Millot: What Kind of Charter Market Do We Want? (II)

Whatever the potential merits of management organizations, their ambiguous legal position in today's charter market is no accident, but the deliberately unfinished business of state legislatures. Charter statutes were not passed for their benefit, but to promote independent community schools.  The Imagine fiasco should warn us that it's time for the states to tie up this very loose end. Unfortunately, the history of charter legislation across the nation implies that change is not likely. I don't see a good way out.

To understand where the law might go with the management organization we need to understand how charter school politics got us here.

The 1990's debate over state charter school statutes took place against the background of elected officials' dissatisfaction with public education coming out of the 1980's. To summarize, state legislators and governors, Democrats as well as Republicans, were simply fed up with an over-bureaucratized system that seemed incapable of improvement despite higher levels of funding. That frustration created an environment ripe for something dramatic. Charters filled legislatures' need for real and/or symbolic change.

Every charter statue is the product of interactions among the legislative representatives of five constituencies. Bills were introduced on behalf of coalitions of community organizers demanding the right to start their own public schools, dissatisfied parents of public school students demanding alternatives - especially inner city parents of color, and policy advocates favoring greater choice for parents and teachers. To the left of these groups were alliances of teachers unions and school boards joined by the threat of competition, and unaligned moderate Democrats in the mold of Al Gore interested in reinventing government by introducing business practices to government operations. To the right lay voucher advocates who hoped charters might be the "camel's nose under the tent", and groups of moderate Republicans in the mold of Massachusetts' Governor Bill Weld, interested in gaining leverage over government bureaucracies by using the private sector to deliver public services.

Each charter statute reflects the balance of power among these factions. In Arizona, where free marketeers dominated, for-profits can hold charters. The stronger the district-union alliance, the less independent the charters, the lower the per-pupil payments, the more likely that chartering authority is lodged exclusively with districts, and the fewer schools that are permitted. In the ten states where the district-union alliance held sway, there are no charter school laws. Where moderate Republicans and moderate Democrats were in basic agreement, laws grant charters more power, give them more money, create independent chartering agencies, and place less stringent limits on school numbers. Pro-voucher groups could be relied upon to support almost any law favored by the moderate coalition.

In the 1990s, "management organization" meant for-profit businesses like Edison, Beacon, and Sabis. These firms were not mere bystanders in the legislative process, but they were definitely bit players. Even legislators who supported business in public education wanted to keep for-profit education providers off the public stage. If moderate Republicans hoped to gain a winning coalition with moderate Democrats, they could not afford to make charter legislation an issue of "privatization." To keep the debate centered on the winning argument - local choice, they had to emphasize community organizers, parents and local teachers. Prohibiting for-profits from holding charters and creating various tests to assure that the schools are community institutions - including local control of charter school boards, was the price of a legislative majority.

The preambles of most statutes reflect the fact that establishing a supportive operating environment for management organizations was not the legislatures' objective. None mention management organizations - let alone distinguish between for- and nonprofit versions, discuss a different kind of central office, or note the underlying theme of scale. The language of legislative intent encourages local initiatives to start local schools, values relief from bureaucracy, and focuses on direct relationships between local groups and their schools' chartering agencies. The charter concept was about independent community schools. To paraphrase early charter advocate Ted Kolderie, the idea was a "system of schools," rather than the "(new) school systems" implied by management organizations.

Nevertheless, where moderate Republicans and Democrats combined to create truly independent schools, statues gave charter boards the authority to enter into contracts for any purpose reasonably related to pursuit of their educational mission and to make the decisions expected of a government entity operating a school. This arrangement gave community organizers access to the resources required to attract students away from the schools run by districts. The formulation allowed moderate Democrats to say that charter laws did not "privatize" public education, but brought it closer to the community. It permitted moderate Republics to get the competition with districts they wanted, and tell the private sector that they had made a start on a market in the delivery of public education. But as we now know, the charter school boards' power to contract, combined with the limited capacity of most community organizers to exercise that power with much skill, created the large, complex national market for management organizations that was exploited by Imagine.

Until quite recently, the basic debate over charter statutes in state legislatures across the nation has turned on on student performance. The U.S. Department of Education's Race to the Top program has pressured state legislatures to pass or amend charter statutes in ways that make the option available to more students. Expect legislatures to bow to that pressure, but until the schools demonstrate high performance consistently, measures that would increase the market substantially are not likely.

The Feds are not asking states to legalize Imagine's business model, or to clarify the role of for- and nonprofit management organizations. And as much as I might think Imagine provides a financial argument for changing the law to give management organizations a chance for success, the political realities run in the opposite direction. In short, I can't see legislatures "rewarding" Imagine's transgressions by giving management organizations the right to hold charters or dominate local charter boards. If anything, I'd expect more oversight of charters contracts and business relationships, and restrictions on the kinds of contracts charter boards can enter into. 

On the other hand, I can't see legislatures banning management organizations from the charter market. This brings us back to continuing confusion, evasion, expensive policing. and management organizations that are marginal if they stay within the law, and bad actors contributing to contempt for the law if they stray. So I don't see a decent way out of this mess. I see a future of failure or never-ending subsidization when management organization stay with the law, and new fiascos when they try to become financially viable. This is no strategy for quality at scale.