Academic freedom: the typical urban school district's personnel and budgeting systems leave principals without much say in hiring teachers or allocating resources. The decentralization movement may just change that - forum

Education Next, Winter, 2004 by William G. Ouchi

The Los Angeles Unified School District is the second largest school system in the nation--and perhaps the worst. Slightly less than half of its 75,000 employees are classroom teachers, meaning that Los Angeles spends just 35 percent of its budget on teacher pay. By comparison, the school systems in Houston, Texas, and Edmonton, in the Canadian province of Alberta, spend 49 percent and 56 percent, respectively, of their budgets on teachers. Since 1980, Los Angeles Unified's enrollment has grown by 180,000 students, but the district has added only 15 schools with a total of 20,000 seats. As a result, nearly 200,000 students must be bused to a distant campus while most attend multitrack, year-round schools that can push more students through but offer 17 fewer days of instruction.

Although elementary schoolers in Los Angeles have made real gains in literacy in recent years, among high-school students, only 23 percent in reading and 34 percent in math meet or exceed the national norm on the Stanford 9. Of the district's teachers, 27 percent lack full credentials. The system has a chronic shortage of qualified principals.

If Los Angeles is the worst school district in America, its East Coast cousin, New York City, is a close second. And the Chicago schools, while improving, are still recovering from the day in 1988 when William J. Bennett, secretary of education in the Reagan administration, pronounced them the "worst in the nation." Why are these three school systems in such deep disarray? Certainly not because they are the three largest. None of them has more than a fraction of IBM or Toyota's work force, and those companies are icons of good management. Nor is it because they serve high percentages of minority children from low-income families. Houston's schools, which are equally minority and poor, perform well relative to other urban school districts. The reason is that the school districts in New York, Los Angeles, and Chicago are too centralized, much too top-down in their management, for their size.

To be fair, I have not studied every school district in America, and I cannot prove that these three are the worst. However, I have studied these three in depth, along with several others that have managed to achieve true decentralization. As a business school professor, I have also spent 30 years studying the largest companies in the United States, and it's clear that any organization as big as these must be truly decentralized or it will fail. A series of business-focused studies has established firmly that with more than about 3,000 employees have fully developed bureaucratic structures with high overhead costs, many specialist staff positions, and extensive sets of rules. Studies by Alfred Chandler and Oliver Williamson have demonstrated that such organizations must decentralize decision-making, thereby granting autonomy with accountability to sub-units, in order to function effectively. Decisions made at the top of a large bureaucracy will suffer from the absence of detailed information about local conditions at each site, will be slow to cope with any unusual situations, and will tend to enforce standardized procedures on every situation, no matter how poorly those procedures may fit the situation.

Decentralization has been a popular theme in school districts for a long time. Indeed, most districts claim that they are decentralized, having latched onto the "site-based management" movement of the 1980s. Superintendents and central-office personnel point to their local school councils, staffed by parents, teachers, and school administrators, and claim that they have moved decisionmaking down to the school level. However, they have neither achieved nor even attempted true decentralization, which requires that power over the budget be given to each school--and taken away from the central office. It's the golden rule of power: whoever has the gold makes the rules. No one has made this point more clearly than New York University scholar Diane Ravitch. Her 1974 book The Great School Wars describes how New York City has played educational three-card monte over its long public school history by moving apparent control over decisions up and down the system, between the central chancellor's office and the local superintendents, but never yielding any fraction of control to the schools.

While Los Angeles too claims to be decentralized, the principal of one of the inner city's most successful schools says angrily, "There is no belief system in the district now that schools can make decisions for themselves--and it's only gotten worse." Another principal said, "We really don't make budgets here. The mother district really tells us how many to hire of which kind, pays them, takes care of all that"

In Making Schools Work, Lydia Segal and I detail the results of an empirical study of nine school systems that vary dramatically in their degree of decentralization. In addition to New York City, Los Angeles, and Chicago, our study included the school systems in Houston, Edmonton, and Seattle, each of which is relatively decentralized, as well as the three largest Catholic school systems in the United States--Chicago, New York City, and Los Angeles--which are more like loose federations of schools than "systems." The findings from our study demonstrate that true decentralization yields benefits in both efficiency and performance.