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Published in Print: February 9, 2000, as School Choice and School Change


School Choice and School Change

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In Michigan, the new choice policies have produced a mix of beneficial and harmful developments.

The state of Michigan today constitutes a lively laboratory for study of the most prominent public school choice policies under way across the country. Over the past three years, we have been studying the impact of these policies in Michigan, and last fall, we issued an initial report on our findings. While new policies encouraging greater family choice of schooling vary greatly across the states, we believe that emerging lessons from Michigan are worth heeding.

Our bottom line? In Michigan so far, the new choice polices have produced a mix of beneficial and harmful developments. Choice creates winners and losers among communities, schools, families, and children. What matters decisively are the rules and administrative arrangements that govern choice. Public debate must concentrate on structuring the new market for schooling in ways that reap the advantages of choice while minimizing and mitigating the harms.

The story of school choice in Michigan began in 1994 with passage of Proposal A, a school finance reform. Under the old funding system, school districts obtained most of their operating revenue from local property taxes. The amounts they were able to raise depended mainly on local property wealth and millage rates and only secondarily on student enrollments. Operating revenues "belonged" to school districts. Under the new finance system, district operating revenues come directly from state appropriations. With a few exceptions, districts are prohibited from raising local operating funds. The amount of revenue a district receives now depends primarily on the number of pupils enrolled.

This may sound innocuous, but with this change Michigan became the nation's first "voucher ready" state. When students leave their neighborhood schools for other options, their dollars leave with them. The state-set per capita allocation effectively "belongs" to the student, not to the district. Enrollments suddenly matter enormously to the fiscal well-being of Michigan's 550 districts.

What choices do families have, though, short of purchasing a new home in another district, educating children at home, or sending them to a private school? Hard on the heels of Proposal A, the state legislature added two new public options to these traditional, private alternatives. First, it permitted students to attend public schools outside their districts of residence. And, it authorized creation of charter schools (known as "public school academies" in Michigan), which receive public funding but operate outside of district control. Four years later, at the end of the 1998-99 school year, 34,000 students had enrolled in 138 charter schools, and nearly 15,000 students had transferred to other districts, accounting together for about 3 percent of Michigan's 1.6 million students. While this percentage is still quite small, participation in these options is increasing by nearly 50 percent each year. Estimates suggest that there will be 180 charter schools operating in Michigan in the 1999-2000 school year, serving some 50,000 students.

Our report begins to reckon the consequences of these policy shifts. First, the geography of school choice is quite revealing. Charter schools have located predominantly in metropolitan areas with low test scores and high concentrations of poor and minority students. Charter schools have enrolled a disproportionate share of minority students, although the minority percentage has begun to decline in some but not all regions of the state. The Detroit metropolitan area includes 43 percent of all the charter schools in the state. There are 37 charter schools within the city limits, and the great majority of residents now live within a mile or two of a charter school. Metropolitan areas attract charter schools because they offer densely concentrated families with diverse preferences and relatively high levels of dissatisfaction with the public schools. Transportation costs can be minimized, and charter schools can tap "niche" markets appealing to specialized preferences.

Just under half of Michigan school districts have opened up to interdistrict transfers in both urban and rural areas. Transfers feature a pattern of "upward filtering," in which students move to districts with higher family incomes and higher test scores. Most districts in Michigan are still untouched by either choice policy, however. Many affluent and growing districts remain closed to interdistrict choice, for example, and are not challenged by charter schools nearby.

Districts that have begun to feel the pressures of competition are responding in a number of ways. Some are competing directly by adding popular new programs such as all-day kindergarten, marketing more aggressively, and actively seeking to recruit students from neighboring districts. Other responses are cooperative. Often in conjunction with intermediate school districts, local districts are pursuing cross-district agreements, partnering with universities and other entities, and coordinating responses. Some districts affected by the new policies then are mobilizing in various ways to improve their market position and to manage the local effects of choice.

In a small but vital set of districts, however, we see a pattern of steep decline that may not be reversible. These districts—and the families, students, and teachers in them—are being left behind by choice, and they are at grave risk. They typically are serving high concentrations of poor, minority children.

Turning to another question, does choice policy stimulate innovation? We find little evidence of innovation at the instructional core. With a few exceptions, charter schools are not innovating in the areas of teaching, curriculum, or student assessment, and for obvious reasons. Charter schools respond first to parent preferences in a marketplace. Most parents are not clamoring for instructional innovation. They prefer basic education in safe, orderly schools. So charter schools have few incentives to innovate. Charter schools also are under pressure to perform well on the state tests, which drives them toward standard practices. And many of them do not possess the resources needed to fully develop innovative programs. Finally, charter school teachers in Michigan are relatively young and inexperienced. They still are mastering the rudiments of practice rather than experimenting with innovative departures from the status quo. Under these conditions and incentives, we would not expect charter schools to pioneer new practices on a wide scale.

Charter schools in Michigan do represent an innovative approach to governance and management, however. Market accountability is a powerful factor because dissatisfied parents can leave. In addition, the charter school movement is intersecting substantially with the turn to private contracting for public services. Nearly 70 percent of Michigan's charter schools have contracts with educational management organizations, or EMOs. Private, for-profit companies such as the Edison Project, National Heritage Academies, Mosaica, and the Leona Group are engaged in supplying a wide range of services to charter schools.

The much more extensive involvement of EMOs with charter schools in Michigan than elsewhere is attributable to a number of policy guidelines. Michigan law allows EMO involvement with charter schools, which is not the case in other states, such as California. The state does not provide start-up or capital funds for charter schools, which management companies supply. Michigan also funds charter school operating expenditures at a relatively high level that encourages EMO involvement. At present, we have little knowledge about EMO management of schools, but the emerging Michigan experience provides a natural setting for work on this important question.

We also have asked how the new choice policies are influencing social sorting and selection in the state. Michigan law prohibits charter schools from selecting students at the point of admission; they must use a lottery if oversubscribed. But charter schools can shape their student enrollments through the design of their programs. For example, they may recruit particular kinds of students by offering traditional-values programs, ethnic-identity programs, and others. They may take more aggressive steps as well. We have no systematic evidence that charter schools exercise selectivity via admissions or expulsion practices, but in company with the interdistrict-transfer policy, we see that the new choice options accelerate trends toward social sorting of students, families, and communities.

Charter schools are not "creaming" the most academically able students in Michigan, as some feared, but instead are creaming on cost, in direct response to how state policy structures the market. Most charter schools in this state cater to the elementary grades, because secondary education is far more expensive to provide, and the single per capita rate for all students makes charter high schools difficult to sustain. Likewise, a substantial number of charter schools in Michigan offer no special education services and attract very few special-needs children. The result is to lower the average cost of education in charter schools, while raising the average cost in nearby public schools, which must educate all students.

A final obvious question concerns whether school choice improves student learning. Simple comparison of test-score results across schools is highly misleading, because of selection biases and differences in student populations. To address this question adequately, we must look not only at the achievement of active choosers but also at the effects on children who remain in neighborhood schools and on the education system as a whole.

In the early going, choice policies have produced some positive results. The explosive growth testifies to pent-up parental demand for alternatives. Charter schools and transfers are providing new options for families in urban and rural districts. And, in at least some districts, we see positive responses to the new competitive pressures, as those districts add services and attend more closely to family preferences.

Simple reliance on market forces can do great damage, and will not reap all of the potential benefits of school choice policies.

But choice also has failed to yield certain results, such as innovations in teaching and learning, and the spread of exemplary new practices. And finally, the dynamics of choice have had some negative consequences. Some children are left behind in schools that cannot recover from the rapid withdrawal of resources, as parents leave, while cost-creaming creates added fiscal burdens on regular public schools. The new policies open up new questions that require closer study. Because charter schools in Michigan now are tightly linked to EMOs, we need to know much more about the consequences of their involvement in public schooling.

The further expansion of family choice must be structured to make the new market for schooling work fairly and effectively for all families. Simple reliance on market forces can do great damage, and will not reap all of the potential benefits of school choice policies. The key to the future lies in developing a careful policy framework for school choice that creates fair competition among alternatives, renders school providers accountable to common standards, improves access to information about choices, and creates policy incentives that are aligned with public purposes. Finally, states must have strategies to protect children in failing schools from the adverse consequences of market reforms in education.

Gary Sykes and David Plank are professors in the college of education at Michigan State University in East Lansing, Mich., and David Arsen is an associate professor in the university's James Madison College. This essay is adapted from their report "School Choice Policies in Michigan: The Rules Matter" (Michigan State University, 1999).

Vol. 19, Issue 22, Pages 38,41

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