the battle over school choice

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Competition, School Choice and Charter Schools
Caroline M. Hoxby

Hoxby is Associate Professor of Economics at Harvard University and has conducted research examining the value of competition to public schools.

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Now, you're an economist and, in general, to over-simplify, your theory is that competition within schools, between public schools and between different types of schools and public schools, improves schools over all. Is that, generally, your view?

I think that school choice, or competition among schools, has three major effects, or could have three major effects. One of them is what you just mentioned. It's an improvement in the efficiency of schools, and that really means that you get more achievement for the same dollar, or that if you spend more dollars, you're definitely going to get a big improvement in achievement for it. So that's one potential effect, and I think that's the one that we like to focus on the most because it's what we need the most. I think the second potential effect is that you could get schools that are more innovative or that are better matched to students' needs. And, again, that's somewhat similar to what we might see in the private sector, or you might see a company start-up that really serves consumers who have a certain niche demand. So that's the second potential effect. And the third potential effect is that it could change the way that students are sorted among schools, and that's something that we think a lot about, too, when we deal with school reform.

What do you mean by that? In terms of racial integration or other ways?

Racial integration is, perhaps, the most obvious example....Let's say we're a state and we're starting a charter school system. And we want to get the benefits of school choice, so we want to get more efficiency. We want to get better achievement for our dollars. We want to have some innovation. We want to have students who are better matched to schools, but we don't want racial integration to get worse. What we need to do when we write the school policy is to say, "Look, a charter school that manages to achieve the same degree of racial integration as, say, the district around it, is going to get the top number of dollars that a charter school can get on a per-pupil basis." That might be, say, $6,000 in a state and, if it diverges a little bit from the racial integration of the district around it, it gets a little less money. If it diverges a lot, it gets even less money per pupil. Now, if you think about, and, and you could get to the point where you say, "Look. Here's a school that's all white or all black or all Hispanic or all Asian-American." It doesn't get anything per pupil. So it doesn't exist. . . .

If we want to improve student performance, particularly in schools where students have been underserved, what should we be spending money on?

I think one of the reasons people are so focused on school choice as a reform is that people think that it will be one of the things that really improves student achievement in the United States. I think it has enormous potential to improve achievement. We have seen that when we allowed competition in other areas of American life, say, deregulated some industries, we've seen enormous improvements in efficiencies, which in schools, really means more achievement.

And in a charter school plan  parents always have the option to return to their local public school. . . . You can try out a different charter school.  And those  schools that no parent wants are not going to survive very long.  I think that's the beauty of the market . . . . I think, as well, some of the things that we know about schools tell us how it is that choice would actually bring this about. For instance, we know that some teachers are just much more successful in educating students than other teachers. There are individual teachers who are just very good teachers and we can pick them out very easily in data. . . . Many administrators can pick out their best teachers, but right now, the system doesn't have very many rewards for people who are the best teachers. I think that choice would put a tremendous amount of pressure on a school to reward its best teachers, because it would be attracting parents. It would be ensuring its own financial future by attracting parents. So that's one way in which choice puts pressure on a school to make the decisions that we think it ought to be making anyway....

In addition, not only are there some teachers who are very good at teaching, but I think there are some administrators--school leaders, I guess I would like to call them because not all of them end up in administrative positions--who just are tremendously good at organizing students, at understanding what a group of students need, at designing a curriculum that really works for a group of students, whether they are suburban students or whether they are inner-city students. Those people need to be empowered to a certain extent. They need to be allowed to exercise what is essentially a tremendous entrepreneurial and managerial skill. One of the things that I like about some of the choice schools I've visited, is that as soon as you walk into the building, you are aware of this management style--pedagogical style--way of getting the kids involved in the enterprise of learning. And it's not the same in every school, but you can feel when it's working.

One of the things that we've seen in charter schools developing in the areas you're talking about here, is that there's a tremendous range of the charter schools. Some of these charter schools are terrific and really deliver wonderful services and have to be accountable to the state for standards and so forth. And others, either because there's not a real strong accountability system in place or because it's just kind of a fly-by-night set-up, they aren't so terrific alternatives. But I guess the argument, then, an economist might make is that those would then fall by the wayside because they wouldn't hold up enough in the market place.

Right. One does not want students to go to schools that are fly-by-night schools, but parents have relatively good judgement about whether their children are getting a reasonably good education. And in a charter school plan, say, parents always have the option to return to their local public school. So, if they were happy with the local public schools and they send their child to a charter school to try it out and it doesn't seem like it's better, they usually withdraw the child and take him back to the local public schools. They may try a different charter school that is doing better, that has a better reputation with parents, but it's not as risky a venture as one would think because you're not stuck there in that under-performing charter school. You can go back to the regular public schools. You can try out a different charter school. And those schools that no parent wants are not going to survive very long. I think that's the beauty of the market....

I think that the goal of school choice and school reform should be that every school in the United States is a school that's run by somebody who really cares about this enterprise and who is at good at it. And some of the schools are going to end up being private schools and many of them, probably the vast majority of them, in the foreseeable future, will end up being public schools.

What we hope is that the public schools will be able to improve, especially in response to competition, and that competition will empower the people in the public school system who know how to do this job. Many of them struggle against bureaucratic forces that don't make it very easy for them to do the job that they really know how to do. But, in a world with more competition, those people who know how to improve a public school are going to be much more valuable people and one hopes that they will get the power to do what they want to do. So they would stay within the public system. They would never move to a private school. And most of the students would probably stay with them in the public systems....

paul e. peterson

Peterson is the Henry Lee Shattuck Professor of Government, Director of the Program on Education Policy and Governance (PEPG), and Director of the Center for American Political Studies at Harvard University. He is the author of Learning from School Choice and is an advocate of experimenting with voucher programs.

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President Clinton in his State of the Union actually said, "When I was first President, there were almost no charter schools--now there are 1700. Let's double it overnight." So he's a convert now to charter schools.

I think Bill Clinton has always been for charter schools. Whether or not he would go for a full scale? How far does he want to go in terms of charter schools? And how far does Al Gore want to go? That remains to be seen. If [charter schools] turn out to be politically popular, I think presidents will support them whether they're Republicans or Democratic presidents. The real issue right now is at the state level and whether the states will lift the number of charters. Are we reaching an upper limit as to the number of charters that are going to be offered by our states? Or are the states going to go and expand, once again? It's a little unclear. I see a little hesitation in the charter school movement, right now. I don't see it moving to the next level as quickly as one might have thought a year or two ago.

We visited some terrific charter schools in Ohio, but they've also had some problems and closed down a couple of charter schools in Ohio. And I know the State Superintendent of Public Instruction there is saying, "We've got to have more accountability here and maybe we slow this process down of chartering schools so rapidly."

But we won't have success in American education until we have failures. Because it's very important that schools fail. We want bad schools to fail and go out of business. The traditional public school fails and stays in business. This is bad. This keeps students in schools that are failing. We want the school to fail, not the students to fail. And once we learn that bankruptcies and failures are as important to success in education as they are in every other aspect of our society, then we will be moving ahead, we will be making progress....

chester e finn, jr.

Finn is the John M. Olin Fellow at the Manhattan Institute and president and trustee of the Thomas B. Fordham Foundation, where his primary focus is the reform of primary and secondary schooling. He was an assistant secretary of education in the Reagan administration and is co-author of Charter Schools in Action: Renewing Public Education.

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Part of what I like about charter schools is the degree to which it's neither fish nor fowl. Thus, it ends up with quite a lot of bipartisan support that cuts in interesting ways and interesting directions. Charter schools are never going to satisfy school choice purists, because they're still government schools, vulnerable to bureaucratic and legislative mischief. On the other hand, charter schools are far from satisfying the Establishment, the bureaucratic, one-size-fits-all top-down types. As a result, charter schools are a kind of a hybrid here. They do have fans and promoters in both parties and across a pretty broad middle of the political spectrum. I think they're a pretty interesting idea. However, they are not yet any kind of cure-all for what ails American schools. We have 1,700 charter schools, but we still have 85,000 traditional public schools.

We've seen some terrific charter schools--very well run, very innovative. And we've seen some bad charter schools that have been closed down in Texas and Ohio.

Four percent of all charter schools that have ever opened their doors have closed or been closed--60 schools, by my count, as of today. This is a good thing. This suggests the charter accountability world is real. If you run a charter school that nobody wants to attend, or one that fails to deliver the results it promised, or that messes up badly and runs away with the money, for example, you don't have a right to continue operating. What do we typically do with a failed public school? We don't close it down. We spend more money, on the theory that lack of resources must have led to the failure. . . . Let me be clear. Charters schools are not per se always good schools. I've been in some charter schools that I wouldn't send my worst enemy's kids to. But I also need to say that I have yet to find a loopy idea or stupid practice in a charter school that I haven't earlier seen in regular public schools, and frequently in private schools too. The goofiness is not a peculiar possession of charter schools, either.

rudy crew

Crew is the executive director of the University of Washington's new Institute for K-12 Leadership. He was chancellor of New York Public Schools for four years, one of the longest tenures of any recent chancellor. While leading the district of 1.1 million students, Crew ended the automatic promotion of failing students, changed the practice of giving lifelong job protection to principals, and persuaded the state Legislature to give the chancellor more say over the appointment of local superintendents. In news accounts, Crew blamed Mayor Rudolph Giuliani for his departure. The two had several disputes, including over a plan favored by the mayor to give public school students taxpayer-funded vouchers to use at private schools.

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What do you think about charter schools?

I agree with charter schools. I agree with them to the extent that schools are given the opportunity to be and remain public schools. In New York City, I tried to get this point across when the governor was talking about having them work under some other aegis. I don't happen to agree with that aspect of it, but I do believe that charter schools offer an opportunity to build competitive new models. It gives us an opportunity to figure out new and different ways to allocate resources, and ways by which to strengthen and support the creation of new schools within the public school sector.

I don't believe in vouchers, because that takes money completely out of the public school sector and moves it into the private sector. As a result, I think there can be nothing but a diminution of the quality of inputs that then get put on the table for public school kids, whether that be in the form of teachers and their certification, and their numbers of years of service, and the dollars that they're paid. Or it can be in the form of actual materials and supplies and hardware and software that's available for kids. . . .

david brennan

Brennan is Ohio's largest operator of a publicly funded, for-profit school business, the White Hat Management Company, and an Akron, Ohio entrepreneur, developer, attorney, and major Republican Party donor. Brennan helped initiate the Cleveland voucher program in the mid-1990s and his White Hat company is now a major operator of Ohio charter schools, including Hope academies and Life Skills schools.

read his interview

One criticism of charter schools is that, at least in these early stages, there's not much supervision. For instance, a military academy here has since closed. Does that create some problems for you?

Yes. I've been talking about this for a long time and I always make the point that some schools will fail. Whether voucher schools or charter schools, they will fail. The market works in supplying a quality product in the delivery of services because failure is not tolerated by the market. If you fail, you go out of business. I'm amused at the complaints about that, because in my lifetime, I have never heard of any public school being closed, no matter how incompetent they are in what they do. The market is far more efficient at getting rid of the incompetent supplier. The complaint is made that the students suffer in that regard. That's true. That's short-time suffering for those students. But that's a whole lot better than 12 years in a school that's not teaching them anything. So we will have failures. We hope to learn from those. . . .

This whole movement for choice has shaken up the educational establishment. If you look at public school systems around the country now, you hear a lot about alternative schools, magnet schools.

. . . My opponents don't believe me, but I want to improve public education. I want to improve all education. And I am quite satisfied that, if we're good at what we do, we'll make public education better. They don't want to make these changes, because they don't have to. . . . Public education, like all bureaucracies, particularly in monopolies, does not want to change from inside, and will not. So we are the force of change. . . .

. . . Do you need to do this for the money?

Absolutely not. I've been very blessed [financially]. Money is a way to keep score in business. If you don't make money, you lose money, and if you lose money, you're out. Those are principles I believe in deeply. . . . Our management company is not yet two years old. It was organized in July of 1998. And we have incredible people, many of whom took a pay cut to come with us. But they believe in it, and I want to reward that. The way to reward that is you make them shareholders. And if indeed it becomes profitable because of their efforts, they can make some money. That's the American way. Are we hurting children because of them? I don't think so. If we only made profits out of an enterprise where everybody else is losing money, is that bad? Someone has to tell me why. I can't figure that one out.

The argument is that somehow you're going to be shortchanging the students to make a profit.

Yes. That's the wonderful thing about the American system. People who make the kind of statement you make don't realize, because they've never been in the American system. They've been on the government dole all their lives. . . . The power of choice in the hands of the consumer is the most awesome power to guarantee quality, effective cost, effective delivery, and consumer responsiveness. . . . The demands to satisfy the needs of the users drive quality. If they have captive users, where's the drive? We don't have any users unless we do the job. It isn't my experience or my conviction that is compelling here. It's the example of our society as a whole, that the quality products don't come from government-dictated regulation. They come from competition.

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