Every state’s public education system is a market with supply (i.e., instruction) and demand (i.e., students needing instruction). These markets function as the operating systems for public education. Unfortunately, since the mid-1800s, these markets have been poorly designed and managed. As a result, every state’s public education operating system is deeply flawed.
Just as digital applications fail when their underlying operating systems malfunction, public education programs fail when the market mechanisms beneath them are ineffective. This helps explain why nearly every major reform initiative since “A Nation at Risk” (1983), from site-based decision-making and outcome-based education to teacher empowerment and regulatory accountability, has failed to deliver sustained, systemic improvement.
Public education will not realize sustainable improvement until each state’s public education market becomes more effective and efficient.
The monopoly problem
Public education’s primary problem is that the supply side of each state’s market is dominated by a government monopoly that also controls most demand side funding. A necessary correction is giving families greater control over a significant portion of the public funds allocated for their student’s education. Thanks to decades of advocacy by the education choice movement, families in 18 states may now use public funds to purchase education services and products from government and nongovernment providers.
But family-controlled funding alone is not enough. Every aspect of the design and management of public education markets must be improved, not just their demand side.
In high-performing markets, supply and demand are in sync; transactions are easy, and transactional costs low; information to guide decision making is transparent and accessible; resource allocation is effective and efficient; risks are managed appropriately, and customer satisfaction is consistently high.
Aligning supply and demand
The education choice movement has historically focused on increasing the number of families who control a portion of their students’ education funding while putting less emphasis on ensuring the market’s supply side grows in tandem. This imbalance often causes demand to exceed supply, driving up costs without improving quality and leaving families unable to access the best educational environments for each child. A recent study in Florida found that 41,000 students were awarded education choice scholarships last year but never used them, in part because there was no space in their desired schools.
Policymakers can help by enacting policies that better align supply with demand, ensuring students have access to the options they need.
Minimizing unnecessary transactional friction and costs
During the 2025-26 school year, families nationally will spend about $6.75 billion in public funds customizing their children’s education. Emerging Artificial Intelligence tools are already showing promise in streamlining compliance, verifying transactions in real time, and safeguarding public dollars. By adopting these technologies wisely, states can protect taxpayers while reducing bureaucratic burdens on families and providers.
Improving information access
Families shape public education markets through their purchasing decisions. When those decisions are well-informed, they drive higher quality and better prices. Yet in every state, families lack easy access to reliable information about provider performance and pricing. To support better choices, states should create user-friendly tools that provide transparent, trustworthy information. Without this transparency, families are navigating markets in the dark.
Managing risk and resource allocation
Every market decision carries risks and consumes resources. For example, when states implement policies that drive high demand without growing supply, costs rise, and families lose access to the best options for their children. Effective markets require careful regulation and risk management to balance innovation with accountability while ensuring resources are allocated efficiently.
Market optimization and customer delight
States are responsible for the design, implementation, and ongoing management of public education markets. Their goal should be market optimization, with family satisfaction as the ultimate indicator of success. An optimized market is one where all components function well together, and widespread family satisfaction suggests that children’s needs are consistently being met.
Managing market ecosystems
Public education markets are interdependent ecosystems and must be managed as such. When states align supply and demand, reduce friction, expand transparency, and manage risk wisely, they create conditions where every family can access instruction tailored to their child’s needs.
Lasting improvement will not come from the next reform fad. It will come from building healthy markets that empower families and unlock the full potential of every student.
