School Choice & Charters Opinion

A Distant Laboratory

By Edward B. Fiske & Helen F. Ladd — May 17, 2000 11 min read
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Decentralized management. Parental choice. Competition among schools. These are concepts that a wide variety of school reformers, including proponents of charter schools and vouchers, believe can bring about significant improvement in the quality of American schools.

For the last decade, New Zealand has been operating a system of self-governing schools in a market environment.

Promising though they may be, these ideas are essentially untested in the United States. The first charter schools did not appear until 1993, and voucher programs are small and even newer. What we need is evidence from an entire school system that has applied these concepts over an extended period of time.

Fortunately, such evidence exists. It comes from New Zealand—a nation whose population is the same as South Carolina’s and whose national ministry of education operates as the functional equivalent of a state education department in this country. For the last decade, New Zealand has functioned as a laboratory for the key ideas underlying governance-based school reform movements in the United States.

We spent five months in New Zealand in 1998 studying the package of education reforms known as Tomorrow’s Schools. We understand that Americans are not temperamentally inclined to learn from the experience of other countries, but the fact is that the debate over school reform strategies is now being carried out on a global basis. New Zealand is particularly relevant to the United States, since it has similar cultural and political traditions, substantial urban centers, and sizable minority groups (14 percent of the population is Maori, 6 percent Pacific Islander).

So what were the Tomorrow’s Schools reforms, and what can we learn from them?

In 1989, a Labor government in New Zealand radically decentralized school governance by turning control of the country’s nearly 2,700 primary and secondary schools over to locally elected boards of trustees dominated by parents. Two years later, a new government run by the more conservative National Party abolished geographic enrollment zones, instituted parental choice, and forced schools to start competing for students in an educational marketplace. The central government continues to provide funding and to hold local schools accountable through an independent review office. It also negotiates teacher pay scales, though hiring and firing decisions are made by local boards.

For the last decade, in short, New Zealand has been operating a system of self-governing schools in a market environment. It could be loosely described as a whole system of conversion charter schools—with the important caveat that every school had to become autonomous whether it chose to or not.

New Zealand is particularly relevant to the United States, since it has similar cultural and political traditions, substantial urban centers, and sizable minority groups.

The Tomorrow’s Schools reforms produced some significant benefits, starting with the fact that self-governance has been a big hit. Local schools relish their new operational freedoms, and virtually no one wants to go back to the tightly controlled system of the past, when higher authorities told schools not only who their teachers would be, but where to dig the holes for their new trees on Arbor Day. Although some schools in distressed areas have had difficulty recruiting trustees, most schools have made a successful transition to self-governance.

Parental choice has also turned out to be popular. New Zealand parents, including many educationally ambitious Maori and Pacific Islanders, have taken advantage of their new right, and their choices have significantly altered enrollment patterns in New Zealand’s three major urban areas. Even skeptics agree that putting the parental-choice genie completely back in the bottle is no longer a political option. Principals have become adept at marketing their educational wares through publications, open houses, and speeches to local Rotary Clubs.

Since New Zealand does not have a national testing system—the Kiwis are bemused by our faith in standardized tests—it is not possible to calculate the impact of the Tomorrow’s Schools reforms on student achievement. Nevertheless, they appear to have made school officials more responsive to parental wishes and to have had an energizing effect on academic programs—at least in places where schools compete on a relatively level playing field.

The problem is that the playing field is not always level. A substantial proportion of schools have been hurt by the new system, and the Tomorrow’s Schools reforms have produced some serious negative consequences. First and foremost has been a visible polarizing of enrollment patterns by ethnicity, socioeconomic status, and student performance.

Our analysis of enrollment and census data shows that in the five years following the introduction of parental choice in 1991, New Zealand students sorted themselves out by ethnic group to a degree that cannot be explained by demographic changes in geographic areas. Evidence suggests that New Zealand parents use the ethnic mix of students at a school as a proxy for the quality of that school. Thus, schools serving students of European descent grew in size during the decade, while those serving large numbers of minorities watched their rolls decrease.

Since New Zealand does not have a national testing system, it is not possible to calculate the impact of Tomorrow’s Schools reforms on student achievement.

Under the rules, schools with more applicants than places available had considerable latitude in choosing the students they would accept. Popular schools used this freedom to choose academically motivated students from relatively affluent families. By contrast, schools at the other end of the popularity spectrum, many of them in low-income urban areas, ended up with increasing concentrations of difficult-to-teach students, including those suspended from other schools. New Zealanders came to call such schools downwardly “spiraling.”

By the mid-1990s, public pressure began building on the ministry of education to come to the assistance of spiraling schools. There was, of course, no basis for such intervention in the theory of self-governing schools in a competitive environment, but political realities trumped organizational theory. The ministry began offering such schools managerial assistance, then moved toward more direct intervention. By 1998, top ministry officials were conceding that the system would never work for up to a quarter of schools.

So what lessons does New Zealand’s decade of experience with the Tomorrow’s Schools reforms provide for the United States and other countries? We suggest the following:

1. Self-governance, parental choice, and competition have genuine benefits.

The majority of primary and secondary schools made a successful transition to self-governance, and virtually no one wants to return to a more centralized system. Parental choice is popular and has served the needs of many families, including many Maori and Pacific Islander ones.

2. Choice and competition are likely to polarize enrollment patterns by race, ethnicity, socioeconomic status, and student performance.

The polarization of enrollment patterns in New Zealand was no doubt exacerbated by the fact that oversubscribed schools could write their own admissions policies. Parental choice, in effect, became school choice for many students. Even in the absence of such a policy, however, polarizing pressures are likely to be unleashed. Educated and privileged families will figure out how to make the system work to their advantage. Although some minority-group and low-income families will do the same, students from disadvantaged backgrounds will be overrepresented among the noncompetitive schools.

It is surely possible to temper these polarizing tendencies through means such as controlled choice and alternative means of rationing students in oversubscribed schools. Fairness demands that such safeguards be built into the system from the very beginning.

3. Don’t count on market forces, in and of themselves, to solve the problems of troubled urban schools.

The concept of an educational marketplace presumes that some competitors will succeed and others will fail. In a free-market economic system, it is inevitable—even desirable—that some competitors will go out of business. Shutting down a “bankrupt” public school, however, is problematical because the students who attend it must be accommodated somewhere and local political pressures are likely to resist such an action.

The spiraling urban schools in New Zealand had everything that market theorists say you need to be successful. They had operational freedom; they had strong incentives to improve teaching and learning in order to avoid losing students; and, at least in quite a few cases, they had strong management. Yet the odds were still stacked against them, and they, along with the students and families they served, became losers in the educational marketplace.

The lesson is that central authorities must anticipate from the outset that some schools will require direct intervention. Such support is necessary even though it undercuts some of the alleged virtues of competition by easing the pain of failure.

4. U.S. charter schools can best serve the cause of promoting innovation if they remain limited in number.

A major argument in favor of charter schools in America is that they introduce innovation and diversity into the educational system. Some schools in New Zealand used their new operational freedom to introduce innovative programs, such as a curriculum organized around Howard Gardner’s theory of “multiple intelligences.”

There are demonstrable benefits to self-governance, parental choice, and competition, but they also unleash destructive forces.

Such instances were rare, though, in part because schools were under pressure to maximize enrollments, not to seek out niche markets. Moreover, central authorities wasted little time in making sure that the ministry of education’s curricular and administrative goals were written into the chartering documents of each school.

New Zealand’s experience demonstrates that there are limits on the extent to which a government—even one run by political conservatives who are philosophically opposed to big government—will tolerate diversity. As long as charter schools are limited in number, states and local school districts in America can readily assure that the schools are spending tax dollars in a responsible way through the chartering and renewal process. As the number expands, however, greater government regulation is the likely outcome. A large charter school bureaucracy is likely to behave like any other bureaucracy.

5. Private school vouchers will create the same problems as other market solutions.

New Zealand has what has been described as a “quasi voucher” system, in that parents exercise choice and a school’s revenue is closely tied to the number of students it can attract. There is no reason to think that moving to a full voucher system here would not have the same effects as we observed in New Zealand, including polarization of enrollment patterns and exacerbation of the problems of noncompetitive schools. Thus far, voucher programs in the United States have been limited to poor families, many of whom have presumably benefited from them. But voucher plans need to be supplemented by a strategy to address the needs of the students and schools left behind.

6. Mechanisms are needed to balance the interests of various stakeholders.

New Zealand’s approach to decentralization failed to provide adequate mechanisms for balancing the interests of the various stakeholders in the state education system. By narrowly defining the “community” that local schools serve as the interests of current parents in a school, the system pitted schools against each other and against broader interests. For example, trustees of some primary schools used their new autonomy to add two more grade levels to their programs, thereby creating enrollment problems for nearby intermediate schools. Formal mechanisms are necessary to balance narrow interests against the legitimate needs of broader communities and the state school system as a whole.

Over the past two years, policymakers in New Zealand have moved to address some of the problems identified above. Primary schools no longer have free rein to add additional grades, and enrollment policies must now be approved by the ministry of education and recognize the right of children to attend a school “reasonably convenient” to their homes. A new Labor government, elected in December, plans to introduce balloting, what Americans might call a lottery system, as a means of allocating places in oversubscribed schools.

New Zealand’s decade-long experience with Tomorrow’s Schools demonstrates there are no panaceas in school reform. There are some demonstrable benefits to self- governance, parental choice, and competition, but they also unleash destructive forces that polarize enrollment patterns and exacerbate the problems of overburdened urban schools.

The trick is to adopt reform strategies that will protect the positive values of self-governance and competition while minimizing their negative consequences through appropriate policy safeguards. Since we know what some of these consequences will be, we are in a position to establish such safeguards before a lot of students, families, and schools get hurt.

Edward B. Fiske is a former education editor of The New York Times, and Helen F. Ladd is a professor of public-policy studies and economics at Duke University. Their new book, When Schools Compete: A Cautionary Tale, is published by the Brookings Institution Press.

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A version of this article appeared in the May 17, 2000 edition of Education Week as A Distant Laboratory


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