Aug 29

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.