A Predictable Failure of Public Education’s Market Transition
The abuses revealed in federal investigations of the Reading First program are not, as the normally levelheaded U.S. Rep. George Miller of California asserts, the product of a Republican “culture of corruption.” Nor do they spring from a vast business conspiracy, as opponents of privatization would have us believe; an autocratic bureaucrat ideology, as the Bush administration seems inclined to suggest; or an isolated set of circumstances, as all reasonable people hope. The scandal is part of a pervasive pattern in public education today, and is the predictable result of elected officials’ well-intentioned but incomplete approach to school reform legislation.
Since the early 1990s, federal and state government has rightly moved public education in the direction of standards, accountability, and competition. By any reasonable assessment, the programs that schools purchase, not just teachers and the bureaucracy, bear some responsibility for the conditions that led to legislative change. Capped by the federal No Child Left Behind Act, the legislative framework political leaders established aims at compelling public schools to purchase new, innovative programs from the private sector. But in the process, policymakers unwittingly took aim at deeply entrenched purchasing relationships involving school districts, federal and state education agencies, large multinational publishing firms, and an expert class of consultants in academia and the think tanks. Elected officials failed to change the rules of that game. Instead, they left the making of their new market to this syndicate.
It was a bit much to ask a state-managed monopoly, its favored providers, and their coterie of advisers to open the market to competition based on the merits. That the new market would continue to favor insider relationships and inside deals is hardly surprising. Nor are the results:
• By making the decision to grant charters a political, rather than objective, process and failing to give chartering agencies the staffs required for adequate financial oversight, we have a never-ending supply of stories about financial corruption in charter schools.
• By permitting school districts to avoid normal government-contracting procedures for school improvement products and services, we have developments such as those in Prince George’s County, Md., where a LeapFrog Schoolhouse employee allegedly provided $10,000 of her commission on a nearly $1 million purchase by the county to her boyfriend, who was the district’s superintendent at the time. Similar abuse has been widespread in the implementation of the federal E-rate program.
• By thinking that education agencies are doing “God’s work,” we get the kind of internal review that allowed then-Superintendent Linda Schrenko of Georgia to defraud her agency of some $300,000 to fund her gubernatorial campaign.
• By leaving the U.S. Department of Education to its informal regulatory process, we see districts acting in flagrant disregard of federal law on supplemental educational services, years of inaction on a reliable definition of “scientifically based research,” cozy federal contracts for political allies like the group founded as the Education Leadership Council, the secret use of journalists for pro-administration propaganda, and now the abuse of Reading First.
Experience in post-Communist nations demonstrates that market transitions tend to combine the value that monopoly bureaucracies place on efficiency and responsiveness with the emphasis on fairness and equity of unrestrained capitalism. Government insiders feel safe acting in ways that don’t upset the status quo of business relationships. Firms profiting from entrenched relationships do not need to ask for favorable treatment and can hardly be expected to protest when long-standing relationships with consultants and government officials work in their favor. Outsiders are almost forced to buy their way in, a practice commonly understood as “pay to play.” While elected officials intended their efforts to foster an open market in school improvement services, they failed to see how this recent history of Eastern Europe applies to American school reform.
Students, taxpayers, political leaders behind reform, and the emerging school improvement industry all have been hurt by these abuses. Students are denied access to the wide range of new programs with a reasonable chance of improving performance. Taxpayers continue to pay for the same programs that didn’t help schools meet standards and accountability requirements. Reform politicians discredit themselves and their ideas while handing ammunition to opponents. The entrepreneurial firms created to meet the challenge of reform legislation are frozen out of the market. Investment capital senses the political risk and stays away from what might be a very promising opportunity. Reasonable people are left wondering why we should exchange one failed system for another.
It should not be surprising that systems are gamed on behalf of self-interest. Elected officials cannot legislate morality, but they can create rules that channel normal impulses in productive directions and discourage the blatant abuses we’ve experienced. Public education’s transition from state monopoly to market democracy need not follow the learning curve of Eastern Europe. It is neither too late to fix this mess nor incredibly difficult. The root cause is a lack of sunlight—on charter authorizing and review, the procurement of programs designed to improve teaching and learning, and the regulation of government programs.
We need legislation designed to produce clear decision criteria—arrived at openly—on education programs eligible for government funding. We need laws that mandate a rational basis for government contract decisions on charters and programs, and we need it reduced to writing. These reforms will encourage the best providers to rise to the top.
Many, especially pro-market Republicans, despise formal regulation. Typical American markets may well be overregulated, as was the old government education monopoly. But the new market lacks the fundamental basis of regulation that exists for every other market in this country. On top of everything else, Reading First-gate should convince pro-reform politicians that it is also the right pattern for public education’s emerging school improvement industry.
Vol. 26, Issue 16, Page 30