NCPA - National Center for Policy Analysis

Charters Turn To Private Management

August 13, 1999

Founders of some charter schools are contracting with private, for-profit education-management companies, as they come face to face with the complexities of running schools. As a result, the number of such companies, while still small, is growing.

  • Although there are fewer than two dozen companies managing public schools now, and many operate only one or two schools each, analysts at Merrill Lynch & Co. expect such companies to grow over the next 10 to 15 years to account for 10 percent of U.S. elementary and secondary school spending -- about $36 billion a year.
  • At present, most of the 37 states with laws permitting charters require that charter holders be non-profits -- and most of the country's 1,100 charters are operated by parent, teacher or civic groups.
  • But coordinating such systems as managing a business office, selecting a curriculum, running a cafeteria and operating bus routes cries out for professional management, experts say.
  • Some management companies, such as Tesseract Group Inc., even offer to build new schools at no expense to taxpayers.

Real estate developers seeking to sell new homes in subdivisions with no schools nearby are a natural business fit with education- management companies, analysts point out.

But teachers' unions are fighting the trend tooth and nail. The president of the National Education Association warned members recently that for-profit companies were out to turn teachers into "profit maximizers."

Still, with states such as Florida and Arizona launching major school reforms, observers see a bright future for companies seeking to capitalize on education by offering a better product -- if they can avoid the shackles of the education bureaucracy.

Source: June Kronholz, "Tesseract and Others March Briskly Ahead in School Privatization," Wall Street Journal, August 13, 1999.

 

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