Category Archives: School Choice

Education free markets with competition and flexible prices

New York City: uh oh

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The Big Apple has been well run for 20 years. The mayor-elect promises change

We do not follow USA politics – better for the blood pressure that way. But a friend gifted us the 9 November Economist, so I flipped a few pages – finding a quite alarming article on the NYC mayoral election. Two decades ago NYC was a city that I dreaded having to visit on business. Now it is a thriving technology center, has much-improved public schools and some school choice. NYC has even become a desirable tourist destination. Some of that transformation is due to the steady and practical hand of 3-term mayor Michael Bloomberg.

Besides its traditional brainy industries—finance, property and the media—the city now has a thriving technology sector, which generates $30 billion in annual wages. Pay for tech workers is growing even as total pay on Wall Street has fallen (since so many bankers were laid off). Roche, a drugmaker, recently announced that it would move its biotech centre from New Jersey to Manhattan. Since 2007 Brooklyn’s tech cluster has grown faster than that of any large American county save San Francisco. Mr Bloomberg has given land and money to Cornell University and the Technion (an Israeli college) to develop an applied science campus, hoping that this will foster a start-up culture like Silicon Valley’s.

What is scary is that Bloomberg has been replaced by a public-service-union backed politician with zero executive experience. Let’s hope this guy turns out to be similar to London mayor Ken Livingstone. I.e., not as much a disaster as expected. 

Can the Bloomberg education reforms withstand the assault promised by a man bankrolled by teachers unions?

Before 2002, New York’s schools were in poor shape. More than a fifth of students dropped out of high school before graduating. Not one city public school was in New York state’s leading 25, says Mr Bloomberg; today 22 out of 25 are. Mr Bloomberg took control of the schools from a reactionary school board. He closed failing schools, opened smaller ones and allowed some charter schools (which are publicly funded but independently run) to operate. He made principals accountable for test scores and tried to make it easier to sack bad teachers. Overall, he made some progress. In 2003, 20.5% of New York’s pupils were proficient, or better, in maths on national tests; today 29.6% are. Charter schools in Harlem have done particularly well. But the unions hate them and Mr de Blasio means to curb them. Some 20,000 parents protested against his plans last month.

NYC was nowhere near “done” with transforming a dysfunctional, unaccountable school system to Finland standards. And the 1% won’t be touched by a reversion to typical US schools that are primarily in the business of making life comfortable for administrators (and to a much lesser extent, for teachers). The 1% send their kids to elite private schools. Meanwhile middle class hopes depend on what is available at public schools (and the lucky lottery winners, a tiny number access charter schools). And education is only one aspect of the better 2013 New York City.

Besides the unions, who voted for Bill de Blasio?

Reed Hastings of Netflix at Wired Business Conference

Chris Anderson produced an excellent Reed Hastings interview during the Wired conference.Anderson is good at asking a short question, then getting out of the way. We learned a lot about Netflix strategy and were very pleased that Chris asked Reed the school choice question.

Hastings outlined his view that a key reason charter schools can be so much more effective is the absence of the elected school board. Which is frequently populated by wannabe politicians as the first, temporary step on their way to running for city council, etc. until they land themselves a lifetime seat at the trough. The entire interview is worth watching just for the the education segment.

More from WSJ 2008:

(…) “After Pure Software, I had a bunch of money, and I didn’t really want to buy yachts and such things,” he said. “I wanted to find something important to do. And I started looking at education, trying to figure out why our education is lagging when our technology is increasing at great rates and there’s great innovation in so many other areas — health care, biotech, information technology, movie-making. Why not education?”

Mr. Hastings, who taught high- school math in Swaziland from 1983 to 1986, found a vehicle for innovation in charter schools. Naturally, Mr. Hastings brought an entrepreneur’s sensibility to the endeavor.

“We’re finding out more and more that competitive forces can provide great improvement in services — telephones and airlines being obvious examples,” he said. “Now, those are for-profit sectors, but you can obviously see this in the nonprofit sector as well. There’s not one environmental nonprofit. There are dozens, and they all compete for impact and prestige and donor dollars. And they have different approaches to the problems and that’s healthy.”

Mr. Hastings said K-12 education is “the last big government monopoly in America” and that “charter schools are about breaking up the public monopoly, with all its rules and bureaucracy.” In California, “the rule book for schools is this big,” he said, spreading his hand as wide as a phone book. Charter schools “give teachers a way to form their own public schools, more freedom to express their craft, and make schools voluntary for students. No one is assigned. This sets up a very healthy model that provides for innovation because the innovators, the innovative teachers, are drawn to these schools.”

Hastings is on the board of KIPP Academy, the largest group of high performing charter schools.

How Public Schools Are Drowning State and Local Budgets

This Cato policy forum was very, very informative. Not surprising given the expertise of the discussants:

Patrick Byrne, CEO, Overstock.com, and Chairman, The Foundation for Educational Choice; Kil Huh, Director of Research, Pew Center on the States; and Adam Schaeffer, Policy Analyst, Cato Center for Educational Freedom; moderated by Robert Enlow, President, Foundation for Educational Choice; with introductions by Neal McCluskey, Associate Director, Cato Center for Educational Freedom.

Health care is the budget buster at the federal level, but K-12 education is what’s poised to bankrupt state and local governments. Spending on public education eats up around half of the general budget in most states, and it’s by far the priciest single item. For every dollar raised by state and local governments for Medicaid, three dollars go to K-12 schooling. As a result, combined state budget gaps in the high tens of billions of dollars are predicted through at least 2012.

That’s the immediate problem. Just over the horizon, things look worse. State public-employee pension systems are facing a trillion-dollar shortfall in their commitments, driven in large part by the massive costs of public-school employee benefits.

So exactly how bad is the education spending crisis? Is there anything we can do to avoid huge state and local tax increases or a serious decline in the breadth and quality of educational services?

QuickTimeWatch the Event in QuickTime (M4V)
ipodDownload a Podcast of the Event (MP3)

School vouchers: Texas might give vouchers a chance to save their budget

Though they call it the Taxpayers’ Savings Grant and it looks like the Texas politics just might enable the reform.

(…) it would provide grants of up to $5,143 or the cost of private school tuition, whichever is less, for every Texas child who moved from a public school to a private school. Those eligible would be parents whose children are entering either kindergarten or first grade, and those with kids who have been in public schools for at least one year. The plan has significant support from state legislators and some school principals.

(…) the state would save about $3,429 every time a child is transferred. If, as expected, 350,000 students transfer to private schools, the state would save more than $2 billion over the next two years. Whatever money the state saved would stay with the local schools to help alleviate the cuts they face.

The teachers unions will surely be in favor of this reform.

Teacher unions are howling that the proposal would privatize public education (…)

The size of the voucher looks skinny, probably because the $8572 understates the true per student spend. We highly recommend the Cato seminar on this topic Fiscal Undertow: How Public Schools Are Drowning State and Local Budgets, and What to Do about It. From that seminar you will learn what overall US education spending really is, including an estimate of average per student spending of $14,000 – of which only a small portion is actually going to pay teachers (most of the money feeds the education establishment). The 14k is an average so obviously many districts spend much more. E.g., Washington D.C. admits to spending $28,000 per student. The US average private school spend is about $7,000 and tuition about $5,500 (the shortfall made up by private charities).

Joel Klein – What the school reform debate misses about teachers

Joel Klein has resigned as chancellor of NYC Schools, terminating an eight-year stint in one of the toughest jobs on the planet. Perhaps the resignation liberates his commentary a bit:

As the debate rages over public unions and, in particular, over their role in school reform, an unfortunate dichotomy about America’s teachers has emerged. On one side, unions and many teachers say that teachers are unfairly vilified, that they work incredibly hard under difficult circumstances and that they are underpaid. Critics, meanwhile, say that our education system is broken and that to fix it we need better teachers. They say that teachers today have protections and benefits not seen in the private sector – such as life tenure, lifetime pension and health benefits, and short workdays and workyears.

Both sides are right.

(…)

Not true, but you can see a glimpse of Klein’s political skills there. He did succeed to push the unions back an inch or two, but the oppressive weight of the rules and the heavy chains of regulations remain firmly in place. E.g., in the coming layoffs it is sensible to retain strictly on the basis of first in last out? As Klein says “that’s nuts”.

But that is exactly the obsolete factory-labor scheme favored by the unions. “Don’t talk to us about competence – only seniority matters!”

(…) Whatever the criteria, the key point is that we must evaluate and differentiate – with consequences. We do teachers an enormous disservice by perpetuating the myth that we can’t evaluate their performance and that, consequently, neither excellence nor poor performance matters. Teachers are far too important to our students and the future of our country to treat them as interchangeable cogs or widgets.

For an illuminating Klein interview I recommend the Freakonomics Radio “Exit Interview“.

Grockit: real education innovation?

Nivi is preparing what he calls a “hostile takeover” of the K-12 education system, with curriculum that adheres to the standards set by each state for its public schools. Schools will also be able to create private networks, delivering their own content via the Grockit platform, similar to the way another buzzed-about startup, Ning, provides tools for communities to build their own social networks.

Grockit says it is “a social network for studying”. This is not the only such startup, but it smells like innovation is making a tiny step in American education. And not suprising when you consider the investors (plus another $7 million series C in May, total $17.7m now):

(…) Grockit has raised $10.7 million in venture financing from Benchmark Capital, Integral Capital Partners and angel investors like LinkedIn founder Reid Hoffman and Zynga founder Mark Pincus.

And the founder knows the test prep turf, and possibly a thing or two about excellence in teaching:

(…) Grockit founder and CEO Farbood Nivi, a onetime teacher of the year for The Princeton Review, designed the site based on his classroom experiences. As the only instructor in a room with 20 or more students ranging in ability, he broke his classes down into groups where weaker students could learn from stronger students, who in turn reinforced their own learning by teaching.

Grockit, founded in 2006, is not a new company, but has recently pivoted to this new “social study group” business model (from the original model = online video prep courses).

(…) The long-term opportunity for Grockit is in matching teachers with students, says Lasky, who compares the inefficiency in today’s educational system to the auction market, pre-eBay (EBAY).

“The best algebra teacher in America may be in Mobile, Alabama, and she sees a random collection of thirty kids who happen to be in that grade, in that place, at that time,” Lasky explains. “I think if we could liberate education from these constraints using the Internet in the same way that eBay liberated collectibles from local flea markets and garage sales, it’s a multi-billion dollar opportunity.”

After all, while standardized tests may not be around forever, algebra is seemingly here to stay.

No question that Benchmark’s Lasky is correct. And I do hope that Grockit finds a path to profitability. The education productivity gap is way bigger than pre-post eBay. More tidbits on Grockit’s 2008 launch are discussed at Techcrunch50 (including video of the Grockit presentation).

BTW, that “hostile takeover” may already be underway at the Grockit Summer Enrichment Academy.

A few of the other education startups are discussed in this WSJ summary (DreamBox, SmartyCard, and Brightstorm). The venture capital numbers are getting to be biggish:

The online educational industry has been getting a big boost from venture capital firms. Last year, about $1 billion was invested in learning technology companies, according to Ambient Insight, a market research firm focusing on education and technology. That’s up from $850.6 million invested in 2007.

Bill Strickland and Waiting for Superman

This TED Talk by education pioneer Bill Strickland will get your attention. Social entrepreneur Strickland is not polite about the state of American inner city schools, but he is doing something about it in Pittsburgh, and branching out into other cities like San Francisco. He has a real talent for raising huge amounts of money for his arts-oriented institute Manchester Bidwell.

Bill Strickland’s journey from at-risk youth to 1996 MacArthur “Genius” grant recipient would be remarkable in itself, if it were not overshadowed by the staggering breadth of his vision. While moonlighting as an airline pilot, Strickland founded Manchester Bidwell, a world-class institute in his native Pittsburgh devoted to vocational instruction in partnership with big business — and, almost incidentally, home to a Grammy-winning record label and a world-class jazz performance series. Yet its emphasis on the arts is no accident, as it embodies Strickland’s conviction that an atmosphere of high culture and respect will energize even the most troubled students.

With job placement rates that rival most universities, Manchester Bidwell’s success has attracted the attention of everyone from George Bush, Sr. (who appointed Strickland to a six-year term on the board of the NEA) to Fred Rogers (who invited Strickland to demonstrate pot throwing on Mister Rogers’ Neighborhood). And though cumbersome slide trays have been replaced by PowerPoint, the inspirational power of his speeches and slide shows are the stuff of lecture circuit legend.

Bill’s website is Make the Impossible Possible. Check out the Bidwell training center site. There’s an excellent article on Strickland and the evolution of his ‘empire’ Bill Strickland: Role model for social entrepreneurship .

His book is Make the Impossible Possible: One Man’s Crusade to Inspire Others to Dream Bigger and Achieve the Extraordinary.

Check out the trailer for the 2010 documentary release Waiting for Superman, which premiered at the Sundance Film Festival (info page). Bill Strickland is one of the featured educators, along with such successful charter schools as Kipp, Summit Prep, SEED, and Harlem Children’s Zone.

“. . .follows a handful of promising kids through a dysfunctional education system. Embracing the belief in the philosophy that good teachers make good schools, and questioning the role of unions in maintaining the status quo, Guggenheim offers hope by exploring innovative approaches taken by education reformers and charter schools that have – in reshaping the culture – refused to leave their students behind”.

The Waiting for Superman website is a useful resource on American education reform. E.g., this Education News page.

And here’s an excerpt from a review of the film by Elliot Kotek:

(…) Through his dissection of the state of public education by breaking them into elemental units — kids, teachers, administrators, unions, schools, states and the nation at large — Guggenheim is somehow able to present the complex issues at play with relevant simplicity and global context. Are our kids failing school? Or are our schools failing our kids? And how much injustice is being done against kids in the name of harmony among adults?

In 102 minutes, Guggenheim enables us to isolate the institutionalized exigencies inherent in the system, and to identify the heroes and pioneers attempting to become the purveyors of an education that will ready the next generation for the onslaught of opportunities.

While the situational disparity between state of the teachers’ unions and the health of the system they are supposed to serve will no doubt stir heated debate in the months that follow the movie’s release (one could even argue that Randi Weingarten and the two major unions fulfill their roles as villains), the heart of the film belongs to the kids — Anthony, Bianca, Daisy and Francisco. Sampled from across the country, these small individuals represent the struggle for all of those without the means to break the molds that bind them in a vicious circle of “academic sinkholes,” “drop-out factories,” “turkey trots” and “lemon dances.” The film’s dramatic depiction that those who strive to make their children’s lives better must rely on the luck of lottery systems for acceptance into KIPP, Green Dot charter and other alternative schools, is both harrowing and heartbreaking.

Teach for America gets results

“On average, high school students taught by TFA corps members performed significantly better on state-required end-of-course exams, especially in math and science, than peers taught by far more experienced instructors. The TFA teachers’ effect on student achievement in core classroom subjects was nearly three times the effect of teachers with three or more years of experience.” …Ms. Hannaway notes, “Students are better off being exposed to teachers with a high level of skill.”

Do you think the teachers’ unions agree with that? Uh, no…. The study referenced in this WSJ op-ed is from the Urban Institute: The Effect of Teach for America on Student Performance in High School. All I’ve had time to read is the Urban Institute summary — the conclusions look plausible, but let’s look for objective critiques of the study. I’ve read enough education study results to appreciate that it isn’t trivial to get reliable, repeatable results.

School choice: Shortcomings of U.S. School Choice Research…

Today I heard a brief interview on the Cato Daily Podcast with economist John Merrifield. Merrifield is the author of a new Cato Policy Analysis which demonstrates that none of the essential ingredients of free markets exist in any of the US experiments. He is correct — but I had not focused on that fact until he raised it. Periodically we hear of some new study reporting that “we proved markets don’t work that well in education”. That’s rubbish, even advanced school choice systems like the Netherlands are nothing like real markets.

…The most intensely studied programs lack most or all of the key elements of market systems, including profit, price change, market entry, and product differentiation— factors that are normally central to any discussion of market effects. In essence, researchers have drawn conclusions about apples by studying lemons.

Merrifield suggests that for now, in the absence of any real world education markets, that

…economists should look to simulation models, indirect evidence such as outcomes in similar industries, and school systems abroad that enjoy varying degrees of market accountability.

Robert Frank Inadvertently Makes the Case for School Choice

Cato-at-liberty:

Matt Yglesias points to an article in Sunday’s Washington Post by economist Robert Frank that makes a strong case for school choice. Well, OK, he doesn’t explicitly talk about school choice, but he certainly does a good job explaining the problems caused by the absence of choice:

In the 1950s, as now, families tried to buy houses in the best school districts they could afford. But strict credit limits held the bidding in check. Lenders typically required down payments of 20 percent or more and would not issue loans for more than three times a borrower’s annual income.

In a well-intentioned but ultimately misguided move to help more families enter the housing market, borrowing restrictions were relaxed during the intervening decades. Down payment requirements fell steadily, and in recent years, many houses were bought with no money down. Adjustable-rate mortgages and balloon payments further boosted families’ ability to bid for housing.

The most important thing to note, though, is that the scarcity of good schools Frank identifies is not an inherent fact about the universe, but a consequence of the public school monopoly. In a competitive education market, a shortage of good schools in a given area would spur people to either start new schools or expand the best of the existing ones. But the public school system has few mechanisms for doing either of those things (charter schools are a very limited mechanism for starting innovative public schools). Which means that the supply of good public schools is artificially limited, leading parents to bid up their price. The way to alleviate the shortage of good schools is not to re-regulate the mortgage market, but to reform the education system so that it’s easier to start and expand high-quality schools. Few things would do that as effectively as a robust program of school choice.

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