Education plc gets rich

14th February 1997 at 00:00
Big business is capitalising on America's educational reform movement.

Publicly listed education companies that manage public schools, run private and proprietary schools, publish textbooks and sell educational products and technology report revenues for 1996 of nearly $33 billion (Pounds 53bn).

That is an increase of 53 per cent in two years. And on Wall Street, the education industry last year outperformed the Dow Jones Industrial Average by 142 per cent.

"Education is a huge industry," said Michael Sandler, chief executive officer of EduVentures, a Boston firm that provides financial consulting services to education companies.

"There are a lot of niche opportunities out there where the private sector can supplement public education."

The United States spends Pounds 406bn a year on education, EduVentures estimates. And the educational reform movement is encouraging communities to experiment with private management of public schools or try altogether new approaches such as charter schools run independently of local school boards.

About 50 of the nation's 500 charter schools are privately managed, and the total number of charter schools is expected to quadruple in two years.

"There are certainly some school districts that are very entrepreneurial, and that has created opportunities for us," said Philip Geiger, president of Education Alternatives, which last month negotiated a Pounds 15m deal to open 12 charter schools in Arizona.

"Charter schools are clearly the wave of the future," said Dr Geiger, a former public schools superintendent. "It provides choice, it provides public funding and it provides a way people can choose the school their children go to. And companies like Education Alternatives and others will be managing, if not in fact establishing, those schools."

There is also a growing demand for privately furnished childcare as more mothers re-enter the job market, private language instruction for non-English-speaking immigrants, and private coaching for increasingly important college and graduate school admission tests. And record numbers of children are entering school, dramatically increasing the demand for textbooks and supplies.

"People do see this as an enormous market," said Carol Ascher, a senior researcher at New York University's Institute for Education and Social Policy. "It's billions and billions of dollars that until now has gone to public bureaucrats. Besides, there's an enormous ideological movement that sees anything run by government as cumbersome, inefficient and intrusive and business as streamlined, efficient and can-do."

But Dr Ascher and others, including teachers and some parents, worry about the growing involvement of profit-making companies in public education.

"There are different ways to measure efficiency," said Heidi Steffens, policy analyst for the National Education Association, a union representing 2. 2 million teachers. "Do they consider efficiency to mean delivering the best education possible or maximising profits?" Educators worry that private companies will teach children only enough to do well on the standardised tests by which their progress is determined.

"This is where money and education coincide," said Dr Ascher. "If the measure of a company's success is student test scores, then it's going to have an enormous incentive to just prime kids for tests. That is not a real education, and that's the kind of pressure those schools are creating."

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