All Commentary
Monday, February 1, 1993

Disestablishing Public Education

Public-private partnerships provide the economic reality check that public education in this country so desperately needs.

Anna David is a consultant to the Reason Foundation’ s education studies program and a freelance writer.

Lawrence Seals is a cheerful 11-year old who lives in an urban West-Side Chicago neighborhood. Once a gang member, he was one of 150 inner-city children who made up the class of 1988 at the Corporate/Community School of America (C/CSA).

Created and funded by corporations, C/CSA is a “break-the-mold” school, a reform laboratory aiming to find answers to the problems that plague inner-city urban schools—crime, high dropout rates, violence, poor academic achievement. More than 80 percent of C/CSA’s students come from single-parent families; 60 percent live below federal poverty levels. “It was terrible,” says Lawrence of his days in the gang. “At least I didn’t kill anybody.”

But last summer, weary of resisting the gangs who tormented him on his daily walk to and from school, Lawrence announced to C/CSA’s principal, Elaine Mosely, he was dropping out. Her response: a scalding reminder of what lay ahead if he walked out on his education and his future. Less than two hours after Dr. Mosely pleaded with her pupil to stay in school, Lawrence delivered to her office a promise to come to class—a promise he has kept. His handwritten note brought tears to her eyes.” Some kids would respond to pressure with a knife or a gun. But Lawrence responded—in writing. He has grown in inner strength. It’s a profound example of how we can teach children to respond to the challenge of the streets.”

C/CSA is run much like a business, with a 15-member board of directors, seven of whom are corporate executives. Their leadership, which includes aggressive management of financial resources and continual student performance measurement, has resulted in a school that boasts a 97 percent average daily attendance rate and a majority of students at or above national grade-level average performance levels. Last year, for example, nearly 88 percent of the school’s six-year-olds were at or above the national grade-level average in reading. By comparison, 26 percent of Chicago public school six-year-olds had reached the grade-level average. Similar results appear in math and vocabulary. In addition, C/CSA operates year-round for about $1,000 less than the $6,000 spent per pupil in Chicago public elementary schools.

C/CSA is a working example of a market solution to the national education crisis. While public education remains mired in poor academic performance and financial crises, the private sector is proving that free market enterprises are vastly more efficient, more creative, and more responsive than government bureaucracies.

Throughout the United States, elementary and secondary school enrollments continue to rise while many states struggle just to prevent an existing budget deficit from widening. Overall education expenditures are also skyrocketing. At $600 billion, or 12 percent of gross national product, the United States spends more on education than do most competitor countries whose students outperform ours on standardized tests.


Corporate Involvement in Education

By 1989-90, more than half (51 percent) of all school districts in the United States had entered into public-private partnerships, involving about 2.6 million volunteers, with an estimated value of $225 million, an increase of 125 percent since 1986, says the National Association of Partners in Education. About 30 million, or 65 percent of all students in 1989-90 attended schools in districts that had partnerships with business. According to the U.S. Department of Education, about 50 percent of these partnerships involve the donation of goods and services; 25 percent the donation of money; and 25 percent a combination of goods, services, and money.

Indeed, business has given enormous amounts of money to public education but has rarely known what, if any, good it has done. A 1991 survey by SchoolMatch, an Ohio-based consulting firm that matches business with public schools and subsequently measures performance, shows that a majority of companies that give financial resources to schools have little idea of the outcomes of that investment. But that’s changing. The private sector is seeking a return on investment—educated and educable workers. Creating innovative models, it is showing it can provide the programs necessary to encourage educational excellence.

Private companies have contracted to provide ancillary services in education for decades. Transportation, maintenance, labor negotiations, standardized testing, data processing, and professional services of lawyers, architects, and consultants are frequently provided by the private sector. Current patterns in private provision of school lunch programs, for example, suggest 30 percent growth per year during the next 10 years, according to the Reason Foundation’s Privatization 1992.


Private Teaching Practices

In the late 1980s, a renegade band of teachers decided to follow suit. Abandoning the security of tenure and union contracts to venture into private practice, these teachers “live or die” by the results they provide, says Chris Yelich, founder and president of the American Association of Educators in Private Practice (AAEPP). “Competition and accountability have led to innovation, efficiency, flexibility, and diversity,” she says. “If schools are not happy with the result, the contract is not renewed.”

Public educators often lack the incentive to produce results, to innovate, to be efficient, to make the kinds of difficult changes that private firms operating in a competitive market must make to survive. Private practice teaching breaks this monopoly and significantly upgrades the professional status of teachers, leading them to be directly accountable to their clients—and either succeed or fail.

Some limited contracting is now permitted in Wisconsin, where AAEPP has more than 100 members, and also Michigan, Minnesota, Maryland, Florida, Illinois, and North Carolina. It is in Raleigh, North Carolina, that one private firm, Dialogos International, received a contract with the Wake County Public Schools to teach French, German, Spanish, Italian, Chinese, and Japanese in kindergarten through fifth grade. This was after the state passed a law in 1985 requiring all children in grades K-5 to study a foreign language by the 1994-95 school year. The school board estimates the annual cost of a contract with a Dialogos teacher, at about $19,000, is 30 to 50 percent less than the annual salary of a classroom teacher. And if the county is not happy with the language instruction, it can choose not to renew the contract. In the current system, schools find it nearly impossible to fire an incompetent teacher.

Since 1986, teachers have opened a variety of private practices. In Milwaukee, former elementary school teacher Kathy Harrell-Patterson opened her own school, Learning Enterprise of Wisconsin, to help young mothers improve basic learning skills. “No one school can meet the needs of every child,” she says. “We’re catching those kids who fall through the cracks and unfortunately, there are quite a few of them.”

Others run computer-assisted learning classes, instruction in foreign languages, math, science, and music, to gifted or remedial students, or through methods such as experiential learning or peer-teaching. However, obstacles encountered by private practice teachers suggest problems are inherent in joint operations. While more individual teachers favor the option of private practice, their unions have labeled it “union busting.” And while school boards are permitted to contract, agreement from the local union is imperative or boards could face a strike.

For many, the real goal is to get government out of schools altogether. A handful of private firms have made major inroads into private practice. Aware that many public schools are only too relieved to be rid of problem students, one private, for-profit firm, Ombudsman International, provides education to dropout students. For a $3,000 to $4,000 per-student fee—about half the public school per-student fee—Ombudsman boasts a 90 percent retention rate.


Effective Private Alternatives

Private alternative education is more than twice as cost-effective as running a public school district-sponsored program, says Ombudsman president James Boyle. For example, an average district-sponsored program in 1991-92 cost $428,000 for 60 students—a cost of $7,200 per student; next year the cost is expected to rise to $492,000, or $8,200 per student. The company’s schools, housed in shopping centers or business and industrial parks, are staffed by certified teachers, and the pupil-teacher ratio is no higher than 10 to 1. Ombudsman teachers assess each student in English, reading, and mathematics before entering the program, and develop individualized instruction. Students work at their own pace three hours each day, five days a week, receiving lessons and tests on video-display terminals. Students enroll in an Ombudsman program on a private-tuition basis, or are referred by school districts who retain the remainder of state aid for their students after meeting the private company’s fee.

Another private firm, Education Alternatives, Inc. (EAI), runs its own private schools, and also has two major contracts to manage public schools. EAI provides its own teaching program, and with the help of subcontractors KPMG-Peat Marwick and Johnson Controls World Service, aims to cut 25 percent from the public schools’ administration and operating budgets. Chairman David Bennett knows it can be done; after all, EAI’s own private schools operate efficiently for significantly less money while its students outperform those in the public schools.

Corporate philanthropy, once a well-intentioned, feel-good public-relations exercise, is increasingly meeting education needs. For example, the $200 million New American School Development Corporation, made up entirely of private grants, is the single largest non-federally funded education project in U.S. history.

In addition, 1991 saw the birth of privately funded education scholarship programs—private funds for low-income students to attend private schools. Beginning with Golden Rule Insurance Company’s scholarships for low-income Minneapolis students to attend private or parochial schools of choice, other corporations and foundations have followed suit. This year, Kinetic Concepts, Inc., USAA Federal Savings Bank, and the San Antonio Express News; Partners Advancing Values in Education and the Lynde and Harry Bradley Foundation in Milwaukee; and the Vandenberg Foundation in Michigan, all announced similar plans to provide scholarships for low-income students. Golden Rule Insurance Company’s Choice Charitable Trust spokesman, Tim Erghott, expects haft a dozen more programs within the year. These scholarship plans create incentives for parents to investigate schools, and for private schools to respond to parents’ preferences.

The growth in private sector provision of education services is evident, too, in the growth of for-profit learning centers that provide after-school remedial instruction and summer school programs. Parents, increasingly concerned about the quality of public schools, want to supplement their children’s public education with academic courses and learning skills in a small classroom setting they feel the public schools cannot match.

Since 1980 almost 500 Sylvan Learning Centers, an international franchise chain nicknamed the “McDonald’s of Education,” have opened. All centers work on the same formula: individualized basic-skills instruction after school and during weekends and holidays with an emphasis on accountability. The student begins with a two-hour battery of standard diagnostic tests, including examinations to determine if the student has any hearing or vision problems. Based on the student’s ability level, instructors prepare a curriculum that may include workbook exercises, audio-visual aids and computer-aided instructional programs. Standardized exams are used frequently to check progress. Sylvan not only provides the basic instruction many parents feel their children do not receive in the public classroom, but while public schools continue to release students at 3 p.m. when many parents are still at work, Sylvan ensures the students’ after-school time is spent in an enthusiastic learning environment.

Private summer schools are experiencing a boom largely due to widespread cutbacks in public school summer programs. In fact, since 1986 private summer school programs—costing as much as $5,000 for six weeks—have increased by 55 percent, according to Peterson’s national directory of private summer schools and camps for children and teenagers.

Some of the most successful private schools that already exist are religious or church schools. Of the 5.2 million children in private education, for example, more than half attend Catholic schools where students typically score two grade levels above the national average in math, reading, vocabulary, and writing, and where the dropout rate is estimated at less than one percent. This compares dramatically with the national average dropout rate of 29 percent. As a result, 86 percent of Catholic high school graduates go on to college, compared with the national average of 57 percent. According to the National Council on American Private Education, Lutheran schools teach an estimated 247,000 students (1988 figures); interdenominational Christian schools, 233,000; Baptist, 335,000; Jewish, 158,000; and Episcopal, 85,000 students.

In the meantime, a growing number of parents aren’t waiting for public education to improve, or for vouchers, or chain-store style private schools. Instead, increasing numbers are teaching their children at home. An estimated 350,000 children are now homeschooled, compared to only 15,000 in the early 1980s, says the Department of Education. Although homeschooling is legal in 50 states, the laws vary widely. In some states, parents must be certified teachers; in others, parents must only notify the district of their intentions, and have the curriculum approved by school officials. The rise in homeschooling is a dramatic illustration of parents ultimately exercising market choice.

After an era when business leaders, as Chicago’s Teach America president Patrick J. Keleher says, “seem to have been mesmerized by the titles, the jargon, and perhaps the flag-waving that comes out of the incredibly powerful education establishment,” competitive market principles are now being increasingly applied to education. Performance expectations and increased academic achievement are the returns on investment the private sector seeks, and in doing so, it provides the economic reality check public education in this country so desperately needs.