Defining the Education Market: Reconsidering Charter Schools

Several economists and education researchers have argued that current school choice programs fall far short of true market in education. According to Frederick Hess (2004: 249), Those who suggest that smattering of charter schools, that handful of school vouchers, or that the public choice provision of No Child Left are sufficient to force systematic improvement are allowing their enthusiasm to get the best of them. Similarly, in School Choice Wars (2001) John Merrifield wrote about the limits of current school choice experiments and the necessary criteria for true market in education. And when Andrew Coulson (1999) examined the history of market education and detailed the five features of true education market, he also noted that current choice programs do not meet market criteria. In short, there is fairly sizable body of scholarship that recognizes that most programs advocated within our current school choice movement lack fundamental market mechanisms. What Does the K-12 Education Industry Look Like? Further, the for-profit education industry that currently exists is closely tied to the government monopoly provision of education services. Despite poor market conditions, the for-profit K-12 education industry continues to grow on the margins. Most of the growth has been tied to government initiatives that increase funding for the private sector as well as public schools. As Michael Fletcher and Neil Irwin first argued in an August 16, 2001, Washington Post column, President Bush says his education reform plan will empower parents and hold educators responsible for how students perform in school. But the bill also is certain to have another, less vaunted effect: to create lode of new business for private educational firms. The most recent K-12 industry growth has largely been pegged to the standardized testing industry and the No Child Left Act. For example, the Education Industry Association (EIA), which is an 800-member professional organization for education entrepreneurs, has recently relocated to Washington, D.C., and appears to have substantially increased their lobbying efforts with the U.S. Department of Education and Congress. In addition, much of the EIA's growth has been in segments supported by the No Child Left Act, especially testing and assessment and private tutoring companies. Similarly, new education trade newsletter, the School Improvement Industry Weekly, bills itself as a Web-enabled newsletter for the marketplace created by No Child Left Behind (www.siiwonline.com). In other words, the for-profit education industry has experienced substantial growth not from individual consumers choosing education services but from government mandates that have directed more resources to the private-education sector. And the government-education sector shows no signs of reducing government spending on education. At this point, the education industry appears justified in tying their business to direct increases in government spending. In July 2004 study, the Cato Institute's Neal McCluskey (2004: 1) notes that federal spending at more than 36 departments and organizations that run major education programs ballooned from about $25 billion in 1965 (adjusted for inflation) to more than $108 billion in 2002. This year, funding for the U.S. Department of Education is at an all-time high: $56 billion, an increase of $2.9 billion over last year and $13.8 billion since Bush took office. The president's 2005 budget would raise education spending still further, to $57.3 billion. Under No Child Left Behind, Title I aid has risen to $12.4 billion. Title I spending has increased more during the first two years of the Bush administration than it did during all eight years of the Clinton administration. The truth is that for-profit education companies often support the status quo and are lobbying for more government-funded education, not necessarily more market education. …