Competition Isn't Driving Out Lousy Charter Schools

Sunday, April 17, 2005
by KENT FISCHER / The Dallas Morning News


One of the big problems with our current system of education is the monopoly it holds over the market, particularly in rural areas and the inner cities where education options are few and often expensive. With a captive audience and no real competition, public schools are fat, lazy and slow to change, or so the theory goes.

Enter charter schools, the conservative school reform movement's most successful effort to shatter that monopoly and "deregulate" American public schools.

Charters, funded by taxpayers, operate outside the boundaries of traditional school districts. The idea is to open the education marketplace and let the "invisible hand" of competition spur innovation and boost quality. Indeed, the school-choice movement is largely based on the notion that, like pizza parlors, schools would have to put out a good product or they'd go out of business for lack of customers – because parents won't leave their children in lousy charter schools.

Turns out, they do.

Nine years after the first charter school opened in Texas, policy-makers have realized that charter schools don't go out of business, even when they offer a demonstrably inferior product, as judged by test scores and graduation rates. Thousands and thousands of parents appear perfectly willing to leave their children in questionable charter schools.

"I don't know why, but they do," said state Sen. Florence Shapiro, R-Plano. The market "isn't working."

It certainly isn't a Texas-only issue. Charter schools exist in virtually every state. One recent report estimated 3,400 charters serve nearly 1 million school children in the United States. In Texas, 275 charter campuses enroll more than 60,000 kids and pull in an estimated $350 million from taxpayers. One report estimated that less than 1 percent of charters close for academic reasons.

"Around the nation there are certain number of charter schools that clearly are not performing, but they remain open," said Nelson Smith, head of the Washington, D.C.-based Charter School Leadership Council. "It doesn't appear that the model is working the way we thought it would."

Texas has granted a total of 235 charters over the years. Of those, 34 have closed. The state shut down 11 for financial and academic mismanagement. That leaves 23 charters that closed on their own. Eleven of those closed before they ever even opened their doors; another closed over a dispute with its landlord. The remaining 17 charters opened but were unable to survive "in the market" and, accordingly, closed without state intervention. Those 17 charters equate to a 7 percent failure rate.

Consider that many economists claim that more than 50 percent of new businesses dry up within three years. Yet Texas charters boast a 93 percent "success" rate.

Martin Carnoy, an economics professor at Stanford University and a research associate with the Economic Policy Institute, said the fatal flaw with school-choice theory might be the assumption that public school systems are inherently inefficient.

If public schools aren't as inefficient as many assume, then important principles of market theory begin to break down, he said. And that could lead to bad charters staying in business.

"It's complicated, but perhaps this idea that there's room for improvement through competition is the wrong assumption," Dr. Carnoy said.

Enter Ms. Shapiro, who's offered up to lawmakers a complete rewrite of the state's charter school law. In it, the state would be required to shut down low-performing charters in two years. No more waiting around for "the market" to regulate itself, she said.

"Those schools that are doing a good job need to be freed [from state bureaucrats], but those that aren't need the hand of government to come in" and shut them down, Ms. Shapiro said.

Ms. Shapiro's bill, submitted as a rewrite of the House Bill 2 – the proposal to restructure Texas school finance, could move out of committee this week.

If it becomes law, the state could close dozens of charters within two years. And, in Texas at least, the notion that the market drives quality would be history.

E-mail kfischer@dallasnews.com

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