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School Competition Also Produces Losers

Forcing schools to compete among themselves is supposed to benefit students. The argument at first seems reasonable enough. If a school can't count on enrolling students because it is the only game in town, then it will either improve or go out of business. The trouble is that in practice competition has not proved to be the panacea it is cracked up to be. Two hard lessons emerge in this regard from California.

In Sept. 2004, the California Charter Academy, the largest chain of publicly-financed but privately-run charter schools collapsed because of financial mismanagement ("Collapse of 60 Charter Schools Leaves Californians Scrambling"). The fiasco left 6,000 students stranded in 60 sites across the state just as the fall semester began, and left taxpayers stuck with a $100 million loss.

In Jan. 2011, Concord High School, a private high school in Santa Monica founded 38 years ago, filed for bankruptcy. It laid off teachers and left the education of about 50 students up in the air. The cause is being investigated but is alleged to be mismanagement of funds by the head of the school. The Santa Monica Daily Press reported that Susan Packer-Davis-Hille was spending thousands of dollars on personal matters while paying herself a salary over $300,000 at a time when enrollment at the non-profit school had dropped considerably ("Teachers, parents fight to save Concord High"). By comparison, Tim Cuneo, Santa Monica-Malibu Unified School District superintendent had a base salary of $220,000 in 2009.

In both cases, the schools in question were competing with traditional public schools for students. But the perils involved when this happens are given short shrift in the debate. Far from being a guarantee of educational quality, the strategy can be a risky proposition. In the case of Concord High School, it is more than parents losing the full-year's tuition of $29,000 that they have already paid. It also means desperately trying to assure that their children can complete their education this semester. In the case of the California Charter Academy, taxpayers had to assume the loss. But parents still were left at the eleventh hour anxiously trying to find a school suitable for their children's needs and interests. And let's not forget about the teachers who suddenly found themselves jobless.

Nevertheless, supporters of competition refuse to acknowledge the losing side of the equation. In fact, they continue to create slogans to support their ideology. The one that sticks in my mind was the headline in a Wall Street Journal story on March 2, 2006: "Don't Protest, Just Shop Somewhere Else." This suggests that education is just like a business. If consumers (parents) are not satisfied with the service (education) they are getting for their money (taxes), all they need to do is take their business elsewhere. It's as simple as that.

But this argument contains assumptions that strain credibility. For one thing, opening new schools to meet the demand of disaffected parents is not like opening new branches of a business. There are no economies of scale in education. It remains extremely expensive to create a new school no matter how often the process is repeated. The No. 1 expense is paying teacher salaries. But in urban areas, acquiring property can also be prohibitive.

It probably makes no difference trying to point out the flaws in the assertion that competition always results in beneficial outcomes for young people and their parents. That's because ideology almost always trumps evidence. So maybe the best slogan is caveat emptor.

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The opinions expressed in Walt Gardner's Reality Check 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.

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