School Choice Is Good, Unless Its The Wrong Choice

My mom sent me an email a few days ago about a Charter Schools USA (CSUSA) charter school that was trying to get approval in Cherokee County, Georgia. I have a stake in the decision. In addition to being a product of Cherokee County schools, my mom is a second grade teacher in the school district. She has been feeling uneasy about her job security since the financial crisis. She judged this charter school to be an additional threat to her job by taking resources out of the school system.

Let me start by saying that my position is not out of self-interest because I am not concerned about my mother’s job. She is an extremely good teacher. She has won awards for her work. She is beloved by students and parents. She puts in hours during the school year that would an investment banker blush. I am confident that she could find a job in any kind of educational system.

Furthermore, if she was as crappy teacher who would lose her job because of a charter school, then that would be an ideal outcome. No one is entitled to keep their job just because they have it already. A charter school displacing a failing system and trying something new is exactly the way the charter school concept should function.

That is not what would happen with CSUSA.

Competition and consumer choice are generally good things. Consumers allocate more resources to institutions that perform better than their competitors. When a competitor falls behind, they have to raise their game or they won’t last much longer. If they do improve, consumers get greater benefits, and someone else has to perform better. This creates a virtuous cycle of improvement in goods and services with both consumers and institutions benefiting.

On the other hand, the government monopoly on K-12 education is generally a bad thing. America’s educational system has failed. Without competition and choice, there is little incentive to improve. Our children lag behind other developed countries in math and reading and are losing ground to rising powers. What is most perversely about this situation is American children have the highest level of self-confidence in their academic abilities in the world (see, NurtureShock). Our system generates misplaced confidence, and public resources are misplaced in a system that fails to improve.

The problem with CSUSA is that it would not displace a failing system or necessarily improve the quality of education in Cherokee County.

Cherokee County schools are doing pretty well. Students in the county exceeded averages scores on the Criterion-Referenced Competency Tests (CRTC) 90% to 78%. Anecdotally,  I have never felt held back in what I could achieve by the quality of education I received. I received scholarships to the University of Georgia and then Boston University School of Law. There is not much impetus to displace the current system because it provides students the necessary opportunities to be successful.

Just because something works now does not mean it cannot be made better, but there is reason to doubt the ability of CSUSA to do better. For one, most customers are not satisfied with their services. Parent, teacher and student reviews of their schools on GreatSchools.org are not exactly enthusiastic. Neither are there ratings from Great Schools.

All CSUSA schools except for one in Coweta County are in Florida. According to the Cherokee County School Board, “the only national test [Georgia and Florida] share is the SAT. Average SAT scores for CSUSA’s one high school, Florida’s Gateway Charter High School, in 2009 were 450 reading, 449 math and 446 writing. . . which are below average for its home district of Lee County, Fla., and significantly below the 2009 average scores for [Cherokee County School District] seniors: 520 reading, 530 math and 510 writing. The scores for Gateway seniors are also below the 2009 State of Georgia SAT average: 490 reading, 491 math and 479 writing.”

CSUSA schools do outperform the average Florida school. 39% of  CSUSA schools met Adequate Yearly Progress under Florida’s No Child Left Behind standards in 2009, relative to 23% of all public schools in Florida.

However, the difference may not be attributable to superior quality of education. Charter schools self-select better students. Students and parents who care more and are more involved take the additional steps necessary to apply for charter schools. The charter school is operating in a better-than-average pool of students, and this may account for the difference over the average school.

What the CSUSA is likely to do is line private pockets with public money. Looking at it CSUSA’s actions, getting rich on taxpayers dime is seemingly the primary intent, and educating just-so-happens to be the means to do it.

CSUSA has applied to open charter schools in Cherokee, Cobb, Forsyth, Henry, Coweta and Chatham Counties. If the goal is to improve educational performance, why not choose Clayton, Dekalb, and Fulton? It doesn’t look like they have any interest in educating at-risk youth in low-performing school districts. They picked relatively wealthy and well-educated suburban counties. The inferences is that CSUSA is guided by economic, not social or educational, interests.

Their choice in counties here in Georgia casts further doubt on the quality of education they already provide in Florida. If they are cherry-picking from the best school districts, then exceeding the average school in the state is even less of an accomplishment. Their schools performance relative to other schools in their district would be a better yardstick for the quality of their educational services. Unfortunately, CSUSA has not disclosed these statistics or statistics for its one Coweta County school so we can compare apples to apples.

It is a good marketing strategy to inflate the quality of their educational statistics by choosing good schools to displace. Once they get Cherokee County’s high performing students under their belt, they could use those numbers in their pitch to the next school district. Unfortunately, a good marketing strategy is not the same as a good use of public funds.

The further one delves into CSUSA’s plans in Cherokee County the more alarming and manipulative CSUSA appears. Cherokee Country School District would contract with a non-profit organization to establish the charter school. That non-profit organization has already chosen for-profit CSUSA as its “Educational Management Organization” (EMO) and another real estate holding company owned by CSUSA management to provide facilities.

The full extent of the impropriety in these relationships are outlined by Cherokee Country School District here. The short story is that the non-profit was established solely to contract with CSUSA. It has no independent judgment to choose another EMO should a better one come along. Cherokee County taxpayers have no opportunity for input on board members for any of these organizations.

While the organizations are legally independent, this is not the same as being functionally independent. The minutes of the board of director meetings of the non-profit reveal their directors received instructions on their responsibilities from CSUSA’s vice president. The entities were all established by CSUSA’s lawyer, all had CSUSA’s headquarters as their principle office, and even it appears their websites were made by the same designer.  You can search public records on the Georgia and Florida Secretary of State’s websites and judge the extent of independence for yourself.

The real estate holding company looks like a cash-cow. It takes all of the profits from owning the facilities, none of the maintenance or property tax expenses, and openly admits it will pass on higher prices to the non-profit (and thereby the taxpayers) in future years. Unless its mortgage is variable, their mortgage payments will not increase, so the only justification for raising the price is raising profit at the taxpayers expense. The Cherokee County School District reports, “The proposed petition budget indicates the cost of leasing the building goes from $699,500 in year one to $834,500 in year two to $1,064,500 in 4 year three, an increase of 19% and 27%, respectively, and 52.8% over five years.” If they have the gaul to increase their prices drastically in their projections, I wonder what great reasons they’ll come up with to charge more than what they project for a property that has no overhead costs.

If a private individuals can provide the same or better services as a public institution for less, then those individuals should be compensated for doing so. However, taxpayers should be able to participate in those cost-savings, otherwise privatizing does not ever shrink the size of government outlays. Checks should be in place to prevent the size of the educational expenditures from expanding needlessly and putting more of those expenditures in the hands of CSUSA.

The school district superiendent proposed budget approval by elected school board officials to prevent the charter school from costing taxpayers more than necessary. A board member of the non-profit predictably objected to county approval, “We’re happy to let them look at it, but that’s not the way a charter school is set up,” she said. “Budget approval comes from the local governing council and [the non-profit].” Budgetary oversight would certainly impeded the extent they would be allowed to profit at the expensive of taxpayers.

Allowing this charter school in Cherokee Country would trade a well-functioning system for one that lends itself to graft. I understand parents’ desire for choice and taxpayers’ desire to shrink the size of the state. However, this is not the right circumstances. Parents should already have choice, but they should not give up so much to get it. The best thing about freedom of choice is that you don’t have to choose the first thing that comes along. Parents have already demonstrated a demand for a charter school. Believe in competition, and know that it will bring something better to meet that demand.

CSUSA will be back again next year, as they were for the previous three. In the meantime, state and local lawmakers can get systems in place to prevent conflict of interest in charter schools at the expense of taxpayers. For-profit charter schools can turn school boards into rubber stamps if they are allowed to contribute funds to school board candidates. Local or parent voting requirements for director positions on the boards of non-profits that receive charters would give the community oversight against cronyism.  Legislation requiring budgetary oversight is a must. Although I disfavor government creating economic distortions, clearly charter school resources would be better served elsewhere. Incentives to establish charter schools in low-performing districts or a threshold of poor performance to establish a charter school may be appropriate.

Georgia has anti-corruption measures for hospitals, and they are certainly appropriate for charter schools. I would like to leave you with a disconcerting account of privatization in the prison system. You would be well-advised to read this link. Privatization without proper incentives and controls in place can lead to horrible externalities. Don’t make the wrong choice with the right intentions.

  • http://www.formsofinquiry.blogspot.com James

    You should send this to the local paper (assuming they aren’t already covering this). Good stuff.

  • http://twitter.com/NouveauSouth Ryan Michael Murphy

    They’re covering it. I haven’t looked for any local editorials on the subject. I may slim this one down and sent it anyway. The state Board of Education approved the school last week. I’m going to post a follow-up about it this week.