Stanford University

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NEWS RELEASE

11/18/98

CONTACT: James Robinson, News Service (650) 723-5675;

e-mail jamesrob@stanford.edu

Education conference weighs role of private sector

Dissatisfaction with public schools will allow the private sector to assume a greater role in secondary education while lifelong learning will expand for-profit opportunities in higher education as well, experts said at a conference Monday jointly sponsored by the Stanford Institute for Economic Policy Research and NationsBanc Montgomery Securities.

Titled "The Education Forum: A Town Hall Discussion of Public/Private Partnerships in Education," the conference at Schwab Center attracted about 170 people, including investors anxious to tap into what NationsBanc said is a $600 billion industry.

"Investors are realizing that we are at the dawn of the explosion of the education and training industry," NationsBanc said in material distributed at the conference, noting the growth of initial public offerings in the for-profit education sector and the outperformance of education companies against, for example, the Nasdaq index in 1997.

Panelists cited a number of factors that are fueling the private sector's growth in education: "lifelong learning" requiring frequent retraining of workers as they change careers; a growing consumerism in education; and the prospect for increased use of vouchers and other ways to privatize K-12 education born from dissatisfaction with public schools.

The accent on private industry raised some eyebrows among the academics in attendance. Richard Shavelson, dean of the Stanford School of Education, wrote an e-mail to the school's faculty disavowing any role in setting the agenda, saying it appeared to be "narrow" and "largely one-sided."

Michael Boskin, the Tully M. Friedman Professor of Economics and senior fellow at the Hoover Institution, said that representatives of teachers' unions had been invited to participate but declined.

The panels were moderated by prize-winning PBS interviewer Charlie Rose, who asked participants pointed questions and roved through the crowd to engage audience members.

Many panelists in a session on K-12 education decried the lack of national standards in secondary education. Chester Finn, a senior fellow with the Hudson Institute and founding partner of the Edison Project, said students who change schools frequently would be better off if they could stick with the same "model" of school just as guests at Holiday Inns benefit from the consistency in standards of the chain's hotel rooms.

Gerald Tirozzi, assistant secretary for elementary and secondary education at the U.S. Department of Education, said that some kind of national standards were needed perhaps for reading in the fourth grade and math in the eighth grade. But he said the federal government should stay away from setting standards and that states, while setting varying standards, "are moving in the right direction."

Gaston Caperton, the former governor of West Virginia and director of the Institute on Education and Government at Columbia University, said the issue of standards "is all about politics. There's no reason we should not have national standards."

Finn agreed that perhaps standards could be set if they were called "national" rather than "federal." "Between the Left and the Right, the federal government has to stay three steps removed," he said.

While the prevailing thinking on the panel seemed to be that public schools are failing American children, Henry Levin, the David Jacks Professor of Higher Education at Stanford's School of Education, said there were "hundreds if not thousands of public schools doing an excellent job." Statistics showing otherwise can be deceptive, he cautioned.

A panel titled "Doing Well by Doing Good: The Role of Private Enterprise in Public Education" brought together players in the growing for-profit education sector who are starting their own schools or entering into public/private partnerships.

Chris Whittle, founder of the Edison Project, said the project now runs 51 public schools in 12 states. He said there was now a "tremendous amount of acceleration" in private involvement in public schooling. "We've seen the toughest years," he said, alluding to some of the opposition the Edison Project has faced in the past.

A recurring theme during the conference was that schools are allowed to remain mediocre because they lack competition and accountability.

"Companies are held accountable public school systems are not," said Christina Giammalva, president of the Friends of the Family Academy, a public school in West Harlem that also raises money for privately funded programs. She said that when academy students were testing poorly in reading, school officials quickly took measures to improve instruction and curriculum.

Compared to school boards, which are influenced by special interest groups and hold endless debates, "private-sector business can act quickly and privately," said John Kernan, chairman and CEO of the Lightspan Partnership, which markets curriculum products and Internet services to schools.

Boskin said the private sector's role in public education, by virtue of the competition it presents, can push public schools into making improvements. Similarly, he said, Federal Express had made the U.S. Postal Service more competitive.

Whittle cited the Edison Project's involvement in Michigan schools as an example, saying public schools managed to expand to all-day kindergarten after Edison opened a nearby school with the same feature.

Panelists involved in private ventures said they were providing a better education for less money. But Tirozzi, speaking from the audience, noted that public schools must incur high costs for special education students and, increasingly, for providing security for students.

"If you're going to get into schools, you're going to have to get involved in everything," he said.

The conference also examined the future role of the private sector in higher education with many predictions that traditional campus learning will become a thing of the past.

George Gilder, president of Gilder Technology Group, said more and more schooling will take place on the Internet. "Most education will not happen on campuses. . . . Campuses will be a bucolic and nostalgic place," he said.

During an afternoon panel, Benno Schmidt, chairman of the Edison Project and former president of Yale University, noted that in an earlier session "you could get a little sniff of revolution in the room as people spoke about K-12. I think the revolution's coming to the higher education sector." The way both public and private colleges are financed are no longer viable and budget cuts are producing a "fiscal seismic shock" to public institutions particularly, he said.

"There will be an increasing shift in power from providers to consumers. This sector is in for some enormous changes. It will be a little chaotic, but there will be a big shakeout if I'm even half right," he said.

J. Jorge Klor de Alva, president of the University of Phoenix, said his school was now the largest private university in the United States, with 54,000 students. It has sometimes faced resistance from other institutions when it enters new markets around the country because of other colleges' "erroneous perception that we're competing with them. We're primarily focused on students who otherwise would not normally be going to school."

He said the University of Phoenix attracts students because of the convenience of its campuses including the supply of parking and the evening hours of its courses.

Shavelson said that unlike Schmidt he was "not quite a believer in revolution," but acknowledged there will be an increase in alternative forms of education as members of the work force learn new skills. "I'm not nearly as alarmist as my colleagues are here," he said, adding that higher education "is not monolithic - it has segmented itself into many markets."

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