John Locke Update / Research Brief

Who is Making a Killing from Kids? (Hint: It’s not charter school companies)

posted on in Education, Education (PreK-12)
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According to many on the Left, the most terrifying creatures in the public education sector are companies that are contracted to operate public charter schools.  Last month, the NAACP released their Task Force on Quality Education report, which called for a moratorium on so-called “for-profit charter schools.”  The authors of the report recommended,

No federal, state, or local taxpayer dollars should be used to fund for-profit charter schools, nor should public funding be sent from nonprofit charters to for-profit charter management companies. The widespread findings of misconduct and poor student performance in for-profit charter schools, demands the elimination of these schools. Moreover, allowing for-profit entities to operate schools creates an inherent conflict of interest.

They are not alone.  The National Education Association, the American Federation for Teachers, and a host of national and state-based advocacy organizations have condemned the operation of charter schools by companies such as Imagine Schools, Charter Schools USA, National Heritage Academies, K12 Inc., Connections Academy, and EdisonLearning.  They claim that these and other for-profit businesses, which typically receive a small portion of taxpayer funds to oversee charter school operations, lack transparency and accountability.  Further, they accuse them of using those funds to maximize profits at the expense of providing a high-quality education to the children they serve.  These are nonsensical charges, considering that their failure on any of these accounts will result in the permanent closure of their charter schools and the immediate loss of their revenue stream.

In the charter school universe, for-profit charters are the exception, rather than the rule.  According to the National Alliance for Public Charter Schools, around 13 percent of the nation’s charter schools are run by for-profit companies.  In North Carolina, National Heritage Academies operates 13 schools and Charter Schools USA oversees six. K12 Inc. and Connections Academy each operate a statewide virtual charter school.  Another handful of the state’s 173 charter schools have contracts with various for-profit management companies or service providers.

Even if these charter management companies tripled their presence in the nation’s education marketplace, the profits that they would earn would be trivial compared to those enjoyed by corporations that sell education-related goods and services to schools and consumers.

While the bulk of public school dollars will always be used for salaries and benefits, schools in the United States spend billions to equip their schools and keep them running.  Consider the cost to outfit even the most basic classroom.  It necessitates expenditures for chalkboards, inspirational posters, kid-proof furniture, government-compliant light bulbs, flooring, windows, blinds, doors, HVAC, and utilities.  And none of those expenditures include the cost to furnish mediocre curriculum materials, paper, poorly-written textbooks, art supplies, computer hardware and software, and lab equipment.  Add to that the expense of maintaining unreliable copiers, phones, internet access, and intercom systems.  There are also costs associated with the upkeep of bathrooms, hallways, cafeterias, gymnasiums, playgrounds, and parking lots.  Transporting children to school requires buses and fuel purchased from Big Oil.  Behind these expenditures are businesses selling goods and services to schools…at a profit (!$!$?$!).

The National Center for Education Statistics (NCES) reports that total spending on materials and supplies reached nearly $42.9 billion in 2014 (latest available).  Expenditures for purchased services was $58.2 billion. State financial data indicate that North Carolina spent over $1 billion for purchased services, $950 million on materials and supplies, $112.5 million on instructional equipment, and $540 million on capital expenditures during the 2015-16 school year. Neither NCES nor N.C. Department of Public Instruction data specify the portion of these taxpayer dollars that went to companies and businesses, but it is safe to assume that most did.

Consumer spending is relatively modest in comparison to school district expenditures.  The National Retail Federation (NRF) estimates that back-to-school spending by consumers will reach a mere $29.5 billion this year, a $2 billion increase from last year.  According to the NRF survey, parents of primary and secondary school students plan to spend an average of $238.89 on clothing, $204.33 on electronics, $130.38 on shoes and $114.12 on school supplies.

My goal is not to demonize businesses that make a profit from schools and consumers who make school-related purchases.  Three cheers for profits and consumers!  Instead, it is to show the absurdity of progressive activists who target charter management companies, while giving a pass to much larger and much more profitable enterprises in the education sector.  Indeed, their profit complaint is one concocted by political strategists to try to undermine the efforts of those who dare compete with their beloved public school monopoly. When their turf is threatened, ideological consistency is the least of their concerns.

Terry Stoops is the Vice President of Research and Director of Education Studies at the John Locke Foundation. Before joining the Locke Foundation, he worked as the program assistant for the Child Welfare Education Programs at the University of Pittsburgh. ...

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