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Week of: March 4, 2001

When Teachers Become Entrepreneurs

by F.R. Duplantier

What teacher wouldn't want to own a part of his own school and have both a financial stake in its success and a shareholder's voice in its management?

We have spent several billion so far,
And still we have failed in our chore.
Public schools are a mess,
But they could be the best
If we just spent a few billion more.

"The for-profit approach largely replaces centralized bureaucratic control of schools with a decentralized delivery system where consumer choices enforce standards and accountability," observes Richard Vedder of the Independent Institute. "In virtually every other field of human endeavor where private for-profit corporations have existed alongside publicly owned and managed business, the for-profit private businesses offer a superior product, often at lower prices," he reports. "These commercial successes reflect inherent advantages of the market approach."

In a new book entitled Can Teachers Own Their Own Schools? Vedder explains that "the market provides incentives for producers to offer a high-quality product, while economizing on the resources used. In education," he notes, "several factors enter into customer satisfaction. Non-instructional factors are relevant and sometimes important," Vedder affirms; "parents prefer to send their children to schools with successful sports teams, pleasant physical facilities, and a low incidence of crime. Most parents, however, are primarily interested in their children . . . acquiring knowledge and academic skills. A successful for- profit school must have satisfied customers," he comments, "which means it must demonstrate that it is offering positive learning experiences to children."

Vedder emphasizes that "for-profits must show their success by having students demonstrate learning skills on objective measures of performance, such as state tests and university entrance exams." He also points out that "the profit motive encourages schools to engage in curricular and institutional innovation. A successful school may attract students by offering state-of-the-art distance learning opportunities, by using traditional learning approaches favored by many parents (e.g., teaching phonics or multiplication tables) and by introducing foreign language instruction in early grades. Teaching what parents want taught, not what bureaucrats dictate, simultaneously increases consumer satisfaction and the school's financial success."

Vedder argues that "a teacher receiving stock in a for-profit educational corporation might expect to derive substantial financial benefits." He also recognizes that "many teachers today are dissatisfied by the central control over their classrooms and their limited ability to select curriculum, discipline students, and participate meaningfully in the school community. In a school substantially owned by teachers," Vedder promises, "this will work very differently."

Teacher-owned schools! What a brilliant idea! Talk about empowerment! But wouldn't the transformation from public nonprofit to private for-profit be complicated and disruptive? Not necessarily. In fact, it could be surprisingly simple. "Following the model of Employee Stock Ownership Plans (ESOPs), teachers and other employees would gain incentives to satisfy customers while containing costs," Vedder comments. "Existing school districts would become funding mechanisms providing scholarships (vouchers) to students, who would pay tuition at the school of their choice," he predicts. "Such schools would make profits by reducing costs through increases in efficiency and/or expanding revenues through offering superior education products."


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