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Greedheads’ Christmas: The Seedy Side of Entrepreneurial Education Reform

Thursday, December 17, 2009

Officials charged with safeguarding school dollars should get wise to the greedheads.

'Twas the week before Christmas, and Race to the Top
Was the vendors’ obsession and focus nonstop.
The consultants were drafting proposals for states
With smug affirmations of positive fates,
While chiefs in their gray suits and governors, too,
Looked to Arne for dollars—please, more than a few.

In Oliver Stone’s Wall Street, Gordon Gekko (Michael Douglas) infamously asserted that “Greed, for lack of a better word, is good.”

In K-12 education, we submit, greed can be good, albeit ugly; but ensuring that children and taxpayers eke real benefits from the education market demands that consumers be at least as discerning as the suppliers are ardent. Today, that is too rarely the case.

We’re veteran champions of entrepreneurs, for-profits, outsourcing, competition, deregulation, and kindred efforts to open public education to providers other than government and operators other than bureaucrats. We’ve served on boards of some of these organizations, advised them and generally supported them.

As we survey today’s education landscape, we find far too many greedheads on the vendor side and fecklessness on the buyer side.

We’ve zero sympathy for hypocritical establishment grumps who aver that these “nontraditional” providers have darkened the previously pristine world of public schooling with the stain of self-interest. That world has long been dominated by adult “stakeholder” groups that are at least as self-interested as anybody in the private sector. They’ve been shielded by a government monopoly that has ill-served children and taxpayers alike while resisting every effort to reform it or render it more efficient.

Yes, many of today’s for-profit and non-profit operators are self-promoters out to make a buck—and some are little more than snake oil salesmen. Many others, of course, are honorable ventures with a track record of doing right by children and schools.

In the long run, however, whether children and taxpayers benefit from any of this depends on buyers as well as sellers. The problem is that today’s buyers are themselves creatures of the erstwhile government monopoly. They are mostly state and district officials, sometimes school leaders, with scant experience at gauging value for money. They’re only sporadically accountable for the wisdom or efficacy of their purchasing decisions. They’re not rewarded for cost savings or punished for failing to increase productivity. And they don’t spend their own money.

The whole ‘Race to the Top’ enterprise has become a red light district for lusty charlatans and randy peddlers.

Sometimes it works. There are now places and segments of schooling that can claim reasonably vigorous markets, multiple providers, proliferating choices, and signs of improved efficiency and client-mindedess. Bravo, we say. Yet as we survey today’s education landscape, we find far too many greedheads on the vendor side and fecklessness on the buyer side.

Textbook publishers, for example, enjoy a cozy oligopoly, golfing with superintendents, lobbying states to squelch competitors, and gulping up any rivals that survive the gauntlet long enough to develop viable businesses.

As 2009 ends, we see those same publishers angling for advantage in the nascent plan to devise tests to accompany the new “common core” standards. Regrettably, the whole “Race to the Top” enterprise has become a red light district for lusty charlatans and randy peddlers. Big firms full of wealthy MBA types—people who earn in a quarter what teachers make in a year—have gobbled up the $250,000 per state that the Gates Foundation offered as part of its own generous “consultant stimulus act,” along with additional dollars that states have tossed into the kitty. In return, they’re readying cool PowerPoint presentations, nifty white papers, and jargon-littered plans, all geared to helping states persuade Education Secretary Arne Duncan that yes, they are ready and eager to do his bidding.

It is vital that buyers be discerning, parsimonious, persistent, and exacting. The burden is on them to demand value in return for the money they’re spending.

Ah, the holiday spirit. Devising a competitive plan is thought by state officials to require the careful hanging of many glittery ornaments upon their proposals. Conveniently, the consultants (and states) are aided in this task by platoons of self-promoters who tout themselves as one-stop solutions—whether or not they’ve ever actually done successfully that which they’re now promising. “You need school turnarounds? We got turnarounds.” “You want Science, Technology, Engineering, and Mathematics? Look no further.” Plenty of outfits will promise to build your data system, take care of school leadership, fix teacher quality, or whatever else you may need. They’re often non-profits but they get pretty nearly the same plush salaries and reputation-boosting meetings with state and federal honchos, opportunities to self-importantly Blackberry late into the night, and future security—as new connections set them up for future rounds of philanthropic and taxpayer largesse.

It isn’t just Race to the Top, however, and it certainly isn’t new. The ink was scarcely dry on No Child Left Behind when slicksters were offering every imaginable form of “supplemental education services.” The operators of too many “virtual charter schools” deliver shoddy goods at high prices to taxpayers. Data gurus, professional developers, Individualized Education Program specialists, and curriculum refurbishers happily take state, federal, and/or local funds for a few days of running through their stock lectures. National “stars” fly in for a cool $10,000 or more to spend a day running dazzling sessions with checklists, inventories, and assorted “kids will love this” strategies. Motivational speakers pitch creative affirmation and welcoming learning environments. Equipped with jargon like “at-promise” (instead of “at-risk,” of course) and worksheets on the “invisible backpack of white privilege,” consultants and education school professors have padded their salaries with school funds at a handsome clip for decades.

Computer vendors and developers of learning software have long pitched a heady array of snazzy education technologies… that then sit, barely used, in the back of classrooms. We need scarcely mention the purveyors of buses, class rings and photos, cafeteria food, construction, and building maintenance, or any of the other good, old-fashioned enterprises that serenely and profitably peddle away while exploiting careless or bureaucratic purchasing habits.

It’s the taxpayer’s money purchasers spend, they’re not always sure how to judge quality, they lack measures of effectiveness or efficiency, and it’s tempting to avoid tough decisions or unpleasant conflict.

Let us say it again: plenty of private vendors offer quality products and services that benefit schooling and millions of young people. There’s a robust baby cooing in the scuzzy bathwater. Nor should anyone imagine that public education is unique in attracting profiteers along with value-for-your-buck entrepreneurs. Who doesn’t recall military procurement horror stories or the “Big Dig” ceiling panels that fatally fell off because the contractor cut corners?

Markets are supposed to be where buyers and sellers find mutual satisfaction, where prices get established by the willingness of some to pay enough that others find it worthwhile to produce the desired goods and services. Done right, markets are meritocratic as well as efficient.

This despite the proclivity of sellers to be greedy. Markets don’t presume that vendors will be selfless do-gooders. But it is vital that buyers be discerning, parsimonious, persistent, and exacting. The burden is on them to demand value in return for the money they’re spending. And in schooling, too often, purchasers have been heedless, ill-informed, bureaucratic, or gullible. It’s the taxpayer’s money they spend, they’re not always sure how to judge quality, they lack measures of effectiveness or efficiency, and it’s tempting to avoid tough decisions or unpleasant conflict. Reformers and would-be watchdogs often allow state chiefs and local superintendents to excuse irresponsible fiscal stewardship with airy talk of closing achievement gaps and the nobility of the education mission—thus ensuring that the greedheads will prosper another day.

Equipped with jargon like ‘at-promise’ and worksheets on the ‘invisible backpack of white privilege,’ consultants and education school professors have padded their salaries with school funds at a handsome clip for decades.

No, not a pretty picture. The only thing worse is when a monopolistic government tries to do everything itself. There, we have plenty of depressing history; aggrieved constituencies, the weight of bureaucratic routine, and the tug of employee demands means that it just doesn’t improve. The private market taking shape isn’t beautiful today but does hold the promise of getting better tomorrow. And it’ll get better faster if purchasers of these diverse goods and services demand value for their bucks and become more discriminating and less susceptible to faddish enthusiasms. We continue to believe in education entrepreneurship. But we’d be a lot happier if the officials charged with safeguarding school dollars would get wise to the greedheads. Gordon Gekko’s defense of self-interest was tinged with truth—but nobody really wants Gordon Gekko running their schools.

So they wrote many words and promised everyone a win,
Thus filling states’ stockings and bringing a grin
To the faces of teachers and school boards galore—
And doing right by the kids whom they say they adore.
Off to the side sat the taxpayer with battered purse,
Now so empty that he was right tempted to curse.
Observing all this, Rick and Checker are led
To entertain Grinch-like concerns in their head
About a world that is generous with gifts and good cheer
But leaves bills for the kids to pay in some future year.
Still, it’s the holiday season, so they’ll suspend doubt and fear—
And wish you much happiness in the New Year.

Frederick M. Hess is a resident scholar and director of education policy studies at the American Enterprise Institute. Chester E. Finn Jr. is a senior fellow at the Hoover Institution and president of the Thomas B. Fordham Institute.

FURTHER READING: Hess most recently examined Milwaukee’s charter schools for THE AMERICAN in “After Milwaukee.” He also discussed “Rewriting the Job Description” for America’s teachers. Jay Matthews explained how and why two of the country’s most successful entrepreneurial educators said, “‘We Don’t Want Your Money.’” And Diane Ravitch provides a “Question and Answer: The Truth About America’s Schools.”

Image by Darren Wamboldt/Bergman Group.

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