All Commentary
Friday, May 1, 1992

Business and the Adopt-a-School Fiasco

John Hood is publications and research director of the John Locke Foundation in Raleigh, North Carolina, and author of Cato Institute Policy Analysis No. 153, “When Business Adopts Schools: Spare the Rod, Spoil the Child,” from which parts of this article are adapted.

The debate over public education reform in the United States has largely become an exchange of clichés, of orphaned terminology searching for practical meaning. All sides are calling for school “restructuring,” though the architecture of the education edifice to be created from the ruins of the old is rarely defined. The National Education Association, the nation’s largest teacher union, is running an “Invest in Education” advertising campaign, as if massive increases in public education spending over the last two decades haven’t already tested the efficacy of “investment” that does not yield results.

Slogans and clichés have been especially prominent in discussions about what role American business should play in education reform. Businesses have entered into “public-private partnerships,” they have “adopted schools,” and they have formed “business compacts” to encourage change and performance.

But do America’s public schools suffer from a lack of private partners or adoptive parents? Not really. “So long as adopt-a-schools, partnerships, and cooperative ventures are the first, exploratory steps, they are important; as last steps, they are not worth the paper they’re written on,” comments Denis P. Doyle, a Hudson Institute scholar. “As a device to lay the groundwork for restructuring, they are invaluable; if they simply represent transient, cosmetic changes, they are wasted effort.”

Unfortunately, most attempts by businesses to reform education in the middle-to-late 1980s can only be described as cosmetic surgery; the health of American public education continues to deteriorate. Furthermore, in a few cases business leaders have been co-opted by the education establishment, so that businesses have advocated more of the same “reforms” proven to be wasteful and counterproductive in the past: massive cash infusions, continued reduction of teacher productivity, and more government regulation of school operations, personnel, and curricula. This goes beyond cosmetic surgery—these businesses are helping to kill the patient.


Identifying the Crisis

Accustomed to the demands of a competitive marketplace and the incentives it provides to produce the best and most goods at lowest cost, business executives often have a uniquely insightful understanding of the education dilemma. “It is a bitter irony that at a time of unprecedented high-tech affluence, virtually full employment, and our highest level of mean education achievement, our school systems are producing so many ‘products’ subject to recall,” said Preston Townley, president and chief executive officer of The Conference Board, in a 1989 speech in Los Angeles.

Businesses have sound reasons to be concerned about the current flood of ill-prepared, sometimes illiterate high school graduates into the American job market. First, young people entering the work force often don’t have the basic skills to perform the tasks demanded by the modern competitive economy. In studies made in conjunction with the “Workforce 2000″ report by the Hudson Institute, researchers William Johnston and Arnold H. Packer found that the reading level of the average young adult, 21 to 25 years old, was significantly below that required to do the typical job available in 1984—and even more significantly below the level required to fill the jobs to be created from now until the end of the century.

The impact of this job-skills gap is being felt throughout the American economy. Metal Fab Corporation, a Florida manufacturing firm, estimated in 1988 that it could save $1.2 million a year if its employees had stronger reading and math skills—they wouldn’t misread blueprints so often or measure costly production materials incorrectly. Concerned about worker mistakes, New York Life began airlifting its health-insurance claims to Ireland for processing. In 1990 Citicorp Savings Bank of illinois rejected 84 percent of applications for bank teller and clerical positions. Most of those rejected couldn’t fill out the application forms.

When employers do accept ill-prepared applicants, they must spend time and money teaching their new employees to read, write, and solve simple mathematics problems. IBM, for instance, spends about 17 percent of its $60 billion in total revenues each year on education and training, including funds for salaries for 7,000 teachers, for classrooms, and for textbooks—and that doesn’t include the cost of paying employees a salary while being taught the skills to do the jobs they were hired to perform. Some corporations have gone even further by setting up classes for potential job seekers, just to create a suitable applicant pool.

Despite these efforts, discussed in more detail below, new workers in most businesses remain generally unprepared for the demands of their jobs. After all, while large businesses can afford to re-educate at least some of their employees, small businesses more precariously positioned above the break-even line can’t afford such programs. In an American Management Association survey of companies with sales under $50 million (which are still sizable firms compared with the vast majority of American businesses), only 6 percent had tested their employees for basic skills, and only 25 percent of companies administering tests provided remedial instruction or required employees to attend remedial courses elsewhere.

Business involvement in American pre-college education, while varied and in some cases manifested in unique programs, can be divided into three basic categories: 1) businesses helping schools—donations and other aid to elementary and secondary schools, 2) businesses acting as schools—company-run training and remedial programs, and 3) businesses changing schools—involvement in the social and political debate over education reform.


Businesses Helping Schools: How Large an Allowance?

It’s difficult to argue with the notion, widely held throughout the post-Nation at Risk reform wave of the 1980s, that business involvement with and aid to local schools is a good idea. All things being equal, a little encouragement from business executives might be just the thing to keep a particular student on track and motivated with the prospect of future reward in the working world. After all, it’s gratifying and inspiring to learn that someone cares whether you succeed in your studies, especially for students whose parents are uninterested or unable to provide encouragement at home.

Taking this notion to heart, American businesses greatly increased programs to provide funds, technical assistance, volunteers, and other aid to selected schools or school systems during the 1980s. Many of these programs were constructed as “public-private partnerships,” in which businesses find out what needs their partner schools have and then make arrangements to fill those needs. By 1988 the number of partnerships between U.S. businesses and schools had reached 140,000, up from 40,000 in 1983. According to statistics compiled by the Council for Aid to Education, corporate donations to schools totaled about $225 million in 1989, an increase of 125 percent from 1986. And this doesn’t factor in the dollar value of volunteer efforts by business executives, managers, and other employees.

Corporate monetary and in-kind donations are made in a number of ways. One popular method in the 1980s was for a company to “adopt a school,” usually one located near a business office or plant. In many cases, company employees would meet with school personnel to plan visits to teach or help teach classes, make guest appearances as lecturers or motivational speakers, plan and staff fundraisers, and serve as mentors for students.

It’s fair to say that since the early days of partnerships and “adopt-a-school” programs, enthusiasm has waned. Despite costly and time-consuming efforts, businesses couldn’t see practical results. In a Fortune magazine survey, 55 percent of corporate leaders who have given money or in-kind contributions to schools said their involvement made little or no difference. “Adopting schools and buying chic uniforms for school bands and school basketball teams made some local people happy,” said Preston Townley of The Conference Board. “But business leaders began to realize that they did nothing for true educational reform.”

One reason businesses seem less enthusiastic about direct partnerships with schools is that contact with school personnel has pointed out significant differences between the two groups. Government regulations and union contracts have frequently limited the ability of school employees to take action or create programs as quickly and as imaginatively as business leaders want.

Jane Salodof of Management Review describes one case in which a corporation donated a computer to its adopted school, only to find that after several months, the computer still hadn’t been used. It couldn’t be—a chalkboard was in the way. “Such a delay may be taken in stride for school officials, who often do not control unionized school custodians,” Salodof writes, “but it is difficult for corporate leaders to accept as routine.” At another school, a $10,000 business donation wasn’t deposited for nearly a year because approval was required from a committee that didn’t meet very often (which explains why many businesses and schools preferred in-kind, rather than monetary, contributions).

Fundamentally, most business and school leaders have come to believe that partnerships and donations alone won’t make much of a difference. The dollar amount of donations, while substantial, never made up more than a small percentage of school budgets. And businesses seeking to make donations faced a dilemma—if they set specific goals for schools to reach as a condition for aid, they were accused of inappropriate meddling in education policy. But if businesses wrote blank checks to be spent by schools for more of the same old programs, their efforts would be wasted or counterproductive.


Businesses Acting As Schools: Whose Assignment Is It?

Faced with the failure of public education—and the shortcomings of partnerships and donations—many companies have resolved to address the problem themselves by providing basic education to workers. Training programs have been a mainstay for years, of course, but a significant number of today’s “corporate classrooms” are as likely to be teaching workers how to read and solve math problems as they are to be teaching how to operate machinery or follow production procedures.

Considered in the broadest sense, American business is an enormous educational enterprise. Some $210 billion is spent each year by businesses for training and education, either directly ($30 billion for formal classes and training programs) or indirectly ($180 billion for on-the-job instruction, informal lessons from a supervisor or co-worker, and so on). By comparison, the total budget for K-12 education in the United States is around $200 billion a year, and college and university spending is well over $100 billion.

There are notable examples of businesses taking up the slack for failed public education:

• Philadelphia Newspapers, owner of The Philadelphia Inquirer and The Philadelphia Daily News, provides co-worker tutors and classes for employees with poor reading skills. It began the program after learning that 20 percent of employees couldn’t read the newspaper they were printing or delivering.

• Aetna Life & Casualty operates the Aetna institute for Corporate Education in Connecticut. Educating 28,000 students each year, the institute offers more than 250 courses to Aetna employees, ranging from management techniques to basic writing.

• Motorola tests prospective employees for basic skills, requiring workers to reach a fifth-grade level in math and a seventh-grade level in reading. At any given time, about 4 percent of production workers are in company-sponsored classes.

• Honeywell, Boeing, Eldec, and other corporations in the Pacific Northwest sponsor classes at a vocational center near Seattle. They hire most of the program’s graduates.

Company education programs demonstrate that students can be taught basic skills, but they also show that competitive pressures, a focus on productivity and results, streamlined management, and proper student motivation (wages and benefits waiting for them in their new jobs) are crucial to successful education.


Businesses Changing Schools: What Potential?

The most direct route to improving American education is radically to change the way public schools operate. But this is one role that businesses have not been performing, mostly because school officials—and the local, state, and federal policy-makers taking their cue from school officials—have resisted “interference” from the business world. It’s as if the government were encouraging businesses to adopt schools, but preventing the new “parents” from disciplining or instructing their adoptees.

That which creates a spoiled child within a family seems to do the same in education. By and large, public schools have failed to meet the expectations and demands of students, parents, and the general public. But rather than accepting the responsibility and undertaking serious reforms, public educators blame lack of resources, absence of community support, and similar factors.

Educators sometimes say that business involvement in public schooling is hypocritical because many businesses have opposed tax increases. Some have accused businesses of sabotaging legislative proposals that would raise teacher salaries, reduce class sizes, or equalize spending among rich and poor school districts.

Actually, a growing number of business leaders have supported school reform plans devised by the education establishment, including higher taxes. In recent years, business organizations in New Orleans, Cincinnati, Memphis, and in South Carolina, North Carolina, and California have supported local or state tax increases to fund education spending hikes. In 1991 the Committee for Economic Development, a national group of 250 business and education leaders, called for at least $10 billion in new federal spending on education. They announced that the national school reform effort would fail unless the federal government expanded Head Start, an early childhood education program, from its current focus on poor children to all children aged 5 and under.

Teacher unions, education officials, and other supporters of the public education monopoly have made a spirited effort to convince business leaders that the problems of education are mostly monetary and that markets would destroy education. Many schools, in fact, use the partnership model as a political tool to recruit business allies. Cultivating business contacts is part of a marketing strategy to raise public support for increased education spending.

To a surprising degree, the education establishment’s strategy has worked. Even as business leaders complain about the shortcomings of their early involvement with school reform, many support the initiatives and programs devised by the very people who have been in charge of American education during its decline. These programs—more spending for public schools, expansion of Head Start, school “equalization”—are variations on an old theme, not an innovative set of reforms.

American public schools already spend more per student than any other country except Switzerland. Moreover, the 1980s were a decade of rapidly expanding school budgets, reduced class sizes, and increased teacher salaries. Total federal, state, and local spending for current (non-capital) expenses in public schools rose by one-third after inflation during the 1980s. Much of this was related to further attempts to reduce the already declining average class size (which is 63 percent lower today than in 1955), even though countries such as Japan, South Korea, Spain, and France—whose students perform much better on standardized tests than Americans—have significantly larger class sizes. If more money and smaller classes were the answer to our educational woes, some evidence of student progress would exist. But it doesn’t.

The surprisingly widespread support for Head Start expansion among education-minded business leaders is especially disconcerting. The program was never intended to be expanded to all children, as Edward Zigler, a creator of Head Start in the 1960s, points out. “Those who argue in favor of universal preschool education ignore evidence that indicates early schooling is inappropriate for many four-year-olds and that it may even be harmful to their development,” he writes.

It is primarily the health and nutritional components of Head Start, not its educational content, that help poor children. And even that help appears to be short-lived, at least as measured by its effects on schooling. A federal study of Head Start released in 1985 found that by the end of the second year of elementary school, “there are no educationally meaningful differences on any of the measures” between Head Start children and their peers.

Making a major expansion of Head Start the linchpin of education reform, as many business groups have advocated during the past two or three years, would be a costly and destructive mistake. Moreover, it assumes that America’s education problems arise because publicly supported institutions don’t have enough control over the children’s instruction—that schools fail to educate children in grades K-12 simply because they aren’t teaching them at the pre-kindergarten level.


A Real Business Agenda for School Reform

What should American business be doing to promote real reform? First, business leaders should return to first principles. They must begin to apply the lessons they learn every day in the marketplace—competition breeds quality, investment without productivity is wasteful, producers must be accountable to consumers—to an education system they rightly view as a failure. These principles suggest that markets, rather than bureaucratic monopolies, should be delivering the service of education to American students. Business leaders must be in the forefront in advocating this change. “if we in business don’t close ranks and insist on radical reform, and do this very soon, I say . . . forget it,” declares Thomas F. Roeset, president of the City Club of Chicago. “By the year 2000 we’ll be even further behind in the international education standings than we are now.”

Businesses must scrutinize their philanthropic involvement with public schools to make sure they aren’t simply buttressing the current system. Consider the absurdity of improving the U.S. Postal Service, a government monopoly generally regarded as providing relatively poor service at high cost, by having businesses “adopt a post office.” It wouldn’t change anything. If “partnerships” with public schools are to be retained at all, they should be reconstituted as avenues to create pressure for real reform—to be used, for instance, to locate and cultivate relationships with superintendents, principals, and teachers who support market-oriented reform. (There are quite a few, but they have no union to speak for them.)

Most important, however, businesses must seek out their own information, ideas, and opinions on crucial educational questions, rather than rely on the answers provided by the education establishment. Advocates of more of the same—tax increases, higher spending, state control and regulation, rigid tenure rules—actively identify and cultivate business relationships that advance their political and educational goals. Businesses must turn the tables on this strategy and find allies among educators who want real change in American schooling. If education-establishment lobbyists can use the support of prominent business leaders to great effect in political debates, advocates of education markets can use the support of reform-minded educators to equally persuasive effect.

Through research, advocacy, and political organization, businesses can bring about the kind of reform needed in American public education—but only if they remember that “adopting schools” isn’t enough and can often be used to protect the status quo. The discipline of the marketplace must be applied to education, for the same reason that parents must enforce discipline at home: If you spare the rod, you spoil the child.

  • John Hood is a former president of the John Locke Foundation, a state policy think tank in North Carolina, and author of The Heroic Enterprise: Business and the Common Good (Free Press).