Education and the local community

Education and the local community

by Pininvest Analysis

US education and for-profit schools on

  • constituents
  • 92.7% 1y performance
  • 24.8% volatility
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A few more chapters in the never ending search for an educational system giving the young the opportunity to live full-filing lives have been written by the Department of Education in the US

Photo by Roman Mager on Unsplash

Poor coverage and mediocre schooling of underprivileged pupils led Milton Friedman, in a 1955 paper, to advocate for a reversal in the approach to education, questioning the exclusive responsibility of governmental entities in administering both the general education and the vocational schooling, though rightfully financed on the public purse

Private involvement in education has known various iterations – the No “Child Left Behind” of 2002 and “Race to the Top” of 2009 come to mind – and for-profit school management, taxpayer-funded vouchers to cover private school tuition and parental choice have become the backbone of public policy in successive Administrations

Chartered private organizations, adhering to a charter and accountable to their sponsor (such as local school board or state education agency),  benefit from a degree of administrative flexibility for the education of pupils who must achieve positive academic results

Of approx. 7 000 charter schools, 90% are non-profits and educational performance is widely distributed, more telling of the quality of some organizations than of the charter concept itself

For-profit educational management organizations (EMOs) however – supposed to open tens of thousands of private investment opportunities – have never lived up to expectations with some 750 schools today


In his recent book "Education and the Commercial Mindset", Sam Abrams, director of the National Center for the Study of Privatization in Education at Teachers College, Columbia University, draws the conclusions of these experiences which, on balance, remain modest and of educational achievements which, too often, turn out to be average


Prerequisites of educational success

In evaluating the chances of success of any educational experience, whether public or private, the core argument focusses on a tight fit in the local community

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The implications of this requirement touch almost every aspect of education

  • Course requirements, though strict, have to be in phase with the needs of the students living in the community. In this sense, charter or private schools with very ambitious mandates only ‘leave the less capable child behind’
  • Well qualified teachers could – and should – benefit from the esteem and the recognition of the community. Pay, or bonus, linked to demonstrated results do little for self-esteem and even less for the collective effort in the school while social status (and its financial reward) does wonders....
  • From pre-school to high school, the community can offer a sense of continuity in the educational process which insures that the whole age group achieves educational goals and not just the better qualified

Obviously, the focus on community and on continuity advocates for unflagging commitment to the public system of education.

Its resilience relies on both dimensions but its glaring failures cannot be ignored

The argument of Mr. Abrams – and his answer to the fierce defenders of parental ‘choice’ in education and ‘market’ driven efficiency – is subtle and all encompassing, with meaningful implications for a potential investor in private education


A core community effort

From a community standpoint, there is no reason to exclude private options or to ignore the success of some networks of charter schools (such as KIPP)

The failure of some well-funded, and no doubt well-intentioned, initiatives may come down to a lack of unrelenting attention to the community effort

Vast experiences, as in Michigan (under guidance of the current Secretary of Education Mrs. DeVos) or in New Jersey (financed by Mr. Zuckerberg of Facebook) have probably underestimated this hurdle, while political flak limits the possibility of quiet evaluation 

Negatives rolled out in every ‘private-public’ debate – the ‘red tape’ of the administration, the constraints imposed in school management or the job protection benefitting tenured teachers – are all self-inflicted wounds of the public system, inefficiencies which can be addressed as such


An inclusive ‘public-private’ model

Innovations in the public school system might contribute to an inclusive ‘public-private’ model

Photo by Animesh Basnet on Unsplash

A strong case can be made for integration of the most successful private educational methods in the public curriculum

To assess learning outcomes, a 10% sample of an age group – as practiced in Finland – rather than relying on universal tests, is a proven success, obviating the practice of studies ‘for the test’ as seen today

Continuity of the community model could encourage philanthropic initiatives, such as the network of “full-scholarship, Montessori-inspired preschools in underserved communities” recently announced by Mr. Bezos of Amazon, and private schools experiments, as unique testing grounds

The fragility of such initiatives – and their potential failure – derives from their impermanence and the temptation of the donor to ignore the prerequisites of continuity in the educational process in the name of the gift’s uniqueness – weaknesses a dialogue with the public system could alleviate

Because inclusiveness requires flexibility on both sides to expand on the ‘best’ ideas or to be willing to test ‘new’ concepts, the interest of the private sector – and of successful entrepreneurs – should be viewed as a chance, not suspected as a menace


An investor's take

Where this leaves the investor in private education in the short term is uncertain

Too many expectations rely today on political choices which are, by nature, fleeting and the recent stock performance of major private providers should not be interpreted as a trend signal 

However, outsourcing to the private sector – viable for tasks related to administration and logistics – could probably be taken further as technology enters the educational field

Recent PISA downgrades of Finland, still a very successful model analyzed by Mr. Abrams, highlight how the link between the educational system and society is a two-way street, taking ever changing learning formats in their stride

Source for traditional Finnish clothing - East of Neimans
  • The significant drop in achievement of boys in Finland (vs. girls holding their own) is not fully explained but could be attributed to extended daily hours spent on the Internet (4 hours/day, television time not included)
  • Conceivably, on-line entertainment could lend itself to educational gaming, honing analytical abilities or testing course understanding, modeling the software as integral part of the learning process - while much has been attempted by publishers, videogame developers are likely to be the real game changers

On-line educational service providers have their work cut out and operations such as the Khan Academy, online tutoring Crimson Education, Graham Holdings owner of Kaplan test services and many others MOOCs may be frontrunners in fusing traditional education with the new technologies


Listen to Sam Abrams on the Rick Smith Show

Education and the Commercial Mindset, by Sam Abrams, published by Harvard University Press


Business strategies in education will be further discussed in our themes

  • 'Science and Education Publishers' (forthcoming)
  • Private Education in Emerging Markets