Making Up the Rules as You Play the Game



By PAUL E. PETERSON

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Chicago’s school district wants the
federal afterschool dollar. So do many other districts. And more than
two thousand private providers, for-profit and nonprofit alike, are
making their own claims.

More than $2.5 billion is at stake, a figure
scheduled to increase considerably if budgetary trends continue.
How should the money be distributed? Will parental choice and
competition among service providers determine the outcome? Or will
school districts capture the resources for themselves? Can
schoolchildren be the winners this time?

These questions have grown in import as
afterschool programs, the heart of the supplemental service
provision of No Child Left Behind (NCLB), take on increasing
significance in the implementation of the historic federal law. As
more and more schools fail to make their NCLB-mandated Adequate
Yearly Progress (AYP) goals, the demand for supplemental education
services, such as tutoring, summer school, or, most often,
instruction after the end of the regular school day, is
skyrocketing. Especially within big cities, where the largest
concentrations of disadvantaged students reside, these afterschool
programs are becoming one of the most popular features of the Bush
administration’s school reforms.

The supplemental services program has major
potential, but it is freighted with an inherent conflict of
interest that could prove its undoing: the same school districts
that are failing to make AYP are the gatekeepers for these
afterschool funds. As the stakes increase, so does the funding, and
so do the incentives to control those dollars.

 

The Legislative Compromise

To appreciate the current predicament, one
need only understand that when NCLB was being hatched, afterschool
was just an afterthought. The main thrust of the legislation was
and remains the need to meet state proficiency standards by 2014.

But what happens when students fail to meet
their AYP targets? Not much, really. For all the dire talk about
the strictures NCLB places on states and localities, two of the
three consequences thus far have amounted to little or nothing.
Twice-failed schools (those NCLB calls “in need of
improvement”) must offer parents a choice of sending their
children to another public school within the district, but that
option is being exercised by no more than 1 percent of eligible
families. After five failing years, schools are to be
“reconstituted.” Despite the dramatic verbiage,
reconstitution, while it has in a few cases led to major change,
usually means little more than hiring a new principal and asking
teachers whether they would like to remain on the staff or move
somewhere else in the district.

That leaves the third consequence, the
requirement that students must be given access to supplemental
services if a school fails for three years’ running. It was
not supposed to be the most important result. In fact, it was born
of a compromise between frustrated Capitol Hill conservatives, who
saw vouchers as the accountability lever of choice, and liberals,
who wanted anything but vouchers. Republicans, particularly in the
House of Representatives, tossed the idea of supplemental services
out as a last desperate card to avoid losing all choice options.
While this seemed a backdoor way of bringing outside
providers—nonprofit and for-profit, secular and
religious—into the school, the legislators neglected one
thing: they left the keys with the school districts. The districts
could control access to students and parents and the terms of the
contracts with private providers, and in many cases they could
supply their own supplemental services. Even
failing districts,
nominally prohibited from providing such services, can divert the
afterschool monies to their own use simply by suppressing parental
demand for the programs, which are voluntary. Since the school
districts get to keep every dollar not spent on the afterschool
program and deploy those dollars for programs of their own, they
have a clear financial disincentive to encourage student
participation in the program.

 

The Growth of the Afterschool Program

Despite disincentives to school districts,
parental response has been surprisingly strong. Admittedly, fewer
than 100,000 students participated in afterschool programs during
the 2002–03 school year, according to Department of Education
records. But the following year, that number doubled to 218,031, or
11.3 percent of all eligible students. As more students become
eligible for afterschool services, and as word of the program
spreads throughout disadvantaged communities, federal officials
expect that number to continue to soar, with big gains expected as
soon as the 2004–05 tally is made.

The supply of service providers is growing to
meet the demand (see Table 1). Nationwide, more than 2,000 private
entities now offer supplemental services. In most cases they teach
small groups of students after the end of the regular school day.
The degree of competition varies from one place to the next, the
most intense being within big cities that have large numbers of
eligible students. Some states, such as Florida and Idaho, report
no students in thrice-failed schools and so have no one eligible to
receive supplemental services. Other states, like California and
New York, report hundreds of thousands of eligible students.
Although boutique providers limit themselves to one or two locales,
the largest companies, such as Kaplan, Princeton Review, and Plato
Learning, are extending their reach into a majority of the states.
Their energetic moves make good economic sense. Providers are
finding that they can recruit quality teachers, develop effective
curricula, put into place strong management systems, and still make
a reasonable profit.

SOURCE: "Federal Law Spurs Private Companies to Market Tutoring," December 8, 2004, Education Week

Given the still pent-up demand (in Illinois,
for instance, only 5 percent of eligible students are getting
supplemental services), the competition for the afterschool dollar
will no doubt intensify dramatically with the passage of time. Only
2 percent of the $2.5 billion available for the supplemental
services program has so far been tapped. With per-student costs
averaging between $700 and $2,500, depending on location and other
special circumstances, the number of students served could exceed
2,000,000.

In short, if private providers build on their
initial successes, if school districts are unable to stop program
growth, and if Title I funding continues its steady growth (see
Figure 1), the afterschool program could expand to more than ten
times its 2004 size. Just as Head Start began on a limited scale
but has now spread to the point where well over half of all
four-year-olds are in some kind of nursery or preschool program, so
the afterschool program can be expected to take on a life of its
own.

Note: Supplemental Services funds are limited to no more than 20 percent of that fiscal year's appropriations under Title I, Part A, of the Elementary and Secondary Education Act. These monies may also be spent on transportation costs related to the public-school choice provision of the law or, in the absence of parental demand for school choice or supplemental services, other district programs.
 

SOURCE: U.S. Department of Education Budget Office

Many low-income families have quite practical
reasons for finding afterschool services attractive, and they can
be expected to seize this new opportunity to enjoy the same outside
help as middle-class families have for their afterschool needs. For
one thing, they provide a safe haven for a child during hours when
most parents are still at work.


The Academic Potential

The afterschool option has educational
attractions as well. Traditionally, after school has been
considered a time for play, sports, or extracurricular activity, as
well as for latchkeys, television, PlayStation, or life on the
streets. Organized afterschool programs serving the disadvantaged
have tended to focus more on snacks and recreational activities
(basketball, roller skating, and gymnastics) than on reading,
writing, and arithmetic.

Predictably, such programs have had little
impact on academic progress. Both a review of traditional
afterschool programs by Swarthmore economist Rob Hollister and a
recent federally funded study conducted by Mathematica found little
in the way of educational benefit from traditional afterschool
activities. Only 50 percent of the directors surveyed in the
Mathematica study saw “enhancing students’ ability to
meet specific academic goals” as one of their top three
program objectives. As Hollister concluded, “There is a
tremendous struggle between those who believe that afterschool
programs should be focused on skill development … and those
who stress the need to provide an atmosphere for growth and adult
contact for children who are too often ‘home
alone.’”

Presumably, by explicitly identifying
afterschool programs as a way of bringing all students up to the
state-determined proficiency standard, NCLB has given after school
the academic focus previous programs lacked. And by introducing a
measure of choice and competition into the equation, providers
place themselves at risk if they do not have educationally credible
programming.

At this point, we don’t know what kind of
academic lift these programs can offer. On the one hand, many of
the afterschool programs are limited to only one to two hours a day
over a three-month period. On the other hand, education providers
have strong incentives — and few impediments — to make
these moments educationally rewarding. Unlike the regular school
day, the afterschool program is voluntary, not compulsory.
Education providers, to secure their revenue flow, must find ways
to persuade students to attend. Fortunately, voluntary attendance
greatly reduces the problem disruptive students pose for inner-city
teachers during the regular school day, when attendance is
compulsory. And the afterschool teachers themselves can be hired
outside the usual union rules and grievance structures. Providers
can recruit regular public-school teachers for afterschool duty if
they wish, but ineffective teachers can be readily dismissed.
Meanwhile, the teachers enjoy the opportunity to work with those
students who are motivated enough to sign up for the program. The
conditions are such that the afterschool experience should, in most
cases, be educationally positive.

Nor is there any inherent reason to think
students cannot learn late in the day. After all, researchers have
discovered that the biological clock of young people ticks faster
later in the day than at the crack of dawn. (For older adults, it
is just the opposite.)

We also know that privately run afterschool
programs have long been key components of effective education in
other countries, especially those that score high on international
math and science examinations, such as Japan, Korea, Singapore, and
Taiwan. Those countries have a widespread system of private,
academically rigorous “cram” schools to which
middle-class families send their students in order to enhance their
opportunities for admission to college.

In short, strong parental demand, coupled with
new suppliers entering an intensely competitive market, could boost
the performance of those low-income students who are seeking ways
to overcome their education disadvantages. Should that happen, the
afterschool initiative could turn out to be the most important NCLB
reform after all.


The Chicago Factor

For all their potential, and perhaps because of their
potential, afterschool programs are fast becoming an arena for
acrimonious political debate. And what better place to witness the
rancor than the City of Broad Shoulders and Demo­cratic
dynasties: Chicago. In fact, under Mayor Richard Daley’s
strong direction, the Windy City has, since the late 1990s,
anticipated much of what would be included in NCLB. It has, for
instance, required that 3rd graders pass an end-of-the-year exam
(or boost poor scores by attending summer school) in order to
advance to 4th grade.

One would expect Chicago to be among the
strongest supporters of the new federal law on the question of
afterschool academic programs except for one thing: despite some
gains in student test scores in recent years, the Chicago school
district, like many other big-city districts (see Figure 2), still
has so few students making AYP that, under the federal law, the
district has been designated as failing and thus cannot offer its
own supplemental service programs.

SOURCE: Center on Education Policy, "From the Capital to the Classroom: Year 3 of the No Child Left Behind Act" (2005)

The outcry from big-city school officials has
been bitter. “When push comes to shove, we’re talking
about children in desperate need of help,” a Chicago school
administrator told an
Education Week reporter last September. “Should we just
cross our fingers and wait? These children need these services.
They need these services yesterday.” Federal officials argued
in response that if the school district can’t educate
students during the regular school day, it’s time to let
others have a chance after the bell rings.

Eventually the two sides reached a short-term
compromise that allowed the Chicago school district to provide
services itself in 2005 without suffering any serious financial
penalty. But for future years, the issue remains on the table, with
the feds, at least for now, continuing to insist that no failing
school district be allowed to provide supplemental education
services.

The federal focus on failing districts is
understandable, given the way the law is currently phrased. But in
terms of public policy, the central issue is not whether a district
is failing but whether school districts should both offer services
and control the terms of access by private providers.


The Financial Conflict of Interest

Though ignored in most of the public
discussion, the financial conflict of interest is clear: school
districts are given the authority to monitor afterschool education
vendors even while acting as vendors themselves. If this
arrangement were used in the banking industry, the Securities and
Exchange Commission would also be a brokerage firm.

Admittedly, a district, if designated as
failing, cannot offer the services itself. But that does not
eliminate the conflict of interest. If parents are demanding
afterschool services, then up to 20 percent of Title I funds given
to that district must be used to fund the private providers
offering the services. If parental demand for such programs is
slight, then the failing school district may use the money for
other purposes.

School districts have powerful weapons that
can be used in the battle to limit the scope of the demand and
control the provision of services. For one thing, privacy rules
give districts exclusive control over communications with students
and families. Although districts, by federal rule, must send a
letter explaining the afterschool option to all eligible families,
that letter, often sent late in the school year, is typically laden
with the usual bureaucratic jargon. According to the Center on
Education Policy study, “Parents thought the letters
informing them about services were too long and complicated and
buried key information.” As Michael Petrilli, a former
federal education official has pointed out, “It takes very
aggressive marketing to make low-income families aware of their
options, and districts are not doing more than is required under
the letter of the law.”

To be fair, not every district is proving
obstreperous. On the contrary, a number of the largest, New York
City included, are doing their best to inform parents of the
options available to them. Even where cooperation is less
clear-cut, it can in many instances be attributed to significant
start-up problems. Schools are not identified as failing until the
summer or well into the new school year in which afterschool
services are to be made available. Districts must then organize
their own afterschool programs or sign contracts with providers,
then inform parents of services being offered.

But with a modicum of adjustments, those
practical problems can be addressed, if districts are inclined to
do so. Unfortunately, financial incentives and ingrained opposition
to choice and competition push in the opposite direction. When
asked for ways of improving NCLB, one administrator said,
“Eliminate the Supplemental Services provision; it is very
expensive and is of minimal value.” Union leaders are no less
antagonistic. In New York, for example, the spokesman for the New
York State United Teachers, the state’s largest teachers
union, commented, “Our concern is that it is going to be
difficult if not impossible to track whether or not this money is
being spent effectively.” Although the point is well taken,
teacher unions seldom show a similar kind of skepticism for most
other kinds of school expenditure.

The animosity to the afterschool programs and
other supplemental services was amply revealed in the Center on
Education Policy survey of school administrators, who, when given
anonymity, frankly stated their deep-seated suspicion of the profit
motive:

“Supplemental Service funds should go to
districts that would provide services without the profit
motive.”

“I would not use federal funds to
support a program being operated by individuals not held to the
same standards that public school employees are held to.”

“Supplemental Services for any qualified
provider will cause a cottage industry to develop that will be
driven by profit and not academics.”

Suspicious of the private providers, mindful
of the cost to their own coffers, and in control of the access
channel, districts thus have both incentives and opportunities to
check program growth. In Worcester, Massachusetts, for example, the
school district, which offers its own afterschool programming,
actively discourages other entities from offering their wares. Says
one for-profit provider, “The school district is the owner of
the relationship between provider and the parent. And I can’t
get in.” In such cases, says Harvard professor William
Howell, “It’s like asking a BMW dealer to extol the
benefits of buying a Volvo.”

Such resistance to outside vendors is not
limited to the districts in Senator Ted Kennedy’s home state.
In testimony before a congressional subcommittee last May, Jeffrey
Cohen, president of Catapult Learning, reported the numerous
obstacles providers are facing nationally:

“We have seen parent notification
letters that are impossible to decipher. We have seen multipart
registration processes that seem to delay registration, rather than
encouraging it. And, we have been prohibited from talking to school
principals and parents.”

Districts are asked to hold
“fairs” where competing providers can tell parents
about their offerings, said Cohen, but, according to a high
official at one of the major providers, “Districts do nothing
beyond the bare minimum to promote the fairs to parents.”

When districts have financial incentives to
limit participation, such obstacles make bureaucratic sense,
however much they limit opportunities for families. Admittedly,
private providers need to be monitored, so as to avoid
“suede-shoe operators” from peddling their wares to
unwary parents, a concern of Demo­cratic representative George
Miller, who serves as the ranking minority member of the House
Education Committee. Some have been found to be paying parents to
attend, and others have used a web site managed from overseas to
work with students. As the program ramps up, all private providers
need to demonstrate that their services are beneficial. But to turn
the job of managing providers over to school districts that have an
incentive to limit the competition defies all regulatory logic.

Of course, it cannot be left to the industry to
monitor itself. But as long as districts have the monitoring
authority, they can be expected to look for legal constraints that
will keep the programs in-house. “There are some districts
that are clearly not playing fair and have been a thorn in the side
of the providers,” says Petrilli.

Despite tighter federal guidelines issued in
June 2005, local districts still have a great deal of latitude when
negotiating contracts with providers. As Michael Casserly, head of
the Council of the Great City Schools, reports, “School
districts and potential providers have found themselves tussling
over the length of the contracts, per pupil fees, billing and
payment procedures, staff qualifications, union rules, and the
like.”

In short, the possibilities for burdensome
regulations can be endless whenever the financial incentives to
create obstacles are ingrained. As an administrator in Worcester
explained, “We’re not required to provide
transportation. And, to be honest, to send money out of the
district, I’m not sure that we would even offer to do
that.”


But Will Children Benefit?

How this power struggle will evolve, and
whether students will benefit, remains the big unknown.
Unfortunately, the accountability provisions of NCLB do not contain
any mechanism for ensuring that students profit from afterschool
programs, mainly because states are focusing more on overall school
performance than on the performance of individual students.

If the NCLB accountability system can be
gradually shifted to a student focus, then the impact of
afterschool programs, along with much else, can become part of the
planning for the future. Until then, one can expect private
providers to claim great success without much convincing evidence.
And school districts will complain about problems, corruption, and
profit making with no more than an anecdote here and there to
justify their self-serving complaints. But for those who think that
choice and competition are the key to school reform, the
afterschool intervention is the most promising vehicle currently
available.


Paul E. Peterson is professor of government, Harvard University, and the editor-in-chief of Education Next.




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