Tag: private schools

Education under the New Swedish Order

Just over a week ago, Swedes threw out the relatively pro-market coalition that had goverened the country for the past 8 years, handing power (though not an outright majority) to a new left-of-center coalition. Swedish students’ falling scores on international tests were a key cause of public dissatisfaction, and they have been widely blamed on a nationwide voucher-like school choice program introduced during the early 1990s. But as I point out in an op-ed in yesterday’s Svenska Dagbladet, the facts simply don’t support that narrative. Here’s the English draft of the op-ed:

Sweden’s collapsing performance on international tests was clearly a factor in the recent election, and redressing that slide will be a priority for the new government. A good first step in charting the way forward is to understand what has gone wrong and what has gone right in the past. Unfortunately, the most popular narrative about Swedish education trends is badly mistaken.

Many have blamed Sweden’s falling international test scores on the proliferation of free schools, merely because the decline is thought to have followed their large-scale expansion. This would be a common logical fallacy even if the timing were correct—but it isn’t.

Between 1995 and 2011, Swedish math scores on the Trends in International Mathematics and Science Study (TIMSS) fell by a massive 56 points. But the vast majority of that decline—41 points—had already taken place by 2003. In that year, 96 percent of Swedish students were still enrolled in government schools.

Another international test, the Programme on International Student Assessment (PISA), began in the year 2000 and has the advantage of breaking out the scores for government and private schools. The last PISA test was administered in 2012, by which time government school scores had fallen by 34 points while free school scores had fallen by only 6 points.

Anders Böhlmark and Mikael Lindahl’s long-term nationwide study helps to explain these trends: increased local competition from free schools actually raises the performance of students in both sectors—on both national and international tests. But, since free schools still enroll a small fraction of students nationwide, the benefits of this competition have yet to be felt in many areas.

Of course, none of this is to suggest that there are no bad private schools. There has never been an education system in history capable of producing only good schools. The best that can be hoped for is that unsuccessful schools close while good schools expand. And that is precisely what has been happening in Sweden.                                           

Much has been made of the failure of JB Education, which attracted too few students to remain financially viable, and was forced to shut down. This was regrettable for everyone directly concerned, in the short run. In the long run, it is better than any realistic alternative. In most countries, including the United States, atrocious government-run schools are able to continue operating indefinitely because they face no meaningful competition—the poor parents they most often serve simply cannot afford any alternative. These schools are numerous enough that a term has been coined to describe them: “dropout factories.” Swedish families are lucky that they can far more easily escape such schools.

Not only does the Swedish system pressure failing schools to close, it encourages good ones to expand. International English Schools is one of the highest-performing school networks in the country, even after controlling for the parental level of education and immigrant background of its students. It is also one of the fastest growing, now operating 25 schools serving nearly 18,000 students. IES has plans to continue growing so long as demand for its services remains unmet. But if IES’s emphasis on academics and civil classroom behavior seems too traditional for some families, there are many other options to choose from. Another large and successful network is Kunskapsskolan, which allows students to proceed through the curriculum at their own pace, combining tremendous student autonomy with weekly one-on-one meetings with teachers.

But not all good private schools grow. Specifically, non-profit schools tend not to build large networks, no matter how good they are. As a result, thousands of students who might benefit from their services never get the chance to do so. The only good schools that consistently “scale-up” in response to rising demand are those operated as for-profit enterprises. This is not a coincidence. Building a network is both risky and expensive. The profit-and-loss system provides both the resources and the incentives that allow and encourage successful enterprises to grow.  

Sweden is fortunate to have harnessed that system to spur the growth of its high performing schools. Chile does the same thing, and has become not only the highest-performing nation in Latin America but also one of the fastest-improving countries in the entire world on international tests. If Sweden wishes to become a fast-improving nation educationally, the evidence strongly supports preserving the entrepreneurial freedoms and incentives that promote the growth of successful education networks.

Slate Publishes Inaccurate, Fallacious Piece on Sweden and School Choice

Last week Slate published a misinformed piece on Sweden’s school choice program and what we can learn from it. The errors of fact and logic are glaring. Apparently, they don’t have multiple layers of fact checking over there, so I decided to lend a hand and correct the record at Education Next.

Here’s a snippet:

First, [Slate] claims that “more Swedish students go to privately run (and mostly for-profit) schools than in any other developed country on earth.”  In fact, neither of these claims is true. Taking the parenthetical claim first, according to the most recent data of which I am aware (from 2012), the majority of Swedish private schools are non-profit (in Swedish, “Ideella”).

As for overall private sector enrollment among industrialized countries, we can consult the OECD, an association of 34 industrialized nations that administers the PISA test:

“On average across OECD countries… 14% of students attend government-dependent [i.e., gov’t-funded] private schools…. In Sweden, the share of students in private schools increased significantly over the past decade from 4% in 2003 to 14% in 2012…. This brings the share of students in private schools close to the OECD average.”

Slate, in other words, is badly mistaken on this point. How badly? Here are the top five industrialized countries by share of private school enrollment, according to the OECD’s 2012 PISA database:

Belgium 68.4
Netherlands 67.6
Ireland 58.2
Korea 47.5
UK 45.2

 

 

 

 

 

Sweden doesn’t even come close….

Equity vs. Excellence. Or…A Crank Phone in Every Home!

Education secretary Arne Duncan has just announced the Obama administration’s latest initiative to improve educational quality for low-income and minority students: pressure states to measure the distribution of “quality” teachers across districts; and then to make that distribution more uniform. The emphasis is on the pursuit of equity rather excellence. In fact, a state could make a massive leap forward on this scale by simply randomizing the assignment of public school teachers to schools. And if it turned out that some districts were badly managed and actually had a consistently negative effect, over time, on the performance of their teachers, well then the randomized teacher assignment process could be repeated every school year—or even every half-year!

But is a uniform distribution of today’s “quality” teachers really the best we can do for low-income and minority students (or, for that matter, everyone else)? Would they be better off today if Arne Duncan’s and Barack Obama’s equity focus had driven, say, the telelphone industry over the last century? Back around 1900, most telephones were hand-cranked, and not everyone had one. Would the poor, minorities, and others be better off today if we had achieved and maintained a perfectly equitable distribution of hand-crank phones?

The alternative, of course, is what we do have: a vigorously competitive phone market that has given rise to cell phones and then smart phones containing super-computers, global positioning satellite receivers, wireless networking, etc. But of course only rich whites have cell phones and smart phones, right? Not according to Pew Research. Based on 2013 data,

92% of African Americans own a cell phone, and 56% own a smartphone… blacks and whites are equally likely to own a cell phone of some kind, and also have identical rates of smartphone ownership.

In fact, Pew’s comparable smart-phone ownership figure for whites is 53%, but the difference is not statistically significant. With regard to income, Pew finds a 9 point difference in smartphone ownership between those making < $30,000 and those making between $30,000 and $49,999. Most of that difference seems to be accounted for by age, however. Among 18-24 year olds, 77% of those making < $30,000 own a smartphone vs. 81% for those making $30,000 to $74,999.

So pretty much everyone who wants one now has a cell phone which is rather more functional than the old hand cranked variety, and the majority of young people, at all income levels, even have smartphones. That’s a relatively high level of equity, coupled with excellence. Brought to you, again, by a competitive industry. Could the federal government’s Lifeline (a.k.a., “ObamaPhone”) phone subsidy programs be helping out? Certainly, to some extent. Though it’s far from true that every low-income American’s cell phone is paid for by Uncle Sam.

Ironically, many of the people who staunchly support subsidized access to the cell phone marketplace are dead set against programs that subsidize access to the educational marketplace. They’d much rather just redistribute teachers within our hand-crank-era public school systems, sentencing everyone—rich and poor alike—to more generations of academic stagnation. We can do better. We can encourage the same dynamism, choice, and entrepreneurship in education that have driven the fantastic progress in every other field, and we can ensure universal access to the educational marketplace via state-level education tax credit programs.

The Real Problem with Highly Regulated “School Choice”

A Fordham Institute paper released today seeks to answer the question: do private schools really refuse to participate in heavily regulated school choice programs? Its authors tell us that “many proponents of private school choice… take [this] for granted,” citing two examples—one of them being the Cato Institute, whose Center for Educational Freedom I direct. The authors even cite a relevant commentary by former Cato policy analyst Adam Schaeffer.

The only problem is that the cited commentary says precisely the opposite. Describing Indiana’s voucher program, Schaeffer writes: “Because participating schools will have a significant financial advantage over non-participating schools, lightly regulated [non-participating] schools will face increasing financial pressure to participate.” This captures Schaeffer’s concern as well as my own (which I expressed over a decade ago in the political economy journal Independent Review): We do not fear that private schools will refuse to participate in heavily regulated school choice programs. We know that they ultimately will participate, or be driven out of business by their subsidized counterparts.

We know this because there is extensive evidence to that effect from all over the world and across history. Everywhere that private elementary and secondary schools are eligible for government subsidies, the share of unsubsidized school enrollment falls. The higher the subsidy and the longer it has been in place, the more the unsubsidized sector is generally diminished. The Dutch enacted a heavily regulated nationwide voucher program nearly a century ago. Unsubsidized private schooling remains legal, but has been reduced to a statistical asterisk—now making up less than one percent of enrollment, compared to roughly 70 percent for subsidized private schools.

Our reason for concern over this pattern is also grounded in empirical evidence: it is the least regulated, most market-like private schools that do the best job of serving families. That is the consensus of the worldwide within-country research, which I reviewed and tabulated for a 2009 paper in the Journal of School Choice. The Fordham paper does not discuss this evidence.

Despite imputing to Cato scholars the exact opposite of the view we hold, the paper does include some interesting data. In particular, it offers a new corroboration that voucher programs are more heavily regulated than tax credit programs (a difference whose magnitude and statistical significance was previously established here). This will make it even harder for objective observers to cling to the notion that vouchers and credits are functionally equivalent.

The Charter School Paradox

Is it possible for charter schools to increase educational options and diversity in the public school system but decrease it overall; to spend less money than regular public schools but cost taxpayers more overall; and to outperform regular public schools but decrease achievement overall?

Unfortunately, it is possible, and this mix of intended and unintended outcomes is the “Charter School Paradox.” But it is only a paradox if we take a narrow view of charter school effects. Rigorous new research concludes that public charter schools are seriously damaging the private education market, adding to the taxpayer burden, and undermining private options for families and healthy competition in the education sector.

Fortunately, we have a solution in education tax credits …

Take a look at the full paper by Richard Buddin, my short companion piece, and our brief video on the findings and implications of this path-breaking new research.

Market Structure & Barriers to Entry in Education Tax Credit Programs

I want to thank John Kirtley for his gracious reply to my criticism of his policy guidelines. He has spilled a tremendous amount of blood, sweat, and tears on the ground fighting to establish, protect, and expand the largest private school choice program in the country, and I, quite simply, have not. I think this kind of policy debate is good for the health of the school choice movement, however, so on it goes …

Andrew Coulson posted a response to many of John’s points, but I think some areas deserve an expanded treatment. One of the primary issues in our discussion is centralization vs. diversification of scholarship organizations. I did not claim there was a “mandated” monopoly, which I take to mean government-mandated. Step Up for Students is, however, the only active scholarship organization in the state. It became the sole scholarship organization through hard work and good performance. John mentions Microsoft in his defense of market dominance, but Microsoft never fully monopolized any product or service. There is, however, a literal monopoly of the education tax credit system that was produced and is maintained by problematic provisions in the credit program that create a very high barrier to entry. The structure of the education tax credit in Florida all but ensures a monopoly in the education tax credit program.

For the first six years of the program, scholarship organizations were required to spend 100 percent of the credit funds they raised on scholarships. In other words, they had no money for overhead, which made establishing and running a scholarship organization difficult and expensive … a non-profit would need to seriously cannibalize its established charitable funding, likely already committed, and/or fundraise along two separate tracks for administrative and scholarship funding.

To put this in context, Charity Navigator, which rates non-profits, considers it acceptable for a charity to spend close to one-third of its revenue on non-program expenses. Even the 4-star rated Inner-City Scholarship Fund spends over 13 percent of its revenue on overhead expenses.

Scholarship programs, especially ones with relatively high compliance costs such as requiring detailed checks on a family’s income, require significant but entirely normal overhead spending. Furthermore, local scholarship organizations in a decentralized system act as more than a high-volume processor of financial applications. They act as community organizations that consider the needs and struggles of individual families and children, which requires spending more time and resources on each family. A 10 percent overhead allowance is eminently reasonable, indeed, within the bounds of best practices for such charities. Denying any overhead to non-profits ensured that few charitable organizations would be capable of fundraising and processing scholarships under the law.

Exacerbating this problem, scholarship organizations are not allowed to target the use of scholarship funds they raised to particular kinds of educational environments. What this means is that a non-profit would have to a) cannibalize money raised from other sources and for other purposes, and b) possibly fund educational environments that directly conflict with their conscience, mission, or best judgment. For instance, a Catholic charity would be required to fund an atheist, Wiccan, Protestant fundamentalist, Lutheran, Islamic, or any other school which met the basic requirements of the legislation. Even a non-sectarian scholarship organization is required to issue scholarships to any school, regardless of quality, as long as it meets the basic legal requirements.

In addition, the Florida tax credit applies only to corporate taxes, the vast majority of which are paid by large corporations based outside of the state of Florida. This means that fundraising is relatively difficult and time-consuming, not to mention extremely volatile, as large corporations shift revenue and expenses to minimize their tax burden year to year. It can take two years for a large corporation to begin disbursing funds after first being solicited. And fundraising requires expensive out-of-state traveling.

The corporate-only credit acts as an additional barrier to entry that grows over time and with centralization. Step Up for Students entered this constrained market efficient and well-capitalized, and spent the next decade bringing on the biggest corporate taxpayers in Florida as donors. A new entry into the credit scholarship realm would need to raise very substantial funds for fundraising for years before they saw a return in credit donations. Even should the very high quality of Step Up decline in the future, its relationships with the biggest donors, scale, and general dominance would pose a very formidable wall to climb for any non-profit. Indeed, it is far more likely that the state government would intervene long before any non-profits entered the market to impose the discipline of competition.

With extremely high start-up costs, low return for many non-profit missions, a fully established monopoly, and no profit motive or access to investment funding, the Florida education tax credit scholarship organization opportunities are all but nonexistent under current law.

Here’s Where Better Schools HAVE Scaled Up…

Earlier this summer, I released a study comparing the performance of California’s charter school networks with the amount of philanthropic grant funding they have received. The purpose was to find out if this model for replicating excellence was consistently effective. The answer, regrettably, was no.

But a new study we are releasing today finds that there is at least one place where better schools HAVE consistently scaled-up: Chile. Thanks to that nation’s public and private school choice program, chains of private schools have arisen, and they not only outperform the public schools, they also outperform the independent “mom-and-pop” private schools.

For anyone interested in replicating educational excellence, this study by a team of Chilean scholars is worth a look.

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