The business of education

North Dakota’s Governor Burgum recently launched a task forces to study the state’s systems of K-12 and higher education. He was elected because of his experience in corporate management and ran on the promise to reinvent state government and to move the state’s educational system into the 21st Century. It will be interesting to see the recommendations which come from these studies.

The call for education and government to be run more like businesses is not new. Proponents of government’s and public institutions’ being run with the management and financial model of a corporation have argued against deficit spending and in favor of competition and market share at least since the 1980s. Private, for-profit colleges and investor owned charter school proliferated in the last couple of decades. The schools promised better education, more job readiness all while returning a profit on investors’ shares. In the past five years there has been a mass exodus from the privately owned, for profit educational enterprises. Many students who enrolled in for-profit colleges found themselves with massive debts and without a degree when these schools folded.

Some business principles do apply to public institutions and governmental bodies. Modern management as used by successful corporations may have application in the public sector. The basic purpose and mission of public institutions, however, is different than that of investor owned corporations.

Governor Burgum has said that he wants to treat the state’s voters as the “customers” we are. I would argue that we are not “customers” of state government. We are the owners of government. A corporation sells their products to customers by advertising, market manipulation and by creating a perceived need for their wares. Government, on the other hand, is charged with providing goods and services required for the common good.

The purpose of a corporation is to provide a return on investment to shareholders. Many corporations do this by keeping salaries low, hiring minimally trained employees for many positions, pressuring suppliers for always lower input costs and sometimes cutting corners on safety in the name of efficiency. If a corporation doesn’t make profits, it can be sold or shut down.

Public schools and universities and governments cannot simply go out of business. The return on investment by taxpayers and citizens is not financial, but something more nebulous. Educational outcomes have been proven to be difficult to quantify. Are the returns measured in graduation rates, skill levels, beginning salaries of graduates? Isn’t a better quality of life also a reason for learning?

The call to run schools and governments like business is often inconsistent. Deficit spending by public enterprises is decried as bad business, but most businesses operate with borrowed against future income and loans for capital investments. Most corporate executives are paid many times more than the rest of the employees. Yet when schools and governments pay the top people exorbitant wages, we complain. Statistically, more businesses fail every year than succeed.

Schools and government should be run more like a cooperative where the “customers” are the owners and the purpose of the coop is to provide for the common good of all owners or citizens.

Technology will change how information is transferred. But technology and information transfer is not the sole purpose of education. Schools should not simply be focused on job skills and technical training. Futurists predict that the majority of jobs in existence today will disappear in the next several decades. The purpose of education should be to teach children and young people to learn, to think critically, to communicate clearly, to know and understand history. Schools need to teach creativity, the freedom to try new things and how to learn from making mistakes. The “profit” of public schools is not to produce workers but to produce citizens who are involved in their communities, who dare to innovate and who appreciate art and music as well as understand science and math.

The public sector can learn from the management successes and failures of business. Effective schools, public institutions of higher learning and government bodies, however, are not and should not become businesses.