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The School District of Philadelphia is entering its fifth year of extensive experimentation with “privatization” in education – the transfer of government functions to private businesses and organizations. While School District officials have been receptive to privatization – also referred to as “contracting out” or “outsourcing” of educational services -- their stance is at odds with many scholars who caution about contracting out too many services too quickly.

Operational areas, such as busing and food services, have often been contracted out to non-governmental providers, though these efforts have sometimes provoked controversy and results have been inconsistent. School Reform Commission chair James Nevels endorses contracting out work in non-academic areas because then “you can focus on the main mission, which is to educate children.”

However, the contracting out of educational services such as school management to for-profit businesses and non-profit organizations has been a gray area in scholarly discussions about privatization.

Anita Summers, professor emeritus of public policy at the Wharton School of the University of Pennsylvania, agrees with outsourcing of operational areas, but is against any outsourcing of educational services. She maintains that education should be provided by the public sector because it is a “public good” and because it “involves delivering knowledge, national values, social standards of the country, civic responsibility.”

“Certain services make sense to be done by an outside provider-- bus service, for instance, or any services that don't interfere in the educational process,” Summers says. “In those areas, you have to look at which is more efficient.”

However, Nevels explains that the School Reform Commission has been willing to extend contracting out to areas directly linked to the educational process because they were mandated to find ways to improve the city's failing schools. Nevels concedes that the success of contracting out educational services is yet to be determined. In the meantime, he said, it requires close oversight.

“There are times when you need to try something new, and then you need to reevaluate where you are,” Nevels said.

Effective oversight

Effective oversight of outsourcing is not easy to achieve and requires “a strong and capable government,” according to Jeff Henig, professor of political science and education at Columbia University.

“But, if the public sector is under-funded, they don't have the resources to collect their own data and monitor the data and so they're relying on the providers for this data,” Henig notes.

Stressing the importance of competition in ensuring quality contracting, Henig said the number of providers of educational services in the market should also be evaluated. Over time, he has seen the number of providers go from very few in the early nineties to a more substantial amount in the mid to late-1990s. Today, a trend towards consolidation is causing a less competitive market, Henig says.

“What we're beginning to see is some consolidation in terms of the bigger guys swallowing the smaller guys,” Henig says.

So far, that is not a concern for School Reform Commissioner Daniel Whelan, who has consistently supported decisions to contract out services and says he has not seen a lack of sufficient service providers in any area where the District has sought outside assistance. He said he would be “perfectly willing” to contract out any service where there are providers able to meet the District criteria.

There are some in academia who share Whelan's confidence in market forces to improve education services. Charlene Haar, president of the Education Policy Institute, studies the competitive advantage of privatizing education.

“[Private service providers] really do have to look at the bottom line. They really do look at the quality of services when you're in a competitive market because there are other providers, like nonprofits, that will come along and offer services for a different amount or in a better way and they'll have to compete with,” Haar says. “That's what makes markets work.”

Need for competition

But Henig worries that as large educational service companies such as Kaplan increase their scope of educational services, they also increase their ability to control the market. Kaplan offers tutoring programs, curriculum development, testing services and professional development.

To maintain leverage, Henig argues that school districts should limit outsourcing to short-term projects where there is already an established expertise, such as upgrading information technology. Districts should also be wary of losing the capacity to provide any type of service, Henig says.

Carol Ascher, a researcher at the Annenberg Institute at Brown University, raises broader concerns about contracting out any aspect of education. In her book Hard Lessons: Public Schools and Privatization, Ascher argues that the increase of privatization, which has been encouraged by the No Child Left Behind Act, has had negative consequences for public schools.

The danger of privatization is the private sector's profit motive, according to Ascher. Cheaper, she says, is not always better.

“Do teachers who are willing to work for very low pay work as hard? In privatized and charter schools, you tend to see very young teachers and very high mobility rates. Good schools need experienced teachers who are vested in the school,” Ascher says.

Ascher argues that even operational areas are better off left to the public sector. Studies suggest that private contractors are less likely to use community providers for services and therefore take jobs out of the neighborhood, according to Ascher.

“It's not just about getting the test scores up. If neighborhoods are totally devastated, that school is not serving the area.”

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