A Bi-Weekly Bulletin of News and
Analysis from the Thomas B. Fordham Institute
January 25, 2006, Volume 1, Number 5
Contents
Editorial
Investigative Analysis
Legislation Analysis
Recommended Viewing
Announcements
Errata
Editorial
Does the Charter Industry Have a Product Life Cycle?
How do Ohio's charter schools resemble modern Poland's economy? Travel with me across the Atlantic
In 1990, I had the privilege of spending a year in a Polish town as a high school English teacher. This was the year Poland experienced economic "shock therapy." Almost overnight, its state-owned industrial goliaths-mining, steel factories, tractor factories, armament factories, etc.-withered and myriad small businesses began to flower. Cities evolved from gray and dreary centers to colorful, vibrant places populated by hundreds of little shops and kiosks that sold every consumer item imaginable. Most of these shops were little more than a husband and wife selling products they bought in Germany or Russia with money they had been keeping under their beds for years, awaiting the opportunity to spend it.
Revisiting Poland only five years later, however, I discovered a land with far fewer mom-and-pop shops. Many of them had been replaced by established brands of haberdasheries, restaurants, pharmacies, and such. English, French, and U.S. brand-name stores now lined the streets, along with McDonald's, Pizza Hut, and their ilk. The free market had found its way to Poland. By the time of my last visit in 2004, that nation's cities looked much like their counterparts in Western Europe. Poland's economy, at least its service and retail sectors, had matured.
In a decade and a half, I witnessed Poland's entry into modern capitalism, an economic renaissance that resembled the classic sequence taught in Econ 101: a start-up stage (defined by rapid growth of a product or industry), a growth stage (with shake-outs from competition and consolidation), and a mature stage (where the most efficient and viable are left standing).
In observing the charter-school scene evolve in Ohio, I can't help but see parallels. Since 1998, the number of charter schools operating in the Buckeye State multiplied twenty-fold (from 15 to almost 300), and the number of children served by them swelled from 2,245 to over 70,000. It's fair to say Ohio's charter start-up stage has been dramatic, especially considering that these schools are pretty much restricted to the state's eight major cities. Such growth is driven by legitimate parent dissatisfaction with traditional public schools in those communities, and many of Ohio's most vulnerable children have benefited from the charter option.
But the rapid-growth era for small charter schools is coming to a close. The fact that the legislature has capped new start-ups for all but high-performing school management companies ensures that far fewer schools will open in September. And the state's charter sponsors (which, in effect, "license" these schools to operate) are becoming fussier, both because they, too, are under the gun to demonstrate success and because they cannot afford to sponsor small schools that pay small fees for what is often much heavy lifting by sponsors.
Hence the next 12-18 months in Ohio are likely to see fewer new schools open, more faltering schools close, and a round of consolidations where more successful operators take over struggling "mom and pop" operations. If Ohio charter supporters seek long-term sustainability and quality for this important educational experiment, such consolidation should be welcomed. However, as in Poland's economic transformation, there will be some who feel betrayed by these changes, and this could trigger a backlash.
At the end of 2005, 63 percent of Ohio's charter schools served fewer than 200 children each. One school in five enrolled no more than fifty students. (See here). Though nobody can say what is the optimal size for a school, even aficionados of small schools say that effective elementary schools generally enroll 300-400 pupils and that 400-800 students is appropriate for a secondary school. From a financial perspective, Moody's Investors Service observed in July 2003 that effectively funding charter school facilities requires at least 300 to 500 students. Moody's termed this "an important threshold, because below this figure, the loss of even a few students can negatively impact debt service coverage." (See here.) This is a significant point in a state that presently offers charter schools no help with facilities and keeps their operating budgets some 30 percent lower per pupil than traditional district schools.
In short, small charter schools face huge challenges. Their budgets are relentlessly tight, and any increase in operating costs (e.g., health insurance) may erode their academic programs. Sure, there will be happy exceptions to this rule, especially where philanthropy augments the state's dollar, but in general there seems to be a minimum economy of scale for a charter school to succeed in Ohio over the long haul.
Ohio's charter movement is entering the classic Econ 101 shake-out stage, dictated partly by economics and partly by legislatively-imposed caps and school performance requirements. Some schools will surely close, others will merge, and some may gravitate into partnerships that encourage economies of scale across multiple schools. Such consolidations could result in fewer schools but possibly more students. We may see situations where two or three schools become one (as has happened with Catholic schools in recent years). Perhaps we'll also see the emergence of mini charter school "systems." Such partnerships and amalgams will help smaller schools gain economies of scale across essential services (e.g., financial management, food services, special education, and even facilities), while maintaining their academic independence. In the end, these changes are going to improve the quality of choices available to consumers. That's the nature of the economic life cycle. For Ohio's neediest families, it should mean steadily improving schools of choice for their children.
Such changes may also lead to a proliferation of national firms managing Ohio charter schools. Examples of such chains are the Michigan-based National Heritage Academies (which operates 51 schools serving 26,000 student in five states), New York City-based Edison Schools (which operates schools serving 330,000 students in 25 states), New York-based Mosaica (70 schools in eight states), and Ohio's own White Hat Management (51 schools in six states). But for-profit companies aren't the only story. Just as Poland saw an explosion of non-governmental organizations funded by outside philanthropists in the 1990s, the charter school scene is also witnessing an increase in non-profit school chains supported by national foundations. Examples include Lighthouse Academies, KIPP, and the Big Picture Company.
When multinational corporations moved into Poland, the quality of services improved across all sectors because of the competition they brought and because of their resources, expertise, and proven models. The same is likely to be true in Ohio as it relates to charter school management companies and their non-profit counterparts. Yet, as in Poland, when outsiders are seen as taking jobs and control from locals, uneasiness (and sometimes even a sense of betrayal) follows. The key to avoiding a political backlash in Ohio lies in delivering the goods-in this case a demonstrably better educational product. This alone will determine whether the charter school marketplace in tomorrow's Ohio is vibrant, popular, and expansive, or if-as with Poland's neighbors to the east (Russia and Belarus)-the introduction of outside competition triggers a hostile response, protectionism and, in time, the demise of market forces.
by Terry Ryan
Investigative Analysis
Community school funding: Beacon Journal article
The Akron Beacon Journal ran an article on January 21st [http://www.ohio.com/mld/ohio/living/13678884.htm], subsequently picked up by many of the state's newspapers, that misleadingly suggests that Ohio's community school funding system harms traditional school districts and worsens inter-district inequities. This is inaccurate. When children exit for charter schools, Ohio's funding system actually leaves more money per pupil in district coffers for their remaining students.
Consider the example of Cincinnati, which was cited in the Beacon Journal story. According to the paper's numbers, if there were no charter schools, the district would have 39,999 students and $298 million in combined state and local revenues-$7,450 per student. With charter schools, the district has 33,000 pupils and $253.3 million in combined state and local revenue-$7,676 per student. And what about inter-district inequity? There might be a constitutional issue if the charter funding mechanism somehow placed more of a burden on low-wealth districts, but the opposite seems to be occurring. That seems like a good thing for equity, not a bad thing.
Lurking behind all of this is the fact that community schools are greatly underfunded relative to district schools. Again using the Beacon Journal example, Cincinnati district schools receive $7,676 per child in combined revenues, while Cincinnati's community schools only get the $6,382 the state sends them. They receive no local money. It's the community schools, not the district schools, that really lose out.
We're Not in Kansas Anymore: The Evolution Wars Come to Ohio
The debate over teaching evolution in schools, which has been going on in America at least since the famous Scopes "Monkey Trial" of 1925, burst onto the front pages of Ohio newspapers in early January. What's it all about? And where does Fordham stand? Read on.
Let's start with a little background. In 2001, the Ohio Department of Education updated the state's science standards. When a draft came before the State Board of Education in January 2002, several members derided it for only including evolution and omitting any mention of so-called "intelligent design." Those Board members had allies in the Ohio General Assembly who introduced bills in both the House and the Senate that would, in effect, force the board to approve standards that would present both sides of the debate (regardless of the overwhelming scientific evidence in support of evolution). Those bills were killed, however, when the Speaker announced that any decision regarding science standards should be left to the State Board of Education.
The State Board picked up the ball and hosted a panel of experts, in front of an audience of 1,000, which included such heavy hitters from the world of science as the late Stephen Jay Gould. The Board eventually decided to adopt standards that do not question evolution (or promote intelligent design) but, in a political compromise, it also directed the Department of Education to draft an optional lesson plan that includes such elements.
In 2004, the State Board approved that lesson plan. Teachers are not mandated to teach it, but questions about it could show up on the 10th grade Ohio Graduation Test.
The debate was reignited in recent weeks when a federal judge struck down, on "establishment of religion" grounds, a local school board resolution in Pennsylvania that required a skeptical teaching of evolution and promoted the ideas of intelligent design. Fearing a costly lawsuit, some on the Ohio State Board wanted to reconsider its 2004 decision. The issue was put to a vote again-but by a 9-8 margin the Board maintained its earlier decision.
During that debate, some people pointed to Fordham's recent evaluation of state science standards as evidence that the lesson plan must be kosher. In fact, our reviewers examined only the official science standards of every state. Though verbose, Ohio's standards earned a respectable "B." Their straight-up handling of evolution-in the standards themselves-was lauded by our reviewers. The contentious lesson plan, to repeat, is not part of the actual standards.
This misrepresentation of Fordham's view of that anti-evolution lesson plan understandably drew the ire of our reviewers, serious scientists all. Dr. Paul Gross, the lead author of our report and one of America's foremost biologists, along with his co-authors, excoriated the State Board's decision to retain the lesson plan, noting to "To devote scores of pages in the official standards to the principles of good science, and then to teach bad or pseudo-science in the classroom, is to defeat the very purpose of standards. If creationism-driven arguments become an authorized extension of Ohio's K-12 science standards, then the standards will deserve a failing grade."
Fordham shares the scientists' view that this "lesson plan" is inappropriate, unscientific, and raises the same problems (of religion creeping into the science curriculum) as the Dover resolution. At the same time, we recognize that it is not, technically, a part of Ohio's science standards. Therefore we will not change Ohio's grade.
Recently in the news:
"An ounce of prevention," by Columbus Dispatch, January 10, 2006
"Here come the lawyers," by Akron Beacon-Journal, January 10, 2006
"Students will continue to debate merits of evolution," by Scott Stephens, Cleveland Plain Dealer, January 11, 2006
"In 9-8 vote, state panel retains science rules," by Catherine Candisky, Columbus Dispatch, January 11, 2006
"Biology curriculum foes want to resume debate," by Catherine Candisky, Columbus Dispatch, January 12, 2006
"School board begging for court battles," by Dayton Daily News, January 13, 2006
"Ohio may lose science grade," by Scott Elliott, Dayton Daily News, January 17, 2006
"Intelligent design course canceled," by Juliana Barbassa, Associated Press, January 18, 2006
"Intelligent design not science, Vatican newspaper says," by Associated Press, January 19, 2006
"Witnesses badgered at science meeting," by Catherine Candisky, Columbus Dispatch, January 20, 2006
Ohio Charter Schools: Another View
In a new policy brief released by the Buckeye Institute, we analyzed the changes in student passing rates on Ohio Proficiency Tests (OPT) made by traditional and charter schools in the Big Eight urban districts between 2002 and 2004. Using a statistical analysis that controlled for the demographic characteristics of race and income, our study found that:
This kind of analysis gets beyond the over-simplified pabulum that is usually produced when test scores are released. There are two questions to ask: Who is making improvements in the achievement levels of their students, and what is a fair sample to compare charter school results to? We believe that proper answers to those questions oblige one to examine relative gains, not just absolute scores, and we believe charter schools should be compared to those schools they compete with directly, in this case the Big Eight urban districts.
When comparing Ohio charter school gains to those of their district-run counterparts in similar geographic and socio-economic environments, we find that they outperform their peers in 6 of 11 categories and do as well in the other five. This suggests that the current legislative cap on charter schools serves mainly to deny students in poor performing schools the chance to get a better education. It also shows that charter schools are viable alternatives to an unsatisfactory education status quo.
To get a copy of this new report, please visit http://www.buckeyeinstitute.org/.
Matthew Carr is a policy analyst at the Buckeye Institute for Public Policy Solutions in Columbus. Samuel R. Staley is a senior fellow at the Buckeye Institute and director of urban and land use policy at the Reason Foundation in Los Angeles.
Legislation Analysis
Don't Turn Back the Clock
The goal of No Child Left Behind is clear from its title, but hundreds of Ohio students with special needs would be left in the dust if at least one state legislator and the head of America's largest teacher union have their way. They would return to the days when the federal government spent billions of taxpayer dollars without seeming to care if students get shuffled through schools without learning the basics. Rep. Rep. Larry Wolpert R-Hilliard introduced a bill in 2005 (HB 411) that would reverse Ohio legislation that builds on NCLB by tagging school districts with lower report card ratings for leaving behind certain populations of students (i.e., African American, special needs students, etc.). Separately, while speaking at an education conference at Central State University, National Education Association President Reg Weaver criticized NCLB on grounds of unfairness. In particular, he criticized the law for expecting special education students to pass the same tests as other kids. Parents of special needs children, however, overwhelmingly favor more mainstreaming, not less. As former Education Secretary Rod Paige explains"...The new law (NCLB) says that we as a nation will not tolerate schools that practice the soft bigotry of low expectations."
Ohio's neediest kids are making progress. According to the Ohio Department of Education, over the past five years there has been a 27 percent statewide increase in the number of fourth grade African American students who pass the reading proficiency test and a 19 percent increase in the number of disabled youngsters who pass it.
Now is not the time to start backtracking.
Relevant Reading:
"Teachers' union boss rips federal school law," by Scott Elliot, Dayton Daily News
Recommended Viewing
Educational Programming
The education world is constantly bombarded with news, research, and opinions about school choice, while the average Ohioan knows very little about vouchers or charters (See Fordham study below). But recently on ABC's "20/20," John Stossel brought the debate directly into the living rooms of homes across the country in his special "Stupid in America: How Lack of Choice Cheats our Kids Out of a Good Education." He admits it is a "nasty little title for a program about public education, but some nasty things are going on in America's public schools, and it's about time we face up to it." In this special, Stossel took on some of the most controversial issues in education today: school funding, choice and competition, the overregulation of schools, and union resistance to change. If you missed this thought provoking special, check out the video clips or consider ordering the DVD online.
Relevant Reading:
"Halfway Out the Door: Ohioan Sound Off on Public Schooling," Fordham Foundation
by Kristina Phillips-Schwartz
Announcements
Job opening
The Fordham Foundation seeks to fill a research position in our Dayton office. We're looking for a talented writer, a resourceful researcher, and a proven multi-tasker to join our small team as a Research Analyst. You must be interested in education policy and reform, a tireless worker, and in general accord with Fordham's principles. We especially appreciate a literate mind and a sense of humor. For more information go to: http://www.edexcellence.net/detail/opportunity.cfm?opportunity_id=24
Errata
Clarification
In the last Ohio Education Gadfly, we said that as many as 80 percent of 21th century jobs would require a four-year college degree. The U.S. Department of Labor tracks the fastest growing jobs in America. Its figures say that 60 to 80 percent of new jobs will require some form of post-secondary education, not invariably a four-year degree.