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Reading, Writing, and Return

Everyone seems to agree that the public education system in the U.S. is deficient in many ways. The U.S. Supreme Court is now hearing arguments about school vouchers’ applicability to religious schools in Cleveland. This week’s Economist runs the school voucher debate as its cover story.

Last weekend’s AASU conference featured a lively and at times heated discussion on how non-profit and for profit organizations are attempting to address the country’s public school system.

Sandford Gilmore moderated a panel that included Paul Reville, Executive Director of the Pew Forum on Standards-Based Reform, Gene Wade, Executive Vice President of Development for Edison Schools (also founder of LearnNow, Inc.) Renee Jacob, Director of the Education Entrepreneurs Fund, James Stovall, General Counsel for the for-profit Victory Schools, and Robert Duffy, Spokesperson for the Massachusetts Teacher Association.

What is the problem, anyhow?
In the U.S. only 57% of students can pass basic reading tests, one in five students drops out of high school, and of the high school graduates, only 70% have mastered 7th grade arithmetic. In a country where property tax funds have traditionally provided funding for the public education system, it is easy to understand why underperforming schools occur disproportionately in poor areas.

The same schools with minimal financial resources are unable to attract and retain a consistent and strong teaching staff, which further exacerbates the challenge in educating children. One panel attendee suggested that under-investment in education and intellectual capital will eventually erode the country’s competitive advantage in an increasingly knowledge-based economy.

The panelists discussed a range of theories on how to create change in public classrooms ranging from requiring teacher and student exams and changing curriculum to privatizing individual school and school systems under an Educational Management Organization (EMO).

Duffy, the Teacher’s Association representative, was the only panelist speaking from an ‘inside’ perspective. He aggressively argued against vouchers and privatized schools out of concern that decreasing the student base in a high fixed cost environment would ruin public education.

Wade, from Edison schools (a HLS graduate with a Wharton MBA) agreed with Duffy’s economic assessment, and went on to explain that the difference in fixed costs between the Edison model and traditional public school model is exactly what Edison believes drives its advantage. Only $0.17 of every $1.00 that Edison spends is used for central overhead while public school systems must spend $0.40 of every dollar per pupil on central overhead.

A privately run school’s cost advantage over a traditional public school allows it offer additional services. For example, Edison Schools gives a computer to each child’s family to use at home (as well as computer training for both parents and children). The firm also develops its own curriculum.

Teachers are also offered incentives that align total compensation with student achievement. However, teacher’s unions across the country have vehemently opposed being paid according to student performance. Opinions differ on the role of teachers in schools: should they cultivate both student and parent motivation or simply educate children?
The key question for many is if for- profit firms that have shareholder obligations should ever be allowed to offer a public good. What happens, many wonder, if a privately held education concern must cut costs?
Will the firm be influenced by shareholders whom may have intentions of building up a work force with a particular skill set? Can market forces work in the education industry and if so, how? Will more efficient schools inspire public schools to improve?

There are no easy answers to these and many other questions. Our discussion proved that the complex and unequal historical precedent of public education in the U.S. combined with a highly unequal distribution of wealth and services in the country will force educators, policy makers, and business people to develop cutting edge ideas to bring improve training for the most important national resource-our people.

Debbie McCoy (NC) is a product of both private and public schools and consulted to LearnNow, Inc. before it was acquired by Edison Schools.

March 4, 2002
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