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Education Opinion

The ‘Privatization’ Agenda, New Orleans Edition

By Jack Schneider — May 07, 2015 5 min read

In their second post, Jack Schneider and Mercedes Schneider (no relation) discuss the so-called “privatization agenda,” with particular attention to New Orleans schools.

Jack Schneider: In our last post, you raised the specter of privatization several times. Now, I’ve said before on this blog that I have serious questions about charters operated by for-profit companies. But privatization seems to be a bit of a boogeyman. Only five charter schools in New Orleans were run by for-profits under the leadership of the Recovery School District. And now there are none. Yet even thoughtful critics can give the impression that the entire city has been turned over to profiteers. And that just isn’t true. So what gives?

Mercedes Schneider: Privatization is an umbrella term for public entities being run by entities other than federal, state, or local government. Thus nonprofits can benefit handsomely.

Don’t let the term “nonprofit” fool you.

A nonprofit charter management org (CMO) can take public money, including federal grants, and draw money from private entities—including hedge funders, who are known for seeking profitable opportunities, and philanthropists who prefer charters. Since the CMO is not operated by the state, it can escape the same state oversight that traditional school districts undergo.

Moreover, a nonprofit CMO can profit via business arrangements that benefit friends and relatives. In general, one of the most lucrative seems to be the renting of property for inflated prices from friends, relatives, or even self. They can also staff schools using friends and relatives and agree to purchase goods and services from favored companies. It is difficult to audit charters—whether nonprofit or for-profit—in states like Louisiana where the state board and state department of education intentionally choose not to audit. And charters that are pressed for audits of state money can cry “private corporation” in the courts and avoid state audit of state money (such is true of Eva Moskowitz’s Success Academy schools in New York).

So, to assume that the absence of for-profit charter chains equals the absence of “profiteers” is a jump in logic.

In Louisiana, I could open up a charter school and run it for three years before the state might possibly step in and close me down. All I need is to have a D letter grade at the end of three years. And the state still reserves the right to allow me to stay in business even if I don’t meet that. So, for three years, I can take state money, pay myself a huge salary, ignore the needs of kids, get an F school grade, be shut down, and shrug it off. No state money to pay back.

I can even reinvent myself and try again in Louisiana or apply in another state and try my game all over again.

A profiteer’s dream.

Jack Schneider: So, to be clear: if Oxfam—the global non-profit organization dedicated to fighting poverty and inequality, were to run a charter—that would be evidence of privatization?

I just don’t find that a very compelling definition. It’s so broad that it ceases to be useful.

Which isn’t to say that I don’t recognize the very real phenomenon of privatization. I do. And I’m troubled by it. You’re right—there are schools that are clearly being run as money-making operations. But isn’t the solution to that problem a set of oversight mechanisms, which the state—as the chartering authority—would certainly have the power to mandate? There’s graft in district schools, too; is that any less distasteful?

Additionally, you’re right that in many states a CMO-managed charter “can escape the same state oversight that traditional school districts undergo.” But so can a school like Central Park East, which is about the most public public school I can think of. That’s not a privatization issue. It’s an autonomy issue.

The anti-privatization rallying cry has been politically very effective. It has generated some important dissent. But I wonder about its usefulness as a tool that distinguishes right from wrong when it comes to schooling, at least when the word is interpreted so broadly.

Mercedes Schneider: Nonprofits are playing a key role in public education privatization. 501(c)(3) nonprofits can offer tax breaks to the private entities donating to them, and they can enter into contractual arrangements with for-profits.

501(c)(3) organizations often also have 501(c)(4) organizations to use as lobbying arms.

The mixing of private money with public tax money is evidence of privatization. Whether or not the nonprofit entity running the school is Oxfam is irrelevant to this definition.

One of the selling points of charters is to “free” them from the same regulations faced by traditional public schools. Part of that “freedom” is the ability of charters to cry “private entity” in the court system and have it honored—even when it comes to audits of public money.

This “increased autonomy” is a selling point for replacing fully-state-funded, traditional public schools with the public-private-hybrid-funded charter.

Jack Schneider: The real priorities, if we’re talking about money, need to be equity and transparency. And I’m not sure that focus on “privatization” does that. That term not only sweeps in too much—smearing schools that are running above-board operations—but also fails to include violations of equity and transparency.

Now, are there charter schools that are violating these principles? Absolutely. The abuses are borderline, or sometimes outright criminal. Non-profit charters that sweep all funds over to for-profit “management” companies are an example that goes largely undiscussed.

But there are also egregious violations of these principles that are completely ignored by a focus on the so-called “privatization” agenda. For instance, why do 45 percent of school budgets, on average, depend on local property taxes? Is that not also a form of “privatization”? Obviously there are historical reasons for the reliance on property taxes, but the chief reason they persist is that people treat schools as a private, rather than a public, good. They’re willing to pay higher property taxes to benefit their own children, or to sustain their home values (which are buoyed by perceptions of school quality). But they aren’t willing to fund schools through a state-level income tax, as the personal benefits would be too diffuse.

In short, I don’t entirely disagree with you. But it seems more productive to me to demand the outcomes we want, which, for me, are equity and transparency, rather than to focus on a more nebulous concept like privatization. Particularly when people are using highly disperate definitions of the term.

The opinions expressed in K-12 Schools: Beyond the Rhetoric 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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