Thursday, March 29, 2007

Thank Goodness

I didn’t go to bat for White Hat Management the other day. Pho and JMZ started to smack around a White Hat Flack who said during an interview that he didn’t know how much money the company made, but then admitted off the air that he did.

Since I didn’t hear the broadcast, and tone and discussion is a big part of radio, it pretty much struck me as stupid and disingenuous, rather than a cause of outrage.

Assuming White Hat to be a privately held company, he should have said something like “I’m sorry, but I’m not authorized to discuss the specifics of the company’s financial situation”. Pretty much end of story.

The new bit in the Beacon today, on the other hand, a cause for concern. Boiled down to essentials, someone slipped a provision into a catch-all bill to turn the procedure of firing an EMO (White Hat being the best known example, and probably the intended beneficiary) into a steel cage deathmatch:

“Under one provision, Education Management Organizations (EMOs) such as White Hat -- which receives a fee from charter schools for managing their operations -- are allowed to appeal a charter school board's decision to terminate or not renew a management contract.

The appeal can be made to the school's sponsor or directly to the State Board of Education if the sponsor has been involved for less than six months.

If the sponsor rules in favor of the EMO or charter school operator and against the board or governing authority, then the sponsor is required by law to fire the board. The law then requires the EMO to appoint a new board.”

It’s like a line from an old western – “well, [insert villain name here] I reckon if’in yur gunna kill a man.. ya bettern make shure he’s dead”.

Pretty stupid. And it’s not like this wasn’t going to be discovered. It’s almost so bad, I’d suspect some opponent of choice put it in the bill….

The additional uncertainty and risk associated with using an EMO virtually ensures that either no new charters will be started, or that they won't be using an EMO to manage the school. So, in a sense, the legislation is a crippler to new charters, since it increases the cost / risk associated with the charter. It's also a market limiter on EMOs.

The Death Match process also runs directly counter to the choice notion of allowing the market to work - in any enterprise, if you can't change management, you can't do much to improve the operation or outcome. The State of Ohio has essentially given EMOs like White Hat the same monopoly power over a small set of schools as the teacher's union enjoys over the government schools. That will pretty much remove any incentive for breakthrough performance.

It does provide an excellent example of what happens when the government is busy micromanaging various pieces of the economy. Overregulating creates opportunities for rent seeking, poor incentives, and the political picking of winners and losers, with all of the inefficiency, ineffectiveness, and attendant corruption. Unable to give up the impulse to control every aspect of society, and wanting to keep a critical interest group happy, we’re content to deal with education as a pork barrel spending project.

However, at the end of the day, this bit of EMO legislation is probably not much more corrupt that Governor Strickland’s proposal to enforce warehousing these kids in government schools as a sop to the teacher’s unions and educational bureaucracy.

Actually, the EMO issue is probably less corrupt, mostly because it will be easier to fix, and do less long term damage.

From the Wall St. Journal: (subscription site)

“Mr. Strickland's other excuse for this assault on school choice for the poor is that the state needs to save money. Yet the voucher program costs a mere $13 million out of a $53 billion state budget that includes big new spending increases on education and bonuses for the public-school bureaucracy. The
Columbus Dispatch reports that from 2001 to 2006, spending per pupil in Columbus schools rose to $11,918 from $9,078. As everywhere, the problem in Ohio schools isn't money; it's the status quo of union-enforced mediocrity.

We'd have thought that with Ohio's many other problems, a new Governor would have better things to do than deny opportunity for poor kids to escape the worst schools in the state.”

Well, no, because the teacher’s union is one of the major special interest groups supporting the Democratic Party with both money and labor.