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Mitigating and Learning From School Failures in School Choice Programs

The views expressed are those of the author and do not necessarily reflect the views of ASPA as an organization.

By Michael R. Ford
September 8, 2023

School choice was a hot topic at the recent presidential debate in Milwaukee. Considering Milwaukee’s position as first adopter of a widespread school choice program, this was not unsurprising. The number of school choice programs in the United States continues to grow, all but ensuring that education reform will continue to be a hot-button political topic. Lost in the politics of school choice, however, are the administrative realities of implementing school choice programs.

Though school choice can take a lot of forms, it generally refers to contracting out K-12 education to private or quasi-private providers. School choice is, I argue, an example of the ideals of New Public Management and Reinventing Government put into practice. Such reforms challenge traditional notions of publicness, as well as traditional notions of public management. Concepts like accountability, effectiveness and transparency, are made more difficult in a decentralized network of public-private partnerships. In other words, there is a lot our field can learn from studying school choice from an administration perspective.

For example, how can public bodies minimize the risk of organizational failure when utilizing private entities to provide core services? Unfortunately, private school failure was a common occurrence in early school choice programs. When a private school providing a publicly funded education fails there are serious consequences. First, student lives are disrupted, especially if it happens during the middle of the year. Second, administrative records, school resources, etc. are often lost. Third, legacy school districts are burdened with an influx of students they were not expecting. Lastly, the public investment made in failed schools is lost. While there is no doubt some private schools that have failed were doing a lousy job, it is nonetheless incredibly disruptive for a school, even a low-performing one, to suddenly close its doors.

Thankfully there are some steps that can be taken to mitigate the risk and impact of a sudden school failure in a school choice program. Though the ideas I am sharing come from the school choice experience, they can be applied to mitigating risk in any public-private partnership or contracting out arrangement in government. The best way to prevent a school failure is to keep a school that is unlikely to succeed from ever opening in the first place. Some reasonable barriers to entry into a school choice program include a fiscal viability measure that shows organizational capacity, 3rd party accreditation that correlates with stability and a requirement that a school show an operational track record prior to receiving public funds. However, a policy that creates barriers to entry can also tamper entrepreneurship, hence the tradeoff between preventing a poorly performing school and stifling innovation needs to be considered by policymakers.

Once a school opens there are also steps government can take to mitigate the impact of a school failure. One approach is to require schools to have a surety bond so that the state can be repaid any public funds should the school suddenly close. A surety bond requirement adds additional value by ensuring a third party is considering a school’s viability. A second logical step is staggering any public payments so that schools receive public funds as they go rather than upfront. Finally, I like the sponsorship concept where a separate established private school sponsors a new school, agreeing to take their students, records and other materials should that school close.

To be clear, none of these policies can prevent a private entity from failing. Part of the inherent risk of contracting out or partnering with non-public entities is that private entities can go out of business, and government has little recourse when it happens. The case of school choice gets a lot of attention because it is hot political topic, but I think the simple lessons from the growing school choice experience provides guidance on how to administer modern governing arrangements. So often I hear, from academics, practitioners and policymakers, the potential fiscal and performance advantage of contracting out. I agree that utilizing third parties in delivering public services is a valuable tool in the public administration toolbox, but that tool needs to be fully understood for it to be effective. Studying school choice programs is one way to gain that understanding.

Michael R. Ford is an associate professor of public administration at the University of Wisconsin Oshkosh, where he teaches graduate courses in budgeting and research methods. He frequently publishes on the topics of public and nonprofit board governance, accountability and school choice. He currently serves as an elected member of the Oshkosh, WI Common Council.

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