Niche Marketing to the Poor

The fourth problem concerns the long-term strategies and interests of large, for-profit firms that are content, for now, to sell services and products under different brand names. All signs point, however, to trends in which large, established firms capture much of the business of a single school district, albeit through an array of atomistic contracts. This raises issues of monopolies, power asymmetries, and ethical business practices. There is another lurking related issue here. Buoyed by the mandates of NCLB, firms are seeking to develop a niche market among very low-income families, seeking increased market share and market penetration among the economically disadvantaged. They are sending their representatives into low-income communities to learn more about how these families live and, purportedly, what they want, so as to lay a better foundation for selling products and services to them. They are using marketing channels that will help them integrate the sale of their products better into the community, involving and contacting churches in advertising their programs as in the case of SES, offering in-kind contributions to low-income families such as free computers, and forming strategic alliances with organizations with credibility in these communities. Firms are using the language of civil rights to frame their marketing efforts as expanding parents’ choices and giving them more choices as consumers. Yet in the world of retailing, there are many examples of firms using their influence and capital to sell low-income families things that they neither want nor need, like cigarettes and junk food. Supermarket chains offer lower quality food (especially meat and produce) at higher prices in poor neighborhoods. Banks that decide to put ATMs in poor neighborhoods charge higher rates.

Criteria for Strengthening Accountability for Private Firms8

Finally, I consider several criteria for designing governance arrangements given the changing nature of privatization in K-12 compulsory education. The force of policy recommendations is strongest when supported by a collective process whereby different stakeholders participate and provide input. With the hope that they might inform public deliberation, I offer four principles for policymaking that emerge from my analysis.

Economic Entanglements

Any effort to improve accountability for private firms under NCLB must address or at least acknowledge the larger contours and trends in the economic and political environment.9 Under the Bush administration, numerous regulatory changes have been introduced to protect the financial interests of industries by eliminating or changing federal regulations that cost employers and large companies money. For example, business lobbyists have argued for tighter restrictions on employees taking family and medical leave, citing economic losses to industry of reduced work hours. Large banks are evaluating credit and debt applications in ways that raise troubling issues around consumer protection, and the need for more judicious practices on the part of the industry when approving loans. Advocacy groups, such as environmental groups and employee protection groups have charged that under the current administration federal agencies responsible for regulating business practices are responding sluggishly if at all to complaints.

The design and logic of NCLB is deeply entangled with broader economic policy. If policymakers are to address the current tensions in protecting the rights of children under Title I to high-quality instruction, they need to address and advocate for changes in this larger arena. This can be accomplished in part by leveraging what is happening in public school districts across the country which have been at the forefront of recognizing and challenging the centrifugal forces of some education policy and economic policies. Communities across the United States and globally are questioning in tandem the burden of state policy and the spread of privatization in education.10

This work also involves action on the part of the academic community to pay deliberate attention to the underlying logic of policy trends. It involves helping the public see the drift that pulls policies (located in different sectors, such as health, education, and social work) in the same direction. By looking at the big picture, and looking across segments of public policy in our work, avenues for collective action become more possible.

More Transparency and Accountability

Policy is needed that provides institutional incentives for holding private firms accountable to the public goals of equity, participation, access, and quality in education. As a condition for receiving federal education funds, private firms must assume and be held responsible for ensuring appropriate and adequate supply of services to historically underserved populations, such as English learners, students with disabilities, and students living in communities with high concentrations of poverty.

More stringent rules are needed that will enable valid comparisons, both across different kinds of firms (such as the track records of various SES vendors in contributing to average gains of student achievement) and comparison among publicly designed and delivered and privately designed and delivered programs. At the minimum, in segments of the industry such as SES, for-profit firms should be required to use a common standardized benchmark for assessing the academic progress of students. Further, if it is important for public schools to be held accountable for having expected outcomes with students, similar standards with equally clear measures should be required of private providers. With the profit motive providing obvious incentives to compromise educational quality in class sizes, teacher qualifications, and standardization rather than differentiation of curriculum, it is doubly imperative—especially in an incentives-driven model—to insert policy mechanisms that adequately encourage the provision of high-quality offerings, set firm minimal standards of quality, and establish measures of accountability for performance. This is the especially true as for-profit providers draw limited federal funds away from the core offerings of public schools in high-needs areas.

Policy guidance that partly exempts private firms from upholding students’ civil rights while earning millions of dollars in public revenue is unethical. Ensuring compliance with civil rights mandates remains a public responsibility and there is a considerable gray area as new forms of contracting emerge. The problem is exacerbated by the fact that developing appropriate and meaningful services for historically underserved populations can be expensive, and therefore firms and the associations that represent them are likely to see little in the way of financial rewards or incentives for serving these populations.

The federal government can play a very aggressive role in establishing and enforcing the rights of these populations to access the financial resources intended for their benefit, as can the courts. In the context of SES, in the context of virtual charter schools that serve as choice options, in the context of assessment systems that incorporate very high stakes, students have the right to appropriate, high-quality public schooling resources even when and especially when these resources flow in and through intermediary organizations, such as for-profit firms.

Design for Collaboration

The current design of the law moves in the opposite direction, pitting local government against education service providers around control of Title I funds. In the case of SES, for example, Title I funds flow to private providers rather than to local school districts when districts have not made adequate yearly progress (AYP). Alternative frameworks are needed that encourage collaboration and cooperation among providers and local schools and governments. We have few levers or models available to encourage this collaboration. The design of NCLB compounds rather than reduces these tensions because it assumes that the relationship between private firms and public agencies primarily is unidirectional. Involving private firms (SES vendors, charter school operators, testing firms) in the design and delivery of Title I is framed as reforming public agencies and making them more efficient, while those private firms are not similarly subject to reform themselves.

Because of differences in local context, increasing collaboration may ultimately boil down to local efforts to create better contracts between education service providers and local governments. Tighter rules around contracting serve to make both public officials and private firms more accountable for outcomes. For example, there need to be clear restrictions barring public officials who award contracts to private firms aimed at helping their education agencies comply with NCLB mandates from then going on to assume lucrative positions in the industry.

Further discussion and development of these principles is needed. Designing strategies for improving the use of public funds must simultaneously move beyond conventional wisdom while carefully weighing what is politically and technically possible. Political philosophers have remarked that in contemporary policy debates, “the central question is not whether or not choice should be allowed” given that choice already exists in many forms. Instead, they urge us to ask questions such as “What kinds of public choice should be allowed and expanded? On what terms should be allowed? On what terms should it be publicly funded?”" For the sake of increased equity, we also need to be asking these questions when we spend public money on privately designed and delivered education services—not necessarily whether we should do so, but under what conditions, and with what specific and substantive regulations?

In examining the need for stronger policy and legal frameworks for protecting issues of equity in public education, it is important not to conflate completely the role of private firms and public agencies in matters of public education governance. The higher level of accountability for the public interest is part of what defines an agency as public. Neither is it appropriate, however, for federal education policy to exacerbate tensions between the public and private sectors around the governance of public education. How can education policy get more involved in the work of holding the business of education accountable to needs of historically disadvantaged and minoritized groups. The next chapter considers how to tackle this problem in the present historical moment.

 
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