The best example of “failing up” today might be “hold harmless” provisions for district public schools.

Under such terms, the funding of failing schools cannot decrease when students leave them for high-performing charter schools. With no incentive to educate and retain students, hold-harmless systems are free to waste thousands on administrative bloat.

Even in cases where some money follows the student to a different school, the public system retains thousands of taxpayer dollars each time a student flees a hold-harmless school. That insulates failing schools from the competitive pressure of school choice.

When schools compete for students and therefore for funding, they must improve the quality of education to attract and retain students. That creates a rising tide that lifts all boats, including those public schools that provide a poor education today.

No parent wants their child trapped in a school where few children can read and write at grade level. Thankfully, a growing number of parents are fortunate enough to live in 32 states that offer either education savings accounts, vouchers, or tax credit scholarships that provide families with a choice of where to educate their children.

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But as parents choose to leave schools that aren’t meeting their children’s needs, the hold-harmless provisions enable many of these schools to retain their funding, even though their expenses decline.

With more money per pupil, they could hire better teachers, including specialists, buy technological learning aids, and make other investments to improve educational outcomes. But they do few of those things.

Instead, hold-harmless schools in states such as Maryland, Massachusetts and Pennsylvania hire administrators and create bloated bureaucracies. About half the Philadelphia school district employees in the 2022-2023 school year aren’t even teachers.

That helps explain why the Philadelphia school district spends over $26,000 per student, two-thirds more than Pennsylvania’s median spending. By contrast, First Philadelphia Preparatory Charter School—where 99.8% of the students are considered economically disadvantaged—spends just $14,000 per student. That’s less than the state’s median spending and little more than half what traditional urban public schools spend.

Catholic schools in the City of Brotherly Love also manage to do more with less. Father Judge High School charges $9,400 in tuition and fees, although the school receives subsidies from the Archdiocese of Philadelphia, increasing the amount spent per student.

Despite spending significantly less than their district public school counterparts, alternatives like charter schools and Catholic schools achieve better educational outcomes, including higher test scores.

Meanwhile, in the Philadelphia school district, only 16.2% of students in third through eighth grade scored at least proficient in mathematics. More than 4 in 5 students are behind on the fundamentals.

The problem isn’t unique to Philadelphia. Consider Illinois. The Prairie State leads the nation on district-level administration, spending over $1 billion annually while achieving below-average scores in mathematics and reading.

Nationwide, from 2000 to 2019, the number of students in public schools increased 7.6% while the number of teachers grew 8.7%. Both of those pale in comparison with the growth of administrators, which came in at an astounding 87.6%.

This helps explain why students in many districts continue to have poor educational outcomes even as the amount spent on each student continues to rise. It turns out the money is going to administrators and other waste, not education.

The way to remove the ratchet effect of school funding in hold-harmless provisions is to roll back the policy itself. Schools that are failing parents and children don’t deserve to continue riding the gravy train of taxpayer money.

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Further reforms are needed. Similar misallocations of taxpayer dollars occur in places where funding is based not on the most recent enrollment data, but on outdated figures. In Wisconsin, enrollment is measured by a three-year rolling average, which currently overestimates the number of students in traditional public schools by almost 21,000, causing a misallocation of $359 million this year alone.

Free markets work because sellers must compete for buyers’ dollars. Firms that don’t meet customers’ needs bring in less revenue or go out of business. Similarly, schools educating fewer students and providing a poor education should receive less money, not more. When this basic market functionality is short-circuited by misguided education policy, the quality of education lapses.

The recent creation or expansion of education savings account-style options in Arkansas, Iowa and Utah, which give families control over a share of their child’s public education funding, are tremendous victories for families. The wins are especially important in disadvantaged communities since education is the path out of poverty for millions of young Americans.

As other states follow suit, every dollar of funding should follow students to deliver educational opportunities to the next generation.