Opinion
Budget & Finance Commentary

Turning Schools Into Profit Centers

By Peter Sacks — January 08, 2003 5 min read
Be skeptical of former corporate CEOs when they talk about the imperative of running schools more like businesses.

Beware former corporate executives who take control of public schools. Before you can say “accountability,” they’re yakking about how the dowdy world of education ought to be handed over to the slick M.B.A.s and run like a corporation, allowing self-interested individuals and unfettered competition to transform the neighborhood school into a pseudo-profit center. Like Adam Smith’s proverbial invisible hand, the CEOs say the tools of capital will magically improve the nation’s education system.

Under the corporate model of education, schools are businesses and kids are “products,” as former Chrysler Chairman Lee Iococca once called schoolchildren when speaking to a group of educators. “Your product needs a lot of work, and in the end it’s your job,” he said.

Children in this corporate vision of public education are to be measured, sorted, and processed on the basis of standardized-test results. When test scores, and test scores alone, become the coin of the realm, the “market value” of individual schools themselves is simply and unquestionably indicated by those test scores, as any real estate agent will gladly tell you.

Now comes the J.A. and Kathryn Albertson Foundation, the philanthropic arm of the giant supermarket conglomerate Albertson Inc., which says it will hand out “cash awards” to cash-strapped schools in Idaho based on standardized-test results.

The Albertson Foundation finds itself in good corporate company. For instance, Joel I. Klein, the former Bertelsmann Inc. chief executive officer who is now the chancellor of the New York City school system, the nation’s largest, wants to give bonuses to superintendents of up to $40,000 a year, largely on the basis of standardized-test performance. The way Mr. Klein talks about the proposal, it seems as if he had little choice, owing to the widely accepted rules of capitalism. “It’s the way most systems of accountability and reward work in America,” he told a reporter.

To the economist or the CEO, nothing could be more elegant than to reward and punish superintendents and teachers on the basis of simple productivity measures, like test scores. Following the money, school managers will do whatever it takes to improve the performance of their profit centers by, for example, firing supposedly incompetent teachers who aren’t getting the job done.

But there’s at least one glaring problem with this scenario, which Joel Klein, the Albertson Foundation, and others have neglected to realize or simply ignored because it inconveniently muddles the apparent elegance of their corporate-inspired incentives. The problem lies in the very self-interested behavior they are hoping to tap in to in order to improve schools: With the promise of such hefty bonuses, superintendents will, in fact, do whatever it takes to boost test scores, regardless of the educational wisdom of the methods employed to accomplish that end.

Indeed, the lessons of the recent research literature on the effects of high-stakes testing in schools is quite clear, and should give pause to policymakers when contemplating these test-laden incentive systems. Schools operating in high-stakes environments can rapidly engineer impressive gains in test scores by installing intensive test-preparation programs narrowly focused on drilling for a specific exam.

At bottom, children end up being the real losers of such gaming strategies. Among the unintended consequences of these narrowly focused test-prep programs is that test-score gains don’t transfer into real and lasting learning, because the test-specific gains typically cannot be detected in other assessments of achievement.

Consider the recent systemic failings of the American corporation itself when individuals act upon incentives that enrich themselves at the expense of the public good.

As just one example, in a recent study of overall learning gains in 18 states with high-school “exit” exams, David C. Berliner and Audrey L. Amrein of Arizona State University could find little evidence that improvements on the state tests transferred to meaningful gains on other tests, such as the SAT or the National Assessment of Educational Progress. The researchers concluded, “Analyses of these data reveal that if the intended goal of high-stakes testing policy is to increase student learning, then that policy is not working.”

Hence, the bonuses that Mr. Klein and the Albertson Foundation would give to superintendents and schools will likely be based upon illusory, unsustainable gains, for the simple reason that the outcome measures, as well as the means to effect those outcomes, are overly narrow.

Incentives for performance might work for schools, but the prevailing paradigm of school accountability must change to include far broader definitions of school quality than is presently the norm. For example, what if superintendents and teachers were rewarded not just on short- term snapshots of test results, but based on how many of a district’s graduates go on to enroll in four-year colleges? Or, were rewarded on the basis of periodic, external reviews of actual portfolios of student work and other broader measures of academic achievement?

Yes, educators do respond to incentives—and the results aren’t always pretty when school quality is defined by test scores. In some cases, school managers have invented ways to exclude the test results of certain classes of students, such as those with limited English proficiency, thus making the schools appear more “profitable” than in reality. And, in the most egregious cases, schools and teachers, operating under these test-score imperatives, have resorted to cheating to get their numbers up.

In short, schools operating in such “corporatized” environments have, in due course, adopted some of the tricks of the Enrons and WorldComs, fudging the numbers and hiding the losses to inflate their performance.

Reasons abound to be skeptical of former corporate CEOs when they talk about the imperative of running schools more like businesses. A bit of retrospection is in order, especially considering the recent systemic failings of the American corporation itself when individuals act upon incentives that enrich themselves at the expense of the public good.

Peter Sacks is an author and essayist who writes frequently about education. He can be reached at peter@petersacks.org.

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