Focus on for-profits in K–12 education misses the real divide

By Alex Hernandez

Executive Summary

The for-profit, nonprofit divide is taking new prominence in American public schools as traditional K–12 institutions—besieged by dwindling budgets and greater pressure to improve student outcomes—face growing competition from new education providers such as Khan Academy, the Knowledge is Power Program (KIPP), and Teach For America. Efforts by these new providers to bring fresh ideas and approaches to public education are met with cries of “privatization,” ominous warnings about “corporate” reform, and accusations of insidious profit-making schemes. These attacks are leveled indiscriminately against both nonprofits and for-profits that pose a potential threat to K–12 incumbents—primarily school districts, teachers unions, schools of education, and education publishers. The fault line between for-profits and nonprofits serves as a distractor as incumbents fiercely protect their own interests.

The incumbent versus nonincumbent frame explains many of the logical inconsistencies that arise in the current debate. Teachers unions have not coordinated attacks against the $19 billion K–12 publishing industry, even though publishers exert their “corporate” influence by courting state officials, hosting dinners for district employees, and sponsoring international trips for school leaders. This is the case because publishers have carved out a role as system insiders, and as such present no threat to existing institutional arrangements. Conversely, nonprofit charter management organizations are accused of privatizing education and placing public schools in the “hands of businessmen” when they provide students a public school option in addition to their assigned district school.

The Role of New Providers in Public Education. Much of the controversy in K–12 is centered on whether one can support the idea of public education while simultaneously challenging the system of institutions that dominate the sector in its current form. The tangled web of institutional interests that currently controls K–12 public schooling has largely emerged over the last 40 years. And while supporters argue that the K–12 system is the one-best system for delivering public education, it is instead just the most recent system, a system in which incumbent interests are strongly protected through public policy. The quandary in K–12 is that existing institutions either control or disproportionately influence decisions to allow new entrants into the sector. In other critically important sectors like health care and higher education, new providers play a key role in delivering services and driving new innovations. But institutional resistance to new providers has made K–12 one of the least innovative sectors in the US economy, even though it receives $596 billion per year in public funds.

Incumbents Fight Back. New providers are forced to negotiate with incumbent institutions to operate and scale, creating perverse situations where the most successful upstarts, regardless of their tax status, face the most aggressive resistance. This paper explores the opposition experienced by successful new providers, using examples from charter schools, teacher preparation programs, and education technology.

The Fraying of the Coalition. K–12’s current institutional structure seems immutable, but tectonic shifts driven by new technologies and a renewed focus on student performance will fray the bonds between incumbents, creating an opportunity for new providers—nonprofit and for-profit alike—to build a better public school system for America’s children.

The question is: do we trade up for a better system that replaces the factory model of schooling, a model that now seems to have run its course? Or do we merely swap one suboptimal system for another? The battle will be fierce, but, for the first time in years, there are glimmers of hope that we will see dramatic improvements in K–12 in our lifetimes.

You can read and download this Special Report on  as a pdf file here>>>

Alex Hernandez is a resehrt at the American Enterprise Institute he is also a partner at Charter School Growth Fund and is a former public school teacher and administrator.

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