NCPA - National Center for Policy Analysis

Giving Employees Stock in Public Schools

November 5, 2014

Fifteen years ago, economist Richard Vedder suggested that public school employees "take ownership" of public schools through a stock plan. Benjamin Scafidi, senior fellow with the Friedman Foundation for Educational Choice, says that the idea is one worth revisiting.  

Stock ownership is not unusual in the private sector -- 25 million private sector employees own stock in their own employer's company. Vedder's idea, which he first published in a book entitled "Can Teachers Own Their Own Schools?" was that teachers and other public school employees would receive shares of stock in the particular public school in which they were employed. Shares could be distributed according to experience and an employee's particular position (principal, teacher, bus driver and the like). For example, a principal might receive 200 shares of stock for each year of experience, while a cafeteria worker might receive 50 shares of stock for each year of experience.   

Scafidi explains how pairing the stock ownership model with a system of school choice could completely change the educational marketplace. Rather than sending federal education dollars to schools, K-12 funds could be distributed directly to parents, who would then use them to pay for tuition at any school, whether public, private or charter. Parents would be able to allocate tuition dollars toward the schools that would best serve their children, and schools would have to compete. The competitive, free-market model could replace federal regulations and accountability standards, says Scafidi. Teachers would be able to teach according to the best interests of their students, not based on requirements from bureaucrats; if successful, students and parents would flock to them.    

What would this mean for the public schools with stock options? Scafidi says the employees would have a real stake in the outcome. If parents are choosing other schools, the employee-owned public schools would have to improve their own educational offerings, hire better management or sell their school -- or, watch their stock values fall.  

Scafidi writes that the model would more appropriately align teacher, parent and student interests and would provide public school teachers with a strong stake in the performance of their schools.  

Source: Benjamin Scafidi, "An Employee Stock Ownership Plan -- for America's Public Schools," Friedman Foundation for Educational Choice, October 22, 2014. 


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