A Philosopher's Blog

Charter Schools I: Preliminaries & Monopolies

Posted in Uncategorized by Michael LaBossiere on January 6, 2017

In November of 2016, president elect Trump selected Betsy DeVos as his Secretary of Education. While this appointment seems to have changed her mind about Common Core, DeVos has remained committed to expanding charter schools. Charter schools operate outside of the public-school system but are funded with public money. They can be privately owned and run as for-profit business. As might be suspected, they tend to be rather controversial.

Before discussing charter schools, I need to present the biasing factors in my background. Like most Americans, I attended public schools. Unlike some Americans, I got a very good public education that laid the foundation for my undergraduate and graduate education. Both of my parents were educators; my father taught math and computer science and my mother had a long career as a guidance counsellor. I ended up going to a private college and then to a public graduate school. This led to my current career as a philosophy professor at a state university. I belong to the United Faculty of Florida, the NEA and the AFT. As such, I am a union member. As might be suspected, my background inclines me to be suspicious of charter schools. As such, I will take special care to consider the matter fairly and objectively.

As with most politically charged debates, the battle over charter schools tends to be long on rhetoric and short on reasoned arguments. Devoted proponents of charter schools lament the ruin of public education, crusade for choice, and praise the profit motive as panacea for the woes of the academies. Energized enemies of charter schools regard them as plots against public good and profiteering at the expense of the children.

While there is some merit behind these rhetorical stances, charter schools should neither be accepted nor rejected based on mere rhetoric or ideological stances. As liberals and conservatives have both noted, there are serious problems in the American education system. Charter schools have been advanced as a serious proposal to address some of these problems and are worthy of objective consideration. I will begin with what can be called the monopoly argument in favor of charter schools.

Proponents of charter schools often assert that the state holds a monopoly on education and employ arguments by analogy to show why this is a bad thing. For example, the state monopoly on education might be compared to living in an area with only one internet service provider. This provider offers poor service, but residents are forced by law to pay for it and competition is forbidden. While this is probably better than not having any internet access at all, it is certainly a bad situation that could be improved by competition. If the analogy holds, then poor quality education could be improved by legalizing competition.

This analogy can also be used, obviously enough, to argue that people who do have children in school should not be forced to pay into the education system. This would be, to stick with the analogy, like making people who have no computers (including tablets and phones) pay for internet access they do not use. This is, however, another issue and I will return to the matter of charter schools.

While the analogy does have some appeal, the state does not have a monopoly on education. There are, obviously enough, private schools that operate without public money. These provide competition to public schools, thus showing that there is not a monopoly. By going through the appropriate procedures, anyone with the resources can create a private school. And anyone with the resources to afford a private school can attend. As such, there is already a competitive education industry in place that provides an alternative to public education. There is also the option of home schooling, which also breaks the alleged monopoly.

Supporters of charter schools can counter that there is a monopoly without charter schools. To be specific, without charter schools, public schools have a monopoly on public money. Charter schools, by definition, break this monopoly by allowing public funds to go to schools outside the state education system.

This can allow privately owned charter schools to enjoy what amounts to state subsidies, thus making it easier to start a privately-owned charter school than a privately funded private school. Those who are concerned about state subsidies might find this sort of thing problematic, perhaps because it seems to confer an unfair advantage over privately funded schools and funnels public money into private hands.

Supporters can counter these criticisms by turning them into virtues. Public money spent on charter schools is good exactly because it makes it easier to fund competing schools. Private schools without public funding need to operate in a free market—they must compete for customer money without the benefit of the state picking winners and losers. As such, there will not be very many privately funded schools.  Charter schools benefit from the largesse of the state, although they do need to attract enough students. But this is made easier by the fact that charter school education is subsidized by public money.

As such, charter schools would break the public-school system’s monopoly on public money, although there is not a monopoly on education (since privately funded schools exist). The question remains as to whether or not breaking the funding monopoly is a good thing or not, which leads to the subject of the next essay in this series, that of choice.

 

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Gainful Employment & Education

Posted in Universities & Colleges by Michael LaBossiere on April 25, 2014
For-Profit Education

For-Profit Education (Photo credit: Truthout.org)

Since education is rather expensive, it seems reasonable for a student to expect a return on her investment. Given that the taxpayers often contribute to the education of students, it also makes sense that they also receive a return on their investment.

As it now stands, the return on the student’s investment is supposed to be a job that is proportional to the cost of education. Roughly put, a student should be able to reasonably work out of her school debt with the job that education is supposed to get her. In terms of the return on the taxpayer’s investment, the return is similar: the students funded by the taxpayers are supposed to get jobs and repay the investment through the taxes they pay. The student becomes the taxpayer, thus enabling the next generation of students to also become taxpayers.

Because the cost of education is so high these days, it is natural for some folks to place their hopes in the free market. The ideal is that for-profit schools will provide a high quality product (education that leads to a job) at a lower cost than the (supposedly) bloated state and traditional private schools. As might be suspected, the ideal is rather different from the real.

While state schools obviously receive state funds, the for-profit schools receive massive federal support—about $26 billion per year in grants and loans. Unfortunately, this money seems to be ill-spent: 20% of the for-profit school students default on student loans within three years of entering the repayment period. About half of all student loan defaulters went to such for-profit schools, although these schools make up 13% of the student population. The estimate is that about half of the loans funneled through students to the for-profit schools will be lost to default, which is hardly a good investment.

One of the main reasons a student defaults on loans (though not the only one) is financial hardship. As might be imagined, not earning an adequate paycheck is a clear way to end up in such hardship. While there are over 2,000 programs where the students had load debt but who paychecks were not adequate to keep them above the poverty line, 90% of these programs are at for-profit schools. As such, these schools seem to be a bad investment for both taxpayers and students. While public and traditional private schools do account for the other 10% that need to be addressed, they are quite clearly a better investment for taxpayers and students. This is not to say that such schools do not need improvement—but it is to say that the current for-profit model in not the solution.

There have been some attempts, such as those in 2011, to impose regulations aimed at addressing the predatory exploitation of students (and taxpayers) by institutions. Not surprisingly, these were countered by the well paid lobbyists working at the behest of the for-profits.

Interestingly, some states are pushing hard for performance based funding for public institutions. For example, my adopted state of Florida has seen the Republican dominated state legislature engage in what some might regard as micro-managing of education. In any case, we are been transitioned to a performance based model in which funding is linked to achieving goals set by the state. Naturally, for-profit schools are not impacted by this since they are private institutions. As such, the current trajectory seems to be for state schools to be state regulated in accordance with performance measures while the for-profit schools enjoy unfettered access to the federal largesse.

Some might suspect that the performance based funding approach being taken towards public universities and colleges is cover for reducing funding even more. This seems reasonable since one of the main effects has been to cut funding for some state schools (such as my own). It is also the case that the approach is designed to shift funding to schools that have more political influence—which is supported by looking at where the money goes.

It might also be suspected that the performance based funding is also designed to harm public schools and push students towards the for-profit schools. These schools typically enjoy excellent political connections and certainly would benefit from reduced public education opportunities. Of course, the profits of such schools come largely at the expense of students and taxpayers—they are thus well-subsidized by the state in a new twist on the old corporate welfare system.  Shockingly enough, there is little conservative rage at this wasteful socialism and these welfare queens.

 

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For-Profit, Non-Profit & Education

Posted in Business, Ethics, Philosophy, Universities & Colleges by Michael LaBossiere on December 2, 2013
For-Profit Education

For-Profit Education (Photo credit: Truthout.org)

As a professor, I have some interest in the increasing trend to turn education into a profit focused industry. One example of this is the push for schools to partner with for-profit companies that provide MOOCs. Another example is the relentless push for assessment that involves instruments provided by for-profit companies. There are many other specific examples, but it is clear that education is being regarded as a new frontier for economic exploitation.

Being a reasonable person, I do favor things that can increase the availability or quality of education (or both) while doing so at a lower cost. As such, I was rather intrigued by the idea of MOOCs and their promise to provide quality education to the masses at a low cost. Likewise, I was interested by the idea of for-profit colleges that were touted as providing quality education at a low cost—all driven by the invisible hand of market forces. As someone who has served on assessment committees since 2004, I am always eager to hear about effective methods of assessment that take as much workload off the faculty as possible.

Unfortunately, I have been rather disappointed by the reality of MOOCs, for-profit colleges and assessment. Since I have written numerous essays on these specific topics already, my focus will be on the generic problem that seems to arise from the for-profit model relative to the non-profit model of traditional education.

On the face of it, the problem with the for-profit approach is obvious: a for-profit must charge to a degree that covers the costs and also provides for a profit. In contrast, a non-profit needs to only cover its costs. To use an analogy, a for-profit is like a vehicle that is loaded with extra weight—it has to burn fuel to move itself, but also to move that weight. In contrast, the non-profit does not need to move that extra weight.

To take a specific example, consider a university that is considering contracting a for-profit company to provide instruments of assessment or online courses. The for-profit will need to charge the University for the cost (including paychecks for workers) of the instruments or courses, plus extra for the profit. That is, the university is effectively giving the company some of the money in return for nothing. After all, the university could simply create the assessments or courses itself and pay just the cost, thus saving money that could be used on other things, like student scholarships or updating obsolete classroom technology.

The obvious reply is to argue that a for-profit can provide goods and services at a lower cost than the university and, even with the profit tacked onto the bill, the cost to the university would be lower than it would be for the university to do it itself. For example, consider the development and operation of an online course. The university would need to pay faculty and staff their usual salaries to do this while a for-profit could hire cheaper labor to do the work (perhaps even outsourcing it to countries with very low wages). Also, the university would need to create the online infrastructure to  run the classes and this could cost considerably more than having a for-profit company provide infrastructure it already has in place (perhaps in another country).

The obvious counter to this reply is that university could simply do what the for-profit does and thus bypass the middleman. That is, if a for-profit company has lower costs because it will hire people in low-wage countries to do the work, the university could simply hire people in low-wage companies to do the work. There is, after all, no special for-profit magic that allows a for-profit company to do things that cannot be done by a non-profit. The university could thus save money or, alternatively, pay the low-wage workers a better wage.

It can be objected that while there is no special for-profit magic, for-profits have the advantage of the profit motive. That is, to steal a bit from Adam Smith, they will work hard to provide a better product at a lower price so that they can make that profit. Since non-profits do not make profits, they lack that motivation and hence will deliver inferior products at a higher cost.

The easy reply to that, as I have shown in my essays on for-profit MOOCs and for-profit colleges, is that the for-profits in education consistently deliver inferior products at higher prices than the non-profit colleges and universities.  This is not to say that a for-profit education company cannot deliver high quality at a lower cost than a non-profit. After all, just as there is no for-profit magic, there is no special for-profit curse that precludes this. However, universities should be cautious before turning to for-profit companies—assuming their goals are to provide quality education at a reasonable cost (as opposed to more corrupt goals).

 

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For Profit College, Again

Posted in Ethics, Philosophy, Politics, Universities & Colleges by Michael LaBossiere on October 21, 2013
For-Profit Education

For-Profit Education (Photo credit: Truthout.org)

While state support for United States public higher education dropped 25% from 2000 to 2010, for profit colleges have enjoyed an ever larger slice of public funds. Part of this is due to the increase in enrollment for the for-profit schools: in 1990 only 2% of undergraduate college students were enrolled in such schools, but in 2008-2009 it increased to 11.8%.

However, the for-profit schools get a disproportionate amount of state money in the form of federal money. While having 10% of the students in higher education, they received almost 25% of the Pell Grant money and 25% of the federal student loans.

The for-profit schools are also beneficiaries of the GI Bill: in 2010-2011 $1 billion of the $4.4 billion disbursed by the Department of Veterans Affairs went to just eight such schools. Overall, 37% of the GI Bill money went to for-profit schools.

As such, the for-profit schools are receiving state funds that are disproportionate to their actual enrollments at a time when public schools are having their state support cut. To use the rhetoric of the Tea Party and Republicans, this would seem to be socialism: the state just dumping taxpayer money to benefit a few takers. Moving away from the rhetoric, it does seem to be a point of concern that state money is being moved away from public institutions so as to enable for-profit institutions to profit. Shockingly enough, the Republicans (and most Democrats) are not outraged by this “socialism.”

This state money is the main revenue stream for the for-profits, so they are truly state-supported businesses. They are also successful at making money in this manner: they enjoy an average profit margin of 19%. This enables them to engage in advertising and thus gain more students who enable them to tap ever more into that sweet taxpayer largesse.

The obvious reply is to contend that the for-profit colleges earn these profits while state schools flounder in financial woes. This, it might be claimed, is proof that the for-profit approach is superior to the inherently inferior public approach. However, there are two replies to this.

The first, and most blindingly obvious, is that the for-profit colleges get most of their revenue from the state, thus their success depends on siphoning off taxpayer money into their coffers.

The second is that the for-profit schools often turn out to be disasters for their students, especially when compared to public schools.

While student debt is a serious problem, it is far worse for those who attend for-profit schools. 54% of the students who graduate with a BA from a for-profit school end up with over $30,000 in debt. In contrast, only 12% of public college graduates end up in that dire situation.

The for-profit schools also do poorly in actually placing students in jobs—the public schools do much better. As such, it is hardly a surprise that although students who attended for-profit colleges make up a fraction of the total college student population, they made up 48% of those who defaulted on student loans in 2010.

Given their rhetoric regarding government spending, socialism and people “taking” from the government, one would think that the Republicans would be leading a charge against the for-profit schools. After all, these schools are receiving large sums of public money and doing a poor job. As a faculty member at a public university I can attest to the Republican obsession with making public institutions prove that they are providing a return on the state money they get. I serve on various committees that exist primarily to collect and process assessment data to prove to the state legislature and governor that we are getting results for every penny we receive and our funding is tied to this data. Also not surprisingly, there is also a push to have private sector companies provide expensive tests at the taxpayers’ expense to, somewhat ironically, make sure the taxpayers’ money is being well spent.

However, this does not seem to be the case. Instead, the push by Republicans (and many Democrats) is for even more for-profit education that is funded by the taxpayer. This indicates that the opposition is to “socialism” of the sort where public money goes to  public colleges. The “socialism” that involves redistributing wealth from the taxpayers to the problematic for-profit colleges is apparently just fine.

 

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