When Public Money Goes Private: Charter Schools, Privatization, & Pipelines

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Image Credit: Rob Pongsajapan

In a few weeks, Massachusetts will vote on lifting the cap on its number of charter schools. Naturally, this has led to a feud rivaling Shakespeare’s Montagues and Capulets—minus the star crossed lovers who will admit to liking someone from the other side.

Wherever you live, you’ve likely come across charter school debates. You’ve probably even heard phrases like corporate interests, privatization, and for-profit schools thrown around. And if you’re anything like me, you’ve scratched your head as to what these phrases actually mean.

Recently, a friend of mine asked, Does anyone actually understand the model behind the “for profit” charter schools? Aren’t publicly funded schools non-profit by nature? How are charter schools creating a revenue stream?

My questions exactly….

Charter schools don’t charge tuition, so it’s easy to think they wouldn’t create any “profit” system anyone would be interested in.

But that’s where we’d be wrong.

When Public Money Goes Private

Before anyone gets excited, I’m not going to talk about whether individual charter schools are good/bad/amazing/evil/etc. For that argument, please see every other article about charter schools ever. Here, I hope to explore the relationship of charter schools to profit, land, and privatization. 

In a nutshell, privatization involves contracting out the responsibilities traditionally held by the public sector to the private, for-profit sector.

Charter schools, which can function as, or similar to for-profit institutions are often at the forefront of school privatization debates, even though they’re primarily funded by the same taxpayer dollars as public schools.

But if charter schools are taxpayer-funded, how do they generate profit?

Good question. The short answer is: they really don’t. Charter schools don’t necessarily generate profit on their own, but—and here’s the key—they do open doors that make public funds available to private pockets.

Here’s three ways this can work:

1. Investing. Charter schools can generate individual profit through basic venture capital. People can invest in a charter school, or a parent company, just like buying stock in General Motors. Essentially, individuals give the company loan, and are paid back—with interest—if the company does well.

In this case, investors can also receive a 39 percent tax credit for investing in a charter school, which can mean doubling the return on investment in under seven years.

For public schools, individuals can make donations, but investments come with the expectation of profitable returns. In this way, charter schools can open up education—a market of near-guaranteed growth—as a vehicle for profit.

2. Real Estate. Public schools are usually on public land, but charter schools often have to rent their own spaces, which means someone gets a rent check. Depending on the state, public funds can be used to pay this rent. Either way, dollars previously circulated within public systems become available to private real estate interests.

Furthermore, if charter expansion leads to reduced public school enrollment, this can mean public school closures. When a school closes, you’ve got some prime real estate that can be made available for private development. You can see what direction the incentives go here.

3. Freeing up outside contracts.  Kids need lunches; teachers need supplies; staff may want professional development. Public districts usually contract services like these internally, or to a limited number of outside companies. Charter schools have more flexibility here. They can negotiate their own contracts, be it with the same company as the district, an outside business, or theoretically McDonalds. The the point is, once again, public money is freed up for a broader range of private interests.

Seeing the trend here?

So is privatization necessarily “bad?”

Many argue that privatization is actually more efficient—whether in education, healthcare, or any number of public services; this is small-government economic theory 101. So none of this is necessarily good or bad—just capitalism, right?

To be clear, none of the interests above are inherently “bad.” But do look at the cast of characters we have up there—investors, landowners, and private industry. We have to admit, this is a powerful trifecta. One that, throughout history, hasn’t exactly had trouble getting its needs met, even at public expense.

So we have to ask—what makes us think this time will be different?

When we view these moves toward privatization in historical context, we see our nation has long equated privatization with progress. Trace this back far enough and you move through a whole history of dispossessions, stretching back to colonial appropriations of Native American land.

As educational sociologist Dr. Leigh Patel points out, today’s debates about school privatization are deeply intwined with the history of colonization:

“The logic of physical invasions and opportunistic treaties with Native peoples echo in contemporary times with private takeover of public, potentially collective spaces…. As one of the last public spaces in the United States, education has experienced a surge of privatization that acts in keeping with a genealogy of [settler] land grabs.”  (2014, p. 362)

As the Dakota Access Pipeline Protests have reminded us, the privatization of land and public spaces is neither history nor trendy innovation. This is a well-oiled process that has been moving forward uninterrupted for a long, long time.

Does that mean public systems are inherently perfect? Not at all. Nor does it mean charter schools are categorically “bad.” Many, in fact, are staffed by passionate educators who do important work for the students admitted to these schools. But when a seemingly good idea gets out of control, we need to steer it back toward its original intent, which for charter schools, was certainly not to make education a vehicle for private profit.

What this does mean is that privatization has a past, and we should use it to inform our future.

As the history of privatization in this nation has shown, once we give up public land, funds, or accountability—we’re not getting it back. These decisions are sustained for generations.

Whatever your opinions about charter schools, we need to be aware of—and vocal about—this history, these interests, and the larger context of privatization. That way, we can at least be honest about the choices we’re making, who stands to benefit, and at what cost.

We can then move ahead with full awareness that each movement toward school privatization reverberates into the future, each choice its own miniature “Brexit.” That school, that land, and that public accountability aren’t coming back. And if that’s the choice we make, we make it with our eyes wide open.

Feel free to comment below or on the blog’s Facebook Page.

Follow on Twitter @ChrisKBacon

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