NCPA - National Center for Policy Analysis


November 8, 2007

For-profit management of public schools is still in its infancy, and many wonder whether it can have a positive effect on student learning.  In Philadelphia, that idea has been put to the test and it appears that they do, according to a report by Paul E. Peterson, a professor of government at Harvard University and director of its Program on Education Policy and Governance, and Matthew M. Chingos, a research fellow at the Program.

In effect, a competition was run among the three types of management -- for-profit, nonprofit, and government-run. Four years into the race, here are the results:

  • Students at schools managed by for-profit firms were roughly six months ahead in math than would be expected had the schools remained in the hands of the school district.
  • In reading, students in schools managed by for-profit firms were two months further along than they would have been if the schools had been under district control, though that difference was not large enough to give a statistical certainty.
  • Meanwhile the nonprofits -- and the school district's own reorganized schools -- did no better than expected.

Though the methodology is state of the art, the findings will nonetheless be controversial, say Peterson and Chingos, because they contradict a prior study by the RAND Corp. in February which found no impact of private management on student performance.  The RAND study, however, failed to separate out the schools managed by the for-profit firms from those managed by the nonprofit organizations.  In their study, Peterson and Chingos also found that management effects are nil when the two are mixed together, as the positive impacts of for-profit firms are canceled out by the negative impacts of nonprofit organizations.

Source: Paul E. Peterson and Matthew M. Chingos, "Educational Rewards," Wall Street Journal, November 7, 2007.

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