Privatising education

1. Privatising education James Tooley, PhD Professor of Education Policy University of Newcastle ? James Tooley 2001

2. 02/09/2012 2 Three parts Why privatisation of education? Negative and positive reasons Two approaches Public-private partnerships Extending access to private education Implications for Lithuania

3. 02/09/2012 3 Why privatisation? What do I mean by privatisation? Increasing role for private sector in educational provision funding and/or regulation

4. 02/09/2012 4 Why privatisation? Negative reasons failures of state education inequity of state provision Positive reasons Efficiency and cost-effectiveness Investment Innovation Self-help and community self-help Freedom/liberty

5. 02/09/2012 5 Why privatisation? Efficiency and cost-effectiveness World Bank studies show the proportional gain in achievement score if a randomly selected student, with the characteristics of an average public school student, attends a private rather than a public school, holding constant that student�s background Jimenez, Emmanuel, Lockheed, Marlaine E., and Paqueo, Vicente, (1991) The Relative Efficiency of Private and Public Schools in Developing Countries, World Bank Research Observer, Vol. 6, no. 2 (July), pp. 205-218; Jimenez, Emmanuel,, Lockheed, Marlaine, Wattanawaha, Nongnuch, (1988) The Relative Efficency of Private and Public Schools: the Case of Thailand, The World Bank Economic Review, Vol. 2, no. 2, pp. 139-164).

6. 02/09/2012 6 Why privatisation? Efficiency

7. 02/09/2012 7 Why privatisation: cost-effectiveness

8. Kingdon: Cost per achievement (Rs)

9. 02/09/2012 9 Kingdon�s conclusion �PUA schools� are unambiguously and substantially more cost-effective and internally efficient than G and PA schools��

10. 02/09/2012 10 Why privatisation? Innovation and investment Education companies are emerging, with chains of schools and universities, which: benefit from economies of scale � can find finance from financial institutions; can fund student loan programmes invest in research and development � implications for financial efficiency and educational effectiveness Potential to solve the �information problem� through brand names � Solve information asymmetry problem

11. 02/09/2012 11 Why privatisation? Innovation and investment Entrepreneurs in developed and developing countries have created educational opportunities which are: Profitable Financed entirely from student fee income Cater for mass markets, not just the elite

12. 02/09/2012 12 Cases Objetivo/UNIP, Brazil, was founded in 1962 with 20 students and is probably the largest chain of private schools in the world? Over 500,000 students in about 500 campuses Many franchised

13. 02/09/2012 13 Educor, South Africa 1943 - founded as a �cramming� college 1952 - developed distance learning materials 1996 - IPO on the Johannesburg Stock Exchange Now 300,000 students on 127 campuses

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15. 02/09/2012 15 NIIT, India 1979 computer training company Now has 1,000 franchised centres in India and has expanded into 25 countries worldwide Emphasis on R&D and quality control Student loan scheme with Citibank

16. 02/09/2012 16 NIIT R&D The �hole in the wall� programme Challenges the notion of what a teacher is� Is it commercially viable?

17. 02/09/2012 17 Key questions Can the virtues of private education be replicated in the state sector? Can access to the virtues of private education be extended to those currently within the state sector?

18. 02/09/2012 18 Hence: two approaches to privatisation Public-private partnerships (PPP) Contracting out of (failing) state schools Charter schools Vouchers (state) Extending access to private education Private schools for the poor Private vouchers Tax credits and scholarships

19. 02/09/2012 19 Contracting out Founded 1992 First four schools in 1995 Now more than 57,000 students in 108 schools

20. 02/09/2012 20 Inclusive schools Largest group of students is African-American 65% of students on free-school meals

21. 02/09/2012 21 Attracting investment Since taking over first schools, by 1998 raised $120 million for R&D and investing in schools On Nov 11 1999, launched on Nasdaq, raising $122.4 million Share price steady

22. 02/09/2012 22 Inputs and outputs Takes only 90% of state funding Invests �1 million in each school Pays teachers more Share options for all staff, from janitors to principals 84% of classes have statistically significant gains High parental satisfaction Waiting lists in all schools edisonschools.com

23. 02/09/2012 23 Edison versus government schools - % of school budget

24. 02/09/2012 24 Vouchers Government coupons or checks Programmes in USA, Colombia, Chile, Sweden, etc. USA examples: Vermont Maine Milwaukee Cleveland Florida

26. 02/09/2012 26 Chile vouchers Vouchers usable at any private or municipal school Subsidised private schools are more efficient than the municipal schools � employing fewer teachers per pupil and having lower unit costs. Achieve higher test results in mathematics and Spanish. Larra�aga, Oswaldo, (1997) Chile: A Hybrid Approach, in Zuckerman, Elaine and de Kadt, Emanuel (eds) The Public-private Mix in Social Services: Health care and education in Chile, Costa Rica and Venezuela, Washington DC: Inter-American Development Bank.

27. 02/09/2012 27 USA Vouchers Vermont (1869) Parents who live in districts without public schools are reimbursed for costs of sending children to private school. About 400 students per year Maine (1954) Parents who live in districts without public schools are reimbursed for costs of sending children to private school. About 5,300 students per year

28. 02/09/2012 28 USA vouchers Milwaukee Parental Choice Program (1989) Government gives vouchers to select number of parents, to pay for tuition at private schools.

29. 02/09/2012 29 USA vouchers Cleveland Pilot Scholarship Program (1995) Government gives vouchers to select number of parents, to pay for tuition at private schools. 3,500 students (1999) given $2,250 to attend 59 schools 5% of children in grades 3 to 8

30. 02/09/2012 30 USA vouchers Florida A+ Plan (1999) Schools are graded A-F based on standardised test scores Students in schools graded F for two out of four years are given $4,000 vouchers to attend private schools �A school accountability plan with teeth�. 1999 � 134 families offered scholarships 2000 � as many as 50 schools would �qualify�. Superintendent of one Tampa district said that all top administrators would take 5% pay cut if any school was given an F. State judge struck down law on March 14, 2000

31. 02/09/2012 31 USA vouchers: evidence Cleveland study (1999, Dr Kim Metcalf, Indiana University) Found small but statistically significant improvement in language and science achievement scores Programme serves the population intended Most children who enrol would not otherwise have attended a private school Scholarship parent satisfaction with child�s school substantially higher

32. 02/09/2012 32 USA vouchers Very small scale � only about 25,000 students or less than 1% of total nationally Heavily constrained and politicised Implications for Lithuania?

33. 02/09/2012 33 USA vouchers: evidence Milwaukee: Dr John Witte (official evaluator of program). The Market Approach to Education: An analysis of America�s First Voucher Program (2000) Vouchers are a �useful tool to aid low-income families�

34. 02/09/2012 34 Recap of first approach: public-private partnerships Contracting out Charter schools Vouchers

35. 02/09/2012 35 Second approach: Extending access to private education Private schools for the poor (budget private schools) Private vouchers Tax credits and scholarships

36. 02/09/2012 36 Private schools for the poor in India Dramatic growth of private schools for the poor School fees of about $20 per year Scholarships for poorest: 15-20% of student places

37. 02/09/2012 37 Why? Breakdown in public schools �plain negligence: � cases of teachers keeping a school closed for months at a time; a school where the headteacher was drunk, � a headteacher who comes to school once a week� �this pattern is not confined to a minority of irresponsible teachers � it has become a way of life in the profession.�

38. 02/09/2012 38 If India can� Why can�t we?

39. 02/09/2012 39 Extending access to private schools Private vouchers Tax credits

40. 02/09/2012 40 Private voucher scheme USA Children�s Scholarship Fund (CSF) in USA, $100 million foundation, underwritten by Ted Forstmann and John Walton. Awarded 40,000 four-year partial scholarships to low income students to attend private schools CSF received 1,250,000 applications � 30 times the number of scholarships available � from low income families, all prepared to pay $1,000 per year.

41. 02/09/2012 41 Private vouchers in the USA: the Golden Rule J. Patrick Rooney, Chief Executive Officer of the Golden Rule Insurance Company �Golden Rule� model embodied four principles: Vouchers would be for half of the private school tuition fee (thus ensuring parents became financial stakeholders in their children�s education). Only low-income families would be eligible (but low-income families who had already made the sacrifice and commitment necessary to get their children into private schools would not be penalised). Vouchers would be eligible for use at any private school of the parents� choice Low-income families would be granted vouchers on a first-come, first-served basis �

42. 02/09/2012 42 Tax credits Dollar for dollar reduction in taxes owed for use on schooling Includes school fees, textbooks, transport, extracurricular fees In USA, four states: Arizona Iowa Minnesota Illinois

43. 02/09/2012 43 Tax credits - USA Arizona � allows taxpayers to contribute up to $500 to a �tuition organisation� which gives scholarships for poor people to attend private schools In 1999, 30,000 people contributed nearly $14 million to 31 clearinghouses, helping nearly 7,000 low income students

44. 02/09/2012 44 Tax credits - USA Iowa Tax credit of $250 on the first $1,000 of tuition expenses at private school. No income ceiling. Minnesota Families with incomes up to $33,500 can claim a maximum tax credit of $1,000 per student or $2,000 per family. Refundable � I.e., those families who don�t pay taxes can still receive it. Tax deduction for school expenses from $1,625 to $2,500 per year

45. 02/09/2012 45 Tax Credits � Cato proposal $500 nonrefundable education credit against the federal income tax. Estimate that states would save $14 billion on public education costs, and allow 2.3 million students escape failing public schools Two components Parental choice credit � dollar for dollar reduction up to $500 per child Scholarship credit � any taxpayer can receive reduction of up to $500 per taxpayer for scholarship clearing house

46. 02/09/2012 46 Implications for Lithuania?% private schools

47. 02/09/2012 47 Implications for Lithuania?% private school students

48. 02/09/2012 48 Implications for Lithuania? Leading the way with a workable voucher scheme? Easing regulations for private alternatives ? Exploring contracting out to international companies? Other ideas?

49. 02/09/2012 49 For further information� www.katallaxia.org