School Choice & Charters Opinion

The Gates Foundation Responds: The Role of the Marketplace in Education

By Anthony Cody — September 13, 2012 16 min read
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Guest post by Irvin Scott and Stacey Childress of the Bill and Melinda Gates Foundation.

This post can also be read and commented on at the Gates Foundation’s Impatient Optimist blog. This is the last post in a series of five sets of posts, and responds to this post from last week: What Happens when Profits Drive Reform?
Irvin Scott:

The interaction on this blog began with a spoken agreement and wish between us and Mr. Cody during a conversation this summer: to truly engage with those who have different views from our own. To listen to one other, potentially find common ground, agree where we can and respectfully disagree where we can’t. To try and bring some civility to what can sometimes be an uncivil quarter of our education debates. That was our agreement - along with this set of topics reflected in this space over the last few weeks. While I am not sure each post in the series fully met the spirit of the agreement, I do appreciate any effort Mr. Cody made to move in that direction.

The topic of this final blog per our agreement is the “role of the marketplace in education.”

However, before my colleague, Stacey Childress, Deputy Director for our Next Generations Models team, joins me to respond to Mr. Cody’s claim about markets, I want to return to a theme that I have tried to intersperse throughout both of my previous responses. As I have reflected on these exchanges, my meeting with Mr. Cody here at the foundation, and my life’s work as an educator with a deep commitment to equity and opportunity, I must agree with how Mr. Cody started his last column: we have different realities.

Simply, I believe all children can learn. I believe low-income children of color can learn when they have great teachers who believe in them, and treat them with the same passion, enthusiasm and intellectual rigor that they would treat their own children. And I believe in the skill and will of teachers, provided they are given the opportunity to teach, learn and lead as true professionals. I believe in John Dewey’s insight that learning in the process of living is the deepest form of freedom. In a nation that aspires to democracy, that’s what education is primarily for: the cultivation of freedom within society.

I want to believe that Mr. Cody believes this same truth about students, yet in each post he carefully marshals an assortment of facts and statistics which seems to suggest that he believes that children living in poverty cannot learn and that until the status quo changes we should lower our expectations for poor children.

We know that there are great, heroic teachers preparing low-income students for college and that it is our moral duty to understand what they do and how they do it - and help many more teachers learn from them. Then we must make sure low-income young people have access to those teachers and the life changing opportunities they represent. That is the essence of our teacher work here at the foundation - to help create a system that helps all teachers improve so they can change children’s lives.

Our work at the foundation to improve education for low-income students and young people of color is about change, and change is hard. Stacey and I work together on different components of our education strategy. I am a life-long educator in K-12 - and she is an educator from Harvard Business School. We are each working to bring the best thinking of our disciplines to bear on this most critical issue underpinning the health of our economy and our democracy.

Our education system was designed in the last century, for another time - designed to sort by class and send the top echelon to college, the middle to manufacturing and others to the trades. It is our honest intention to use every tool at our disposal to help change the system to meet the needs of today, including by what some may consider non-traditional means. We prefer to think of them as innovations that reflect our impatient optimism regarding the potential of all America’s children. The impatience that we speak of is similar to the impatience that Dr. Martin Luther King spoke of in his famous Letter from Birmingham Jail. We will elaborate on that shortly, but first; it’s important that we turn our attention to Mr. Cody’s most recent blog, and our agreed topic and Stacey’s expertise - the marketplace in education.


Stacey Childress:

In response to some of his most recent assertions regarding charter schools, the role of business and markets; let’s be clear about the following facts:

Charter schools are public schools. They serve more than two million, or 5 percent, of the 50 million U.S. public school students. Some perform better than the district-run schools in their neighborhoods, many are about the same, and some are worse. The CREDO report Mr. Cody cites shows this to be true across the country, but it also found that charters did a particularly good job of raising academic performance among low-income students , and some cities and states have higher percentages of effective charters than others, generally correlated with more rigorous authorizing and accountability policies. At the Gates Foundation, we believe the same thing about all schools, whether they are charter or district schools: students and families deserve more schools that serve them well.

Mr. Cody asks, “Must every solution to educational problems be driven by opportunities for profit?” The implication is that charter school operators are personally driven by the chance to make a lot of money running schools. But this doesn’t match reality.

In fact, for-profit companies only operate 12.5% of all charters, and therefore serve about half a percent of all public school students. If they misuse public funds, they should be treated as any other fraudulent government contractor. But Mr. Cody’s claim that “profit-seeking” charters are somehow a big contributor to the scale of the educational challenges in low-income communities is inconsistent with the facts.

Charter schools receive only a small portion of the foundation’s annual education giving, and those dollars support nonprofit charter organizations with a track record of strong learning outcomes.

We do not provide financial support to for-profit charter operators.

For-profit companies do operate a high percentage of virtual charters, which account for a tiny percentage of all students. They, too, should be held accountable for serving their students well. The Gates Foundation does not support virtual charters of any kind, for-profit or nonprofit.

We understand that Mr. Cody has a different view than ours on the value of charter schools, and we respect that. But a substantive debate of the issue must be grounded in facts. We also would ask Mr. Cody to forego insinuations about the Gates family’s alleged profit-seeking motives in public education, and push back against his supporters when they make these claims. It is simply untrue. The Gates family is now in the business of giving away money, not making it.

In his argument about “the education market,” Mr. Cody refers to a source that values the US education market at $1.3 trillion, and suggests this is somehow a corrupting influence in K-12 education. This figure actually refers to the country’s annual spending for a broad array of education activities, including child care, tutoring centers, all k-12 and higher education spending, technical institutes, corporate training, textbooks, workforce development, and informal learning products and services (think Rosetta Stone foreign language CD’s and those 99-cent educational apps your kids love).

So let’s hone in on the relevant K-12 spending to get to a more cogent discussion of the opportunities and risks associated with it. Annual public spending on K-12 is around $600 billion, with approximately 80% of this flowing to public employee salaries and benefits. Schools spend less than 3% of the total (roughly $16 billion) on instructional supports like curricula, assessments, instructional software, computer hardware, and data systems. Though it’s a small percentage, it’s still a lot of money; especially because these are taxpayer dollars intended to contribute to student learning.

Our work in this domain is focused primarily on strengthening incentives for quality, performance, and affordability. Schools buy lots of products and tools to support teachers’ work in classrooms, and teachers find and use free content and tools online, as well. But because there aren’t clear criteria for evaluating how well these things work for different learners, the economic incentives in the market don’t always reward quality and performance.

We think all providers, whether large or small, established or new, for-profit or nonprofit, should compete for the right to serve students and teachers on the basis of whether their offerings help teachers meet the learning goals they have for their students; not because they have the biggest sales forces or lobbying budgets. When it comes to emerging instructional technologies, we are working to increase quality and lower costs, as well as on finding ways to give teachers more choice and autonomy to select what to use with their students. We support a range of activities aimed at these challenges, including evaluations of the effectiveness of some of the new and existing products in the market.

Even as schools move to more digital resources, many online content and instructional tools operate on different technological protocols and data formats, so they don’t work very well together. Hundreds of teachers have expressed this challenge to us first-hand in focus groups around the country. To address this and some of the challenges we mentioned earlier, we partnered with the Carnegie Corporation, the Council of Chief State School Officers and a number of states on a project called the Shared Learning Collaborative (SLC). The SLC is an organization creating shared technology services designed to lower costs for states, districts, and schools by giving them a way to make their various instructional technology investments work better together. By accessing these shared services, state and local education agencies are able to ask for and receive much more value for their money from the vendors they do business with.

The SLC engaged a number of contractors, including Wireless Generation, to help develop the underlying open source software for the shared services. An independent nonprofit organization will operate the SLC services over the long term. No SLC contractors have any proprietary rights to the assets they are building. It is incorrect to suggest SLC contracting decisions were in any way related to the New York state controller’s decision not to authorize a NY education department agreement for a separate project with Wireless Generation in 2011. The SLC contracted with Wireless Generation in June 2011, and the New York controller made his decision later that summer.

Rather than open a dialogue with anyone at the Gates Foundation or the SLC about this complex endeavor, Mr. Cody chose to repeat incorrect information from the blogosphere, misrepresenting the SLC and its relevance to the situation in New York. We invest in projects that help schools get higher quality instructional supports for less money, which we think is especially important given schools already spend billions with commercial suppliers on these products and services. Does Mr. Cody disagree?


Irvin Scott:

The context to all of this discussion is a fundamental truth: our economy and our democracy have changed dramatically in recent years - in terms of technology, globalization, complexity, the recent recession - and our education system must change as well. It must prepare all students to meet a much higher standard - especially if they are poor. This level of change requires that we engage the best minds of a range of disciplines to work together on new approaches. And pace matters because young people’s futures are at stake.

As lifelong progressives with a strong belief in social justice, we go back to Dr. King when we read such apologia for the status quo as Mr. Cody advances.

Dr. King wrote in his iconic Letter from Birmingham Jail:

“For years now I have heard the word ‘Wait!’ It rings in the ear of every Negro with piercing familiarity. This “Wait” has almost always meant ‘Never.’ We must come to see...that ‘justice too long delayed is justice denied.’

Again, we acknowledge the issues of poverty that many of America’s children face. And we applaud and encourage the work of federal, state, local, faith-based, and community groups in addressing these issues of poverty. Many of them are our partners. However, the imperatives of equal opportunity do not have time to wait for far away social policies to change.

The good news is that we work with thousands of committed educators and leaders across this country - in districts, traditional schools, charter schools, non-profit organizations, universities - and all of them are committed to equity and opportunity. They also know that getting a good education is one of the surest ways out of poverty.


Finally, as we bring this dialogue to a close and reflect on our exchange, it is clear that we simply have a different world view. In our view, we must not wait - our future depends on the actions we take today. Poverty is an important issue as evidenced by the number of people and institutions that dedicate their missions to its mitigation. But it isn’t destiny - unless we let it be. Education remains the most effective engine of individual opportunity, economic growth and innovation.

Here Dr. King said it most vividly: justice delayed is justice denied. Today education delayed is opportunity denied. Such change is difficult, but profoundly necessary for individual students as well as America’s future.

In a previous post, the foundation’s press secretary and education spokesman, Chris Williams, chose not to respond to a series of questions from Mr. Cody that seemed more rhetorical than sincere. In the spirit of the dialogue that we hoped for, we have chosen to respond directly to the questions with which Mr. Cody closed his last post. His questions, with their biases clear, are in italics. Our responses follow each one:

So as we bring this dialogue to a close, we come up against some of the hardest questions. Can we recommit to the democratic ideal of an excellent public school for every child?

There is no “recommitment” necessary. Our work - every day - is to help bring great educational opportunities to all young people. We believe that excellent public schools can and do look different from each other, and that there can be all kinds of options to reflect the differences in children.

Can the Gates Foundation reconsider and reexamine its own underlying assumptions, and change its agenda in response to the consequences we are seeing?

We consider our assumptions and examine data regularly. Our approach continually evolves based on the constant engagement we have with the people and organizations who have an impact on the way our schools operate. Our engagement with Mr. Cody is one of a number we have with thousands of teachers, administrators, school providers, leaders, and policymakers. We have listened to Mr. Cody, and agree on some things and not on others.

Given the undesirable results that we are seeing from the use of VAM in teacher pay and evaluations, is the Gates Foundation willing to put its influence to work on reversing these policies?

We all agree that a good evaluation must consider more than test scores, and we are open to considering what alternatives are most effective at measuring student growth. We will continue to support teachers, districts and leaders in their efforts to help teachers improve and students thrive. We hear regularly from teachers with a broad array of views on these issues. Teachers are not monolithic and we will continue to listen to a broad range of teacher voices and engage teachers in our work going forward.

VAM is a potentially powerful tool in measuring teacher performance that we hope will continue to improve over time as new and better assessments of student performances are developed. Many are in the pipeline now.

Does the Gates Foundation intend to continue to support the expansion of charter schools and “virtual” schools at the expense of regular public schools?

We addressed this inaccurate assumption in the text of our blog: We support high performing charter management organizations and a range of high quality school options, and will continue to do so. They are not “at the expense” of regular public schools. They are public schools that serve students. We will support those that do a great job educating low income students and students of color. As Mr. Cody has said, students and teachers are not one size fits all, so we believe that there should be many high quality options so students can find those learning environments that best meet their needs.

Must every solution to educational problems be driven by opportunities for profit? Or could the Gates Foundation consider supporting a greater investment in programs that directly respond to the conditions our children find themselves in due to poverty? Things like smaller class size, libraries, health care centers, nutrition programs, (none of which may be profitable ventures.)

We of course do not think this, and our track record of investments shows that.

We have invested hundreds of millions of dollars in public school districts, high performing public charter schools, non-profit organizations, and $2 billion in college scholarships for low-income students and students of color. It would be unwise for us to try to invest in every possible solution, so we have made some clear choices about how we prioritize our grants.

Our partnerships with for profit entities are a comparatively small part of what we do. That said, variation of perspectives among our partners is intentional. We want smart people from a range of disciplines and perspectives working on an issue so critical to the success of our country, and to the success of our nation’s children. No single sector or political perspective has a monopoly on wisdom. These are times of great change. Such times demand true partnership, imagination and daring. Those attributes exist in all sectors of America, public and private.

Regarding investments that “directly respond to poverty such as smaller class size, libraries, health care centers..."-- our read of the literature and my own experience as a teacher and leading schools and districts is that an effective teacher’s positive impact dwarfs the effects of class size reduction. As for libraries, that’s how we got our start as a foundation. Since 2000, we have invested $327 million in libraries across the country.

But as we have said, we target our resources here and abroad where we believe we can have the greatest impact: vaccines that save children from serious illness and death, more increased agricultural productivity that allow families to feed themselves and earn a living, access to contraception to ensure that women can decide when to have children, and a great teacher who can make a dramatic difference in the life of low income students in the United States.

Readers, what do you think of this response?

The opinions expressed in Living in Dialogue 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.