and that they enable racial segregation.  Both of these critiques are debatable, and maybe even wrong-headed, and yet they are energetically rehashed by the Post readership in more than 11,000 comments.  

However, there’s another way to think about this flux, this disruption, in education.  According to Skillademia, “The landscape of U.S. Public Education Spending Statistics is shifting dramatically. In 2021, the spending per student surged by 6.3%, marking the largest year-to-year increase in over a decade.” 

In fact, total expenditures for public elementary and secondary schools in that year totaled $870 billion.  In the meantime, as this map from the Post suggests, voucherization is spreading.  

Notably, Texas is not highlighted.  But that could well change in the wake of the recent Republican primary elections, in which pro-school-choice Governor Greg Abbott purged many anti-school Republicans from the state legislature.  So it’s likely that the Lone Star State, the second largest in the country, will soon join the pro-voucher roster. 

One of the central arguments of my new book, The Secret of Directional Investing: Making Money Amidst the Red-Blue Rumble, is that the Republican-Democrat divide means that just about every policy issue will be cleaved into two: a red approach and a blue approach.  In public K-12 education, the red approach is choice or vouchers, while the blue approach is the status quo, including, of course, a heavy dose of DEI and transgenderism.  This blue policy mix is actually rather popular in blue states, so there’s no reason to expect education in those places to change much. 

However, as we have seen, the red states are in motion. Most Republicans look forward to abolishing DEI, and quite possibly also the teachers’ unions and the associated administrative state.   That further energizes voucher supporters—the thought of disempowering the institutional left and its favored party, the Democratic Party.

So that will be the split on education: roughly half the states, blue or purple, will likely stand pat, while the other half forge into new realms.  It’s the Brandeisian “laboratories of democracy” point.  So out of that $870 billion in K-12 spending, the red-state allotment is very much in play. 

And it’s also, potentially, laboratories of prosperity, because when money moves, there’s money to be made in the inflection points and new trends. 

Meanwhile, in the background, private investment and private equity.   There have been plenty of efforts at for-profit investment in K-12 schools, everything from the Edison Schools (now Edison Learning) to Amplify.  Some of these have been successful, carving out some share of the education pie.  Yet on the whole, their impact has been small.  

However, the full voucherization of K-12 really opens the door to a flood of investment and innovation. 

Perhaps most obviously, there’s AI.   We’ve had distance- and video learning for a long time, and we had the massive experiment in Zoom education during Covid, and once again, these experiments, always controversial, have not been all that successful.  Yet the technology keeps getting better, and investors and visionaries never stop thinking.  

So the destiny is disclosed, and the light of investment shines the path ahead.