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MONTHLY NEWSLETTER:  APRIL 2005 ISSUE

PROFIT HAS A ROLE IN PUBLIC SCHOOLS
BY LAWRENCE W. REED, Mackinac Center for Public Policy


Is it wrong for a private company to earn a profit when it does business with a public school? Gov. Jennifer Granholm, the Michigan Education Association, Superintendent of Public Instruction Tom Watkins, and many critics of charter schools seem to think so. Their concern, however, is more than a little misplaced.

A 2003 survey by the Mackinac Center found that more than one-third of Michiganís public school districts contract with private firms for at least one nonteaching service. Percentages are calculated for the 517 school districts that responded to the survey (there are 555 public school districts in Michigan).

Charter schools are public schools and receive per-pupil state aid just like conventional public schools. Michiganís 216 charters have enrolled more than 70,000 students, who have often come from other public schools that did not educate them well. Charters have greater freedom to manage, hire and fire, maintain discipline and determine curricula---all good reasons why most have waiting lists of parents who want their children to attend them. But critics are making an issue of the fact that private, for-profit management companies sometimes are hired to manage charter schools. One former state representative recently told an audience, ďI donít believe itís appropriate for somebody to make a profit off of public education.Ē

Maybe whatís needed in the public schools is more profit, not less. Think about it: Where is the crisis in public education these days? Is it in the availability of desks, food or computers, or in other areas provided by the for-profit private sector? The crisis concerns the classroom --- the part delivered by government, regulated by legislatures and supervised by district bureaucracies.

Charter schools have greater freedom to manage, hire and fire, maintain discipline and determine curricula -- all good reasons why most have waiting lists...

If we follow the anti-profit premise to its logical conclusion, we would have to pass laws requiring public schools to hire only government construction companies to build new buildings (fortunately, the government usually doesnít run construction companies). Desks, chalk and pencils would have to be purchased from government-owned desk, chalk and pencil factories (fortunately, the government usually doesnít run those either, except in places like Cuba and North Korea). At lunch time, students would have to eat food that was grown on state-run collective farms and sold in government grocery stores.

Or alternatively, we could pass laws that tell public schools itís alright to buy these things from private companies, but only those that lose money instead of earn it in the form we call ďprofit.Ē But itís hard to imagine school districts could find suppliers who would provide a good or a service at a loss. Not even the Michigan Education Association does that. In addition to the tens of millions of dollars it extracts in compulsory dues from its union members every year, the MEA-founded nonprofit health insurance association MESSA rakes in hundreds of millions more from taxpayers.

In fact, the MEA is not so much against profit as it is simply against somebody other than the MEA making any. In the MEAís flagship publication, MEA President Luigi Battaglieri stated, ďPrivate companies donít care about our students or our communities. They are in the business for the money. They aim to turn a profit and thatís not in the best interest of public education.Ē But the headline for the cover story in the very same MEA publication read, ďAdrian food service staff fights privatization by turning big profits for district.Ē

And perhaps Mr. Battaglieri is unaware that the profits that private companies earn allow them and their employees to pay the taxes that keep him in business.

The fact is that public schools have always relied on profit-making firms for just about everything. Maybe whatís needed in the public schools is more profit, not less. Think about it: Where is the crisis in public education these days? Is it in the quality or availability of desks, food or computers, or in other areas provided by the for-profit private sector? Do we have a national crisis in paper and pencils? The crisis that concerns Americans from coast to coast is not in these things. Itís in what happens in the classroom, the part that is delivered by government, regulated by legislatures and supervised by district bureaucracies --- the part that could benefit from the same choice, accountability and dynamism that make our relatively free, profit-driven economy the envy of the world.

A good number of politicians and bureaucrats donít like profit, and thatís nothing new. Theyíve been bad-mouthing and taxing it since the sun first came up in the east. For some, itís self-serving rhetoric. On the part of others, it represents neither deep thought nor study, but simply knee-jerk bias.

Schools and school districts should consider all their options fully and objectively --- including provision of goods and services by their own employees, by volunteers, by nonprofits and for-profit firms. To waste time and money spreading myths and misconceptions serves no one, least of all children.

Lawrence W. Reed, President, Mackinac Center for Public Policy
A Research and Educational Institute, Midland, Michig