Can professional business management practices improve the performance of troubled public schools? Several high-visibility projects have been undertaken to bring best management practices to the classroom, including Harvard's Public Education Leadership Project. But in the 1990s, a different approach was begun: Riding a wave of charter school legislation, for-profit and nonprofit startups called private education management organizations, or EMOs, were created, essentially private companies brought in to manage public schools.
The result? Mixed, but promising, says Steven F. Wilson, a senior fellow at the John F. Kennedy School of Government at Harvard University. Wilson was founder and former CEO of one of those EMOs, Advantage Schools, which at its height had 10,000 students in its programs. He writes of his experiences in a new book, Learning on the Job: When Business Takes on Public Schools, published by Harvard University Press.
"Was it moxieor arrogance?" Wilson writes in the preface. "The business plan for Advantage Schools . . . promised investors we would 'create a new generation of outstanding public schools that would enable studentsregardless of their socioeconomic backgroundto reach the heights of academic achievement.' I admit I'm uneasy reading these words today."
In this interview, Wilson discusses where EMOs went right and wrong, and the lessons we can apply today.
Mallory Stark: What were the major problems with the public school system in America that invited the entry of the charter school movement?
Steven Wilson: In the early 1990s, state legislators, business leaders, and the nation's governors were radicalized by the failure of repeated efforts to reform the public schools from within. American schools were, on the whole, failing to equip students with the skills they needed. Many inner-city schools were entirely dysfunctional. As spending on public education had climbed sharply over the preceding decades, and the United States outspent almost every other nation on its schools, some reformers began to question the conventional wisdom: Were inadequate resources really to blame for poor performance? And was still-greater spending the solution?
Supporters of charter schools reasoned that the system's structure was itself an impediment to reform. It was time to launch new public schools that were independent of the school districts, free of collective bargaining agreements, and out from under the bureaucracy of the district office. New charter schools would benefit from driven leaders, innovative academic designs, and high expectations for their students. Maybe they would demonstrate what public schools could achieveand point the way for the majority system.
Q: How did the charter school movement gain momentum in the early 1990s?
Charter schools are the most accountable schools in America. |
A: In many states the right and the left came together in an improbable alliance. Conservatives saw in charter laws the infusion of competition and market forces into the "monopoly" of public education. Some liberals were no less enthusiastic: Charters afforded a kind of radical decentralization where teachers and students were empowered to devise innovative education programs and build vibrant experimental learning communities.
Ironically, it was the late Al Shanker, then president of the American Federation of Teachers, who was the first to champion charter schools in a 1998 speech to the National Press Club. Minnesota passed the first law in 1991, and other states rapidly followed suit.
Q: How would you define a charter school?
A: Charter schools are best thought of as independent schools, freed from rules, but accountable for results. Laws vary widely across the forty states that today permit charter schools, but everywhere the idea is the same. Much like an entrepreneur submits a business plan to a venture capitalist, the school's foundersteachers, parents, civic leaderssubmit a plan to a "charter authorizer." If approved, the school becomes eligible for public funds for its first term, typically five years. It must educate all studentsincluding the disabledand if there are more applicants than seats, students must be selected by lottery. Schools must teach to the state's educational standards and participate in testing regimens. At the end of the charter period, if it has not made good on its academic promises, the school can be shut down. Charter schools are the most accountable schools in America.
Charter schools are not under the control of the local district school board. Teachers may elect to unionize in charter schools, but the school does not inherit the collective bargaining agreements of the surrounding district. Teachers are not tenured. Still, many other debilitating rules that stifle district schools remain in place.
Q: Could you describe the evolution of the education management industry?
A: The first education management organization was Education Alternatives Inc. (EAI), which attracted national attention when it won ill-fated contracts to manage the Baltimore and Hartford school systems in the early 1990s. The company went public and later collapsed when both contracts were cancelled. The next wave of private managers learned some lessons from EAIsimply taking over the central office of existing school districts and ousting superintendents in favor of private-sector managers was not enough to effect decisive improvement.
Edison Schools, the first of the second wave of managers, focused on implementing a comprehensive "school design" at each client school and began modestly, opening just four schools in 1992. Most organizations focused on opening only de novo charter schools, built from the ground up. But like EAI, other EMOs continued to over-promise and under-deliver. They were thwarted by contractual arrangements that, while superior to EAI's, fell far short of providing them the authority they needed to implement their models exactingly. And political resistance from the education establishment remained fierce.
A third wave, first appearing in 2000, employed a different strategythey would organize as nonprofits, build a base of schools in just one region, and eschew publicity.
Q: Historically, why is the idea of corporate America managing public schools so counter-intuitive for the public at large?
A: The "common school" is a cornerstone of the American ideology: Public schools afford every child, regardless of circumstance, a chance to realize the American dream. Because this ideal of public education is inseparable in the American public's mind from the school's longstanding institutional structureof local school boards, school districts, and unionized public employeesprivate managers of public schools encounter a deeply felt, if unexamined, resistance in the public at large. Opponents, chiefly the teachers' unions, successfully portray private management as an assault on public education itselfand the democratic ideals for which it stands. Never mind that for many students, especially the urban poor, the neighborhood public school is an utterly failed institution.
Soon enough, an education entrepreneur will devise a scaleable business model for opening high-achieving schools. |
Q: Your book focuses on six EMOs: Advantage Schools, Chancellor Beacon Academies, Edison Schools, Mosaica Education, National Heritage Academies, and SABIS Educational Systems, and one nonprofit organization, KIPP. Did the founders of these ventures share a common vision for managing public schools?
A: They shared a faith in private sector principles. They all believed in building new accountabilities, where everyone in the organization, from the classroom teacher on up, was held responsible for performance. But from there their visions varied. Perhaps the most important difference was in the models' degree of academic prescription. The most prescriptive companies, like Advantage Schools, sought to impose on every school nearly scripted educational programs in the critical subjects of elementary reading and math. KIPP, in contrast, permitted school leaders wide latitude in matters of curriculum, but sought to replicate a culture of very high expectations that had driven its two schools to remarkable levels of achievement.
Some companies favored "progressive" pedagogies and others traditional ones. The majority envisioned a powerful, charismatic principal in every school who would create a positive school culture, have the authority to hire and fire, and maintain an unrelenting focus on academic results. However, finding such individuals, as I write in the book, proved enormously difficult, especially on the EMO's helter-skelter school opening timetables. This was the dot-com era. EMOs were under enormous pressure to open schools quicklyto post impressive top-line growth, and to reach the critical mass where school margins exceeded corporate overhead costs.
Q: What was the basic business model for the EMOs that you studied? How does K-12 education fare in light of the four criteria of the basic business modelprofitability, capital intensity, growth, and risk?
A: Running schools will always be at best a low-margin business, and EMOs will have to compensate with growth. So long as charters remain scarce (because of politically imposed caps on their number), entrepreneurs will have to open schools across a vast geography, enormously complicating execution risk. Each state regulatory regime is unique, from the funding formula to the grade-by-grade academic standards students are expected to attain. Building a business out of such far-flung "one-offs" is not viable.
The business has historically been very capital intensive, but only because most current charter laws deny the schools, unlike district schools, public capital for school construction. That is beginning to change. The greatest remaining impediment is the fact that EMOs have not been permitted to hold charters directly. Instead, they work in effect as advisors to local charter school boards, who hold ultimate authority over the school's operations. Yet EMOs shoulder all the investment risk.
Modest changes in state regulatory environments would improve business prospects. State-level authorizers, who have the impartiality and expertise to gauge the organizations' performance evenhandedly, should award charters directly to private managers. Accountability for school performance would be clarified, investment risk and control would be in the same hands, and the long-term stability that is essential for the implementation of any comprehensive school design would be assured.
Q: Given that your study focuses on the first generation of an evolving industry, what conclusions can be drawn from your analysis? Is there a future for EMOs in the United States?
A: The school management industry is still in its infancy, with a relatively short and dramatic history. A few companies, including National Heritage Academies, have demonstrated that running schools can be a profitable business. Many others continue to post losses, and no one has as yet achieved consistently superior academic results. But industry pioneers rarely get it right and win the rewards.
Soon enough, an education entrepreneur will devise a scaleable business model for opening high-achieving schools. I predict a fourth generation of education management organizations will appear, with retooled designs from the EMOs. We will see much more disciplined management by entrepreneurs, careful growth plans, refined academic designs, and much stronger academic and financial results. The country currently spends $400 billion annually on K-12 public education and posts chronically mediocre results in international comparisons of student attainment. The first company to demonstrate consistent academic success at scale will not only be in enormous demand, but will have made an extraordinary contribution to society.