EDUCATION WRITERS ASSOCIATION Supporting Education Coverage, Today and Tomorrow A REPORTER’S GUIDE TO PRIVATIZATION Preface More and more,private for-profit and non-profit organizations are involved in schools.No longer limited to support services like transportation and food PUBLIC SCHOOLS, services,companies are providing tutoring,directing classroom instruction PRIVATE MARKETS and managing public and charter schools.School reform has raised the stakes A Reporter’s Guide to for schools and students,asking for greater accountability and companies are Privatization directly involved in raising achievement and taking the place ofthe traditional A publication ofthe Education Writers Association school.Private companies are not always required to make their books and their studies available to the public.This is a challenge to education reporters This project was made possible who help make school decisionmaking transparent to the public. by a generous grant from the Joyce Foundation. This report is a guide for beat reporters in covering this emerging and The Education Writers Association, growing phenomena.We thank Scott Elliott for his work in pulling the book founded in 1947,is the national together and the Joyce Foundation for their support in helping us produce it. professional association ofeducation reporters and editors. Mary Jane Smetanka,President Editor and Project Manager: Minneapolis Star Tribune Lisa Walker Author: Scott Elliott About the Author Contributing Editors: Lori Crouch,Associate Director Scott Elliott,36,is the education reporter at the Dayton (Ohio) Daily News,where Andy Mollison,Consultant he has worked since 1998.In 2004-5,he was the Knight-Wallace Fellow in Laura Deaton,Marketing and Education at the University ofMichigan.Prior to coming to the Daily News,Elliott Membership Director covered education at the Springfield (Ohio) News-Sun.He won the 2005 National Headliner Award for Education Reporting for a series he co-wrote about stan- darized testing and No Child Left Behind.Elliott is a graduate ofthe University of Dayton with a degree in journalism and English. 58 YEARS OF EDUCATION REPORTING Education Writers Association 2122 P St N.W.,Suite 201 Washington,D.C.20037 (202) 452-9830 Fax (202) 452-9837 [email protected] www.ewa.org © Copyright 2005 by the Education Writers Association. 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Design by [R+B]Design Firm CONTENTS Preface Inside cover Introduction iii Charter Schools: Breaking Free and Growing 1 Are Charters Underfunded or Taking Money from Public Schools? 3 Dayton, Ohio: Massive Change, But No Academic Gains 4 Sources 6 Vouchers: Still A Hot Topic, Impact Unclear 7 Cleveland as a Test Case 8 Sources 10 EMOs: Companies as Managers 11 Start with the Contract 12 Edison Tells the Story 13 How Many Schools do They Run? 14 Sources 15 Supplemental Services: More Companies, Limited Monitoring 16 A Growth Company 17 Top National Companies 18 Sources 19 About the Education Writers Association 20 PUBLIC SCHOOLS PRIVATE MARKETS INTRODUCTION P rivate companies have long schools,private schools and individual Comparisons can be made and betterdata played a role in public educa- tutors offered instruction to those who is more accessible than ever before.But tion.They performa host of could afford it. test scores alone do not tell the whole story non-academic functions, But the movement that began in the ofa school’s effectiveness. ranging from construction firms that build 1990s — options for families in which Reporters will have to find new ways to schools to companies that provide prod- instruction is provided by private agencies compareinstructional services like tutor- ucts for school lunches.Beginning in the but paid for with tax dollars — is truly ing.When states and school districts late 1980s,privatizationbecame more con- different.Instruction itselfis now out- evaluate these privatizededucation services, troversial as school districts moved to out- sourced to private providers. journalists should look closely at the source positions they traditionally Key elements ofthe privatization move- criteria used to judge them. employed like custodial jobs and school ment include: Safeguarding public money.Billions of bus transportation. • Charter schools.The charter movement tax dollars will be spent on school privati- On the academic side,private companies continues to grow.As education market- zation in the years to come.As private also played a role.Consider textbook com- places develop,families must navigate new companies manage more ofthat money, panies and standardized test publishers,for choices. challenges arise for reporters to get infor- example.Even before there were public • Vouchers.The idea ofvouchers initially mation needed to judge how well the pub- sparked the privatization movement 50 lic’s money is being spent.Reporters will years ago.Limited voucher programs, need to be much more aggressive tracking some through tax credits,play a role in those funds.And scrutiny ofprivate com- offering school choice in several states. panies that provide instructional services • For-profit education companies.These in public schools will require education companies,sometimes called education journalists to hone skills for reporting on management organizations,wield influence private businesses. in the education ofchildren with every Impact on traditional public schools. new school they manage. School choice and privatization have been • State-sponsored tutoring.The supple- sold not only as a better way to educate mental education services provision ofthe kids,but also as a way to force bureau- No Child Left Behind law opens direct cratic school systems to improve through student instruction to a wide variety of competition.Journalists must carefully tutoring providers at the grassroots level. track the effect on school districts. Tracking this trend will require new Whether changes from competitionforce twists on old reporting techniques.This more efficient school systems or create guide is aimed at helping journalists better more chaos is a key concern. understand the emerging issues.The Equality.In the second halfofthe 20th challengesare: century,debates in education policy were Judging effectiveness.The biggest ques- dominated by concerns for equal access to tion ofall is whether these reforms will quality education for all students,especial- help children get a better education.The ly those traditionally shortchanged — answers are not always simple.Objective poor,minority and special needs students. measures such as test scores,attendance How privatization affects this debate and graduation rates are useful tools. remains unclear. A Reporter’s Guide to Privatization iii PUBLIC SCHOOLS PRIVATE MARKETS CHARTER SCHOOLS Breaking FREE and GROWING B reaking public schools free issue on a national stage in a speech to the and former teacher Joe Nathan pushed for from local school boards was National Press Club in 1988.Shanker pro- charter schools.They argued that compe- once a radical idea that posed charter schools run independently tition would break the exclusive control became mainstream in the by teachers under contract with the local school districts had over public education 1990s as part ofthe national push for school board.Again the idea was for teach- — a monopolyas they saw it — and result school reform. ers to explore new methods. in improved services. Defined as free,publicly-funded but But neither Budde nor Shanker envisioned By the time Minnesota enacted the first independently-run schools,charters are the charter movement as it is today.The charter school law in 1991,a new theory usually released from many government concept ofcharter schools as a force for was emerging that charter schools could be regulations.Their advocates argued that education reform developed first in used not only to encourage innovation, privately run charter schools would give Minnesota. but also to spur reform by creating an parents choices and put pressure on school There,the state legislature passed pioneer- “education marketplace.” districts to improve.Critics — mostly ing laws that allowed high school students Innovative charter schools were to school boards,school administrators and to take college courses and permitted “open compete with regular public schools for teachers’unions — argued that charters enrollment,”so students could attend students — and resources — forcingschool would hurt public education by draining schools in neighboring districts. districts to break from their bureaucratic away critical funding,reducing teacher Ted Kolderie,a policy researcher with an ways to respond with innovations oftheir quality,bringing in little innovation,prov- organization called the Citizens Group, own. ing less accountable than traditional public schools and possibility raiding school districts oftheir best kids,leaving only the poor and most troubled children behind. Just over a decade after the first charter school opened,the movement neither has produced the blueprint for improving student learning nor led to the ruination ofpublic education. Teacher Ray Budde coined the word “charter”in the 1970s when he suggested that small groups ofteachers be allowed to work independently under contract with their local school boards in New England to explore innovative educational ideas. By the 1980s,President Ronald Reagan and his secretary ofeducation,Bill Bennett,were championing school choice ideas including federally funded vouchers and tax credits for parents who choose private schools. Albert Shanker,then president ofthe American Federation ofTeachers,put the A Reporter’s Guide to Privatization 1 Charter schools won broader favor in • Governing boards.Many charter child who leaves for a charter school costs the late 1990s with legislators who found schools have their own mini-school the district money and those losses can political minefields in publicly funded boards,sometimes called governing add up in cities with growing charter vouchers.Charters offered an alternative to boards,that set school policies and movements or come more gradually if entering the hot zone ofthe church-state budgets but generally do not run the charter growth is slower. issue. school day-to-day.These boards are The education marketplace theory Since the City Academy Charter School ultimately responsible for the school, assumes school districts will take steps to in St.Paul,Minn.became the nation's first operating much like non-profit boards. be more competitive.That could include tightening budgets and cutting unneces- sary spending.It could mean crafting a Charters in 2004 more customer-friendly culture with a premium placed on making parents happy. Number of charter schools: 3000 Or it could mean upgrading the district’s Number of students: 700,000 academicprogram,or perhaps offering Percent of 94,000 public schools: 3% more academic options through magnet Percent of 48 million public school students: 1.45% schools or other avenues. But districts may be slow to respond. States with charter school laws: 41 plus District of Columbia District leaders may not recognize the States with schools in operation: 37 competitive threat right away,or ifthe States that don’t allow: Alabama, Kentucky, Maine, Montana charter movement grows rapidly in a city, Nebraska, North Dakota, South they may not be prepared for the fast- Dakota,Vermont, West Virginia arriving consequences. State with most schools: Arizona (495) One ofthe early concerns about charter State with most charter school students: California (170,000) schools was that they might draw away the best students with the most academically minded and motivated parents.Critics charter school to open with less than 50 Sometimes the school’s principal or feared they would skim off“the cream of students in Septemberof1992,the move- developer sits on the board,and some the crop,”leaving behind only the most ment has spread across the country. schools have been criticized for boards troubled students.They also argued that stacked with friends or relatives ofthe special education students would likely be developer. left behind. How schools are governed • School operators.The operators are the In early studies,these concerns have not All charter schools have some relation- people who actually run the school materialized. ship with the state or a local school dis- day-to-day.Often it is the school A national study commissioned by the trict.Who runs a charter school,and who developer — a person or team ofpeople U.S.Department ofEducation in 2000 oversees its performance,can be a compli- who created the concept for the school, found charter school enrollments generally cated question.State charter school laws obtained a charter and formed a govern- followed the patterns ofthe school districts vary widely,but here’s what a reporter is ing board.The board then oversees the in which they are located. likely to find: operators as they run the school.In Using data from 1998–99 the study • Chartering authority.Some public some cases,governing boards hire private found charter school enrollment nationally entity must grant the charter,giving the companies,called education manage- was about 48 percent white versus 59 percent charter school permission to operate. ment organizations,to run the school. white for other public schools.Charter Usually it's the state board ofeducation • Contracts.Most charter school con- schools had more black and Hispanic or a local school district that grants the tracts are for three or five years.The students,the study said. charter and makes a contract directly contract may spell out specific details, Poverty levels,however,were similar. with the charter school. such as what curriculum the school will The percent ofcharter school students • Authorizers.Some states are moving use or what the management structure eligible for free or reduced lunch prices away from making contracts directly will be.Usually the contracts include because oflow family income was 39 per- with charter schools.Instead,they are specific expectations for performance. cent nationally,compared to 37 percent for approving “authorizers”— often non- That may mean student passing rates on regular public schools. profit organizations,school districts, state tests or other academic measures The study found charter schools served county boards ofeducation or universi- are spelled out.Sometimes expectations slightly fewer disabled students nationally ties.Under this design,states approve for financial practices are included in (8 percent vs.11 percent) and roughly the authorizers.The authorizers then make the contracts. same percentage oflimited English profi- the contracts with the charter schools cient students (10 percent). and take responsibility for monitoring But researchers caution that there is Impact on school districts and overseeing those schools.This step wide variability in the statistical data across removes the state from direct responsi- How school districts react to competi- states.In some parts ofthe country,charter bility for charter schools.The authoriz- tion from charter schools is a key for school students are far more likely to be ers also may charge the schools a fee. reporters to observe.In most states,every poor and minority,in part because charter A Reporter’s Guide to Privatization 2 schools specificallytarget at-risk students. highly satisfied with charter schools,often charter school academic performance is In other places,charter school students exceeding satisfaction levels ofparents in scarce and the available data is mostly out- tend to be less poor and more white. the same local school district.Critics cau- dated or too narrow in scope to draw wide In terms ofinnovation,some charter tion that surveys asking about a parent’s conclusions. schools have clearly broken new ground.A satisfaction with their own child’s school The vast differences among charter laws public boarding school for inner-city usually report high rates ofsatisfaction, from state to state also makes comparisons youth in Washington,D.C.,and a building and that the satisfaction rates for charters a challenge.Not all charter schools are trades school in Dayton,Ohio,that pays and other public schools are usually both playing by the same rules,or serving kids modest wages for coming to school high. students with similar demographics. on time and being prepared as ifit were a Individual charter schools can be job,are two examples. compared for test passing rates to similar But most charter schools employ instruc- Do charters offer higher schools within the host school district. quality learning? tional methods from well-knownprograms But care must be taken to address such as the hands-on Montessorimodel or Arriving at definitive answers about how schools with very small enrollments, the back-to-basics Direct Instruction. charter schools are performing academi- where the results from one or two kids Many studies have shown parents are cally can be difficult.National data on can dramatically change the school’s Are charters underfunded or taking funds from districts? States usually take one of four approaches to funding charters: state. Some states also offer state-sponsored funds for new charter schools. — Per pupil funding.Most states fund charters by allocating the same per pupil amount the state sets aside as aid for public — Philanthropy.A charter school may partner with a philanthropic school districts. The amount generally is set by the legislature organization that offers aid or other support or may seek out- and usually consists entirely of the state funds for the educa- side funds through grants. tion of each child. In most cases, funds for charter schools are — Transportation.States may require districts to provide trans- deducted from the districts where those students live. portation for students attending charter schools or may provide — Per pupil spending.Some states pay each charter school by state transportation dollars. determining how much the local school district spent per pupil. — Supplemental funding.States may provide extra funds to That amount is then redirected from the district to the charter districts with high percentages of children with special school for each student that it enrolls. Per pupil spending is challenges, such as low income, special education or English calculated by dividing the total amount spent by the district by language learners and may pass the funds to charter schools the number of students enrolled. This figure will be higher than for the kids they serve that qualify. the per pupil funding districts receive from the state because the figure includes money the district receives through federal — Cost of living calculations.Some states apply a per student, programs, special subsidies and from local tax collections. cost of living calculation for school districts that are in areas considered especially more/less expensive to live in. Those — State average of per pupil spending.A few states pay charter calculations may also apply to charter schools in those areas. schools based on the average per pupil spending of all districts in the state, rather than on the per pupil spending of the local The major controversy over charter school funding is whether school district. charters have an unfair advantage or disadvantage compared to other public schools. — Negotiations.State laws may allow the charter school sponsor, whether a local school district, a university or another entity, to Charter advocates say districts have many funding advantages not negotiate with the school to determine how much funding the afforded to charters, such as the ability to levy taxes when expenses school will have for operations. rise or access to state bond money for school construction in some states. There also are up front costs for charter schools such as — Dual funding systems.Some states have different funding obtaining a facility and purchasing initial materials, supplies and formulas for charter schools sponsored by the state and those equipment. Even with federal assistance for start up, launching a sponsored by local school districts. new school is a fiscal challenge. Reporters also should probe other support for charter schools Critics say charter schools get the same state funding, but are including: released from many bureaucratic rules that cost districts money. — Start-up funds.New charter schools are eligible for federal They also point to areas like transportation, where state laws funds through the Federal Public Charter School Program require districts to transport students who go to charter schools. through a competitive process usually administered by the A Reporter’s Guide to Privatization 3 Dayton, Ohio: Massive change, but no academic gain In a mid-sized Midwestern city, dissatisfaction with a decade of children in the city. Charter schools enrolled 18 percent and private poor performance by the public schools led parents to flock to new schools stayed steady at 27 percent. charter schools. The financial impact hit the school district hard and forced opera- Over the course of six years, nearly one in five school-aged tional change. For nearly two decades, Dayton Public Schools had children enrolled in charters, 14 district schools closed, the school steadily lost enrollment — a drop of more than 27 percent from board underwent massive political change and district leaders 31,923 in 1981 to 23,183 in 1999 — but the school board had installed a wide-ranging academic reform. lacked the political will to close a single school. This is the story of Dayton, Ohio, and if it ended there, the city Yet as money began to follow students to charter schools, the might be hailed by choice proponents as a sterling example of the financial bite was too big to ignore. City-Day had cost the district positive effects of the new education marketplace. just more than $200,000 in 1998. By 2003, the district, with a general fund budget of $200 million, was shelling out $35 million But for those who favor market reforms, the nation’s No. 1 charter for charter school students. The school board responded aggres- school city (as measured by the percentage of school children sively, closing 14 schools in four years. attending charters) also is a story of frustration and unintended consequences. Political change came, too. In 2001, four professional women won a majority of the seats on the seven-member school board and For the 160,000 residents in this former manufacturing center, the embarked on massive financial and academic reforms. decline of the public schools was one of the most troubling side effects that came with the rise of the suburbs and the wilting of an Today, evidence of academic improvement is sparse. In 2004, the industrial job base. Poverty grew (more than 70 percent of the Dayton school district ranked lowest of 613 Ohio school districts students qualified for free or reduced price lunch in 2004) as the on state report cards for the third straight year, with 10 percent graduation rate tumbled to 51percent in 2001. passing all parts of the state fourth grade exam, 11.9 percent pass- ing at sixth grade and a graduation rate at 53.8 percent. Charters, By the mid-1990s, Dayton was ripe for education reform as while popular, performed no better. In fact, a Dayton Daily News patience ran out for business leaders and community advocates. analysis showed the district outperformed charters on fourth and In 1997, a non-profit called the Fordham Foundation started a sixth grade tests every year from 2000 to 2004. privately funded scholarship program for city families that wanted And perhaps most unexpected, charters had begun to hurt private their children to attend private schools. Run by Dayton native and schools. For 100 years, Catholic schools thrived in Dayton as an former U.S. assistant secretary of education Chester Finn, Jr., alternative to the district, growing strongly through the 1990s. But Fordham made Dayton a “real world laboratory” for choice by pro- by 2004, enrollment at two-thirds of the city’s 15 Catholic schools viding financial backing and technical support for charter schools. had reached 10-year lows. Ohio passed its charter school law in 1997 and City-Day Even a Christian school network decided to close its two Dayton Community School was Dayton’s first charter school when it campuses after 30 years in the city, partly because of falling opened with 43 students in the fall of 1998. enrollment. By 2003, the charter movement had completely changed the Six years of intense charter school competition in Dayton has education landscape in Dayton as 19 charter schools enrolled brought dramatic changes. But as of yet, there is no evidence of nearly 6,000 students. The district’s enrollment was down nearly achievement gain. a quarter from 1999 at 18,243, just 54 percent of 34,000 school overall performance. in charter schools on the reading and math studies had shown charters and regular Studies thus far ofcharter school per- portions ofthe National Assessment of public schools essentially even on test formance have been mixed.They generally Education Progress compared to peers in performance. match the passing rates ofthe local school regular public schools,taking into account And a study released the same month by districts with small variations.But approach- poverty and other factors. Harvard University professorCaroline ing or equalingthe local school district The analysis showed charter school Hoxby found nearly opposite results.Her isn’t always a great victory,considering students generally fell short oftheir public study ofstate test data in elementary many charter schools are in low perform- school peers even when low income charter grades compared charter school test ing districts. students were compared to low income performance with nearby public schools Two studies released in late 2004 illus- students in public schools.The study also ofsimilar demographics. trate the difficulties ofjudging charter found charter schools that had been open Hoxby found charter students were school effectiveness. longer tended to perform worse on the test. proficient more often than their public The U.S.Department ofEducation Charter advocates complained about the school counterparts in reading and math. released an analysis offourth-grade students data collection and argued that other She also found that for charter schools in A Reporter’s Guide to Privatization 4