Title: Privatising education
1Privatising education
- James Tooley, PhD
- Professor of Education Policy
- University of Newcastle
- ? James Tooley 2001
2Three parts
- Why privatisation of education?
- Negative and positive reasons
- Two approaches
- Public-private partnerships
- Extending access to private education
- Implications for Lithuania
3Why privatisation?
- What do I mean by privatisation?
- Increasing role for private sector in educational
- provision
- funding and/or
- regulation
4Why privatisation?
- Negative reasons
- failures of state education
- inequity of state provision
- Positive reasons
- Efficiency and cost-effectiveness
- Investment
- Innovation
- Self-help and community self-help
- Freedom/liberty
5Why privatisation? Efficiency and
cost-effectiveness
- World Bank studies show the proportional gain in
achievement score if a randomly selected student,
with the characteristics of an average public
school student, attends a private rather than a
public school, holding constant that students
background
- Jimenez, Emmanuel, Lockheed, Marlaine E., and
Paqueo, Vicente, (1991) The Relative Efficiency
of Private and Public Schools in Developing
Countries, World Bank Research Observer, Vol. 6,
no. 2 (July), pp. 205-218 - Jimenez, Emmanuel,, Lockheed, Marlaine,
Wattanawaha, Nongnuch, (1988) The Relative
Efficency of Private and Public Schools the Case
of Thailand, The World Bank Economic Review, Vol.
2, no. 2, pp. 139-164).
6Why privatisation? Efficiency
7Why privatisation cost-effectiveness
8Kingdon Cost per achievement (Rs)
9Kingdons conclusion
- PUA schools are unambiguously and substantially
more cost-effective and internally efficient than
G and PA schools
10Why privatisation? Innovation and investment
- Education companies are emerging, with chains of
schools and universities, which - benefit from economies of scale can find
finance from financial institutions can fund
student loan programmes
- invest in research and development implications
for financial efficiency and educational
effectiveness - Potential to solve the information problem
through brand names Solve information asymmetry
problem
11Why privatisation? Innovation and investment
- Entrepreneurs in developed and developing
countries have created educational opportunities
which are - Profitable
- Financed entirely from student fee income
- Cater for mass markets, not just the elite
12Cases
- Objetivo/UNIP, Brazil, was founded in 1962 with
20 students and is - probably the largest chain of private schools in
the world? - Over 500,000 students in about 500 campuses
- Many franchised
13Educor, South Africa
- 1943 - founded as a cramming college
- 1952 - developed distance learning materials
- 1996 - IPO on the Johannesburg Stock Exchange
- Now 300,000 students on 127 campuses
14(No Transcript)
15NIIT, India
- 1979 computer training company
- Now has 1,000 franchised centres in India and has
expanded into 25 countries worldwide - Emphasis on RD and quality control
- Student loan scheme with Citibank
16NIIT RD
- The hole in the wall programme
- Challenges the notion of what a teacher is
- Is it commercially viable?
17Key questions
- Can the virtues of private education be
replicated in the state sector? - Can access to the virtues of private education be
extended to those currently within the state
sector?
18Hence two approaches to privatisation
- Public-private partnerships (PPP)
- Contracting out of (failing) state schools
- Charter schools
- Vouchers (state)
- Extending access to private education
- Private schools for the poor
- Private vouchers
- Tax credits and scholarships
19Contracting out
- Founded 1992
- First four schools in 1995
- Now more than 57,000 students in 108 schools
20Inclusive schools
- Largest group of students is African-American
- 65 of students on free-school meals
21Attracting investment
- Since taking over first schools, by 1998 raised
120 million for RD and investing in schools - On Nov 11 1999, launched on Nasdaq, raising
122.4 million - Share price steady
22Inputs and outputs
- Takes only 90 of state funding
- Invests 1 million in each school
- Pays teachers more
- Share options for all staff, from janitors to
principals
- 84 of classes have statistically significant
gains - High parental satisfaction
- Waiting lists in all schools
- edisonschools.com
23Edison versus government schools - of school
budget
24Vouchers
- Government coupons or checks
- Programmes in USA, Colombia, Chile, Sweden, etc.
- USA examples
- Vermont
- Maine
- Milwaukee
- Cleveland
- Florida
25The Voucher Tree
Limited fixed-value uniform fees
Unlimited supplementable uniform fees
Unlimited supplementable cost-fees
transport included
Unlimited supplementable cost-fees
transport included income-related restricted
Unlimited supplementable cost-fees
transport included income-related unrestricted
(Blaug 1984)
26Chile vouchers
- Vouchers usable at any private or municipal
school - Subsidised private schools are more efficient
than the municipal schools employing fewer
teachers per pupil and having lower unit costs. - Achieve higher test results in mathematics and
Spanish.
- Larrañaga, Oswaldo, (1997) Chile A Hybrid
Approach, in Zuckerman, Elaine and de Kadt,
Emanuel (eds) The Public-private Mix in Social
Services Health care and education in Chile,
Costa Rica and Venezuela, Washington DC
Inter-American Development Bank.
27USA Vouchers
- Vermont (1869)
- Parents who live in districts without public
schools are reimbursed for costs of sending
children to private school. - About 400 students per year
- Maine (1954)
- Parents who live in districts without public
schools are reimbursed for costs of sending
children to private school. - About 5,300 students per year
28USA vouchers
- Milwaukee Parental Choice Program (1989)
- Government gives vouchers to select number of
parents, to pay for tuition at private schools.
- 8,000 students (1999), given 5,000 to attend 91
private schools - No more than 15 of total children
29USA vouchers
- Cleveland Pilot Scholarship Program (1995)
- Government gives vouchers to select number of
parents, to pay for tuition at private schools.
- 3,500 students (1999) given 2,250 to attend 59
schools - 5 of children in grades 3 to 8
30USA vouchers
- Florida A Plan (1999)
- Schools are graded A-F based on standardised test
scores - Students in schools graded F for two out of four
years are given 4,000 vouchers to attend private
schools - A school accountability plan with teeth.
- 1999 134 families offered scholarships
- 2000 as many as 50 schools would qualify.
- Superintendent of one Tampa district said that
all top administrators would take 5 pay cut if
any school was given an F. - State judge struck down law on March 14, 2000
31USA vouchers evidence
- Cleveland study (1999, Dr Kim Metcalf, Indiana
University) - Found small but statistically significant
improvement in language and science achievement
scores - Programme serves the population intended
- Most children who enrol would not otherwise have
attended a private school - Scholarship parent satisfaction with childs
school substantially higher
32USA vouchers
- Very small scale only about 25,000 students or
less than 1 of total nationally
- Heavily constrained and politicised
- Implications for Lithuania?
33USA vouchers evidence
- Milwaukee Dr John Witte (official evaluator of
program). - The Market Approach to Education An analysis of
Americas First Voucher Program (2000)
- Vouchers are a useful tool to aid low-income
families
34Recap of first approach public-private
partnerships
- Contracting out
- Charter schools
- Vouchers
35Second approach Extending access to private
education
- Private schools for the poor (budget private
schools) - Private vouchers
- Tax credits and scholarships
36Private schools for the poor in India
- Dramatic growth of private schools for the poor
- School fees of about 20 per year
- Scholarships for poorest 15-20 of student
places
37Why? Breakdown in public schools
- plain negligence cases of teachers keeping a
school closed for months at a time a school
where the headteacher was drunk, a headteacher
who comes to school once a week - this pattern is not confined to a minority of
irresponsible teachers it has become a way of
life in the profession.
38If India can
39Extending access to private schools
- Private vouchers
- Tax credits
40Private voucher scheme USA
- Childrens Scholarship Fund (CSF) in USA, 100
million foundation, underwritten by Ted Forstmann
and John Walton. - Awarded 40,000 four-year partial scholarships to
low income students to attend private schools
- CSF received 1,250,000 applications 30 times
the number of scholarships available from low
income families, all prepared to pay 1,000 per
year.
41Private vouchers in the USA the Golden Rule
- J. Patrick Rooney, Chief Executive Officer of the
Golden Rule Insurance Company - Golden Rule model embodied four principles
- Vouchers would be for half of the private school
tuition fee (thus ensuring parents became
financial stakeholders in their childrens
education). - Only low-income families would be eligible (but
low-income families who had already made the
sacrifice and commitment necessary to get their
children into private schools would not be
penalised). - Vouchers would be eligible for use at any
private school of the parents choice - Low-income families would be granted vouchers on
a first-come, first-served basis
42Tax credits
- Dollar for dollar reduction in taxes owed for use
on schooling - Includes school fees, textbooks, transport,
extracurricular fees
- In USA, four states
- Arizona
- Iowa
- Minnesota
- Illinois
43Tax credits - USA
- Arizona allows taxpayers to contribute up to
500 to a tuition organisation which gives
scholarships for poor people to attend private
schools
- In 1999, 30,000 people contributed nearly 14
million to 31 clearinghouses, helping nearly
7,000 low income students
44Tax credits - USA
- Iowa
- Tax credit of 250 on the first 1,000 of tuition
expenses at private school. - No income ceiling.
- Minnesota
- Families with incomes up to 33,500 can claim a
maximum tax credit of 1,000 per student or
2,000 per family. - Refundable I.e., those families who dont pay
taxes can still receive it. - Tax deduction for school expenses from 1,625 to
2,500 per year
45Tax Credits Cato proposal
- 500 nonrefundable education credit against the
federal income tax. - Estimate that states would save 14 billion on
public education costs, and allow 2.3 million
students escape failing public schools
- Two components
- Parental choice credit dollar for dollar
reduction up to 500 per child - Scholarship credit any taxpayer can receive
reduction of up to 500 per taxpayer for
scholarship clearing house
46Implications for Lithuania? private schools
47Implications for Lithuania? private school
students
48Implications for Lithuania?
- Leading the way with a workable voucher scheme?
- Easing regulations for private alternatives ?
- Exploring contracting out to international
companies? - Other ideas?
49For further information