Show Me the Money

Introduction

“The merits of a marketplace model for public education have been among the most prominent themes in education policy discussions over the last two decades” (Molnar & Garcia, 2007, p. 11). In the March 2010 Elementary and Secondary Education (ESEA): A Blueprint for Reform, the United States Department of Education declared supporting effective public school choice as one of the ESEA 2011 reauthorization’s top five priorities. “We will support the expansion of high-performing public charter schools and other autonomous public schools . . .” (United States Department of Education, 2010, p. 6). Furthermore, the blueprint underscores the Obama administration’s commitment to choice by stating that “. . . the Administration’s ESEA reauthorization proposal will encourage educational entrepreneurship” (p. 37).

One way that entrepreneurship is evident in the public school sphere is through the operation of educational management organizations (EMOs). EMOs are private, for-profit companies that contract with local school districts and charter schools to operate public schools. EMOs contract to operate charter schools and, to a much smaller extent, local public district schools. Furthermore, since the passing of No Child Left Behind, EMOs contract with local schools for supplementary aides and services such as tutoring (Molnar & Garcia, 2007). EMOs have grown steadily since their appearance on the educational landscape in the 90s. Molnar and colleagues at the University of Arizona’s Commercialism in Education Research Unit have tracked annual EMO growth since 1992. Borja (2006) summarized Molnar and colleague’s reports from 1997 to 2005 to highlight the steady annual increase of EMOs in operation across the nation. Borja’s report stated that in the 1997-1998 school year, there were 131 schools and in 2001-2002 that number increased to 368 schools. Furthermore, in Molnar, Miron, and Urschel’s (2009) 2008-2009 report, the total number of EMO-run schools increased to 733. That is a 460% increase in 11 years.

The increase of EMOs on the educational landscape has led to heavy debates between supporters and critics of EMOs (see, for example, Molnar & Garcia, 2007). The supporters argue that choice, profit seeking and expertise encourage innovation and increase student achievement. Critics argue that privatization of education will water down the quality of our school system. There is a paucity of literature on the efficacy of EMOs. Conversely, the literature is replete with commentary, rhetoric, and debates either attacking or supporting EMOs.

With the 460% increase in EMO-run schools and the commitment from the Obama administration for increased entrepreneurship and choice in education, it is clear that EMOs will remain a part of the public education landscape. Therefore, the “they’re good/no, they’re bad” debate is a moot point. It’s time to change our focus and stop the dichotomous arguments. It is time to begin looking at what works, what doesn’t work, and what is needed. The reality is that many children are receiving better education in the EMO-run charter schools than their traditional neighborhood school counterparts (Loveless, 2003). There are benefits to EMOs, and that is the focus of this article.

What is important to focus on is what EMOs are doing and how they benefit the educational landscape. In this article, I will show that EMOs benefit American education by (a) giving a quality educational option for families living in urban areas or low socioeconomic status neighborhood where the public neighborhood school options are neither satisfactory nor equitable (b) governing schools that are free from bureaucratic control, and (c) showing significant student achievement gains.

Urban Niche

Lack of quality education for poor students in general, and students of color in particular, has been an issue that has garnered considerable discussion since the 1960s. From Coleman (1968) and Oakes (1986) to Kozol (1990, Winter/Spring), the education research community, and the American public, has been well aware of the tragedy of our American urban schools. Although we have known for decades that education must be drastically different for families living in poverty, and in our urban cores, little effective change has taken place (Oakes, 1986). Schools are still failing children and families. EMOs offer an effective option for change.

The research on EMOs is still scant; however, researchers are beginning to look closely at whom EMOs are serving (Lacireno-Paquet, 2004). A long-held critique is that they serve the “easy to teach” kids and schools—younger grades and students without unique education needs such as students from urban and low-income families (Lacireno-Paquet, 2004). According to Lacireno-Paquet (2004), the largest EMO companies have 10 or more schools nationwide, without even counting all the contracted supplemental aides and services. I will refer to these top largest organizations as the major players in the EMO landscape. One of the biggest and most well-known EMO is Edison Schools.

Wilson (2005) found that these major entities target families from urban and low-socioeconomic status neighborhoods. Given that the average urban core school is currently doing a less than acceptable job educating children, it is time that someone puts a targeted foci on the children that continue to be failed. Many of these schools, in fact, were originally part of the traditional district but failed consistently under No Child Left Behind guidelines. Often, large EMOs take over the managing and operating of a school after it is designated a failing school and closed down. By reopening the same school that was closed as an EMO-run conversion school, neighborhood children are given a quality education option in their own neighborhood.

Loveless (2003) conducted a 3-year quantitative examination of traditional charter schools and EMO charters in America. His report on American education found that “they [EMOs] serve a larger proportion of Black children and children in poverty and are more likely to be located in urban communities” (p.34). Likewise, Lacireno-Paquet in both 2004 and 2006, in her in-depth analyses of charter school enrollment in America, found that “schools operated by large-EMO firms in urban areas enroll higher percentages of low income and minority students” (2006, p. 100).

Common conclusions among the few studies that have examined EMO schools are that both the size of the organizations and the state’s charter school policies matter. That is, there is a difference between large EMOs (the major players which operate 10 or more schools) and the smaller EMO organizations (organizations which operate less than 10). Both Lacireno-Paquet (2004) and Garcia, Barber, and Molnar (2009) found that the large EMOs are serving more students in need and are providing much-needed quality educational choices to the urban areas where traditional public schools are failing them. In addition, Garcia et al. found that a district’s transportation policy for choice schools, whether the district provides transportation to and from schools of choice or if the families are responsible to, was related to the percentage of low-income students and students of color attending EMO-run schools. For example, the percentage of students receiving free and reduced-price lunch and from non-White European ethnic groups in EMO-run schools is much lower in states where the districts are not required to provide transportation (Garcia et al., 2009).

The large EMOs provide benefit to our schools by educating those students that traditional schools have failed since the 60s, the students living in low-income and urban core neighborhoods with failing schools. We need to adjust policies so that students have access to these schools, and we need to realize that not all EMO-run schools are the same, specifically large-EMO corporations are serving the students in most need, those that our school system has been failing for more than 40 years. Large EMOs have found a niche in our educational landscape that has previously been neglected. By providing a quality urban educational option for low-income students and students of color where traditional public school is failing, EMO organizations improve educational opportunities for students who may not have a quality urban public school option.

Lack of Bureaucratic Control

Urban districts are large and heavily bureaucratized (Levine, 1971). This reality has been documented since the 70s. Bureaucratic insulation, especially those in large and diverse urban and low-income regions of our country, serves as a barrier for schools to be able to adjust as needed to meet the needs of their local neighborhoods and students (Levine, 1971). Research teaches us about the importance of developing community and a sense of purpose for school success and student outcomes measurements (see, for example, Kruse, Louis, & Bryk, 1995). EMOs can offer the benefit of being outside the insulated bureaucracy of schools and, therefore, better able to adjust to local needs in the development of a sense of community.

According to Bulkley and Hicks (2005), EMOs “may aid schools struggling for a sense of purpose by providing them with new resources and education and organizational vision and expertise” (p. 307), among other community-related influences. Findings from this comparative case study, which analyzed six different schools operated by three EMOs, suggest that when done well, EMOs can have a significant effect on creating a strong professional community.

EMO-run schools are able to create a strong professional community by having more latitude in providing aid and supports needed to develop the strong professional community necessary to affect student outcomes. For example, Bulkley and Hicks (2005) observed that the EMO-run schools incorporated creative teacher scheduling and the development and support of programs for collaborative and individual professional development. It was also found that even in highly prescriptive companies, major players in the field who have their own branded system across all schools they operate were able to promote professional community through very specific design elements, when done purposefully and well. By having flexibility and independence from district bureaucracy, quality EMO-run schools are able to use resources to create a strong community and positive learning environment, which lead to positive student outcomes.

Furthermore, EMOs can have a significant effect on starting up quality schools where they are needed most. Education Sector analysts state that starting and running a charter school requires substantial resources as well as up front capital (Mead, 2006, p.14). It can be further deduced that turning around a failing school would cost at least that, or more. Very few independent charter organizers have this type of up front capital, yet EMOs do.

Given that start-up costs are immense and resources, both financial and human, are needed to run a quality school, EMOs provide a huge benefit to the educational landscape. EMOs are able to inject the start-up capital needed to begin a quality school. They are also able to continue providing resources in an individual and unique way to develop and maintain systematic student outcome improvements and positive professional communities (Bulkley & Hicks, 2005; Hannaway & Sharkey, 2004).

Hannaway and Sharkey found in their 2004 study of resource allocation in the Edison EMO-run schools, versus traditional public schools, that the schools run by Edison (EMO) were able to creatively place funds where they were needed. Although a common critique is that EMO schools allocate fewer funds to instruction, this study found that this might not be the case and that EMOs just allocate differently. For instance, while less is spent in the actual “instruction” budget line, EMOs invest more in staff support for teachers and curriculum and professional development for their staff. In addition, the EMO schools showed fewer students per teacher. This study confirms Bulkley and Hicks’s (2005) results that suggested EMOs are able to develop and maintain professional communities needed for improved student outcomes.

Furthermore, with the cost strictly borne by a for-profit company, it is in the best interest of the company to maintain a high-quality school so that resources and capital are not lost due to dissatisfied consumers (parents and students). The need for profit maintenance forces EMOs to be cutting edge in terms of top-quality educational innovation to meet the needs of their learners. An impactful benefit of EMO-run schools is that they are outside of the bureaucratic insulation and, therefore, can, and do, creatively and innovatively operate their schools in the best interest of students.

Student Achievement Gains

Evidence shows how schools run by EMO, for-profit companies have the benefit of targeting the students who are systematically left behind, students living in poverty and the urban cores of our country (see discussion above). EMOs benefit from being outside the insular bureaucracy system that plagues many of our nation’s schools, allowing EMO-run schools to develop and implement educational innovation and best practices that bureaucracy and decentralization do not allow for. It has been discussed how each of these benefits is tied closely to a unique ability to improve student outcomes. However, the reality is that if student outcomes are not improved on, then the system is no better than one without EMOs. Therefore, it is important to examine research for evidence of whether students attending EMO-run schools do, or do not, show significant academic gains.

Loveless (2003) examined EMO-run charter schools in comparison with non-EMO charters. He found that typically EMO-run schools take over schools which were already showing systematic failure and that when looking at these scores disaggregated from the overall achievement scores, the students at EMO-run schools did show a significant gain with improved test scores after 2 years of attendance. This gain was consistent in multiple replicated statistical tests, confirming that data suggests that students who attend EMO-run charter schools showed significant academic gains in 2 years. Furthermore, when the scores were compared with traditionally run schools, the EMO-run schools again showed more significant academic gain. Levine (2005) concluded that when looking just at academic achievement scores alone, EMO schools show lower scores than traditional or charter schools, but this may not tell the whole story because the EMO-run schools have been chartered to serve already low-performing schools with lower test scores. Furthermore, when looking at academic gains of students in the three different environments (traditional school, non-EMO charter, EMO charter), the most significant gains were found in the students attending EMO-run charter schools. This suggests that EMOs are in fact improving academic achievement for the students they serve.

Garcia et al. (2009) also conducted a study to compare the academic achievement of EMO-managed charter schools with other charter schools and traditional public schools. The results showed an increase in basic-skills achievement for students who attended the EMO-run charter school for three consecutive years. It is important to note that this study did not show the same positive effect on complex thinking skills in EMO-run charter schools. However, the authors reported that an agreed on characteristic of EMO-run charter schools in the education field is a focus on basic skills and standardization (Garcia et al., 2009). Therefore, the schools are delivering on what they are targeting to do. They are chartering to focus on and improve basic skills, and their students are achieving higher in those areas.

EMOs target improving student outcomes and their students are showing significant academic gains. Therefore, once the field stops infighting on the issue of whether EMOs are good or bad, and instead focus on what they should be doing based on research, EMOs can take the recommendations and begin to focus on basic skills as well as complex thinking skills. Given that research has shown EMOs to do what they set out to do, chances are that they too will deliver on improving complex thinking skills for their students when they set out to do that too.

Final Thoughts on Recommendations

In the spirit of focusing on what works, we must continue to allow EMOs to operate schools in a manner that truly benefits the children and families they serve. It is too early to say what all the “what works” are, but it is time to start putting forth the research efforts and dollars into finding out. State policies need to be written to ensure educational access and equity to choice options. Districts need to allow equal opportunities through transportation as well as support and guidance to families for using solid choice options. Families may not be fluent with choice procedures or how to assess if choice options are of high quality. It is our job to enact policies and procedures as well as to disseminate information to all stakeholders, families included, to ensure this happens. EMOs are here to stay, and we need to know which ones are effective and why. Moreover, we need to share those results with EMOs so that they can benefit from the research and in turn the families and students they educate can benefit as well.

Conclusion

The benefits of EMO schools are clear. They provide a haven from bureaucracy to truly adapt to the needs of their local communities by developing strong communities and educational innovation. Last, they do what they set out to do, which is to improve the academic outcomes of their students. As the country moves toward a push for educational entrepreneurship, it is important that we focus on these benefits. We need to focus on these benefits so that as the number of for-profit organizations operating public schools continues to increase, their presence remains to be beneficial. It is our job as educational researchers to be an integral part of that conversation. We must focus on what works.