$5

January 1994

 

EXECUTIVE SUMMARY

Charter schools can improve educational opportunities for their students without additional spending. Because of their increased managerial flexibility, charter-school administrators can apply competitive management strategies used in schools elsewhere to stretch available resources and improve educational quality. The key is to view the private sector as a resource, one that can provide an infusion of expertise, accountability, and cost-effectiveness into public education. Consider:

The Baltimore Public Schools, among others, has engaged a private management firm to operate some public schools.

The Minneapolis School Board unanimously voted to hire a private consulting firm, specializing in turning around failing companies, to take over as school superintendent.

The Bowling Green Charter School found it could get copier paper at an office-supply store for $5 less per case than what the district charged. The result? The district dropped its paper price to all its schools, in order to match its "competitor."

The Lazear Charter School got something for nothing when it picked up surplus portable-school buildings from a local government agency and set them up on a parking lot donated by a local church.

Companies providing foreign-language instruction, science programs, and remedial education now work with public schools to broaden course offerings for students.

In areas as dissimilar as pupil transportation and curriculum design, administrators are using the private sector to promote excellence throughout the learning environment. Many administrators are also making greater use of contracting for support services, allowing them to focus on their core function—education.

This paper presents charter-school administrators with an overview of management strategies that can assist them in making the most of available resources. It shows how the competitive efficiencies of the market can be put to work providing students with the best education possible. Appendices at the back of this report list contacts for more information, and buyer's guides for school services and supplies.

 TABLE OF CONTENTS

I. INTRODUCTION

II.THE MAKE OR BUY DECISION

A.Avoiding the Pitfalls

III.EQUIPMENT AND SUPPLIES: DONATIONS, LOANS, AND OTHER ASSISTANCE FROM GOVERNMENT AGENCIES

A.State Agency for Surplus Property

B.Department of Energy National Laboratories

IV.SUPPORT SERVICES

A.Pupil Transportation

B.Food Services

C.Janitorial/Facilities Management

D.School Facilities

V.CORE SERVICES: ENRICHMENT OPPORTUNITIES FOR STUDENTS

A.Management Services

B.Instruction

C.Curriculum

VI.CONCLUSION

ACKNOWLEDGEMENTS

ABOUT THE AUTHORS

APPENDIX A - INNOVATIVE MANAGEMENT TECHNIQUES

Recommended Resources

APPENDIX B - PRINCIPLES OF SUCCESSFUL CONTRACTING

APPENDIX C - RESOURCE DIRECTORIES

APPENDIX D - CONTACTS

REFERENCES

 

I. INTRODUCTION

With the advent of charter schools, school administrators have unparalled opportunities before them. Decisions must be made about what to teach, how to teach it, and in what context. What is the school's mission? How will parents be involved? What additional services will the school make available? And who will provide these services—the school district? Parent volunteers? Teachers? Or private companies? This report encourages charter-school organizers to explore a variety of provider options, with an emphasis on private-sector providers.

Charter school organizers may be particularly interested in pursuing public-private partnerships which can provide a variety of education services with little or no start-up costs. As of mid-1993, charter-school legislation, which allows some public schools to operate exempt from certain state and local regulations, had been approved in seven states, with several more states considering the idea. The flexibility of charter schools facilitates the use of many of the innovative management approaches.

Charter schools present unique opportunities for entreprenuerial educators. Neither private nor public in the conventional sense, charter schools can draw from the successes and experiences of both education sectors.

Private schools have often used their autonomy to implement creative solutions in response to student needs. Often operating on more restrictive budgets than their public counterparts, private schools are especially bottom-line driven, motivated to seek cost-effective solutions to their operating needs. Moreover, as entities accountable to tuition-paying parents, private schools also have strong incentives to provide the highest quality services with limited financial resources. Many private schools have used private-sector contracting to tap the expertise of individuals not directly employed by the school itself. Charter-school organizers may be able to learn from the experience of these schools.

Public educators too, are making greater use of private-sector providers to promote excellence in every part of the learning environment, from pupil transportation to foreign-language instruction. Pressure to improve academic performance has prompted many administrators to explore new administrative approaches.

Often the problem is not how much money is spent on education but how well that money is spent. Inefficient allocation of resources plagues public schools, and too many expenditures fail to reach the classroom. Consider that:

× Only about half of all public-school employees are teachers (See Figure 1). Out of 4.5 million school staff employed in 1990 by the nation's public schools, just 2.4 million were teachers.

× Public schools operate with five times more noninstructional personnel per student than parochial schools.

× Between 1960 and 1984, the number of nonclassroom instructional personnel in America's public-school system grew by 400 percent, nearly seven times the rate of growth of classroom teachers.

× Noninstructional and support activities total 42 percent of public-education spending.

Though schools often suffer from a scarcity of education resources, the crisis in education is not due to a lack of funding. Americans spent $16 billion on K-12 public education in 1960; $96 billion in 1980; and over $200 billion in 1990, which represents an inflation-adjusted increase of 300 percent in 30 years with only minor changes in enrollment (See Figure 2). During the decade of the 1980s alone, inflation-adjusted per-pupil spending in public schools increased 37 percent.

Recognizing the need to restructure operations, many educators have organized charter schools where they can enjoy greater flexibility and exercise greater authority over school operations.

Contracting for educational services with the private sector may be of interest to charter schools as it has the potential to improve efficiency and increase accountability. In addition, the private sector may be able to offer services otherwise unavailable from the local school district which fit the unique educational missions of charter schools. This guide presents charter-school organizers with a survey of private-sector provider options. Whenever possible, the guide includes case studies to illustrate the advantages and drawbacks of various management strategies.

A resource list at the back of this study will help the reader obtain additional information about the services discussed. Descriptions of buyer's guides are also included in the appendix to assist charter-school organizers in identifying potential providers of services ranging from accounting to janitorial to security. The buyer's guides also contain listing for companies providing school supplies and equipment.

 

II.THE MAKE OR BUY DECISION

Unlike conventional public schools, charter schools design their own operations from the bottom up. A key question charter schools must address is what services should they continue to receive from their school district, what services can be produced in-house, and what services or supplies require an outside contractor. The answer depends on the particular needs and capabilites of the charter school, the availability of service suppliers, and the willingness of the school district to cooperate with the charter school.

Districts vary in their ability to provide high quality, cost-effective services to their schools. Some do an excellent job, using school dollars efficiently for the benefit of the students; others are characterised by wasteful spending, unresponsive bureacracies, and poor service. When it comes to the make or buy decision, there is no one-size-fits-all answer.

Deciding whether to contract for a service with a district or private-provider, or to produce it in-house requires comparing the cost and quality associated with each approach, often termed a "make-or-buy" analysis (see Table 1). The make-or-buy analysis should include a thorough cost comparison beginning with an analysis of current school-district costs, benefits, and how much the charter school pays the district for its services.

Education consultant Eric Premack notes that school districts are not accustomed to assessing cost data for individual schools. "It may take awhile to get an answer," he says, but, "the shrewd school district will see charter schools as a way to look at their own cost and mangagement structure. It may find the time and effort worthwhile."

In addition to the question of cost, service quality must be considered. Contractor quality is fostered through competition, for any contractor can be replaced by other providers if it performs poorly. To attract business and make a profit, providers must promote customer satisfaction by providing quality service in a cost-effective manner. To encourage school districts to provide quality, cost-effective services, charter-school administrators should consider them in the competitive contracting process, evaluating districts along with private providers.

A.Avoiding the Pitfalls

Procurement pitfalls exist in both the public and private sectors. But there are steps charter schools can take to avoid them. Charter schools should think strategically about the long run, and avoid getting into a situation where they become so dependent on a single provider—be it public or private—that switching to another provider becomes cost prohibitive. While cancellation clauses are essential, they may not provide protection once a school has become deeply invested in a particular provider. Contracts can be structured to avoid being captured or monopolized by a single provider in the long run. For example, Premack suggests including an option in contracts to lease back or buy back essential school equipment should the arrangement with the contractor not work out.

Precautions like these may make charter schools more effective, but they don't make their operations any easier. "The law maximizes the charter school's freedom, autonomy, and ability to act. But it also maximizes the administrative problems. Schools have to organize everything by themselves; it's pretty daunting," says Ted Kolderie of the Center for Policy Studies in Minnesota.

He suggests that charter schools may want to join together to purchase such essentials as supplies and insurance, enjoying economies of scale in the process. Kolderie cites Colorado, for example, where there is an interest in forming charter-school networks. Alternatively schools could form or join a separate entity—either a commercial or charitable venture—to construct that "nest" of support services. Says Kolderie, "Individual schools could buy into its service package: No longer would each have to struggle its own way up the learning-curve."

Once charter-school administrators decide to contract for services, care should be taken to prepare thoughtfully written contracts to reduce the likelihood of problems. Structuring a privatization effort to assure fair treatment for current workers is also important. This can be specified in the charter itself, or handled separately. Guides to assist public officials with these implementation issues exist and should be consulted.

 

III.EQUIPMENT AND SUPPLIES: DONATIONS, LOANS, AND OTHER ASSISTANCE FROM GOVERNMENT AGENCIES

Governmental agencies are also an alternative source of equipment and supplies for schools. Typically these agencies have donation or discount policies for surplus or obsolete property for schools and other education institutions. Be prepared to pay storage, handling, and transportation fees. Keep in mind that the availability of various items is always changing; also the condition of the property may vary widely. Charter-school administrators should periodically check back with an agency to find out what is available.

Government agencies may also enter into long-term loan arrangements with schools. For example, the Department of Energy loaned two portable buildings to the Lazear Charter School in Oakland, California. (See sidebar on page 20.)

Some government agencies provide volunteers to assist schools in developing or assisting with new instructional programs. Whether or not a government agency will cooperate with a school in this way might depend on the agency's particular mission with regard to community outreach. For example, in order to foster science and mathematics education, the Department of Energy will enter into formal partnerships with schools to help them develop technical instructional programs.

Federal agencies, many of which have specific donation programs for colleges and universities, are currently revising their policies in order to encompass elementary and secondary schools as well. Contact addresses and telephone numbers for the agencies described here are listed in Appendix D.

A.State Agency for Surplus Property

The California State Agency for Surplus Property (SASP) acts as a clearing house for state and federal government agencies, including military bases. Following the end of World War II, each state established an SASP for the disposal of surplus military and other government property. Today, surplus property such as vehicles, office furniture, and janitorial supplies are available from the SASP to public schools and other eligible organizations for a minimal fee covering service and handling costs. Charter-school administrators should write or call the SASP, with offices and warehouses in Sacramento and Fullerton, to find out if items they need are available.

By law, surplus property must be distributed in a fair manner based on the needs and resources of eligible organizations. Requestors will need to fill out an application (available from the SASP), present proof of public-school status (such as a copy of the page from the current Public School Directory which lists the school), briefly describe the school's economic condition, and describe the item(s) wanted. Occasionally the SASP will advertise specific items in its warehouse via a mailing list or word of mouth; charter-school administrators may wish to become familiar with this process. The time from application to delivery of the item can take between two and five weeks. School personnel may also visit the warehouses, and select and take receipt of surplus items.

B.Department of Energy National Laboratories

In order to support science and mathematics education, the Department of Energy (DOE) sponsors a number of local education programs through its national laboratories and other agencies. This includes making some surplus property available to schools and eligible non-profit organizations.

Surplus property of interest to schools may include copiers, computers, furniture, desk supplies, oscilloscopes, microscopes, audio-visual equipment, and vehicles. In California, there are several laboratories that may be contacted for donations. The Lawrence Berkeley Laboratory, the Lawrenece Livermore National Laboratory, and the Stanford Linear Accelerator are examples of these types of institutions.

School administrators should send a brief letter on school letterhead to the property manager at each facility with a specific list of the item(s) and quantity desired. Of course, there are no guarantees of availability or condition. Requestors may be required to provide additional identification for eligibility such as a letter from the IRS certifying that the school is non-profit. Schools receiving DOE donations may be expected to pay transportation and shipping costs.

 

IV.SUPPORT SERVICES

"Contracting for auxiliary and support services is the trend of the future. Privatization of these services will enable school districts to obtain the management services of companies whose primary expertise and focus is in these specific areas. Thus, the quality of our schools in these areas should improve. This will also permit us as educators to focus our efforts in the areas of our expertise—educating the youth of our communities and state."

Superintendent James M. Gray, Ed.D.

Norman (Okla.) Public Schools

 

The cost of noninstructional activities such as administration, clerical support, maintenance, transportation, food services, and some capital outlay totals 42 percent of public-school expenditures. In 1989–90, public schools spent over $78.4 billion for noninstructional services.

A survey of school districts in Southern California found that the number-one reason for contracting out was cost-effectiveness, followed by the availability of specialized expertise. School District Business Manager Billy H. Conn, of Tucson's Catalina Foothill School District, says:

My reasons for advocating private-sector contracting are twofold. First, it is imperative that a school district remain as flexible as possible in responding to change. Secondly, the cost of support operations needs to be minimized whenever possible.

In a 1987 poll, secondary school principals reported that their number-one problem, cited by 83 percent of the respondents, was "Time taken by administrative detail." These officials have been asked to do the impossible: to be proficient at a bewildering range of activities—from menu planning to bus route design—in which they have limited expertise. For charter schools desiring autonomy from school districts, the task of managing and running every school support operation can be even more daunting.

A.Pupil Transportation

"When the noninstructional costs of operating schools are reduced, more money can be spent on educating children. The privatization of school transportation simply makes good business sense and generally allows more money to flow towards the primary mission of education."

—Superintendent Philip Geiger

Piscataway (N.J.) Public Schools

1.Overview

Public-school pupil transportation represents an enormous transportation enterprise, with $8.3 billion spent in 1990. Over 22 million students are transported in more than 350,000 yellow school buses traveling over 3.4 billion miles each year.

Approximately 60 percent of all public-school students are now transported by bus, following a historical trend of increased busing in public schools, as shown in Figure 3. School buses make more than double the number of passenger trips made by all the mass transit buses in the country, and about 70 percent of all pupil transportation is provided by public providers.

Per-pupil transportation costs have been rising sharply. In 1960, the public per-pupil transportation cost was just $40 per year, jumping to over $320 per year in 1989, an inflation-adjusted increase of about 100 percent.

1992 SCHOOL BUS SAFETY IN CALIFORNIA
TYPE I SCHOOL BUSES
Operator	No. of Buses	Miles (in Millions)	Collisions per Million Miles
Public School	12,042	147	7.5
Contractor	3,613	59	10.3
Private School	661	6	8.0
TYPE II SCHOOL BUSES
Operator	No. of Buses	Miles (in Millions)	Collisions per Million Miles
Public School	2,570	34	7.7
Contractor	3,038	54	6.6
Private School	316	3	9.1

2.Strategies for Streamlining

The main streamlining strategy for pupil transportation is contracting. Unlike many other industrialized nations, U.S. pupil transportation is largely provided by public providers, with only 30 percent of all school-bus services provided by private contractors. In contrast, virtually all school-bus service in England and New Zealand is provided through contractors, as is 80 percent in Canada.

The top priority of school transportation administrators is pupil safety (see Table 2). Fortunately, school buses, whether operated by contractors or school districts, are an extremely safe form of transportation. In California, for example, where roughly a third of all school bus service is provided by private contractors, school buses traveled almost 1 billion miles between 1990 and 1992 with only one pupil-passenger fatality. Public operators, contractors, and private schools have very similar—and very good—safety records.

The data in Table 2 shows contractors having a somewhat higher incidence of accidents for Type I school buses and a somewhat lower incidence for Type II buses. It should be taken into consideration, however, that a proportionally greater number of contractors operate in dense urban settings and thus operate under more accident-prone conditions. For instance, 100 percent of the bus service in San Francisco is contracted, as is approximately 43 percent of the service in the Los Angeles Unified School District.

School administrators often find contracted service to actually be safer than district operation. In a survey of administrators in Washington state and Oregon, respondents generally believed that contractors were as safe or safer than district operation (See Figure 4). According to Austin, Texas Superintendent Jim Hensley, his district had changed over to a private contractor after rumors of drug use and drug dealing among the district's school-bus drivers led to a police sting operation that resulted in three drug arrests. According to Hensley, after contracting "I had the peace of mind that came with knowing students were riding on newer, safer, better-maintained buses.... Of the approximately 120 drivers employed by the district, about 30 either failed the drug and other tests or refused to take them."

Districts or schools that contract have found that in addition to private-sector operating efficiencies, contracting often relieves the burden of capital expenditures. In most cases, the contractor is responsible for purchasing and maintaining equipment. Districts often generate income by selling or leasing their buses and/or bus terminals to the contractor.

For example, in a proposal under consideration in Pinckney, Mich., a contractor has offered to pay $561,000 for the existing fleet and garage equipment while also purchasing a minimum of nine new buses. The school board estimates an immediate savings of $750,000 through privatizing with an additional estimated $70,000-per year reduction in operating costs (cost growth would be limited to 4 percent per year or the annual change in the Michigan Consumer Price Index, whichever is less). Says School Board President Timothy Gladney, "That's $750,000 we don't have to take out of the children's program."

Few studies have compared costs between district bus provision and contracted service. One study by economists at Indiana's Ball State University analyzed transportation costs of school-bus service in Indiana and found public ownership to be approximately 12 percent more costly than contracting.

The scarcity of comparison data is partly caused by the fact that many districts tend to significantly underestimate the true, total cost of in-house pupil-transportation costs. This problem is so endemic that an entire literature exists to assist public officials in assessing the true cost of district bus operation. A 1993 study by KPMG Peat Marwick was unable to draw any conclusions regarding the relative cost of public and contracted operation because they considered the cost data available from districts to be unreliable and incomplete. The report stated that when analyzing "Districts' costs, the quality, accuracy, and comparability of the data was highly questionable." When a true cost analysis is conducted, contracting is often found to produce substantial savings.

The KPMG Peat Marwick study examined 30 school districts in Washington and Oregon that had turned to privatization since 1980. The study surveyed the opinions of public officials in districts that used contracting, finding that in the areas of cost and quality, competitive contracting was generally deemed superior to district-operated service (See Figures 5 and 6).

In June of 1993, Indiana became the first state in the nation to adopt legislation requiring school districts to consider privatizing their pupil transportation services. The law does not mandate private contracting. However, in order to receive their portion of state pupil-transportation funds, school districts must show that they are making "reasonable effort to provide, or to contract with a provider that will provide transportation services at a competitive cost." For the first time, districts that operate inefficiently will be required to explore privatization or risk losing state funding.

In addition to contracting, there are other steps districts can take to reduce transportation costs. Auditing current bus operations in terms of labor utilization, staff training, and preventive vehicle maintenance can reveal potential cost savings.

For example, by staggering school starting times districts can use fewer buses and make more efficient use of labor. Durham County (N.C.) schools saved approximately $225,000 in operating and capital expenses by "pairing" schools in this fashion. Another approach is to streamline school-bus routes. In many cases, bus routes are the result of historical precedent. Computerized school-bus routing can generate efficiency gains for some districts, but a needs/benefits analysis should be undertaken because it can be an expensive project.

B.Food Services

"Any money saved providing food services leaves more funds for educational programs."

Lanny Ebenstein, Ph.D.

Santa Barbara School Board

1.Overview

Each day, an estimated 25 million public-school children eat prepared lunches and 5 million enjoy school-prepared breakfasts. Roughly $8 billion dollars is spent preparing food in America's public schools.

During the 1987–88 school year, the average cost to produce a school lunch was $1.62, including the value of donated commodities. Approximately 20 percent of the average public-school lunch is made up of United States Department of Agriculture (USDA) commodities, and the USDA spent $4.2 billion on its school lunch programs and an additional $685 million on school breakfast programs. More than 28 percent of all public-school students participated in federal free or reduced-price lunch programs, as did approximately 6 percent of private-school students.

Historically, most school dining programs have been district operated, but that is rapidly changing. In 1969, the Food and Nutrition Service of the USDA amended its regulations to permit food-service management companies to contract with public-school food authorities and maintain eligibility for the National School Lunch Program (NSLP). Since that time, increasing numbers of districts are turning to private management firms. In 1987, only about 4 percent of all school districts contracted for food services; today, that figure is roughly 11 percent. Still, public schools take advantage of the expertise of food-service companies far less than do businesses and other organizations (See Figure 7).

2.Improving Cafeteria Management

Since all food served in public schools that take part in the NSLP must meet the requirements of the USDA, quality standards for nutrition are identical for all providers, public or private. But companies that specialize in providing dining services are more likely to be familiar with a host of cost-limiting approaches than a small operation, including the latest techniques in food packaging, food preparation and storage, and menu design. A larger food-service company may also be able to obtain price reductions for bulk purchasing unavailable to some school districts. Larger operations are more aware of menu options that encourage student participation.

Whether using in-house or contracted services, school administrators must ensure the nutritional content of the food served. When it comes to health, nutrition, and safety, private firms have an incentive to meet these requirements: a desire to stay in business. This kind of competitive pressure to perform is frequently missing when districts administer their own food-service operations.

Reacting to unsanitary conditions and widespread student dissatisfaction with district-run cafeterias, the Baltimore public school officials announced in July of 1993 that 18 high school food services would be turned over to private companies. According to The Baltimore Sun, a review of city health violations uncovered at the 177 Baltimore public school cafeterias during 1992–93 revealed that:

× 66 were infested with rodents and/or roaches;

× 36 had no thermometers to check food temperatures;

× 23 had no thermometers to monitor refrigerators;

× Franklin Square Elementary was cited for 28 violations, prompting a health inspector to comment, "If this were a restaurant, it would have been closed";

× Live roaches were found on food-preparation tables at Lake Clifton High;

× A dead rabbit was found beside a food storage room at Bentalou Elementary.

Baltimore Public School Director of Food and Nutrition Services Leonard Smackum says privatizing the 18 cafeterias could save more than $500,000 a year, increase participation in school dining programs, and possibly even boost overall school attendance.

C. Robert Brown, superintendent of the Santa Cruz Valley, Arizona Unified School District, says contracting for food service in Santa Cruz has been a success. "Menus, food production systems, employee training and management have dramatically improved food quality," reports Brown. The district has enjoyed an 87 percent decrease in the cost per meal and a 38 percent increase in the total number of lunches served, turning a $120,000 a year loss into a revenue source.

It should not be assumed, however, that a private provider will excel. When contracting, it is important to establish monitoring procedures to ensure the contractor is performing satisfactorily. Most contracts allow schools to terminate a contract without cause with 30 to 60 days notice, an important safeguard for charter schools.

Contracting can be structured to avoid widespread layoffs for current workers. The Board of Education of the Norman (Oklahoma) Public Schools entered into a contract for food-service management with a private firm for the 1992–1993 school year. All 87 of the district's food-service employees were offered employment with the private firm, with 84 accepting. According to Superintendent James M. Gray: "Privatization of our food service has not harmed our community. On the contrary, it has been beneficial to Norman."

C.Janitorial/Facilities Management

"It's a crime when you pay custodians more than professionals."

Schools Chancellor Joseph Fernandez

New York City Public Schools

New York City public-school janitors earn an average of $57,000 a year, while the average teacher in New York state earns $42,080. In a school district beset by problems, every unnecessary dollar spent sweeping the halls is one less dollar that makes it into the classroom.

There are roughly 83,000 K-12 public-school buildings in the United States; all of them require cleaning, maintenance, and repair. The market for such services is estimated to be $9 billion annually. It is estimated that 10 percent of this work is currently contracted.

Studies on contracting for janitorial services for public buildings show significant cost savings, as competition generally fosters efficiency and often results in quality improvements.

Few comprehensive studies exist on school custodial contracting, but a number of districts have enjoyed success with this approach. According to Anton Jungherr, Associate Superintendent of the Berkeley, California Unified School District, "The programs and training [the contractor] provided our employees have been most beneficial to them. As a result, positive changes can be seen throughout the schools." Berkeley Unified saved $500,000 by contracting for facilities management in the first year. Table 3 shows other recent public-school experiences with contracting.

Like any contracted service, janitorial services must be carefully monitored. Carbondale (Ill.) Community District 165 has changed custodial firms three times since the district first privatized in 1984–85. According to District Financial Officer Steve Kosco:

"When you think of making a change, get with an attorney to make sure all the T's are crossed and I's are dotted. It's not as easy as you may think. You really have to keep your eyes open."

Issues such as weekend and after-hours use, exceptional cleaning costs (from flooding or vandalism, for example), and equipment costs should be clearly spelled out beforehand. Formal monitoring procedures should also be in place.

Table 3

D.School Facilities

1.Industry Overview

Charter schools have the freedom to build themselves from the ground up. This can also mean they have the responsibility of securing classroom space. Many charters simply convert existing public schools into charter schools. In this case, the charter school usually stays in the same space, with school district cooperation. Other charter schools must seek their own facilities. The task is not an easy one, particulary given the fact that charter schools must make do on their per-pupil revenue limit funds and whatever funds they can raise through donations. However, charter schools are freed from compliance with the Field Act, a seismic-safety regulation that typically applies to all K-12 public schools. Charter schools are still covered by the Uniform Building Code (UBC), the California State Constitution, and other federal health and safety regulations.

Some may wish to build new school facilities, particularly if their curriculum and teaching methods depend on a particular classroom setting. However, the costs of new-school construction may discourage many (see Table 4).

Public-school construction is a multibillion-dollar industry; over $10.7 billion was spent in 1992 by school districts for construction of new buildings, additions, and modernization (not including interest payments on previous construction debt). (See Table 5). This continues an eight-year trend of increasing school-construction spending. There are roughly 83,000 public-school buildings in the United States, with that number expected to increase as K-12 enrollment in public schools grows throughout the decade of the 1990s, from 41 million students in 1990 to 46.5 million students in the year 2000.

On average, over three-quarters of the cost of a new school comes from construction, with site purchase and development typically accounting for about 10 percent of total cost. Table 5 details these new school costs.

 

To meet these demands, some school officials have adopted creative methods of accommodating students without building new schools. Alternative schedules, such as year-round, multi-track schools, can increase the effective utility of existing structures. The Los Angeles Unified School District, for example, staggers year-round attendance to deal with overcrowding. Steve Walters, administrator for year-round programs, estimates multi-tracking has avoided $1.1 billion of new construction costs for LAUSD.

Other strategies include lengthened class periods, flexible staffing arrangements, and multi-age groupings to help maximize classroom utilization. In addition, some districts are experimenting with shared-use facilities in which resources such as libraries or cafeterias are used by both school children and other organizations, such as community groups or senior's centers. In such cases, maintenance and operations costs may be shared among users. Charter schools may be able to share facilities with community colleges or universities. Arrangements such as these would be particularly applicable on a campus serving primarily night-school students where facilities are underutilized during the day.

Other potential cost savings arise in the area of physical plant improvements. When budgets are tights, needed plant maintenance and improvements are often deferred, raising the long term operating costs. For example, upgrading existing heating and air conditioning systems can reduce operating costs. Unfortunately, such improvements do require up-front capital investments. Fortunately, companies such as Honeywell will often provide a vehicle for schools to make such improvement by covering the initial capital expense, recouping its investment in later years through lower operating costs. In many cases, says Business Building Manager Mike Rohan, "Honeywell guarantees the savings will equal the cost of the program or we'll refund the difference. It removes a lot of the risk of the program for schools."

2.Satellite Schools: The Private Provision of Facilities

The 1990s witnessed a new form of public-private partnership that can expand much-needed school infrastructure: satellite schools. Satellite schools are public schools located at business worksites. Businesses typically provide the infrastructure (land and building) free of charge to the local public school district. In return, the school agrees to enroll the children of the host-businesses' employees, enabling the business to offer a childcare benefit to its workforce. About a dozen partnerships of this type exist in four states, Florida, Minnesota, Iowa, and California. (See Table 6).

Faced with overcrowded classrooms, the Dade County School District, the nation's fourth largest, approached the business community with a plan to set up public schools at corporate worksites. American Bankers Insurance Group (ABIG) responded by establishing a school in 1987, enrolling roughly 60 K-2 children of employees of ABIG. The company contributes about $50,000 a year to the school to cover the cost of maintenance, security, utilities, landscaping, and insurance. The school district supplies everything else: teachers, curriculum, administration, and supplies. Because students commute to school (and work) with their parents, the district also reduces busing costs. The Dade County School District annually saves roughly $65,000 in transportation costs as a result of the satellite schools.

ABIG reports that employee turnover fell 9.5 percent and absenteeism dropped 30 percent among employees with children enrolled in the on-site school. The school district estimates it saved taxpayers $2 million in construction costs alone with the first three satellite schools built at private expense. In addition to the insurance company, the Dade County School District now operates satellite schools at an airport, a hospital, a community college, and a nuclear energy facility. Says Deputy Superintendent Thomas Cerra, "It's been very, very successful in every place."

Satellite schools, because their enrollment is based on the demographics of the workplace, not the neighborhood, have also fostered desegregation. "I have the melting pot classroom," says Betsy Hogenough, kindergarten teacher at a satellite school located at Martin-Marietta in Florida. "We draw parents of all races so we have children of all races. We don't have to bus to get an integrated classroom," she says.

 

V.CORE SERVICES: ENRICHMENT OPPORTUNITIES FOR STUDENTS

"It is not government's obligation to provide services, but to see that they're provided."

New York Governor Mario Cuomo

Within the past few years a number of innovative contracting arrangements have been embraced by school administrators. New approaches now have private-sector enterprises providing all or part of the operational and instructional services in a classroom, a school, or a group of schools. Such contracts take advantage of private-sector expertise to provide public education in the most efficient manner possible. The three main areas of core service contracting are:

× Management services.

× Instruction.

× Curriculum.

A.Management Services

1.Overview

Just under half (47 percent) of all public-school staff are nonteaching personnel. According to the U.S. Department of Education, public schools operate with five times the number of noninstructional personnel per student compared to private Catholic schools. In 1987–88, for example, the public schools had approximately one full-time noninstructional employee on the payroll for every 30 students. The Catholic schools, by comparison, used one noninstructional staff employee for every 150 students. Within the classroom, U.S. private schools on average have 15 percent fewer pupils per teacher than public schools.

Some staff requirements in the public schools are due to programs such as special education or other federally mandated services. Even after these programs are accounted for, however, public schools have proportionately higher numbers of noninstructional personnel than their private-sector counterparts.

2.Private Management of Public Schools

A growing number of schools and school districts are looking to the private sector for basic education services, and several private-sector firms now offer management services to public schools. These comprehensive services may entail managing a single school or an entire district. The firms typically are given the same per-pupil funding as the public schools and assume full responsibility for all aspects of school operations, including administration, teacher training, and noninstructional functions such as building maintenance, food service, and clerical support.

The most prominent of such firms is Education Alternatives, Inc. (EAI). EAI is a private, for-profit management and consulting firm specializing in education. In June 1990, it signed a contract with a public school to manage South Pointe Elementary School in Dade County, Florida. Under the terms of the five-year, $1.2-million contract, EAI agreed to reduce student-teacher ratios, expand teacher training, increase the use of technology in the classroom, and implement its own innovative curriculum program, Tesseract.

Two years later, in June 1992, EAI signed a five-year $28-million contract with Baltimore Public Schools to manage both the curriculum and general services of eight elementary schools and one middle school. EAI has engaged Johnson Controls World Services to provide comprehensive building cleaning, maintenance and repair, and the accounting firm of KPMG Peat Marwick to assist with school financial operations.

Management at EAI expects the partnerships to reduce operating and administration spending by 25 percent, enabling EAI to reinvest 20 percent back into the classroom—and make a 5-percent profit. For their part, school districts incur no additional costs because EAI operates the schools for the average annual per-pupil cost, about $5,500 in Baltimore, already allocated for public education.

Yet schools often enjoy enhanced service quality. For example, EAI's partnership with Johnson Controls World Services in Baltimore has led to an upgrade in facilities maintenance (See Case Study on page 15).

At South Pointe Elementary, EAI's efforts have been well-received by teachers, unions, and administrators alike. "Their training of teachers is the best I've seen in 35 years," says South Pointe Lead Teacher Linda Lentin. She points out that the teachers at South Pointe worked in conjunction with school administrators over a period of time to bring EAI to the school. In Baltimore, by contrast, there was some resistance from the teaching staff, because administrators "didn't give those teachers time to develop an open attitude toward the program," says Lentin.

Because both the school and EAI's role in it are new, test-score results are not yet available. Says Lentin, "We think we'll see a small gain, but obviously you don't make those gains overnight. You have to give us some time, and give the kids some time." Perhaps one of the best indicators of the school's promise to date is the fact that a number of affluent families have chosen to send their children there despite the fact that over 90 percent of the school's students qualify for the federal lunch program for low-income students, according to Lentin. Says Lentin, "They said these [affluent] parents would never come, would never entrust their children to an inner-city school. EAI has helped us do that."

Since the advent of contracts between EAI and the public schools, at least two more private-management companies have entered the market. Whittle Communications, which launched the Edison Project, a plan to construct 1,000 for-profit private schools, also intends to offer its services to public schools, including charter schools. According to Benno Schmidt, president of Edison, "We're going to bring our design to public schools where we're wanted, where we're invited and where we're given freedom." Edison has submitted a charter-school application in partnership with a local party in the state of Massachusetts.

Says Edison Project spokesperson Ronald Brady, the Edison Project—with its comprehensive education program and innovative curriculum design—would be "particularly helpful to people wanting to start a new charter school, but who may not have the ability or the resources to go out and create it."

While the Edison Project would essentially manage and create the charter school, Brady emphasizes that a local partner is essential. "We would bring the education program and the local entity, having knowledge about local needs and values, would guide us about what components of the curriculum should be shaped to fit the community."

Much like EAI, the for-profit Edison Project would use the school's existing revenues to operate the school, and also provide a return to Edison's investors.

Another start-up company, Alternative Public Schools, Inc. (APSI), based in Nashville, also offers management and curriculum-development services. Like EAI and Edison, APSI would provide management and curriculum-development services. Unlike its competitors, however, APSI plans to hire and train its own teachers to staff the public schools.

Not all private-management efforts are comprehensive in scope. Many school districts contract with management consultants for specific needs. The Detroit Public Schools, for example, contracts with Wilkerson & Associates to assist Detroit's 24 "Empowered Schools" in making the transition from conventional operation to autonomous charter schools. The consulting firm is assisting with team building as the school develops a new governance structure. It has established an automated financial-management system and helps the schools manage a competitive bidding process for purchasing goods and services. "We make sure we do knowledge transfer as well so [public administrators] can acquire the skills they need to do the work after our contract expires," says Wilkerson consultant Renee Bundy. "The involvement with an outside firm was the major factor in helping these educators and parents at the schools be able to really concentrate on teaching children," says Larry Patrick, board member and past president of the Detroit Board of Education.

The Minneapolis School Board in November, 1993 unanimously approved the appointment of a private consulting firm to assume the school superintendent's position. Public Strategies Group, Inc. will oversee the 44,000 student district under terms of the performance-based contract. "If we don't produce results, we don't get paid." says PSG president Peter Hutchinson. PSG will likely be evaluated on performance measures such as student achievement, including decreasing the achievement gap between white students and minority students; meeting staff development goals, and increasing school safety.

Charter schools can use existing private schools as a source of information and consulting help, since such schools have experience in independent school accounting and management most public schools lack.

For example, Fairmont Private Schools, headquartered in Anaheim, Calif., has four campuses and an enrollment of over 1,100 students. Fairmont offers services from pre-school through ninth grade (a high-school is near completion), with tuitions ranging from $5,400 to $5,995.

In a sense, Fairmont operates like a small school district with true school-site management. Most school functions are autonomously controlled by Fairmont's campus directors, who hire employees, prepare academic policies, oversee curriculum, and make most academic decisions with minimal interference form headquarters staff. Each campus has its own budget and can make significant budget changes, as long as the operating results meet targets, leaving the administrative headquarters to manage largely non-academic services—such as accounting, transportation, food service, maintenance, and risk management.

According to David Jackson, Fairmont's Executive Director, "The dynamics of the private school marketplace have forced us to develop sophisticated tools and strategies in order to maintain a competitive advantage. I expect that many of these tools would be useful for charter schools." The expertise and administrative experience of the Fairmont Schools could made available to independent public schools on a consulting basis.

The efforts of these private companies and the public schools in partnership with them provide a model for charter-school organizers eager to explore new options for managing administrative and instructional operations. Such services have traditionally been handled in-house, but for charter-schools with limited financial and human resources, private-sector management could enable them to tap expertise and efficiencies they might not otherwise enjoy.

B.Instruction

1.Overview

Charter schools may wish to enhance their instructional offerings with classes in the arts, foriegn language, advanced science, computer technology, or remedial education. Private-sector contracting can help schools expand learning opportunities for students without adding full-time instructors to the school payroll.

For many charter schools, the cost of hiring new teachers would be prohibitive. In 1991–92, the average public-school teacher's salary excluding benefits was $35,487; adjusting for the longer work year of non-teachers yields a full-time comparable salary of roughly $46,000.

Teacher salaries have increased substantially in the last decade. Between 1981–82 and 1991–92, public-school teachers' salaries grew 22 percent after adjusting for inflation. In general, public-school teachers are paid more than private-school teachers; according to the U.S. Department of Education, the average base salary for private-school teachers is roughly 35 percent less than that of public-school teachers.

Besides having the potential to help charter schools economize on costs, another advantage of contracting for instructional services is that private providers can be judged on outcomes, with firms being rewarded for successfully teaching students. This is in sharp contrast to the backwards incentive structures often found in public schools. As Principal Roger Harris of the Timilty Middle School in Boston, Mass., explains: "I don't see any incentive for improvement. In fact, as public school scores go up, they lose funding....It's a Catch-22."

2.Opportunities and Techniques

Charter schools may find it more cost-effective to contract out for various instructional programs rather than developing and maintaining the same capabilities in-house. Instruction may be contracted out to education companies, to other private schools or colleges, or to private-practice teachers who contract with schools for instruction. The following examples illustrate the variety of instructional services that are now contracted out by public schools.

Programs for At-Risk Youth. Programs for students at-risk of failing or dropping out are now offered by private, for-profit firms. The Illinois-based Ombudsman Educational Services provides education programs for over 2,000 at-risk students in Arizona, Illinois, Minnesota, Florida, and Maryland. Middle and high school students are instructed by state-certified teachers with pupil-teacher ratios no greater than ten to one. The classrooms typically are located in commercial spaces, such as shopping centers or office buildings. Tuition at Ombudsman is $3,000 to $4,000 and is paid for by the school districts or on a private-tuition basis. That is well below the $5,000 to $8,000 that districts in those states spend on average to educate high-risk youths in the public schools. Moreover, Ombudsman boasts a retention rate of 85 percent of this hard-to-educate population. Says Boyle, "Anyone can teach good kids. It's the bad ones that make good teachers."

The state of Minnesota allows some students failing to thrive in the public system to enroll in private, nonsectarian alternative schools at public expense. Part of the state's High School Graduation Incentives Program, the Private Alternative Program, allows students to enroll in private alternative schools on either a full-time or part-time basis. Approximately 20 private alternative schools take part in the Private Alternative Program, and in 1990–91 over 1,000 full-time-equivalent students participated. In Wisconsin, the Milwaukee Public Schools offer a similar program for children at risk. In 1992–93, 1,035 Milwaukee students attended private, nonsectarian schools offering alternative programs. Beginning in 1993–94, the Wisconsin legislature allows all districts within the state to contract with private providers for at-risk programs.

Special Education. Under federal law, children with disabilities must be provided with a "free appropriate public education." When the public schools cannot accommodate a particular child, they frequently turn to the private sector for help. In the United States, approximately 60,000 children with disabilities attend private schools at public expense.

Basic day rates for a private-school placement typically range between $80 and $120 per pupil. Private-school placements are often more expensive than public-school placements. However, for some students, due to the nature of their disability, private-school placements are the most cost-effective means of providing appropriate instruction.

Remedial Education. The learning needs of children are unique, and some children require extra assistance. Most schools already have special funds, under the federal Chapter 1 program, for example, for the purpose of providing additional instructional support. Such support can be provided by teachers employed by the school district full time, or through contracting with a private firm responsible for hiring, training, and assigning teachers.

Sylvan Learning Systems, a private tutoring company, signed a contract with Baltimore Public Schools in 1993 to provide remedial education to disadvantaged students in five elementary schools. Using $1.4 million in funding from the federal Chapter 1 program for low-income students, the Baltimore schools have retained Sylvan to provide instruction to 660 eligible students. Sylvan provides one-hour tutorials twice a week with maximum student-teacher ratios of three to one. Class sizes in the Baltimore schools for remedial instruction currently average between eight and ten to one, according to Sylvan. If a student fails to achieve significant increases in academic performance, the company will provide an extra six weeks of remedial education to the student at no charge to the schools.

Other national franchise chains providing services to schools include Huntington Learning Centers and Kumon Mathematix.

 

Foreign Language. Contracting out for foreign language enables public schools to broaden their course offerings without having to increase the size of their permanent staff.

DiaLogos International Corporation, based in Raleigh, North Carolina, was among the first private businesses to provide foreign-language instruction in public schools. Beginning in 1981, DiaLogos supplied the foreign-language program, including instructors, to a magnet school in the Wake County School District. Another private company, Berlitz International, Inc., which built its reputation by providing foreign-language instruction to business executives and tourists, now serves over 100 schools nationwide, including a handful of public schools.

Palmetto Elementary School, a public school in Florida, began using Berlitz in 1988 for its Spanish-as-a-second-language program. Berlitz also helps develop the language skills of native Spanish speakers in their home language. The cost of the program is the same as if the school district had provided it, but, says Palmetto principal Paul Papier, the Berlitz program offers more scheduling flexibility, program enhancement options, and easier access to the three certified teachers. "We tell them (Berlitz) what hours to come in. If we were using the district's teachers, we would have to fit into the district's hours," says Papier.

Science Courses. Lacking teachers trained in the sciences, many schools offer limited science instruction at the elementary and secondary school levels. Contracting for science instruction or science-teacher training enables schools to enhance their science curricula.

Science Encounters and Discovering Science in Maryland are two private firms specializing in activity-based preschool and elementary school science programs. Science Encounters also provides teacher training workshops to improve the ability of regular classroom teachers to engage children in science. Science Encounters has trained teachers in the Washington, D.C. public schools under district contract.

Science Encounters, which teaches science to 1,500 children a year and employs 30 part-time teachers, contracts primarily with private schools for classroom instruction. As do private schools, charter schools may find contracting offers certain conveniences. "The schools don't have to worry about employee benefits," says Robin Gross, director of Science Encounters. "As subcontractors, we're hired to do a specific job. We have the skills to solve the problem that they might not be able to get from their regular staff," she says.

Science Encounters has also cooperated with two public-school districts to offer after-school programs. The public schools provide the classroom space and parents pay the cost of instruction. "If children are turned on to science after school, they will be more interested in what they learn about it in their regular classes," says Gross.

 

Private-Practice Teaching. Teachers in private practice are self-employed professional educators who sell their services to public schools, private schools, individuals, or businesses. Though private-practice teaching is common in the private sector, it is just beginning to take root in public schools, where institutional barriers have slowed its acceptance. Because of the greater freedoms it provides, charter-school legislation could advance private-practice teaching.

Private-practice teachers can be hired on a full-time or part-time basis, as individuals or as part of a group. They can be hired to teach a regular curriculum course, such as math, or a unit within a course, such as math games. One advantage private-practice teachers bring to public schools is in the area of enrichment courses (such as art, music, computers, or language) that require special skills. Private-practice teachers typically come equipped with their own lesson plans, instruction techniques, equipment, and supplies.

Private-practice teachers offer charter schools greater flexibility and quality assurances. If a private-practice teacher performs poorly, the charter schools can simply choose not to renew the contract. Ted Kolderie and Ruth Anne Olson, pioneers of the concept, write in Private Practice in Public-School Teaching:

The contract relationship provides a corresponding accountability. It is for a limited term. It expires if not affirmatively renewed. And it will be renewed only if both parties find the relationship a successful one.

Charter schools that cannot afford to hire a full-time teacher for enrichment programs may simply have to go without. With private-practice teachers, however, a charter school can hire a teacher on a short-term or part-time basis with minimal financial commitment, thereby providing students with exposure to a subject they might otherwise have missed altogether.

Private-practice teaching enables charter schools to tap into a whole new population of skilled educators: retired teachers and former teachers, business executives, students, scientists, college professors, and parents.

Driver's Education. There are a number of community-based driver's education services available to public schools. The flexibility that these companies provide is especially useful for small charter schools that may not have sufficient student demand to warrant a full-time driving instructor.

Alan Schafer, district administrator for Johnson Creek Public Schools in Wisconsin, contracts for such services, explaining that the fluctuations in the demand from year to year are easily accommodated by using a private provider. The arrangement "gives us the flexibility of having the program or not depending on how many kids sign up, without having to go through lay-offs of staff," he says of his school district, which enrolls 550 students.

Lyle McBride, part-owner of Valley Driving Systems, Inc., a private driver-training firm in California, claims "We can be economical about it because we're doing a large number of students, therefore we can spread those costs around," explaining that his biggest cost is insurance.

McBride cautions schools wishing to contract out their driver-training programs to take an active role in its design. "It must be their program....The [charter school] must outline in detail the mission they want to accomplish," says McBride.

C.Curriculum

1.Overview

There is considerable disagreement in the education community over which teaching methods and curriculum designs serve students best. From bilingual education to phonics to the new math, all have their detractors and their champions.

Curriculum is a politically sensitive issue, and control over teaching content is one of the central elements of public education. Charter schools, however, have greater flexibility implement the kind of curriculum appropriate for their school population.

2.New Approaches in Curriculum Development

A number of reform-minded school districts have considered revising curriculum and teaching methods at the local level to meet local needs. In these cases, private companies have been responsible for developing and implementing public-school curricula. Most often, the curriculum has been comprehensive in nature, usually developed for an entire school. However, curriculum can also be tailored for a particular type of student, grade

As part of their management services, Education Alternatives, Inc., the Edison Project, and Alternative Public Schools, Inc. each provide their own custom-designed comprehensive curriculum and related teacher training. Another curriculum designer is the Houston-based Performing Schools Corporation (PSC), which promotes a highly structured curriculum called Direct Instruction Teaching Arithmetic and Reading, or DISTAR. By its very nature as a provider in a contract arrangement, PSC is accountable for its performance in a way that public schools typically are not. In addition, the company offers a performance guarantee for student achievement and will take a prorated reduction in its contract fee if it fails to meet specified goals. Says John D. Privett, president of Performing Schools, "What you have here is an emerging $100-billion industry...[companies will be] competing on the basis of performance and cost to the district."

 

3.Instructional Technology

According to a 1993 report by Market Data Retrieval, 30 percent of all school districts surveyed used Integrated Learning Systems (ILS) in the classroom, an 11 percent increase over 1991 levels. One of the fastest growing segments of the educational technology market, ILS provides comprehensive lessons, typically supported by a personal computer, which are customized to meet individual student learning needs.

In 1993–94, the instructional-technology market for K-12 public schools, including the ILS market, was valued at $580 to $600 million, according to Mark Stevens, marketing director for Jostens Learning. Serving more than half the ILS market, Jostens is the largest provider of this type of education technology. Other major ILS and education-software vendors include Computer Curriculum Corp. (CCC), Eduquest, a division of IBM, and the Minnesota Educational Computing Consortium (MECC).

Jostens Learning provides computer-based curriculum to 14,000 public schools in subjects ranging from language arts to social studies to mathematics. Using software designed to support and monitor individual student progress, Jostens promotes what it calls an "interactive learning environment" in which software programs, hardware-service support, teacher training, puppets, and other classroom supplies are integrated and managed by Jostens.

"Most schools and educators know what kind of outcome they want, but may not know how to get there. We help them get where they want to go. We're a piece of the total instructional package," says Stevens.

VI.CONCLUSION

Charter schools can learn much from the experience of public schools contracting with the private sector. Contracting has proven a useful strategy for school districts to reduce expenditures and expand the educational opportunities for their students. By contracting out for services, charter schools can also take advantage of the competitive efficiencies offered by the private sector, freeing them to focus on their core concern: student performance.

Among public schools generally, charter schools have unprecedented freedoms to design, manage, and operate their own educational programs and facilities. Too often, these opportunites are not fully realized as those proposing charters lack a throrough understanding of the various options available for school operations. This report attempts to prompt charter-school organizers to consider making use of the tremendous resources the private sector can offer.

In addition, for those charter-school organizers who already possess a clear vision for the design of their charter school, this report may provide them with strategies for implementing the various charter-school components.

Widescale use of contracting will depend on the school's willingness to consider alternative providers in areas traditionally handled by the public sector. Organizational resistance to change and employee opposition can be an obstacle to privatization. However, by working with public-employee organizations, privatization can be implemented in a manner that minimizes disruption.

The great value of contracting arrangements is that they harness competitive efficiencies to the benefit of student welfare.

Monopolies are inherently inefficient organizational structures, and introducing competition in the provision of public education has the potential to stretch available resources and improve services.

Greater school autonomy and de-bureacraticization are essential aids to school administrators in their efforts to better serve students. Charter schools, with their decentralized decision making, flatter hierarchical structures, and local autonomy, can more easily employ the management strategies outlined in this study.

 

ACKNOWLEDGEMENTS

The authors would like to thank Myron Lieberman, Ted Kolderie, Eric Premack, Philip Geiger, Lanny Ebenstein, Chris Yelich, and Senn Brown for their input and suggestions. Our thanks to Reason Editorial Production Assistant Raymond Ng for his work in preparing this paper for publication. We would also like to extend our appreciation to the supporters of the Reason Foundation who made this research possible.

 

ABOUT THE AUTHORS

Janet R. Beales is a policy analyst with the Education Studies Program of the Reason Foundation. Before earning her M.B.A. degree at the University of Washington, Ms. Beales was assistant editor for the Fortune Encyclopedia of Economics, and a project manager at the National Chamber Foundation in Washington, D.C. She is the author of numerous articles and Reason Foundation studies on education policy.

 

John O'Leary is a policy analyst with the Privatization Center of the Reason Foundation. He is a graduate of MIT and holds an M.S. degree in engineering. Mr. O'Leary is the editor of the monthly Privatization Watch newsletter, is a contributing editor to Intellectual Ammunition magazine, and writes a regular column for the LA Daily News. He is the author of numerous articles and studies on privatization.

APPENDIX A - INNOVATIVE MANAGEMENT TECHNIQUES:

Making the Most of Available Resources

There are a variety of management techniques available to charter-school administrators striving to provide students with a quality education in a cost-effective manner. Many of the approaches described will be familiar; others may be new. These management strategies may not be suitable in all cases, but should be evaluated by administrators.

Many of the techniques described fall under the general category of privatization—forms of alternative service provision that utilize competitive efficiencies. Privatization increases private-sector involvement but does not equate to an abandonment of public responsibility or a loss of public control.

These techniques include:

Vouchers. There are two main categories of vouchers. In a limited program, vouchers can be provided to special needs or at-risk children, allowing them to attend a private school with public funds. Vouchers can also be used to assist students in pursuing vocational or pre-professional instruction generally unavailable in the public schools. Under a comprehensive voucher program, all students are provided with a voucher redeemable at any school, public or private.

Contracting for Support Services. A public entity enters a contract with a private firm to perform a specific function. Contracts are commonly used in public schools for support services such as food services, pupil transportation, building maintenance, and data processing.

Contracting for Management/Curriculum Services. Contracting for management and curriculum services enables public school districts to engage private operators to manage educational programs—for a course of study, a school, or a number of schools within a district.

Contracting with Private Schools and Universities. Some public-school students have special needs (or abilities) that require special attention. In these cases, public schools allocate public funds to pay for that student's tuition in a private school better equipped to serve that student.

Public-Private Partnerships. This term covers a wide array of arrangements, including satellite schools, concession agreements for instructional services (as with Channel One), and local business-education partnerships, for example, in the area of vocational-intern training programs.

Philanthropy. This refers to charitable contributions of funds, equipment, and in-kind assistance provided to schools.

Asset Management. This entails making greater use of existing assets, such as through the sale or lease of unused facilities, or the renting out of facilities for use during non-school hours.

 

RECOMMENDED RESOURCES

Satellite Schools: The Private Provision of School Infrastructure, by Janet R. Beales, Reason Foundation Policy Study No. 153, January 1993.

Designing an Effective Bidding and Monitoring System to Minimize Problems in Competitive Contracting, by John Rehfuss, Reason Foundation How-To Guide No. 3, February 1993.

How to Compare the Costs Between In-House and Contracted Services, by Lawrence Martin, Reason Foundation How-To Guide No. 4, March 1993.

Privatization and Public Employees: Guidelines for Fair Treatment, by John O'Leary and William D. Eggers, Reason Foundation How-To Guide No. 9, September 1993.

APPENDIX B - PRINCIPLES OF SUCCESSFUL CONTRACTING

 

 

APPENDIX C - RESOURCE DIRECTORIES

Charter-school organizers may wish to consult the following directories for additional listings of companies providing school services and supplies. Companies also exhibit at national conferences held by private-school agencies such as the National Association of Independent Schools, and the National Catholic Educational Association. These organizations should be contacted to obtain further information.

 

The Green Pages: California's School Business Directory

1130 K Street, Suite 210

Sacramento, CA 95814

(916) 441-3883

Published annually by Murdoch, Walrath & Holmes, The Green Pages is available free of charge to public and private educators. It lists catagorically and alphabetically over 850 businesses serving California's education community. Listings are on a paid-advertisement basis with no membership requirements. Numbers 175 pages.

CASBO Membership Directory and Buyer's Guide

California Association of School Business Officials (CASBO)

P.O. Box 179

West Sacramento, CA 95691

(916) 371-1103

Annually lists over 500 businesses serving the education community in addition to its membership directory of public school administrators. Available free of charge to CASBO members; $35 for non-members. Listings of business suppliers are on a paid-membership or paid-advertisement basis. Numbers 200 pages total with 70 pages of business listings.

Who's Who: Directory & Buyers' Guide

401 N. Broad St.

Philadelphia, PA 19108

(215) 238-5300

A special guide produced by American School & University magazine, Who's Who includes over 1,400 listings and case studies, including paid advertisements, of national school suppliers. The cost of the buyer's guide is $25. Numbers 175 pages.

APPENDIX D - CONTACTS

Caveat Emptor: One of the first lessons schools interested in contracting with companies for services must learn is "buyer beware." It is the responsibility of the parties involved to identify, select, and contract for appropriate services meeting their particular needs. The Reason Foundation and the Pacific Research Institute do not endorse any particular company, organization, individual, or their services and products.

Curriculum and Instruction

Kumon Educational

Institute Co., Ltd.

2000 Mariner Avenue, Suite 400

Torrance, CA 90503

(310) 215-3311

Sylvan Learning Centers

9135 Guilford Rd.

Columbia, MD 21046

(410) 290-6644

American Association of

Educators in Private Practice

Chris Yelich

N7425 Switzke Rd.

Watertown, WI 53094

(800) 252-3280

Berlitz International, Inc.

125 Main St.

Westport, CT 06880

(203) 222-0537

Computer Curriculum Corp. (CCC)

P.O. Box 3711

Sunnyvale, CA 94088

(800) 227-8324

DiaLogos

International Corp.

5104 Oak Park Rd.

Raleigh, NC 27612

(919) 782-2630

Eduquest

411 Northside Parkway

Atlanta, GA 30327

(404) 238-2000

Jostens Learning

6170 Cornerstone Ct.

San Diego, CA 92121

(800) 521-8538

Minnesota Educational

Computing Consortium (MECC)

3490 Lexington Ave.

St. Paul, MN 55126

(612) 569-1500

Ombudsman Educational Services

1585 N. Milwaukee Ave.

Libertyville, IL 60048

(800) 833-9235

Performing Schools Corp.

5373 West Alabama, Suite 209

Houston, TX 77056

(713) 957-4941

Science Encounters

4401 East West Highway, Suite 300

Bethesda, MD 20814

(301) 718-0808

Valley Driving Systems, Inc.

1888 West 6th St.

Corona, CA 91720

(714) 734-4720

Government Donations

Lawrence Berkeley Laboratory

Property Management

1 Cyclotron Road

Berkeley, CA 94720

(510) 486-4184

Lawrence Livermore National Laboratory

Property Management

7000 East Ave.

Livermore, CA 94550

(510) 424-0500

Stanford Linear Accelerator

Property Management

P.O. Box 4943

Stanford, CA 94309

(415) 926-4353

For information about government agency partnerships,

contact Jim Dorn:

U.S. Department of Energy

San Francisco Operations Office

1301 Clay Street, 700 N

Oakland, CA 94612

(510) 637-1808

California State Agency for Surplus Property

1421 North Market Blvd.

Sacramento, CA 95834

(916) 928-4630

California State Agency for Surplus Property

701 Burning Tree Rd.

Fullerton, CA 92633

(714) 449-5900

School Management and Consulting

Public Strategies Group, Inc.

275 East 4th St.

Suite 710

St. Paul, MN 55101

(612) 227-9774

Alternative Public Schools, Inc.

28 White Bridge Rd.

Nashville, TN 37205

(615) 356-6975

Edison Project

Whittle Communications

505 Market St.

Knoxville, TN 37902

(615) 595-5000

Education Alternatives, Inc.

1600 West 82nd St.

Minneapolis, MN 55431

(612) 832-0092

Private Alternative Programs

Minnesota Department of Education

550 Cedar St.

St. Paul, MN 55101

(612) 296-6105

Wilkerson & Associates, P.C.

19627 Grand River

Detroit, MI 48223

(313) 532-2660

Support Services

American School Food

Services Association

1600 Duke Street, 7th Floor

Alexandria, VA 22314

(703) 739-3900

ARA Services, School Division

1101 Market St., 20th Floor

ARA Tower

Philadelphia, PA 19107

(800) 328-5200

Association of School

Business Officials

11401 North Shore Drive

Reston, VA 22090

(703) 478-0405

Durham Transportation, Inc.

9171 Capital of

Texas Highway North

Travis Building, Suite 200

Austin, TX 78759-7252

(512) 343-6292

Honeywell Inc.

Honeywell Plaza

Minneapolis, MN 55408

(612) 870-5200

Johnson Controls World

Services Inc.

7315 North Atlantic Ave.

Cape Canaveral, FL 32920-3792

(407) 784-7368

Laidlaw Transit

7501 S. Quincy, Suite L

Willowbrook, IL 60521

(708) 887-0134

Marriot School Services

1001 Bayhill Drive, Suite 200

San Bruno, CA 94066

(415) 742-7600

Mayflower Contract Services

5360 College Blvd.,

P.O. Box 7941

Shawnee Mission, KS 66207

(913) 345-1986

National Big BUS Council

Department of Student Transportation

1819 West Pershing Road

Chicago, IL 60609

(312) 535-7740

National School Bus Service, Inc.

18-4 East Dundee Rd.

Barrington, Ill. 60010

(708) 382-0525

National School Transportation

Association

6213 Old Keene Mill Court,

Box 2639

Springfield, VA 22152

(703) 644-0700

National Association for Pupil

Transportation

P.O. Box 745

East Moline, IL 61244

(309) 755-1060

Preferred Meal Systems

1672 Reynolds Ave

Irvine, CA 92714

(714) 770-5590

Ryder Student Transportation Services

P.O. Box 020816

Miami, FL 33102-0816

(800) 648-7787

ServiceMaster

1 Service Master Way

Downer's Grove, IL 60515

(800) 333-6678