Get Ready for Public School Inc

Insight on the News, Jan 10, 2000 by Aimee Howd

The education system In the 21st century no longer may be a government monopoly but will be open to the free-market forces of quality, competition and client service.

The 20th century has been one of public education, but the 21st may see more emphasis on education than on public. The educational establishment has evolved into a government-run monopoly costing hundreds of billions of dollars every year. But while per-pupil spending has increased by more than 70 percent (in constant dollars) since the 1970s, student achievement on national tests has stayed relatively level, according to data provided by the U.S. Department of Education.

Although theoreticians may spin elaborate schema backed by expensive studies for the failure of public schools to impart real learning, a burgeoning movement is coming in the back door to change schools and schooling piece by piece, with practical improvement. This movement is betting -- and risking its money -- on the hunch that the government monopoly bas not allowed education to benefit as much as other sectors of the economy from the research and development that produces better ways of doing things. The new players believe that the lack of intellectual diversity in the educational establishment has deprived schools of the kind of ferment, restructuring and transformation that bas enabled free entrepreneurs to make the U.S. economy No. 1 in the world.

"Leaders in the capital markets recognize education as a huge opportunity" says Todd Parchman, who presides over Parchman, Vaughan & Co. LLC, a firm of private-investment bankers for the education industry. The firm is unique, a cutting-edge boutique for clients interested in for-profit education projects ranging from $20 million to $50 million.

What sort of projects? Many already are familiar. No one thinks anything of school districts outsourcing most of the services Americans have come to expect from their public schools. There are transportation companies that compete for public contracts to provide busing and food-service providers who, for the right price, will brave junior-high-schoolers' angst and cook up lunches in the cafeteria. Even the companies that sell the curricula which schools purchase are involved in risk-taking.

But ready or not, more and more entrepreneurs are making a profit by imparting actual instruction -- and doing it better, more efficiently and more creatively. Even public-school teachers are breaking out of the government monopoly and setting out on their own to stir up a little friendly competition.

Transformation is everywhere. For example, charter-school legislation, which enables public schools to innovate free from the constraints of many state and local regulations, has been approved in 37 states. Minnesota's launch of the first charter school in 1992 already has had a ripple effect. Last year, according to Charter Friends National Network President Jon Schroeder, 1,700 charter schools in 32 states served about 350,000 students. Many school districts contract with for-profit school-management companies to run the daily operations of the schools. Appropriations for federal start-up grants to charter schools increased from $6 million in 1995 to $145 million in 2000. "When these schools open there is a waiting list from day one," says Parchman. "Parents want to choose what they perceive to be a better opportunity for their kids."

Overlapping the charter-school movement, a new professional philosophy is gaining acceptance with educators -- namely, that professionals with teaching degrees should view themselves as entrepreneurs of education, with a product (knowledge) and a service (teaching) to sell to school districts or directly to clients, not limiting their career options to working as state employees bound to operate under traditional government regulations for a salary that isn't correlated to their effectiveness.

The Association of Educators in Private Practice, or AEPP, is at the heart of this shift. "It's really a different way of thinking about education ... as the business of education," explains Chris Yelich, a former high-school teacher who founded AEPP with 16 people in 1990. "At first, we had a hard rime even explaining to people who we were," Yelich, who now contracts to teach chemistry classes at a public school, tells Insight. Today AEPP comprises 750 members, ranging from one-person tutoring services to large school-management companies.

Parents, school boards and school districts desperate for fresh prescriptions to cure the public-school system's nagging ailments increasingly are looking at education providers in a new way. More and more, they are looking at private provider initiatives.

In response to establishment criticism that private providers may be dangerous to the health of education, the private-practice teachers say that, in most areas, competition drives quality up. The 1990s brought about a technological revolution in the U.S. economy when venture capitalists took note of consumer demands and invested their dollars into innovative new products. In fact, many economists have said that the U.S. success of the last decade, compared with the relative stagnation of European economies, has happened only because the United States is the prime market for venture capital.