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For-Profit Education in Philadelphia

Dan Tortorice

On April 17, Philadelphia’s School Reform Commission decided to hand over twenty of the city’s lowest performing middle and elementary schools to Edison Schools, a for-profit company that manages schools. The vote was split 3-2 and both students and teachers have expressed outrage at the decision. This outrage makes sense, for one is hard pressed to accept the rationale for having for profit schools.

Proponents of the system note the inherent inefficiencies in most government bureaucracies and claim that privatizing schools will help them be more efficient. By tying profit to achievements in education, the schools will have real incentive to increase efficiency.

There are many problems with this argument. First, it is not clear at all how one goes about tying profit incentives to educational achievement. How do you measure the educational achievement of a school? The only objective measure I know of is standardized tests, and, in fact, it was the dismal performance of these schools’ students on standardized tests that lead to the privatization move. However, standardized testing is a very limited measure of educational achievement, and tying profits to standardized test scores provides incentive for standardized test achievement and not necessarily educational achievement. If a large part of Edison’s profits are tied to performance on a state-wide test, I imagine a large part of Edison’s classroom instruction will be dedicated to teaching the test. This is most likely not the best education one can give middle-schoolers.

Perhaps the commission will choose not to link profits to test scores. We can’t know because the commission has not offered a detailed plan. (This omission causes me to believe that the decision was not well thought-out.) Maybe, instead, the commission will pay Edison a flat fee per student. But this also raises problems. If Edison is trying to maximize its profit, it’s going to provide the least costly education it can for each student. This means hiring less experienced teachers, using less modern textbooks, having larger class sizes, and a whole host of other actions that most people see as problems.

What prevents a company from lowering the quality of its service is competition in the market, your ability to choose another company. Here, though, the citizens of Philadelphia have no choice but to attend Edison’s school. Any MIT student who has eaten in an Aramark cafeteria has seen the effects of granting one for-profit company a monopoly on food services. Now Philadelphia is doing the same to its schools. Fortunately, for us, the negative effects of the Aramark monopoly do not extend past our stomachs. Unfortunately, for the children of Philadelphia, the negative effects of the Edison monopoly start at their education and, therefore, extend well into their future.

The decision demoralized many teachers in Philadelphia. They felt as if they had been told that they did not do their job well enough. But I think the move by the commission makes an even stronger statement. It says that the only incentive one can give in order to improve the schools is the profit incentive. It says that the current educators of Philadelphia simply will not work as hard as those who get extra financial incentive to work hard. It accuses Philadelphia teachers of slacking off at the expense of their students. While I’m sure there are some teachers who do, my own experience with educators has lead me to believe that this maxim is not true in general. And by making the statement, the commission risks alienating the good educators in Philadelphia, it risks alienating teachers who are an integral part of the future success or failure of the Philadelphia school system.

But even if you believe that the only incentive that can really motivate a person is money, it still does not make sense to privatize the school system. One can provide financial incentives to teachers in a traditional system. Having bonus awards for outstanding teachers, perhaps as nominated by the faculty or students, would provide incentive to contribute to educational achievement. Moreover, it would successfully target real educational achievement, unlike financial incentives based on test scores.

For-profit education creates one more particularly pernicious problem. The current education budget in Philadelphia is $1.7 billion. All this money currently goes to further education somehow. Either it maintains buildings, pays salaries, buys textbooks, etc. Once you introduce profit into the equation, on top of the $1.7 billion you need to add an additional expense, namely the profit for Edison. They have to make some profit in order to want to stay in the business of running Philadelphia’s schools. To support school privatization, it is not enough to believe that private firms can find more efficient ways to provide education. One must also believe that the efficiency gain is large enough to justify the profit that Edison must receive. And given the incentives Edison has to reduce educational quality, this belief is a tough pill to swallow.