Mixing Public and Private; L. W. Reed

The idea that business-savvy entrepre neurs might improve the operation and per formance of public education is, on the surface, an attractive one: under contract with local school boards, private manage ment firms would take over the schools, exert some financial discipline, promote innovative educational techniques, and boost student test scores in the process. Many public schools already save money and get value for tax dollars by contracting with private firmsfor food service, custodial work, transportation, and even certain in structional services. Why not go one step further and put private companies in charge of running the whole operation? To school reformers who see the need for public education to be less bureaucratic and more responsive to customers, this form of "privatization" may appear to be a step in the right direction. And it might be precisely that if it worked so well that it prompted parents and taxpayers to see the virtue of separating school from state altogether.

Unfortunately, the recent experiences of a prominent company pioneering in this field indicate that reforming public schools with halfway measures like private management is at best a frustrating exercise and, at worst, Lawrence W. Reed, economist and author, is President of The Mackinac Center for Public Policy, a free-market research and·educational organization headquartered in Midland, Michi gan. by Lawrence W. Reed a waste of time. The root of the problem with government schools, these experiences sug gest, is government itself. Education Alternatives, Inc. (EAI), a Minnesota-based school management firm, made headlines when it signed a five-year contract in 1992 to operate nine inner-city schools in Baltimore, Maryland. As the first major experiment of its kind in the country, the arrangement put the company in charge of management, computer instruction, and administrative services. But on November 22, 1995, barely halfway into the life of the contract, Baltimore city officialscanceled it.

Apologists for public education seized on the news to claim that it spelled failure with a capital "F" for the cause of privatization in general. That interpretation was wide spread but it was also superficial, self serving, and dead-wrong. In reality, the contract fell apart because EAI rejected an ultimatum it couldn't pos sibly abide. City officials suddenly and ar bitrarily demanded that the company accept $7 million less per year-16 percent of its $44 milliona-year contract-to help Balti more close a deficit in its municipal budget. The politicians in Baltimore were saying this: "Our mismanagement of other budgets for such things as streets and sewers has put us in financial trouble. We decided to fix our problem by taking it out on the schools. Even though we have a contractual obliga tion to a private firm and are not claiming that it has failed to live up to the agreement, we decided to unilaterally rip them offfor $7 486 million anyway. We can get away with this because we are the government. "

An analyst with Lehman Brothers told the New York Times, "Baltimore has been a success. . . . The schools that EAI took over were a disgrace, and today they're schools that work." Baltimore's Superin tendent of Schools, Walter G. Amprey, one of EAI's strongest defenders, praised the company, saying it "established a model and a template for us that has changed the way we are doing business." But the Bal timore Sun correctly chalked up the expe rience to the failures of government: EAI ran into the cold reality of urban education and city politics. The company chose a struggling urban system to estab lish a beachhead, and it was handling nine of Baltimore's most troubled schools. Mr. Golle (EAI president) signed a contract allowing the city to cancel with 90 days' notice. The escape clause, which Mr. Golle said was a "mistake," left EAI at the mercy of cost-cutting politics at a time of shrinking school resources.

Opponents of the Baltimore experiment with EAI, some of whom worked hard from the start to make sure it failed, claim that student performance as measured by test scores did not improve during the three year period of EAr s contract. They are not very quick to point out that EAI "main streamed" many children that otherwise would have been labeled "learning dis abled. " The company reduced the percent age of learning disabled in Baltimore from 25 percent (two and a half times the national average!) tojust 12 percent. A University of Maryland report explained that this fact "almost certainly accounts for some of the lack of increase in test scores." More recent data put EAr s work in an even more favorable light. According to the January 10, 1996, issue of Education Week, results from last spring's Maryland School 487 Performance Assessment Test became pub lic in late December, weeks after the can cellation of EAI's contract. They revealed "larger improvements in the nine schools run by EAI than in other city schools."

Baltimore's officialdom can't bring itself to apologize and reinstate what worked for the kids because, after all, it is the government and government knows best. On January 23, 1996, EAI suffered an other setback. Hartford, Connecticut, pulled the plug on its 16-month relationship with the company. More proof, opponents claimed, that privatization doesn't work. Closer inspection, once again, revealed politics as the real culprit. Teachers union agitators sabotaged the effort from the start, resisting every constructive move the com pany wanted to make. EAI was compelled to retain every employee and avoid any layoffs. It had to hire locally and submit to costly, nitpicking union work rules. Good business sense dictated a switch from one computer brand to another, but the com pany was prevented from doing so by the neanderthals opposed to change. The school board refused to get its act together and allow the company to straighten out its financial procedures as the contract stipu lated. To top it all off, Hartford's board of education·imitated the reprehensible exam ple of Baltimore: it decided to make up a budget deficit by simply not paying EAI for services rendered.

Perhaps some will say that we shouldn't be quick to give up on the idea of private management of public schools, that the events in Baltimore and Hartford are iso lated instances and nonrepeatable if we learn from the mistakes. But, alas, a round peg doesn't fit a square hole. The stronger argument would seem to belong to those who say the real mistake of Baltimore and Hartford was assuming that private management can be grafted on to government schools in the first place. 0 THEFREEMAN IDEASON LIBERTY The Spread of Education Before Compulsion: Britain and America in the Nineteenth Century by Edwin G. West M ost persons agree that children need the protection of the law against po tential abuse by parents. But evidence shows that only a small minority of parents turn out to be delinquent. In practice it is very seldom indeed that governments re move children from their family home. At the end of the 1980sfewer than two children per 10,000 below the age of 18 were under state care in either the United States or England and Wales. That is less than two hundredths of one percent! 1 It can thus reasonably be assumed that the vast majority ofparents are altruistic toward their children so that, for instance, they will not neglect their food, clothing, or shelter.