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New Approaches Blurring the Line Between Public and Private Schools

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This article is the first in an occasional series on new arrangements for providing public education.

By Lynn Olson

It used to be so simple: The government paid for--and provided--public education.

Today, though, new approaches are challenging the government's once-unquestioned role as the direct provider of school services.

Public vouchers are being used to pay for private education, and private firms are operating public schools.

Some corporations are underwriting design efforts to transform the public schools; others are investing in for-profit enterprises to compete with them. In Minnesota, a private school has even opted to become public.

"The whole notion between public and private is being blurred,'' John Witte, a professor of political science at the University of Wisconsin at Madison, observes.

What all these new arrangements have in common is a belief that the entrenched public school bureaucracy will not change willingly or quickly. To crack it open, reformers are proposing a variety of private and quasi-private alternatives that rely on the use of market forces and competition to do what they say regulation and exhortation have not.

While the number of such experiments is small, their acceptance is growing rapidly as policymakers become more desperate to fix the schools. Given this more congenial climate, new twists on how to deliver public education are surfacing with increased regularity.

This look to the private sector is hardly unique to education. One of the most popular books in policymaking circles this year is Reinventing Government: How the Entrepreneurial Spirit Is Transforming the Public Sector.

The book, written by Ted Gaebler and David Osborne, advocates making government services leaner and more effective, in part by throwing them open to competition, funding outcomes rather than inputs, and giving employees an incentive to earn money, not just spend it.

Proposals to contract out the operation of state prisons or citywide garbage collection, for instance, reflect the belief that private firms can accomplish results more quickly and efficiently than public institutions can.

"People don't think government works,'' says Susan Fuhrman, the director of the Consortium for Policy Research in Education at Rutgers University, "so we have to reinvent it, which to many people means making the public more private or making government more market-driven.''

Private School Choice

In education, the purest reflection of this view can be found in the growing popularity of school-choice plans that employ vouchers.

Vouchers would provide parents with a government subsidy to spend at public, private, or parochial institutions. Schools that failed to lure clients would shape up or lose funds.

The assumption is that competition and parental pressure--not government regulations--would spur public schools to improve. Advocates also portray vouchers as a way of empowering low-income families.

"So these are our beliefs, then, that parents, not the government, should choose their children's schools,'' President Bush said on June 25 in announcing a proposal to provide $1,000 scholarships to low- and moderate-income families to spend at public, private, or parochial schools.

The momentum behind vouchers has grown rapidly during the past year, in part because of the choice issue's prominence in the Presidential campaign.

In addition, ballot initiatives to provide families with private-school choice will go before voters in Colorado in November and in California in June 1994.

And lawmakers in at least six other states are expected to consider voucher legislation this year that would include private and religious schools.

Individuals and corporations in at least half a dozen cities have forged ahead with privately funded voucher schemes of their own. The scholarships are available to a limited number of low-income families on a first-come, first-served basis.

Patricia A. Farnan, the director of education and empowerment policy for the American Legislative Exchange Council, a bipartisan organization of state lawmakers who advocate free-market principles, predicts that it is only a matter of time before a state passes a voucher law that encompasses private and parochial schools.

"And when you see one go,'' she maintains, "you'll see four or five head right behind it.''

A 'Common' Mission?

Critics charge that vouchers would violate the constitutional separation of church and state (90 percent of private schools in the United States are religious); drain money from financially strapped public schools; and segregate children on the basis of race, ability, and income.

"What markets are best at are allocating scarce goods,'' argues Marc S. Tucker, the president of the National Center on Education and the Economy. "And they do it on the basis of ability to pay. Any way you look at it, the incentives for suppliers are to leave the kids with the greatest needs in the lurch.''

But the more fundamental concern is that vouchers would destroy America's long-cherished notion of the "common school'': a place where children from all walks of life come together to become productive, participating citizens.

"The purpose of education in our schools is to get all kids in our country to learn to live with and respect each other, just as much as it is about learning algebra and Shakespeare,'' asserts Albert Shanker, the president of the American Federation of Teachers. "We're destroying something that is extremely important as the glue of the United States of America.''

'Load Shedding'

Opponents also contend that vouchers undermine the notion of education as a public good and the willingness of taxpayers to support it.

In an article written for the conservative Heartland Institute, Myron Lieberman, a long-time critic of the public schools, advocates that government reconsider its role as both the funder and provider of education through a process known as "load shedding''--"or ending government's role as funder of most or all educational services.''

Unhappy with drivers' education? Mr. Lieberman asks. Stop funding it. Perhaps, he suggests, high school teachers could be offered 20 percent pay raises, contingent upon eliminating the 1st grade.

If parents pay for education from their own pockets, Mr. Lieberman contends, they will be more likely to insist on performance from their children and from their schools.

Only those who cannot afford to pay should get government help. "Just saying that something's a public good,'' he says, "it doesn't follow that government should pay for it. That's just a non sequitur.''

Mounting Support

Despite the heated charges of critics--and the organized opposition of the education establishment--public support for private school choice appears to be mounting.

In a Gallup Poll released by the National Catholic Educational Association last month, seven out of 10 Americans said they would back a government-supported voucher system that included public, private, and parochial schools. Sixty-one percent said they would support such a proposal even if "some of the tax money now going to public schools'' was used to pay for it.

Minority and urban residents voice some of the strongest support. A poll released this summer by the Washington-based Joint Center for Political and Economic Studies found that two-thirds of black respondents were not familiar with the concept of school choice or vouchers. But, of those who were, 88 percent favored choice.

"I think mobilization of the low-income community offers breathtaking possibilities,'' argues Clint Bolick, the litigation director of the Institute for Justice, a public-interest law firm that supports choice.

The only state-subsidized voucher program now in place is in Milwaukee, where scholarships are available to send up to 1,000 low-income children to private, nonsectarian schools. A coalition of conservative Republicans and inner-city parents, under the leadership of State Rep. Polly Williams, a black Democrat, pushed for the legislation.

The Institute for Justice has also filed lawsuits on behalf of low-income parents in Los Angeles and Chicago, who are demanding vouchers to send their youngsters to private schools on the grounds that their public schools are unsafe, inadequate, and lacking in parental control and involvement. Mr. Bolick said at least one other lawsuit will probably be filed this year.

'Trading Lemons'

Whether the marketplace would enable families to purchase something better for their money--or just something different--is open to debate, research on the differences between public and private schools indicates.

Mr. Shanker maintains that differences between the academic performance of public and private school students are minimal, and that neither group performs well on international comparisons of achievement.

"What we're going to do is allow kids to escape from one set of schools that are lemons to go to another set of schools that are lemons, solely on the basis of phony reputation,'' he complains.

In contrast, many scholars have concluded that, at least on some measures, private school students substantially outperform their public school peers, even once differences in family income are taken into account.

The continued debate highlights how little is known about how an educational market would actually work and what its benefits would be.

In 1990-91, the first year of operation for the Milwaukee program, seven nonsectarian private schools enrolled 341 students from low-income families. Although attendance was higher among students participating in the program than the systemwide average--and parents reported greater satisfaction with and involvement in their children's education--little progress was shown in test scores. And many of the children who enrolled in the program the first year did not return.

Mr. Witte, who evaluated the Milwaukee program for the state, advocates that the experiment be continued, but not expanded.

Other studies indicate that even modest competition may produce some results.

Since 1985, when Minnesota began permitting high school students to take courses at local colleges and universities at taxpayer expense, the number of Advanced Placement courses offered by area high schools has increased dramatically.

'At the Margins'

The question, many agree, is how much competition is enough to spur the system to change, without bringing it crashing down. Few think that there would ever be enough private-sector alternatives to actually replace the public schools.

"Even if you doubled the capacity of private schools,'' notes Sandra Kessler Hamburg, the director of education programs at the Committee for Economic Development, "you'd still have 80 percent of the kids going to the public schools.''

"We really are talking about movement from public to private schools at the margins, at least in the short term,'' Mr. Bolick of the Institute for Justice agrees. "But that may be all that it takes to make dramatic changes in the public system.''

Some believe that the focus on private-school choice will diminish markedly if President Bush loses next month's election. Gov. Bill Clinton of Arkansas, the Democratic contender, opposes extending choice beyond the public schools.

But others think the pressure for vouchers will continue.

"We have tough economic times, and we're likely to have them for a while, so the public ... wants to save money,'' Mr. Shanker asserts. "And they're going to find these things very appealing.''

The union leader also worries about a powerful "education-industrial complex'' getting behind the voucher movement.

'Private Mission, Public Goal'

Mr. Shanker's reference is to the Edison Project: a $2.5 billion undertaking designed to launch a nationwide chain of for-profit K-12 schools in the fall of 1995.

The project is the brainchild of the media entrepreneur Christopher Whittle. And it is backed by Whittle Communications L.P., Time Warner Inc., Philips Electronics N.V., and Associated Newspapers Holdings Limited.

Mr. Whittle refers to the project as a "private mission with a public goal.'' The aim, he asserts, is to create schools so powerful and innovative that they will have a real influence on the structure of public education in America.

As part of that pledge, he has promised to provide a significantly better education at no more than the nation's average per-pupil cost, or about $6,300 a year.

One appeal of approaches like Edison's, advocates say, is their ability to start from scratch, instead of trying to fix the schools that exist.

"There are real benefits from wiping the slate clean and thinking fresh about education,'' says John E. Chubb, a member of the project's design team and a prominent choice advocate.

Similar thinking undergirds the work of the New American Schools Development Corporation. Business leaders launched the privately funded foundation in 1991, at Mr. Bush's request, to underwrite the development of "break the mold'' schools that public educators could emulate. The 11 design teams that have received grants include both for-profit and nonprofit corporations, as well as public school systems.

But one of the most striking differences between the two initiatives has been their ability to raise money.

NASDC, which relies primarily on corporate donations, has only raised $50 million of its $200 million target. The Edison Project, which its backers hope will yield a substantial return on their investment, began with $60 million
just for research and development.

Market Not There?

Much of the distrust of Mr. Whittle's project centers on his motives, which many contend are chiefly pecuniary.

The suspicion is that, when children's needs are weighed against the bottom line, students will suffer. The checkered history of many profit-making trade schools has fed such concerns.

Critics also allege that Mr. Whittle is counting on government vouchers to make his project financially viable. The average parochial school in the Milwaukee area, Mr. Witte of the University of Wisconsin notes, charges slightly less than $800 a year in tuition. In contrast, the Edison Project is banking on the willingness of parents to pay up to $6,300 per student.

"If you're competing at the bottom,'' Mr. Witte says, "you can't charge that much, unless, of course, you get vouchers. Without the public subsidies, I don't think the market is really there.''

If Mr. Whittle cannot take advantage of vouchers, others suggest, he could still make a profit by contracting out his services to public school districts and educating their students for them.

Contractual Arrangements

Public schools have habitually contracted out the operation of such ancillary services as food delivery, transportation, and maintenance. In recent years, however, the practice has widened to encompass the very heart of the educational enterprise: educational management and instruction.

The most prominent example is Education Alternatives Inc. In July, the Minneapolis-based, for-profit management firm signed a $140 million contract with the Baltimore school district to operate nine public schools. And it is conducting a feasibility study to see if it can manage several more in Palm Beach, Fla.

Education Alternatives has promised to assume day-to-day management of the Baltimore schools, train their teachers in new instructional methods, and produce measurable gains in student achievement, all for the same amount of money normally alloted to the schools: about $5,550 per student.

In the Midwest and Southwest, Ombudsman Educational Services has contracts with more than 60 school districts in Arizona, Illinois, and Minnesota to provide alternative education for students who are having trouble in traditional school settings.

James P. Boyle, the president of the for-profit firm, is a former public school teacher and administrator. But he argues that trying to change the system from inside is "harder than changing the Vatican.''

The freedom to operate outside the bureaucracy, Mr. Boyle says, has enabled his firm to break the "course and content'' gridlock in education, providing services both less expensively and more effectively.

Students in Mr. Boyle's program attend school only three hours a day, enabling each teacher to work with several groups of youngsters. The program is computer-assisted, individualized, and outcome-based. The cost is between $3,000 and $4,000.

According to Mr. Boyle, the trick has been to cut out the "frills.''

"We don't have baseball and football and cafeteria and band and art,'' he says. "Particularly now, as school systems are hitting the wall in terms of funding, a cost-effective alternative becomes more attractive.''

Education Alternatives is also hoping to improve education--and make a profit--by trimming wasteful expenditures in some areas up to 25 percent.

'An Extension of the District'

Such private entrepreneurs claim that they are a part of the public school system, not a threat.

"We've always thought of ourselves, and still do, as an extension of the district,'' Mr. Boyle says. "If the district doesn't like us, they can fire us.''

"Our mission,'' an Education Alternatives brochure states, "is not to replace or compete with the public schools, but to be the public schools--and to fundamentally change the dynamics of the learning environment.''

In Miami Beach, where Education Alternatives is entering the third year of a contract to operate the South Pointe Elementary School, Principal Patricia Parham describes the experience as "100 percent totally positive.''

"People get so excited about somebody coming in that's a private group,'' she says. "But we buy textbooks from private companies; we have consulting services all the time from private companies. It's really no different.''

That view is not shared by teachers and paraprofessionals in Baltimore, who last month boycotted the company's training sessions to protest its decision to replace unionized workers with college-educated interns.

'Just Like the Public Schools'

Critics warn that, as with vouchers, the cost savings from contracting out to private firms may be overstated. In its first five years, Education Alternatives has failed to turn a profit or generate a positive cash flow.

In 1990, Chelsea, Mass., turned over the operation of its school district to Boston University, a private institution. Three years later, Mr. Shanker notes, the system has lost its superintendent, the university official who was monitoring it, and many of its principals. And student performance has still not improved.

"And they say, 'Well, we couldn't do much, because we haven't gotten enough money,' '' he says. "They sound just like the public schools.''

Others argue that, because the ultimate responsibility for contracts still rests with local school boards, the idea does not extend far enough.

"If boards of education are the problem,'' says Phillip C. Schlechty, the president of the Center for Leadership in School Reform in Louisville, Ky., "then the fact that they contract out to someone else doesn't change the fact that you have a board of education.''

In part because contracting out is less threatening, however, many predict that the practice will expand over the next few years. "Such experiments are going to become much more widespread than they are,'' forecasts Paul T. Hill, a senior scientist with the RAND Corporation.

"Still,'' he adds, "it would be big news if there were 3,000 such schools in five years.''

Charter Schools

To many reformers, the private sector's allure lies in the ability of an outside agent to challenge the status quo.

But some suggest that the same dynamics could be produced wholly within the public system.

They advocate a third course: a new kind of school that would reflect many of the principles of high-performance businesses but that would remain public.

Under these proposals, groups of teachers or others could operate their own schools under a "charter,'' or contract with a school district. Unlike traditional schools, charter schools would enjoy total autonomy in budget, staffing, curriculum, and teaching methods. And they would be exempt from nearly all state and local regulations.

In return for such freedom, charter schools would have to specify the goals they want students to achieve and how they would measure progress. "It's simple,'' says State Sen. Ember Reichgott of Minnesota, who last year sponsored a successful measure to enact the nation's first charter-schools law. "No results; no charter. Teachers trade away regulation for results, and bureaucracy for accountability.''

Although Minnesota was the first state to pass such legislation, others are close behind. Gov. Pete Wilson of California signed a charter-schools bill last month that allows for the creation of up to 100 such schools. Similar bills have either been introduced or are being considered in Colorado, Connecticut, Florida, Massachusetts, Pennsylvania, and Tennessee.

Such schools, Ms. Reichgott argues, reward innovation, empower teachers and parents, and increase choices--all within the context of public education.

"I view charter schools as an incentive to enhance public education,'' she says. "I view vouchers as an incentive to abandon the public schools.''

'A Strong Consensus'

All the talk about privatization and other new arrangements has spurred educators to think more openly about less radical options.

Public school choice, an anathema in education circles a decade ago, has become widely accepted.

But the real question, many school-improvement devotees argue, is how to free most public schools to become more efficient and effective.

"I don't hear much talk out there about that side of things,'' complains Christopher T. Cross, the director of education programs for the Business Roundtable.

Nonetheless, continued pressure from advocates of more radical approaches is forcing the public schools to diversify and to create a greater variety of options of their own.

"I think over the next five or 10 years, you're going to see all these creative bursts of how you package public education,'' California's superintendent of public instruction, Bill Honig, predicts. "They'll still be public schools, and they'll still be subject to standards, but there'll be a lot more variety. I think that's a pretty strong consensus.''

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