Wednesday, December 04, 2013
On November 26, 2013, the National Education Policy Center (NEPC) released its annual EMO report entitled, "Profiles of For-Profit and Nonprofit Education Management Organizations: Fourteenth Edition – 2011-2012." The report is the latest edition in a series of reports examining the status and trends of school management in charter and brick-and-mortar schools. The authors (Miron & Gulosino, 2013) differentiate among the varied types of EMOs in terms of their sizes, profit-nonprofit orientation, and enrollment growth. In the report, the authors define education management organizations (EMOs) as private entities that manage public schools, including charter schools via contracts to produce specified academic and financial results. EMOs have management authority over a school, and are thus distinct from vendors hired to meet particular education-related services. In what follows I will not take a stand on EMOs as much as to discuss the principal findings of the report (Miron & Gulosino, 2013) and two pressing issues from prior research on EMOs.
One indicator of the success of EMO-managed schools is their rapid growth. This is a particularly valid indicator of EMO viability because students attend EMO-managed schools voluntarily and have the option of returning to brick-and-mortar schools if EMO-managed schools prove unsatisfactory. A cornerstone of the market theory is the assumption that there are no barriers to entry that prevent EMO-managed schools from increasing their share of the market. The ability of EMO-managed schools to differentiate the quality of their services from those offered by brick-and-mortar schools while charging zero tuition as brick-and-mortar schools make EMO-managed schools potentially strong competitors to existing brick-and-mortar schools in the market for students.
A. For-Profit Operators
During the 1998-1999 school year, 5 for-profit EMOs enrolled approximately 1,000 students; during the 2011-2012 school year 97 for-profit EMOs had a total enrollment of 462,926 students. While the actual number of for-profit companies has grown very little over the past few years, many of the large- and medium-sized EMOs are expanding into new service areas, such as supplemental education services and virtual schooling.
B. Nonprofit Operators
Since the 1998-1999 school year, the number of nonprofit EMOs has increased from 46 to 201, and the number of schools managed has increased from 92 to 840. Enrollment has grown from 5,426 students in 1998-1999 to 445,052 in 2011-2012. Nonprofit operators have shown more robust growth in regular public school settings than for-profit operators, both in terms of new nonprofit EMOs and new managed schools. KIPP, the Knowledge is Power Program, a national charter school network, remained the largest nonprofit EMO, with 98 schools and just over 35,045 students in 2011-2012.
C. Virtual Schools
The number of virtual schools operated by EMOs has increased from 60 in 2009-2010 to 91 in 2011-2012. This represents 10.8 percent of all schools (a total of 840) managed by for-profit EMOs. The average virtual school enrollment is 1,388.
A. Academic Achievement
Critics of EMO-managed schools question whether or not they will improve the educational achievement of students, particularly students from poorly performing inner-city schools (Brown et al., 2004). Broad generalizations about the academic impacts of EMO-managed schools should be viewed with skepticism unless buttressed by supportive evidence (Betts & Tang, 2011). Policy-wise, however, the present context for education reform focused on academic achievement has provided an enabling environment conducive to the growth of EMO-managed schools. In particular, the Obama administration's Race to the Top (RTTT) reform has included an increased emphasis on the role of EMOs generally and a specific emphasis on EMOs-managed charter schools in replicating best practices to "turn around" the lowest performing 5% of the nation's public schools. Tennessee and particularly Memphis has become an epicenter of the RTTT reform. Since being awarded RTTT funding in 2010, Tennessee has seen the number of EMOs grow from 2 to 8. The majority are located in Memphis (i.e., Yes Prep; Scholar Academies; Green Dot; KIPP Memphis; The Influence 1 Foundation, LEAD Public Schools; Aspire Public Schools). A verdict on their contribution to academic achievement will take time to fully determine.
EMOs also have had significant support from venture philanthropy networks, from corporate giving and family foundations to individual donors (Hentschke et al., 2003). Critics of K-12 funding formula argue that the pace of school change has been too slow, that educational bureaucracies have been able to resist major changes, and as a result, the many millions of dollars invested into schools have produced minimal results (Colvin, 2005; Hess, 2005; Lake et al., 2009). Venture philanthropies respond to this criticism by seeking a return on their investment in the form of for-profit and nonprofit education management or supporting the growth in a new school industry (i.e., virtual schools). Bill and Melinda Gates Foundation, NewSchools Venture Fund (NSVF), The Broad Foundation, and The Walton Family Foundation are leading these efforts. Such venture philanthropy networks can influence policymakers, education officials, and charter school authorizers, and can circumvent formal policy processes to get reforms enacted (Ravitch, 2013). In this way, they can ignore the traditional democratic processes by which educational policies take shape, directly impacting school structure, curriculum, and personnel issues without necessarily engaging in public deliberation (Reich, 2005; Ravitch, 2013). Educational researchers are just beginning to investigate the strategies the venture philanthropy networks employ (Hess, 2005; Wohlstetter et al., 2011), and how their efforts are have helped fuel the expansion of EMOs. A more detailed examination of EMO scale-up strategies, such as budgets, financial plans, and locational decisions is clearly warranted.
Some of the most important finance questions that have remained unanswered are: Are they profitable or cost-effective? In what ways has the sector transformed since 1999? How do venture philanthropy networks affect the design and delivery of education by EMO-managed schools? Finally, mergers, acquisitions, and non-profit/for-profit arrangements seem to be the cutting edge in EMO growth and yet there is no systematic research into what is going on and what it means for schools. Given the budget crisis all schools are facing, more empirical studies are needed on how to help EMO-managed schools reduce costs or enhance revenues if they are to be used as vehicles for educational innovation.
As a cautionary tale, the range of venture philanthropy networks providing financial resources to EMO-managed schools is diverse and our understanding is fragmentary (Wohlstetter et al., 2011). There is no single repository to which researchers can access data on the contributions and donations from private sources or on the amount that they give. In addition, the determination of the profitability of a single EMO is very difficult since they are not required to report that information. The findings from NEPC's latest profile report on EMOs should form the starting point for more in-depth and thoroughgoing analysis into how EMOs fund their growth.
Betts, J. R., & Tang, E. (2011). The effect of charter schools on student achievement: A meta-analysis of the literature. Seattle, WA: Center for Reinventing Public Education.
Brown, H., Henig, J., Lacireno-Paquet, N., and Holyoke, T. T. (2004). Scale of operations and locus of control in market- versus mission-oriented charter schools. Social Science Quarterly, 85(5): 1035-1051.
Colvin, R. L. (2005). A new generation of philanthropists and their great ambitions. In F. M. Hess (Ed.), With the best of intentions: How philanthropy is reshaping K-12 education (pp. 21-48). Cambridge: Harvard Education Press.
Hentschke, G., Oschman, S., & Snell, S. (2003) Trends and best practices for education management organizations. Policy Perspectives, WestEd, San Francisco.
Hess, F. M. (Ed.). (2005). With the best of intentions: How philanthropy is reshaping K-12 education. Cambridge: Harvard Education Press.
Lake, R. J., & Hill, P. T. (2009). Performance management in portfolio school districts. Seattle, WA: Center on Reinventing Public Education. Retrieved from http://www.crpe.org/cs/crpe/view/projects/1
Miron, G., & Gulosino, C. (2013). Profiles of for-profit and nonprofit education management organizations: Fourteenth Edition—2011-2012. Boulder, CO: National Education Policy Center. Retrieved [date] from http://nepc.colorado.edu/publication/EMO-profiles-11-12
Ravitch, D. (2006). Bill Gates, the nation's superintendent of schools. The Los Angeles Times.
Ravitch, D. (2013). The reign of error: The hoax of the privatization movement and the danger of America's public schools. New York: Random House, Inc.
Reich, R. (2005). A failure of philanthropy. Stanford Social Innovation Review (Winter), 33.
Wohlstetter, P., Smith, J., Farrell, C., Guilbert, H., & Hirman, J. (2011). How funding shapes the growth of charter management organizations: Is the tail wagging the dog? Journal of Education Finance, 37 (2), 150-174.