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School Choice vs. Privatization

What is the difference?

Lisa Snell
June 5, 2002

My house is located in a rural area of Riverside County. When my family moved into the neighborhood, we had to decide who would pick up our trash every week. There were seven different trash haulers. We asked the neighbors which company they recommended and we picked one. We had to provide our own trashcans and every week our trash was picked up. We didn't spend much time thinking about our trash service. Then two years ago Riverside County decided this was too confusing for residents. They "competitively" bid out the countywide trash collection and selected a trash hauler for all the residents in the county.

The new trash company gave residents new trash bins and recycle bins. But the company consistently "forgets" to pick up our recyclables. Sometimes 3-4 weeks have gone by without the recyclables truck coming out to our house. They rarely keep to their collection schedule. We have complained to the company. We have complained to the county. But unless the company fails on a grand scale it is unlikely that anything will change. Perhaps in four more years when the contract is up, the county will have another competitive bid and select a different trash hauler. I liked it better when we could choose between the seven companies serving our neighborhood.

But this is a minor problem compared with the government-run school in my neighborhood. Today I went to http://www.greatschools.net to see how the school that my kids will never set foot in was doing and to confirm the fatal flaw (for parents like me) in the No Child Left Behind act (NCLB). I quickly confirmed three facts I already knew about my neighborhood school:

1. Overall Test Score Performance: Below Average—This school has a rank of 4 out of 10 on the 2001 Academic Performance Index.

2. Performance Compared to Similar Schools: Well Below Average—This school has a rank of 2 out of 10 compared to similar schools.

3. Test Score Improvement: Met Its Improvement Targets.

Here's the flaw: my school is "below average" or "well below average" depending on which measure you use as a benchmark, yet it is meeting California's low requirements for adequate yearly performance (AYP). As far as the NCLB act is concerned my school is improving. This school will never be labeled a failing school and there will never be a right of exit for students who do not want to attend a "below average" or "well below average" but not "failing" school.

In twenty years, give or take a decade, this school might meet California's target of 800 points on the Academic Performance Index. Students at this school and other schools in my district will never even receive the extra reading-tutoring voucher that kids at failing schools will get. And these kids need some extra reading help. My school district has an average of 48 percent of students scoring above the 50th percentile on the Stanford 9 in reading.

The education situation in my neighborhood is more critical than the poor-performing trash collector. Unless parents can afford to "buy" their way out, they will be stuck with low performance for a long time. Unlike the poor-performing trash collector, El Cerrito Elementary's contract will most likely never run out.

This is why education privatization is better than the status quo. It introduces some accountability into the system. An education service provider, like Edison, has a contract with actual requirements for performance. And when they fail to meet those performance measures everyone hears about it and some districts or schools cancel their contract. That's the point, and it shows privatization works better than the status quo.

But this minor improvement over the status quo should never be confused with a real education market with competition and choice. The media confuses the two all the time. Take this sentence from the Financial Times last week covering the Philadelphia school privatization: "The plan marks the biggest trial of school privatisation, the controversial approach that pits advocates of public education against free-market reformers."

Privatization is usually equated with a free-market in the press and by most education reform activists. Yet, privatization is only a poor proxy for competition in education. Even when a school is privatized, that school does not face a true market test. The kids that go to the privatized school in Philadelphia, for example, will be the same kids who went to the public school last year. And if Edison or their counterparts fail, then those same families will send their kids to the next government-selected school the next year. The parents never exercise choice and the schools, whether private or public, are not threatened by the right of exit of the school children they serve.

While Edison and other education service providers are arguably more responsive than the public school providers, ultimately the government agency and not the parent is their customer.

When I think of this dilemma, I remember two speeches I heard back to back at the Association of Education Practitioners and Providers conference last summer at USC. Chris Whittle gave a speech on Edison's model of national schooling companies and economies of scale. Jack Clegg, the CEO of Nobel Learning Communities, gave a speech on why public education needs a new heart made up of school choice, where parents pick the school that most fits their child's needs. At the time I thought it was striking how the themes in the speeches matched the companies´┐Ż business models. Chris Whittle has tried to go national by wooing large school districts and ramping up several schools at a time based on government contracts to run multiple schools. Jack Clegg, on the other hand, has grown by attracting parents to his schools--one school at a time. Guess which company's stock has a higher value? Guess which company is meeting the market test without a government sanction?

Now don't get me wrong, I work for a think tank that has advocated privatization for thirty years. Just last week the Financial Times called me a "pro-privatisation advocate." I applaud Edison. I'm impressed they have lasted this long in the brutal world of labor negotiations and government contracts. The recent Gray Davis/ California Teachers Association brouhaha proves that teacher's unions eat their own kind. And as Checker Finn said yesterday in an editorial in his Education Gadfly about Edison, "Never forget that the teacher unions HATE Edison and the other EMO's and are doing their best to subvert and bankrupt all such ventures. . . . they so look forward to dancing on its grave."

I applaud Chris Whittle and find it fascinating that Edison has lasted this long. They have, partly because they have a superior product, and when the product is well implemented and the contract goes their way, student achievement goes up. Ultimately though, this is a poor proxy for real competition and choice. In a real free market system, Edison wouldn't need a well-written contract to ensure that they could properly implement their business model. Instead, they would need customers that were willing to support their model and enroll their children.

When school districts, school boards, or state governments choose an education service provider, it is no different than the city choosing your trash hauler or your cable service. If you have a complaint, you are at the mercy of the government agency that selected the provider. Likewise, if you like Edison, and the school board does not (think San Francisco), you are still at the mercy of the government agency. Either way the government is still choosing.

I can't hire a trash company that actually picks up my trash and I can't find a local government school that can teach my kids to read. But at least with the school situation, I can pay a private school in downtown Riverside, The Growing Place, to teach my kids to read. The law prevents me from hiring a different trash hauler. Things could be worse. And for many kids, things are worse.

Lisa Snell is director of education and child welfare at Reason Foundation. She formerly taught speech courses at California State University, Fullerton.


Lisa Snell is Director of Education


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