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For-Profit Charter Schools

By Walt Gardner — July 29, 2011 2 min read
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Reformers are convinced they can create a network of charter schools that can provide a quality education and in the process post a nice profit. They’ve been able to sell their idea to investors who sense an opportunity to do good and to do well at the same time.

But the evidence to date shows they are wrong. The latest involves two marquee-names: Tom Vander Ark, who handed out more than $1.6 billion from the Gates Foundation between 1999 and 2006, and Chris Whittle, whose Edison Schools were supposed to revolutionize public education. The track record of both men serves as a cautionary tale at this crossroads in educational history.

Vander Ark was granted a charter in 2010 to open a high school in the Bedford-Stuyvesant section of Brooklyn and two others in Newark. He envisioned them as the start of a larger plan to do what has never been done before in this country.

But despite the expenditure of more than $1.5 million of investors’ money on lawyers and consultants, Vander Ark will not be opening any school any time soon.
Vander Ark attributed his abandonment of his dream to the weak economy and the difficulty of establishing charter schools in New York and New Jersey (“Tom Vander Ark’s New York-Area Charter Schools Falter,” The New York Times, Jul. 14).

Whittle first convinced investors about his Edison Schools in the early 1990’s with the same sales pitch. He promised that each student would receive a world-class education through a marriage of technology and back-to-basics curriculum. But he also was forced to walk away after studies showed that Edison schools were no better than other schools serving similar students.

What happened to both Vander Ark and Whittle?

The No. 1 lesson is that there are no economies of scale in education. It is extremely costly to open a school no matter how often the process is repeated because education is a labor-intensive endeavor. In 1996, Edison opened its first four schools. It quickly ran up a deficit of nearly $145 million. Nevertheless, Whittle refused to concede defeat, asserting that Edison would become the 20th largest school system in the country. He finally caved in when it became apparent that his plan was not feasible, leaving investors to lick their wounds.

The same realization explained why Vander Ark, a former business executive and superintendent of a Washington state school district, ran aground. He underestimated the challenge, conceding that he now has “a lot more sympathy for nonprofit leaders.” It’s to Vander Ark’s credit that he acknowledged as much.

Nevertheless, the for-profit movement will not go away. There are currently more than 700 public K-12 schools across the country managed by for-profit companies. In May, Ohio adopted legislation allowing for-profit-businesses to open their own taxpayer-financed charter schools.

Why do for-profit schools remain popular? For one thing, they pay taxes, which their supporters use as a selling point in these hard times. They also raise money from investors who hope to make a profit when the school is sold or the company that owns it goes public. As a result, for-profit schools find support from many people who are angry and frustrated by the glacial pace of improvement in traditional schools that depend on property taxes.

Whether the tools of the boardroom can be successfully applied to the classroom is highly unlikely based on what is known so far. But in the final analysis, evidence has never been a match for ideology when the stakes are high enough.

The opinions expressed in Walt Gardner’s Reality Check are strictly those of the author(s) and do not reflect the opinions or endorsement of Editorial Projects in Education, or any of its publications.

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