What Educators Are Learning From Money Managers

I'm not going to give this a STOP THE PRESSES because I'm trying to restrain myself – but this is a great article, and it's on the COVER of Forbes!  (Joining Steven Brill's cover story in this coming Sunday's NYT Magazine, which was in my last email.)  The title is "What Schools Can Learn From Money Managers" and the main article features Achievement First, with sidebar articles on Bret Schundler, among others.  Here's an excerpt from the main article:

The emphasis on polite manners and discipline is straight out of the 1930s. Except for what is going on behind the scenes: From quiz scores to homework and attendance records, every detail of a student's performance at Brownsville Elementary is fed into computer databases where teachers and administrators examine the constantly unfolding record and quickly adjust lesson plans and individual teaching strategies in response. Achievement First, the New Haven, Conn. nonprofit that operates Brownsville Elementary and 16 other schools in Connecticut and New York, is more like an information-driven company than an old-fashioned school district. "We're obsessed with using data on an ongoing basis," says Douglas McCurry, Achievement First's co-chief executive and a frequent presence in school halls. "Schools are fundamentally undermanaged."

American education is, as always, in a state of crisis. In the past four decades spending per pupil (adjusted for inflation) has gone up 2.6 times, but sat scores have not budged. Despite the $661 billion a year this country puts into public K--12 education, we are churning out a nation of mediocre graduates ill equipped to meet global competitors. Thousands of teachers are being laid off. Central Falls, R.I. fired all of its high school teachers (half will be hired back); in Kansas City, Mo. half the schools are closing. Reformist politicians in Florida, Colorado, Washington, D.C. and New Jersey are confronting teachers' unions and the sacred rights of tenure and rising compensation.

Away from the angriest national debates, however, a quiet revolution in American public education is occurring at organizations around the country like Achievement First (see sidebar stories listed below). Most were launched by idealistic liberals with dreams of social equality. But with annual budgets exceeding $50 million, sophisticated computer systems and hundreds of employees, they are starting to resemble corporations--tracking and responding to minute changes and putting resources to efficient and innovative uses. The question is whether these strategies can be writ large, like Wal-Mart ( WMT - news - people ), to work in thousands of schools with millions of students nationwide. There are plenty of doubters.

One believer in data-driven management is Joel Klein, chancellor of the 1.1 million-student New York City Department of Education. Klein takes a portfolio-theory approach to education reform, meaning he wants a selection of large, professional organizations to choose from when he sets up a new charter school to operate outside the district's maze of union contracts and bureaucratic rules. Like a pension sponsor looking to put assets with winning portfolio managers, Klein and his crew want to pick school operators (or traditional school principals) that can reliably move poor students ahead. The goal is to close the so-called "Scarsdale gap" between wealthy suburbs and urban schools in student test performance. Eliminating the gap may be impossible; narrowing it is not.

Charters, says Klein, are a "core part of our portfolio strategy," which includes working with traditional public schools as well. "Our view is those that are good we want expanded and those that are doing a poor job we want closed down." As an assistant attorney general in the Clinton Administration and a longtime corporate lawyer before that, Klein says, "I learned two things: competition and accountability."

Charter operators in New York City, including Achievement First, Knowledge Is Power Program, Green Dot and Victory Schools, now run 125 schools with 40,000 students. They tend to pay teachers more than union scale (albeit for longer hours and more school days per year) and collect a stipend of roughly $12,300 a year for each student they enroll, close to what the district spends on traditional public schools (not counting occupancy and police costs). In the aggregate, they are getting results. Last year charter-school students exceeded the New York City average by eight percentage points in reading and seven in math, and outperformed students from their own districts by at least three times as much. These kids were not cherry-picked; nearly all the students were selected by lottery.

A 2009 study by Stanford University researcher Caroline Hoxby showed that the New York City charter schools achieved this with students who were 63% African-American versus 34% districtwide, and whose household incomes were 37% lower. Hoxby compared applicants who won the lottery for a slot in a charter school to those who didn't. She found the charter students had closed 86% of the Scarsdale gap by the end of eighth grade, while the noncharter pupils remained just as far behind. Perhaps reflecting the motivation that led them to apply for the lottery, all students outperformed their peers in poor districts. (There are no such controlled experiments nationally.)

Frustration with the persistent gulf between rich and poor students drove Dacia Toll, a Rhodes scholar and Yale Law School graduate, to found her first charter school in New Haven in 1998. Now 38, Toll launched Amistad Academy--named after the Spanish ship hijacked by slaves and sailed to the U.S. in 1839--on the theory that social justice begins with better education. Achievement First has a $60 million budget and 17 schools with 4,500 students (300 of them at Brownsville Elementary), making it the equivalent of a good-size school district. The company spends less than 10% of its budget on central administrative costs, compared with 15% to 25% at most urban school districts, which tend to have a heavy load of patronage jobs. The savings get spent at the school level. Teachers receive higher salaries--and help. Brownsville Elementary backs 23 teachers up with five administrators, including deans and "coaches." "We don't think you can coach and manage more than six people effectively," co-chief McCurry says.

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What Educators Are Learning From Money Managers

Daniel Fisher, 05.20.10, 06:00 PM EDT
Forbes Magazine dated June 07, 2010

www.forbes.com/forbes/2010/0607/education-achievement-first-charters-learning-from-money-managers.html