Why I Am Against For-Profit Public Schools

[This stems out of a conversation that happened on Facebook, and I want to capture the thoughts. And now that I've written this monster, I realize there could easily be a part two.]

I’m against for-profit companies running schools as for-profit ventures.

I’ll explain why.

A really simple economic truth about profit is this: The amount you make in revenue minus the amount you spend equals your profit. Yeah, that’s an incredible oversimplification, but it’s true.

With public schools that are managed by for-profit companies, what they take make in revenue is, with very few exceptions, static. It is the per-pupil expenditure they receive from the local, state and federal buckets of money for education, as determined by the district the child lives in. And because the input is static, this makes it a very different kind of market than the market for any of the goods and services that schools use which have the ability to change their price point.

Now, some for-profit education providers to work to raise other revenue. The other sources of income for for-profit schools are essentially one of three things – the ability to monetize services such as professional development or curriculum and sell them to other schools or parents, VC funding or grant funding. I don’t really have a problem with schools finding ways to provide a service to other schools or parents as way to raise money, after all, that is what SLA does with EduCon. But venture capital money comes with a need for a return on an investment, and as for grants, I’m uncomfortable that for-profit groups would receive grants to run a school. When was the last time Coca-Cola got a grant?

I want to touch on the VC money for a moment more. I’ve heard several well-respected folks in the world of disruptive innovation say that increased VC investment in the education sector is good for education because it means more money coming in. But I admit, that doesn’t make sense to me, because the only way that money will get invested is if investors believe they will eventually get that money and more out of education. It strikes me that whatever seed money gets invested in the world of for-profit public education, sooner or later, either the schools need to spend less per pupil than they receive to be able to create a return on investment for their investors. I can imagine that another way is for that VC money to create vertical economies of scale where textbook / curriculum / assessment companies would start running schools so that they could have a market for their own goods and services, but that seems to border on the world of the robber barons for me.

Moreover, I have a deep, deep concern that what we saw — and continue to see — in the tech sector could happen in education, where VC companies dump an insane amount of start-up / seed funding capital into educational entrepreneurship companies of all kinds, only to realize that very few of these companies have a real business plan that can create any sort of ROI. That will be a bad enough education bubble if companies that supply support to schools through curriculum / technology / etc… suddenly crash and go out of business. That bubble will be devastating if those companies are actually running schools.

So that leads us to the most obvious way for for-profit public schools to make money – reduce expenditures. According to a speech made by Michael Moe of GSV Ventures at the Education Innovation Summit, 90% of expenditures in public education is in personnel, and Moe stated that if one wishes to make money in the education sector, one must find a way to reduce personnel costs. And most of those personnel are teachers. If schools are to reduce that expense, they can only do so in one of two ways – more students per teacher so that you need fewer teachers or pay teachers less. (And for the purpose of this argument, I’m considering benefits as part of the compensation package for teachers.)

Why would anyone think either of those things a good idea?

And yet, that’s exactly what’s going on. Student loads for teachers in K12.com’s for-profit schools are far higher than they are in non-profit and publicly run schools. Places like Rocketship are hiring fewer teachers and paying education aides $14 / hour to monitor students working online.

When one of the goals of universal education in this country is to help students prepare for citizenship which includes the ability to create a sustainable economic future for themselves (and a tip of the hat to Jose Vilson for reminding me that the famous 1963 civil rights march was officially entitled the March on Washington for Jobs and Freedom), how can for-profit schools justify reducing the number of sustainable middle-class jobs so that a few wealthy investors can make more money? And when you consider that most of these for-profit schools have a high number of low SES students, and that teaching has long been a pathway to the middle class for students coming from economically disadvantaged backgrounds, how is this o.k.?

Another problem is that there is the thought that technology can replace teachers and create a more personalized education for students. I’ve already written about how that definition of personalization could lead us to a very reductive view of what education looks like, but a quick summary is simply that most of the technology I’ve seen that folks say can do that would simply take kids through standardized content at the student’s pace. And as I have written before, that’s not a model of education we should embrace. Technology allows students and teachers to do more, create more, learn more and share more than ever before. If there are efficiencies that edu-tech creates, through work-flow improvements, record-keeping efficiencies, etc… we should use whatever savings realized to find ways to reinvest in the school, and making sure there are always enough caring adults to for all the kids who need them is a good start.

To recap, here’s one problem:

  • The per-pupil input is fixed in education, so the way to make money is to spend less per pupil than you receive from the government.
  • Therefore, according to one of the leaders of the for-profit education movement, the way to make money from the public education sector is to reduce personnel expenditures.
  • You can reduce personnel expenditures one of two ways – pay teachers less or increase the student:teacher ratio so that fewer teachers are needed.
  • Many of the people in the for-profit education sector use language that their solutions will help students from low socio-economic backgrounds be more college and career ready.
  • One of the best jobs for upward class mobility over the last 100 years has been public school teacher.
  • The long-term effect of the for-profit education sector will be to a) reduce the total teaching positions and/or b) lower the pay for teachers while increasing profits for executives and investors.
  • Which raises the question – is the very notion of these schools paradoxical toward any hope of an altruistic goal?

Here’s a quick recap of another problem:

  • The ramifications for an overvaluation of the market or of the ability to monetize public education could cause an Education Bubble that, if it burst, could do irreparable damage to thousands, if not millions of kids.

And another:

  • For-profit education assumes a thin value proposition of the promise of educational technology, using these tools as a way to automate and teacher-proof teaching while having the effect of creating a more standardized curriculum (which will most likely be tied to a standardized assessment) that may allow students more ability to proceed at their own pace but will, in the end, be more restrictive in terms of student ownership over their own learning. That is a profound failure of the promise of educational technology.

Finally, the last argument is, for me, a philosophical one. Let’s agree that schools are not always the most efficient organizations. And let’s assume that there are business practices that the for-profit world uses that schools could learn to do to create business efficiencies to save money. And let’s even engage in some magical thinking that there is some as-yet-uncreated online tool that could allow schools to have some subjects taught online through assistance / adaptive technologies and therefore use fewer teachers for that subject with no depreciation of student learning.

If we find innovative ways to save money in our schools, do we really think the best thing to do with that saving is to give it to investors? Shouldn’t we always be investing and reinvesting in the students in our schools? And while schools buy stuff from for-profit companies all the time, shouldn’t the institution itself always remember that the most important investment is made by the parent who sends her child to the school, not the VC fund? And given that most parents I’ve ever known – myself included – would want the money a school takes from the state to be spent on our children, shouldn’t we have an understanding that the parental investor and VC investor have a natural conflict of interest, and it is a conflict the profiteers should never win.

17 thoughts on “Why I Am Against For-Profit Public Schools

  1. Excellent. Agree 100%. Couple of points –

    1. Do those advocating the use of for-profit schools send their children to for-profit schools? I suspect not. For if they truly felt the education was better, they would.

    2. Online education can save money. But it is not for every student, and not for every course. With the bottom-line motivation of a for-profit school, the tendency is to put other needs secondary to the profit. Always follow the money.

    3. Your point “For-profit education assumes a thin value proposition of the promise of educational technology” reminds me of the 2 uses of technology – do we want it to do things better, or to do better things? The for-profit tendency is toward efficiency, i.e., do things better – standardized tests, etc, computerized to save money. The better use, “to do better things,” encompasses the creative uses better schools strive for. But it does not save money.

    Jeff

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  4. First, perhaps the issue is not that there are “for-profit” schools, but that the way schools are funded should change. Perhaps all schools should be funded based on completion rates rather than seat time similar to the funding policy for Florida Virtual School.

    Second, one of your final questions: “Shouldn’t we always be investing and reinvesting in the students in our schools?” Of course the answer to this question is an unequivocal Yes! But, that is no different in public schools, charter schools, private schools, online or blended learning schools or for-profit schools. Schools that have money to reinvest should spend money to continue to educate the students they serve. If they did not reinvest money to improve and change their respective education systems, then they would not exist. This is even more true with for-profit enterprises since parents and students choose to attend their schools. I just wonder if traditional public schools were meeting the needs of all students, would there be a need for for-profit or even private schools?

    Public schools have done a great job with 70% of students (people like you and me and those who will read this blogpost were all probably educated in U.S. public schools), but what do we do with those 30% of students who drop out of high school every year? In my opinion, we need a variety of options for “school”. Now, if you could clone SLA or other similar schools and make them available in every community, that would be one solution. But, to do that is not feasible because of the resources available in Philadelphia that are not available in small rural communities or other parts of the U.S.. I think it is only the combination of for-profit and non-profit entities that will make a real difference for all students in the U.S. because the traditional public school system has had the last 150 years to educate all students, and it has not.

    Next, under your “recap of another problem” – you suggest that “to monetize public education could cause an Education Bubble that, if it burst, could do irreparable damage to thousands, if not millions of kids.” What about the irreparable harm done to those students who have dropped out of high school because the schools did not meet their needs? (Yes, there are drop outs in all schools – traditional, private, charters, online and blended learning schools, for-profits, etc. – but it will only be through a joint effort with all education entities that the number of high school dropouts may decrease.)

    Finally, I do agree with your 7 “recap” bullets. These are the same challenges that every school system – traditional and for-profits and others – face every year (and, even more so in poor economic times). And the one bullet point I most agree with is “One of the best jobs for upward class mobility over the last 100 years has been a public school teacher.” This is true whether the teacher is in a traditional school, a for-profit school, an online or blended learning school, a private school, a charter school or a home school. No doubt about it (and much research has confirmed this), the teacher is the one that makes the difference in the education of students across the world.

  5. Outside of a few in AZ, there are no for-profit public schools, there are few private companies that contract with non-profit groups and school districts to provide school management services.
    It’s interesting to note that in socialist Sweden, for-profit school thrive and serve 1/4 of urban kids. See my review of a chapter from a recent book (that I contributed to) http://gettingsmart.com/blog/2012/07/free-school-reforms-sweden-boost-quality-innovation-choice/

    A second blog outlines how private companies (include one my fund backs) are bring good schools to the world’s poorest neighborhoods:
    http://gettingsmart.com/blog/2012/07/good-schools-world%E2%80%99s-poor/

    In October (when my book was released) I outlined three big benefits of the shift to personal digital learning: motivation, customization, and equalization in this blog: http://gettingsmart.com/blog/2011/10/personal-digital-learning-is-changing-the-world/
    All three of these big advances are occurring as public private partnerships where the right form of capital is being put to use:
    -Governments set goals, guarantee the quality of public services, creates partnerships
    -Philanthropic capital promotes equity and a long term view
    -Private capital produces and scales innovation

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  7. This a great post, and you are spot on!

    I often begin this type of conversation by means of analogy. The ethical dilemma is clear when we ask the question, “Would it be appropriate if judges or police officers where privately funded or run by ‘for-profit’ institutions?” The obvious answer (for most of us) is no. I follow with, “Is the field of education more similar to public entities such as judges and police/firefighting forces or is it more similar to chain restaurants and car dealerships?” To me, this is an ethical dilemma that is being clouded by the people distorting reality and without any care for equity, fairness, or equal opportunity.

    Effective teachers can leverage technology to personalize learning and to extend their influence beyond the traditional boundaries of a school day, week, year (or unit for that matter). We can all use technology to easier convene people to solve problems and to develop each other. Technology, however, can’t replace a teacher’s influence (Birds sing sweeter than tweets tell how.).

  8. “Another problem is that there is the thought that technology can replace teachers and create a more personalized education for students.”

    Technology is already replacing teachers in Alaska; Teacherbots: Tomorrow’s Solution Today? http://goo.gl/0s9TQ #satire

  9. I agree with most of what you’ve said, but there are a couple of extra points which came to mind as I read it (from a UK perspective).

    (i) in these tough economic times when the government is trying to tighten its belt, it is hard to justify borrowing money to build a new school – even if one is needed. Private investment might be more expensive in the long run, but at least it means the school gets built in the first place.

    (ii) the main problem you raise is that profit = income less expenditure, and income is fixed. However private schools in the UK (admittedly *not* for profit) charge fees. Parents are only willing to pay these if they feel the school is clearly better than state-funded alternatives, and so the school is forced to put quality first if it wants to keep its pupils. Perhaps that could work for for-profit schools in America?

    These private schools are known for small class sizes, good resources, and a focus on pastoral care. They certainly pass the test of “would you send your child there?” – the challenge in this case is convincing them to recruit students from all backgrounds (i.e. including people who can’t pay the fees).

    (iii) over here we’re starting to trial public-private partnerships where the private company is offered funding for outcomes rather than services – e.g. £500 for every jobseeker they place in work, or £1,000 for ever drug addict they rehabilitate. These are currently still on a small scale, but potentially the same idea could work in schools. Paying private companies based on their results could move risk away from the state. One obstacle is that – for a vital service like education – the government would need ways of ensuring that schools which didn’t achieve their results wouldn’t go bust.

  10. As an aspiring online teacher and as a retired pastor, I have investigated various models of K12 online instruction. Initially I was impressed with the curriculum developed by K12 because it seems to be more acceptable to conservative Christian families and home schoolers than other curricula I have seen. This certainly stems from K12’s origin as a brainchild of William Bennett (President Regan’s Secretary of Education who was a proponent of Character Education). However, the for-profit nature of this company is NOT consistent with what I see as in the best interest of the student. Teachers are underpaid by K12, and they are expected to teach more students than is reasonable.

    I also believe that online schools should be focusing on helping students MASTER competencies at their own personal pace. This means that some students should be able to race through or even skip portions of a course, or slow down and take longer with some portions as they struggle to master a skill. While students may need deadlines to complete their work, these deadlines should be very flexible and not tied to our old-fashioned school year.

    One local public school district in my area has adopted a K12 curriculum for its district public school. Teachers from within the district are hired as teachers, and are available to meet personally with students and families on at least once a month. That personal meeting is certainly valuable. However with this model the students are expected to stay on a time track that is identical with the traditional school year. The flexibility of matching the pace of instruction with the student’s learning pace is lost with this district’s model.

    I believe whole-heartedly in the right of every student to receive an excellent education; and I am convinced that the use of technology to personalize instruction is a monumental improvement to our traditional education model. Increasing profit should not be the goal of an educational institution; and money should not be the priority in making educational decisions. Children are worth our investment, and teachers deserve both respect and a decent salary.

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  16. Exactly right. Consider two other issues. The first, there is no product being produced but there is a service offered. If customers are satisfied with service, the business continues. How, in a privatized environment, would parents know the school was doing its job? If private schools are allowed to make up their own standards such as creationism is science, then there is little preventing a real cultural travesty. And, it takes years to really know if one’s kid turned out well by way of their schooling. Would investors be satisfied with that kind of profit horizon?
    The second, privatized schools would harden the racial and opportunity disparities already present. Even with vouchers, the wealthy and white and privileged would continue to out-bid and out-comptete everyone else for top buildings, teachers, and curricular resources.