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McDonald, fellow, Center for Policy Studies
Civic Caucus, 8301 Creekside Circle #920, Bloomington, MN 55437
Verne Johnson (chairman), Janis Clay, Jim Hetland (phone),
Wayne Popham (phone), Clarence Shallbetter; guests Jon Bacal, Brad Blue,
Summary of meeting:
fellow at the Center for Policy Studies and associate of
Education|Evolving, discusses his new book, Unsustainable: A Strategy
for Making Public Schooling More Productive, Effective and Affordable.
He contends that the public K-12 school system as currently structured is
no longer financially viable and as a result becomes increasingly
inefficient each year. He proposes enabling and incenting people to work
on lowering the cost and increasing effectiveness of schools and argues
public policy should be structured so that this dynamic is created.
Welcome and introductions.
McDonald is a
fellow at the Center for Policy Studies, a non-profit research
organization focused on the redesign of large systems in the areas of
health care and public education. He is also an associate at
Education|Evolving, a project of the Center.
Find a copy of the
Find a full summary of
the book here:
Comments and Discussion
Tim McDonald opened
his remarks by thanking the Caucus for the opportunity to test ideas with
and obtain feedback from members and guests on the issues he has broached
in his recently published book. He asserts that while the United States
continues to have the most competitive economic model and established
human capital, future educational success will go to the country, the
state or the region, that can put in place systems that best capture
individuals' talents and direct them toward productive ends.
He argued that such an
ability to increase educational productivity could be Minnesota's
long-term, durable competitive advantage. Since all the 50 states have
open economic systems, we could try to compete with tax policy, but it
will be difficult to differentiate our state simply along economic lines.
Ted Kolderie made a compelling case in 2006 (http://tinyurl.com/3fws35o)
that one of Minnesota's greatest points of leverage for creating an
appealing business climate is to have a high-performing public sector that
empowers individuals and organizations, whether large or small.
education offers the greatest potential for
to distinguish itself and to set a new theme for the nation to follow. The
timing is good now, he continued, because proposals are coming together
that could enable the Governor and the Legislature to do just that. The
ideas appear to have bi-partisan appeal, and after this year's budget
stalemate the two parties can really use something constructive to agree
on. Bipartisanship has been shown to be a characteristic of successful
system-redesigns, McDonald said. If an idea involves long-term change in
the incentive structure of a public system there tends to be more of an
appetite for both parties to engage it than there might be if a proposal
deals only with taxing, cutting, or regulation.
is the current system unsustainable?
McDonald argues that
there is an inherent structural imbalance in the finances of the public
school system, with costs continuing to rise much faster than the growth
of available revenue. He cites statistics showing that K-12 costs are
projected to increase at 4 to 6 percent annually, while revenue growth
will not exceed 2 to 3 percent. This poses a productivity paradox: as
costs increase but performance measures stagnate, inefficiency continues
to mount and the value of the school "output" per dollar of cost
declines. The result has been perennial cuts as taxpayers and
philanthropists tire of paying for the same performance.
However, there is
evidence that with different business models the cost structure of public
schools can be significantly improved. Across the country there are
independent public elementary, middle, and high schools that operate on
half the funds required by many districted schools today, using on-site
management to determine effective ways to do more with less. Most
Minneapolis chartered schools for example operate effectively on around
$9,000 per student, while the city district requires $19,600 per head.
In his research
McDonald found that unions are not the most-often cited inhibitor to
change, as popular conversation would suggest; instead it is the excessive
dedicated funding and other bureaucratic constraints that come with large,
centrally controlled districts of schools.
This is important, he
noted, because it indicates that the problems that schools and districts
are facing, and even the root of the real or perceived intransigence of
unions, are not fundamentally problems of money, will, or self-interested
employees, but more essentially a problem of structure. The culture of
control and regulation in public education is what leads to rising costs
without improved performance since incentives for productivity are
missing. That culture is what creates the dynamic that leads to the
formation of teacher labor unions instead of the type of professional
associations that exist in law and medicine.
As long as districts
are controlled centrally, McDonald said, principals will structurally be
more the agents of the central office than leaders of those in their
schools. Since schools have no self-determination teachers have neither
the reason nor the opportunity to innovate because they do not compete for
students, nor do they have an incentive to save money since they do not
see or influence the budget.
Continue restructuring the system so productivity is incentivized.
To achieve structural
reform of schools, McDonald believes policy makers need to begin by asking
certain questions. Too often, he observed, proposals are pushed without a
clear idea about the causes of the problem they're seeking to solve. If
behavior is a function of the incentives of a system, then policy makers
must always ask: How does this proposal change incentives? Some
How to get better achievement?
How to contain costs?
Put schools in charge of their
How to improve productivity?
Empower students through
How to make more and better use of
teachers in charge of setting up school structures and processes.
Not enough innovation?
Get districts into the game.
How to address union resistance?
Create opportunities for unions to move toward a professional model.
The question Dan
Loritz and Ted Kolderie then ask is How can these strategies be
implemented? Policy needs to be humble, and recognize it will not be
able to directly compel change. Instead, policymakers should think about
restructuring laws so incentives encourage people and organizations inside
the system to begin behaving differently.
TO ACHIEVE THE GOAL?
elected leadership in
Minnesota in facing the problem must seize an opportunity.
The challenge we face
is that the chartering sector in
has almost ground to a halt. In the past 3 years there have only been 11
new schools opened (just one this current year) - down from 15-20 annually
in years prior. This is a problem McDonald said because the chartering
sector is the driving force behind all the competitive dynamics within
public education. Innovation, choice, and the development of alternatives
are all activated by the pressure created when appealing options are
provided to parents and students.
Top on the agenda then
for the special session and interim should be to reactivate the chartered
school sector. This can be a near-term strategy to set the stage for
Next, we must seize
the opportunity to bring about real structural change.
Minnesota led the
first phase of structural redesign of the modern American public education
system, through a succession of initiatives that began the choice
movement. This "removed the exclusive" as Ted Kolderie describes it, of
districts over the creation of new schools. This state created the
structures for choice that were quickly replicated or modeled through most
of the country. It happened locally, and Minnesota provided the model.
In the ensuing time
there has been rapid growth in the availability of options for students,
but there are areas that need improvement requiring more innovation, more
dynamism, more experimentation. In a lively public school sector good
schools should grow, McDonald said, and bad schools go out of business.
"As Walt McClure says, protect kids, not schools."
The time is right
McDonald said, 20 years on from the enactment of the first-and
strongest-chartering law in the country, to revisit the strategy. There
has been lots of innovation, but there could be much more. Modern
technologies are yet to be widely taken up in schools. The job of teaching
is still very much blue-collar, thus probably why it's not attracting
top-tier college graduates. The legislative and executive leadership needs
to ask itself: If, 20 years on, the system is not doing what we want,
then how can incentives be changed so it does?
Consider a different approach to management.
After the important
task of re-starting the chartering sector, one of the most potent
strategies the Governor and legislature could take is to get districts
into the game of innovating. The Governor can lead this effort. The key
question, McDonald said, is what incentives could get the public education
system spinning in a direction toward self-improvement.
The legislature can
begin now to establish incentives for school districts to engage in
innovation in competition with the chartering sector. The goal is to have
schools that are continually seeking out ways to improve on their
own-without outside pressure-to improve their cost and effectiveness.
districts into innovation.
For 20 years districts
have been competing against charters with one hand tied behind their
backs, McDonald said. What would happen if
At present only the
chartered sector is endowed with the type of school-based authority
required for robust innovation. Yet districted schools still account for
more than 90 percent of public school enrollment in Minnesota. Almost
wherever chartered schools appear they attract students away from
districted schools. They tend to be much more responsive to student,
family, and teacher interests. Why not give districts the same authority?
Put them on equal footing-let districts create schools with the same
appealing conditions as those in the chartered sector have.
There are two steps to
the legislature could strengthen a law that was passed in 2009 but has yet
to be used, that enables school districts to enter into agreements with
so-called site-governed district schools (statute 123B.045). These are
districted schools, with union teachers, that are intended to be as
independent as chartered schools. The local union enters into an agreement
with the district board waiving aspects of the collective contract that
are deemed necessary by the teachers in order to run the kind of school
they would like.
At present there has
been some ambiguity around what the school should have control over -
budget, staffing, curriculum and pedagogy? The answer is all of it. You're
either all-in on giving schools autonomy, McDonald said, or they won't
take off. Autonomous schools are small businesses and need to be treated
as such. There is no part-way. The school needs to be in a sink-or-swim
dynamic, and for that to work they need complete authority over anything
consequential to operate. This includes full control over the allocation
of resources, which they should receive in a lump sum-not with the tangle
of dedications placed on traditional districts from the outside.
To strengthen the law,
direct a minimum of 95 percent of revenue to the school site. This
guarantees they will have complete control of their budget, putting them
in the driver's seat. One of the most distinct advantages of chartering is
control over a lump-sum budget - and the freedom to allocate resources as
the board sees fit.
This is the first
step. It enables districts to create unionized schools with the autonomy
of a chartered school. It can be done.
has a similar law, and has built up a pipeline of schools putting together
proposals. Minnesota can build on this by pairing this new option for
locally controlled district schools with a new district-management
the Minnesota legislature and governor can make use of the site-governed
schools statute to create the first-ever law of its kind in the country to
enable school boards to flip their management model from a board that both
runs and oversees schools, to one that oversees schools that run
One of the greatest
inhibitors, McDonald said, to change in the district sector is the legal
requirement that district boards must run schools. Reading from the
Minnesota statute establishing school boards, McDonald noted that the
duties of a school board are that:
"The board must
superintend and manage the schools of the district; adopt rules for their
organization, government, and instruction...and prescribe textbooks and
courses of study." (123B.09 Subd. 8.)
"This small provision
is the root of why the present system behaves as it does." In order to run
schools, he said, the board hires a chief public administrator to
superintend them. He then hires deputies to administer each individual
school. Decisions are made in the central office and the administrators
are directed to carry them out. Structurally school administrators are
more closely aligned with the interests and sentiments of the central
office than the teachers. This process necessitates standardization, since
it is prohibitively complicated for a central office to design and run 10,
20, or 30 different schools.
Senators Olson and
Pogemiller, and Representatives Downey, Greiling, and Benson called this
model "education boards" in a bill they introduced this year. The idea has
varied origins, but in addition to being promoted by these legislators it
has been developed and advocated by Ted Kolderie (Education Evolving) and
Paul Hill (Center on Reinventing Public Education).
"They recognize - at
least I think they recognize - it is antithetical to try running a
decentralized framework inside a centralized school district."
This is significant,
McDonald said, because for innovation to occur those at the school site
need to have both the reason and the opportunity to improve schools - and
the structure of the education board appears to be capable of providing
If enacted, he
continued, there is reason to believe other states would quickly follow
suit, as was the case with chartering in the 1990's. And, like chartering,
there is a role for constructive federal involvement. If states could
demonstrate that schools may be created inside districts that have equal
self-direction and autonomy as do chartered schools, then they could be
made eligible for the same federal startup grants as chartered schools
To aid in the startup
of chartered schools, McDonald said, the Federal government has a program
by which it provides funds to state agencies to distribute to approved
chartered schools. If Minnesota could secure stronger autonomy and
self-direction for districted site-governed schools than many states
require of their chartered sectors, he asked, shouldn't they be allowed to
access the fund as well? New schools have extra capital costs at the
outset, McDonald said, and conversion to self-governance requires
planning, so startup and transition aid could be a tangible way for
Republicans like Chairman Kline of Minnesota to use federal policy to
This can be
Minnesota's strategy. "While other states work on improving the existing
system, Minnesota will be redefining it."
A participant noted
that he believes policy makers should be focused on higher levels of
student learning and neutral about how that is achieved; policy should let
resources move from lower performing schools to higher performing schools
and establish incentives for high performing schools to replicate.
that one of the greatest virtues of the chartering philosophy has yet to
be realized: That good schools grow, and bad schools close. Lack of
enrollment is the strongest mechanism for accountability, he said. The
ability of parents to choose high performing schools will be key in the
demise of low-performance/low-enrollment schools. But that also depends
upon the availability of multiple measures of performance to properly
inform parents and allow good decisions to be made. It is clear that if
regulators were in charge of closing schools, few if any would ever be
A participant observed
that we must also be wary of the "not my kid's school" syndrome,
referencing surveys where parents regularly say they are dissatisfied with
the education system as a whole, but are pleased with their own schools.
that part of this effect is probably human nature, but a sizeable portion
of it can probably be explained by a lack of alternatives present and
available. Parents need to see not just multiple schools, but different
kinds of schools. It is hard to prefer an alternative, McDonald said, if
no real alternatives are available and if parents are unaware of what
distinguishes them. Walt McClure, chairman of the Center for Policy
Studies, sometimes calls these 'Honda schools.' Americans didn't know what
else was possible for car design and production, McDonald said, until
Hondas started to show up and quickly improve. "Then they forced the
issues of quality and efficiency on the entire industry."
A participant asked
how Teach for America fits.
McDonald said that
Teach for America provides a vivid illustration of the need to incentivize
local control in schools. "TFA does an effective job at recruiting,
training, and supporting competent and effective new teachers, but then
they are placed into environments that are dysfunctional." Half the talent
of TFA teachers cannot be tapped, McDonald argued, because they have no
professional authority to change things.
The dichotomy is
absurd at times, he continued: These brilliant young people, supported by
a brilliant training program, are placed in environments that are toxic
for everyone involved. "The school designs most poorly matched to their
student populations are urban districted schools," McDonald said. Localize
control here, and change will come very quickly.
He added that a huge
problem with recruitment of teachers stems from the fact that people
perceive the quality of the job of teaching to be bad. And while some TFA
teachers are willing for at least a period of time to be subjected to
martyrdom, for the long run, we need to make the job of teaching more
appealing. Then the talent may naturally follow.
A member brought up
the issue of performance measurement and the specialized training needed
for K-12 teaching. He noted that much work must be done in the education
graduate study arena, both in addressing the research and in training new
educators. Now teachers are training to work in the system, as it exists
today, not as it must change in the future. There needs to be
"disruption" in university graduate education studies as well as
disruption in school systems in order to achieve the kind of innovation
"Very true," McDonald
said. "Teach for America is just the beginning. As the exclusive right of
districts to run schools was removed 20 years ago, so has the exclusive
right to train teachers been removed from universities."
The difficult economic
situation, while exacerbating the cost/revenue squeeze on public schools,
paradoxically affords an unusual opportunity for leadership and
cooperation in bringing about the reforms needed to improve productivity.
Leadership, especially by the Governor, will be critical in order to take
advantage of this unique opportunity for
to again lead the nation in education reform.
The Caucus chair
expressed his view that he has never seen as much sentiment for change as
he sees today. The opportunity to bring about real innovation is
stimulating a degree of enthusiasm unlike any in recent memory. The
situation calls for new proposals for actionable ideas from groups such as
Education|Evolving and others. He believes the key to leveraging the
teacher's role lies in the expanded use of information technology.
that Ted Kolderie's idea to flip the management structure of school boards
and schools in order to encourage innovation might in itself take as many
as ten years before measurable results are apparent. This is a strategy to
alter a trajectory, he said. It introduces a new paradigm.