Education Commentary

Creating an ‘Entrepreneurial’ School System

By Marc Tucker — June 21, 1989 8 min read

Most of the discussion about accountability these days seems curiously vacuous.

Many school people see accountability as a process of accounting--telling the public how funds were spent and how the system and the students perform against a set of indicators.

But the public thinks in quite different terms: If students are not learning, who is responsible and what happens to them?

At the same time, discussion of restructuring has for the most part focused on individual schools, not districts. The relation of restructuring to what happens in the district as a whole has been largely dealt with by references to “school-based management": The job of the district is to make restructuring possible by pushing decisions now made at the central-office level down to the schools, to the professionals in closest contact with the students.

But if it stops there, this view of restructuring has little chance of working. Until the public is satisfied that teachers and principals will take full responsibility for the results of their decisions, it is not likely to regard them as true professionals or grant them the major voice in how students get educated.

There must be explicit rewards for performance and penalties for failure. “Performance” itself must be defined, and it must be measurable. And because most elementary and secondary education is a public function, the community as a whole must agree upon standards of performance--though school professionals should be active participants in the discussion.

In my view, the key to overall improvement lies in devising an approach to restructuring that centers on entire districts and includes accountability measures as an integral component.

What follows is a proposal that incorporates these features as vital elements in an “entrepreneurial” system of education, in which school staffs would have strong incentives to produce gains for their students and to operate at maximum efficiency.


This Commentary was selected for inclusion in The Last Word: The Best Commentary and Controversy in American Education, published in 2007. Get more information on the book from the publisher.

Assume that the state government and the local school board have formulated a comprehensive but parsimonious set of dimensions for student performance--definitions of what a student should know and be able to do on graduation from high school. These might encompass everything from the ability to apply principles of physics to the problems of everyday life to an understanding of the essential characteristics of democratic institutions; from the ability to collaborate with others to the capacity to analyze historical data and write an essay that draws reasonable conclusions from that analysis.

Assume, too, that the district and the state have been able to develop satisfactory methods for assessing students’ progress toward mastering these skills.

Imagine then that the superintendent and the board say to the district’s staff members that they are free to form groups and plan programs that, in their judgment, would enable students to make rapid progress toward these objectives.

Each staff group would have to provide the full range of activities students required to meet the core objectives of the district over a period of years, but it need not have that full capacity within the group. It might wish to buy some specialist capacity--say, the teaching of music or laboratory science--from another group of teachers banded together to offer that service (these service groups might be located within the district or might be private groups based outside the district).

The staff units would be allotted pro rata shares of the district’s resources to implement their programs, provided they satisfy two conditions: first, that they attract parents willing to enroll their children in the program; and second, that they present their program to a board of their peers, who would judge whether it meets professional standards of education. Upon passing both tests, they are in business.

The entire district would then consist of such entrepreneurial groups, competing with one another for students. School buildings would simply be physical facilities managed as services; the fundamental unit of organization would be the entrepreneurial programs.

One group--say, a Montessori program for early-childhood education--might have several classrooms in each of several school buildings. Another--for example, a secondary-school program organized around the study of technology from a scientific, social, historical, and political point of view--might occupy all of one school building and part of another.

Embracing all students, these programs would grow or decline to the degree that they were able to attract pupils. The base budget for each would be a function of the size of the student body corrected by a weighting that took into account the characteristics of the students; non-English-speaking or physically-handicapped students, for example, would bring in additional revenue. This provision, creating a stimulus for programs to attract the most capable professionals to work with the students who need them the most, is crucial.

Beyond the base budget, the district would hold a substantial portion of its overall budget in reserve for distribution at the end of the year. This reserve would be dispensed according to a unit’s success in promoting student progress against the state and district measures. A program that showed major gains would receive a substantial year-end bonus.

The staff of such a program would have the option of putting that money in its pocket or plowing it back into the program’s operation. It would have a strong incentive to choose the latter course, knowing that other programs would be reinvesting the funds and those that elected not to do so would be at a competitive disadvantage.

The district would decide on a student-performance “floor” below which no program would be allowed to fall. In this way, parents and taxpayers could be assured that well-meaning incompetents or charlatans could not persuade unwary or inattentive parents of the merits of a poor program. Even more important, those left behind in a program that was losing students to the competition would not be in danger of receiving a substandard education.

No group could discriminate on the basis of race, sex, handicapping condition, or limited English-speaking capacity. None could turn clients away because they did not meet entrance requirements, though a popular program could use a lottery to keep its size down if it did not wish to expand.

Within broad limits, each program staff would be free to devise its own curriculum, though its choices would be constrained by the student-performance standards set by the state and district, and by the structure of the incentive system. In effect, the staff would be free to choose the means by which students reached goals embraced by the community.

Each unit could also add its own goals to those established by the state and district. One early-elementary program, for example, might work at acquiring a reputation as a place serving the needs of parents who worked a full day; another might concentrate on attracting parents who wanted a program reflecting Piagetian principles of child growth and development. One high-school unit might offer a curriculum geared to meeting the needs of the local laser industry for highly skilled technicians, and another might specialize in the arts. All programs, however, would be operating in the context of the goals that applied to all students; none could turn out narrowly trained graduates whose prospects later on in life would be constrained by the lack of a broad education.

The job of the board, the superintendent, and the central-office staff in such a scheme would be to set the goals; structure the reward system; disseminate information about student performance by program to parents and community members; develop standards for hiring school staff (though the management of each group would determine who actually taught in that program); distribute funds to the programs; maintain a robust staff-development system; operate the physical facilities; and provide the necessary support services.

Some support services, like transportation, would be centrally funded and controlled. But others, such as curricular and instructional support, would be purchased by the programs in the field. They could buy those services wherever they wished--the central-office service would go out of business if it were not delivering support of a quality and at a price attractive to program managers.

The program staff could not be held accountable for student progress unless the district had a policy requiring students to remain enrolled in the school where they began the year throughout that year. In inner cities now experiencing substantial student movement between neighborhoods and schools during the year, the district would have to be prepared to bus students from wherever they move after the beginning of the year to the school in which they originally enrolled.

This is a real cost of the structure I have laid out, but it can be justified on grounds having nothing to do with the merits of my proposal. In any case, since the choice feature of this plan would require that a district transport any student to any school within its boundaries, the specific requirement to provide transportation to students whose families move during the course of the year would be only one aspect of increased transportation needs.

Perhaps the most important objective of this proposal is to create program staffs that would behave like entrepreneurial units. They would be to existing schools what Federal Express is to the Postal Service.

All students would benefit, but none--with the proposed incentive structure--more than the minority and low-income youths who fare so badly under the current system.

This plan would both demand and produce profound changes in the culture of American schools. Successful implementation would require not only great managerial and political skill but also creation of staff-development systems that simply do not yet exist in the schools.

But the benefits could be no less profound. There is every reason to believe that gains in performance would be comparable to those achieved by the Japanese managers--using methods developed in America--who took over failed American automobile plants and, with the same workers who had been there before, turned them into highly successful enterprises.

A version of this article appeared in the June 21, 1989 edition of Education Week as Creating an ‘Entrepreneurial’ School System