NCPA - National Center for Policy Analysis

Focus on For-Profits in K-12 Education Misses the Real Divide

December 7, 2012

The debate over student education is heating up as for-profit and non-profit institutions are forced to defend themselves against a barrage of objections. For-profit institutions are accused of being influenced by corporations whereas non-profit schools are accused of being privatized, says Alex Hernandez of the American Enterprise Institute.

However, these arguments are merely distractors made by incumbent institutions, such as school districts, teachers unions, schools of education, and education publishers in an effort to fracture any opposition to their monopoly of public education.

  • Before public charter schools, school districts and teachers unions had complete monopolies in their markets.
  • In addition, education publishing companies -- a $19 billion for-profit industry -- have dictated what schools can buy.
  • Colleges of education invest little in their programs but generate substantial tuition revenue from their students.
  • Moreover, the combination of money from the education publishing company and lobbying from school districts and teachers unions have created a strong political force that make change increasingly difficult.

Public education represents one of the least innovative sectors in the U.S. economy despite receiving $596 billion per year in public funds. This is primarily because the complex institutional arrangement has made it nearly impossible for new providers to enter the market and create competition.

Various charter schools, teacher preparation programs, and education technology show plenty of promise to increase education standards, but are met with fierce resistance from incumbents. Most of the time, they are unable to get the same tax status as public schools or necessary funding to build a location for schooling.  However, states that have allowed competition to flourish by facilitating the rise of charter schools and teacher preparation programs have shown great promise.

Over the next couple of decades, there will be an emphasis on performance-based outcomes and the expansion of technology. Both trends will help break down the grip that incumbents hold by pressuring them to adopt reforms or lose to competitors that offer superior services. In any case, new providers will have more room to create innovative ideas.

Source: Alex Hernandez, "Focus on For-Profits in K-12 Education Misses the Real Divide," American Enterprise Institute, November 2012.


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