To every proposal for education reform, there is a chorus of objections. Voucher programs, both publicly and privately funded, have been gaining in popularity over the past few years. Studies show that children who receive vouchers have improved academic performance, and that these childrens parents are more satisfied with the quality of education their children receive.
Despite attempts to improve the public education system, including reducing class size, offering public school choice, and curricular innovation, the increasing demand for vouchers, which can be applied toward attending private schools, is an indicator that these piecemeal reforms are insufficient and ineffective. Given the choice, most parents would prefer to send their children to private schools.
In spite of studies that demonstrate increased satisfaction due to vouchers and school choice, some teachers unions, school districts, and even parents oppose voucher programs for a variety of reasons. Some of this opposition is based on personal interests, some on a misunderstanding of the consequences of such programs.
Considering the many objections to vouchers, more radical proposals for education reform, such as noted economist Richard Vedder proposes in his recently published Independent Policy Report Can Teachers Own Their Own Schools?, will be even harder to swallow. However, his proposals, which are founded on a wide base of research, are worth considering.
In Can Teachers Own Their Own Schools?, Vedder explains how a system of employee-owned, for-profit schools could offer a better quality of education than the inefficient, poorly-performing public education system in place now. Under the current public school monopoly, the quality of education is low, while the price of education, which we pay indirectly through taxes, is wastefully high. By privatizing the school system, education consumers can hold schools accountable to the same market forces that make companies manufacture better products. Introducing competition into the school system would strongly encourage schools to offer the best education in the most cost-efficient manner possible. Even under the current system, private schools spend less per student, yet have higher levels of student performance.
One of the more interesting proposals that Vedder offers is to give ownership of schools to teachers, principals, and staff through Employee Stock Option Plans (ESOPs). As stakeholder in their own company, school employees would have an incentive to adopt strategies to increase revenues and reduce costs.
Vedder discusses the long-term benefits of such a plan to students, taxpayers, and teachers. Students would benefit because the quality of education would improve as schools compete to provide the best learning environment possible. Taxpayers would benefit because the waste of resources that occurs under the current system would be eliminated by the discipline of the market. The benefits to teachers are twofold. The monetary gain is obvious. The decentralization of control would allow teachers more freedom to select curriculum and participate meaningfully in the school community.
Vedder cites United Airlines (UAL inc.) as an example of a company that adopted an ESOP, and improved substantially as a result. In the years prior to the installation of an ESOP, UAL was experiencing great financial losses despite stringent efforts to cut costs. In 1994, the UAL board decided to adopt a proposal that allowed employees to take pay cuts and forego future pay increases in return for setting up an ESOP that would own a majority of the companys stock. As owners of the new company, employees were able to replace the old management, much disliked by employees, with new managers. Today, United is the worlds largest employee-controlled airline. Virtually all union and non-union employees participate in the airlines ownership, although the general public holds about 45 percent of the stock. The near-tripling of the price of UAL stock since the reorganization of the company offers strong support that ESOPs can improve a organizations performance.
While Vedder makes a very appealing argument for school privatization, his proposals are bound to encounter skepticism and criticism. Some people worry that profit-maximizing schools might raise tuition above the ability of low-income families to pay, or that high-cost children with disabilities will be neglected. Without question, these are valid concerns. However, the prospects for meaningful education reform made possible by ESOPing public schools makes Vedders proposal well worth considering. The doubts that may arise should be considered challenges to rectify, but not excuses to discount, a potentially beneficial reform.