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For-profit charter bill passes House Education Committee

A bill that would allow for-profit charter operators to run schools in Tennessee passed the House Education Committee yesterday.

The bill allows charter schools in Tennessee, which are publicly-funded and can currently only be run by non-profit organizations, to contract out educational services to for-profit companies.The Associated Press reports that the bill, sponsored by Memphis Democrat John DeBerry, passed 8-7. The bill is on the senate education committee’s calendar for Thursday.

The bill was promoted by National Heritage Academies, based in Michigan, and Charter Schools USA, based in Florida, two for-profit charter operators represented by lobbyist Tom Lee.

DeBerry said that the bill would level the playing field for charters. “We’re constantly putting stringent standards on charter schools as though they’re not public schools,” he said. The house education committee also passed a bill with stricter guidelines for closing charters designated as “priority schools,” or in the bottom five percent in the state.

“I approach it as a progression of the legislation: We created charters in the state of Tennessee, and now we pass legislation to make them better,” DeBerry said in an interview. “I think charters having the ability to consider having a professional company manage various parts of programs is nothing more than what the city does, what the state does, what the public schools do.”

The Tennesseean reports that representative DeBerry emphasized non-profit boards would have to approve the new boards, while others don’t think that would work.
From the Tennessean:

“I don’t see where in any good faith how for-profit charters are going to be any better than the mess we’ve already got,” said Rep. Ron Lollar, R-Bartlett, who voted against the bill.

There are currently 69 non-profit charter schools in Tennessee. That number is expected to grow in coming years. The bill would require non-profit organizations to obtain charters, but those organizations could then contract out to for-profit operators.

As of 2011-12, some 35 states permitted for-profit school operators, according to the National Education Policy Center. Metro Nashville Public Schools has previously contracted out the running of one of its schools, Spectrum Academy, to a for-profit operator. (For-profit charter operators are known as Education Management Organizations, or EMOs, while non-profit organizations running multiple schools in Tennessee are known as Charter Management Organizations, or CMOs.)

Researchers Matthew Chingos and Paul Peterson summarized the debate over for-profit v. non-profit managers in Education Next as follows:

Nobel Prize–winning economist Milton Friedman theorized that for-profit firms are more effective because they have clear economic incentives to lift student performance. …Others have suggested, however, that for-profit firms are likely to cut costs and thereby shortchange students in order to benefit the firm’s owners and shareholders.

Research on for-profit schools is not particularly sunny. In Michigan, where for-profit operators have run schools for years, there have been concerns that schools are motivated to cut corners in order to profit.

In Ohio, for-profit charter schools were rampantly mismanaged, as an NPR State Impact story illustrates. National Association of Charter School Authorizers president Greg Richmond told State Impact that the problem was not that the schools were for-profit, but rather that there was not enough oversight exercised.

DeBerry’s response to tales of mismanagement of for-profits in other states: “Are these going to be a panacea? Absolutely not. But my thinking is, we can’t demonize companies for stuff they haven’t done yet in Tennessee.

“The public schools have no incentive to improve,” he said. “There’s mismanagement everywhere. We have kids who go to school for 12 years and they can’t read.”

Tennessee Charter School Center director Greg Thompson said the center had been neutral on the bill and said that the state should “focus its efforts on strong authorizing practices.”

Oddly, the Nashville Post reports that DeBerry said he did not anticipate that the bill would pass. Nashville Public Radio reports that bill sponsors drew a comparison between private management of public schools and private management of state prisons.

Correction: An earlier version of this title misstated Greg Richmond’s title. He is the current president and CEO of NACSA.

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