What happens when unregulated special interests control public budget allocations? No, I'm not talking about the GOP Tea Party-ists shutting down the federal government. Instead, let's look at Lakewood Public Schools.

The Ocean County school district is broke, a $4 million hole in its $107 million operating budget, reported the Asbury Park Press this week. Lakewood will apply to the state for relief because of an imbalanced and inequitable system of private school choice. It's laissez-faire capitalism run amok and the victims are the kids who can't choose.

The total enrollment of Lakewood Public Schools – the kids who actually attend each day -- is 4,802 students, shrinking a little bit each year. Ninety-five percent of those students are Hispanic or black, according to DOE data. Sixty-seven percent are economically-disadvantaged. Academic achievement "significantly lags" behind comparable districts; the high school graduation rate is 73 percent. Lakewood High School is labeled a "Priority School," one of the worst in the state.

That's a big problem for the district's families, but mere trivia for the vast majority of families served by the school district. Most of Lakewood's children – about 25,000 at last count -- don't go to the public school but instead attend private Jewish Orthodox day schools. The district provides textbooks, tutoring, nursing services, professional development for yeshiva teachers, and, most pressingly, transportation.

In fact, Lakewood allocates $21 million -- 20 percent of its operating budget -- to transportation for its Orthodox students to attend 96 different Jewish day schools.

Meanwhile, thousands more yeshiva students, way more than projected, will arrive in Lakewood this year, a boon for the private religious schools (every property in town, except for a tiny bit by the airport, is zoned for yeshivas) and a bust for the public district. Thus, Lakewood faces a $4 million funding shortfall and spends only $12,517 per in-district student, well below the state average.

Not that there's anything wrong with that. State law mandates that public schools provide transportation for private school kids -- after all, their parents pay taxes. Lakewood goes an additional step by respecting the edicts of the Orthodox community and segregating buses by gender and religion. This policy was litigated in 2003 by an executive member of the NAACP who charged that the practice was tantamount to "unconstitutional segregation between public and private schools, Jewish and non-Jewish students, and boys and girls." Administrative Law Judge Steven C. Reback threw out the case.

Lakewood's fiscal problems extend to its practice of religiously-segregated special education. While almost all minority students with disabilities are educated within district schools or at moderately-priced private schools, the district pays for its Orthodox Jewish children with significant disabilities to attend expensive out-of-district private special education schools. One in particular, the School for Children with Hidden Intelligence (SCHI), costs $92,837 per student annually, exclusive of mandated summer programs, transportation, and other services. A school board agenda this past June lists 149 students who will attend SCHI for the school year at an annual tuition cost of $13,832,713.

Lakewood also generously sends some of these children to overnight summer camps like Camp Mikdosh, advertised as a "stronghold of Torah." Mikdosh's tuition this past summer, according to the July 12 School Board agenda, was $263 per student per day for the six-week session.

This is all legal (although I'm not 100 percent sure about the summer camps). As Michael Kinsley once famously said, "the scandal isn't the illegal behavior -- the scandal is what's legal." The legal scandal in Lakewood is the control the of the School Board by special interest groups (despite some recent moderating influences) and the lack of public school options for unrepresented kids.

Lakewood is a caricature of uncontrolled and unregulated private school choice, an education reformer's nightmare. Everyone gets to choose except the neediest children. There are no public charter schools in Lakewood, indeed none in Ocean County, to offer options. Their families have no power and so they get bubkes. Someone get D.C. on the phone.

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Laura Waters is president of the Lawrence Township School Board in Mercer County. She also writes about New Jersey's public education on her blog NJ Left Behind. Follow her on Twitter @NJLeftbehind.