Comparisons of Private and Public Schools: What Can We Learn?

The previous chapter argues that comparisons of the performance of public and private schools can be misleading. This chapter examines in detail recent research providing such comparisons with the goal of clarifying what lessons can be drawn. The chapter also explains why the recent comparisons have puzzled, and in some cases infuriated, many public school educators. I begin by providing background on the best known of the recent studies. On April 7, 1981, at a conference attended by more than four hundred educators and the press, James Coleman announced the findings of research that he had conducted with Thomas Hoffer and Sally Kilgore on public and private high schools in the United States. Their principal finding was that Catholic schools and non-Catholic private schools are more effective in helping students to acquire cognitive skills than public schools are. Coming at a time of widespread criticism of public education and presidential support for tuition tax credits for families that use private schools, this finding was widely reported in the press and evoked a range of spirited reactions. Critics and supporters responded to Coleman, Hoffer, and Kilgore’s (henceforth CHK) work with articles and editorials with lively titles such as: “Coleman Goes Private (in Public),” “Lessons for the Public Schools,” “Coleman’s Bad Report,” and “Private Schools Win a Public Vote.” Over the succeeding months CHK’s work remained visible as critiques of their research and reanalyses of the data they used appeared in a variety of journals, in some cases accompanied by lengthy responses by CHK. Another wave of interest was sparked by the publication and subsequent reviews of CHK’s High School Achievement: Public, Catholic, and Private Schools Compared, in which they presented their final research findings. As a result of the wide range of responses to CHK’s work and the numerous symposia in which CHK have debated their critics in print, there is now ample material available to any reader interested in forming a judgment about the quality of the research that produced their main conclusion.

Public Subsidies for Private and Public Education: The Dutch Case

The possibility of “privatizing” education and other quasi-public services has been widely discussed in the United States today, and in other chapters of this volume. Policies such as a voucher or tax credit system, which would give public subsidies to private schools, are examples of privatization proposals. Many people feel that such policies would bring variety, choice, consumer responsiveness, and greater efficiency to our schools. Others fear that they would increase social segmentation, damage the public schools, and enable wealthy people to receive a better education for their children privately, but (partially) at the public expense. To expore these issues, this chapter examines the experience of the Netherlands, a country which, in effect, has had a voucher system in education for many years. In Holland, education and most health and social services are financed by the government but delivered by private nonprofit organizations, often religious in nature. As shall become evident below, the Dutch educational system avoids many of the possible pitfalls of privatization. This is due partially to particular mechanisms the Dutch have adopted to avoid these problems, which could conceivably be replicated here, and partially to broader structural features of the Dutch educational system and its role within society, which could not readily be replicated. The chapter proceeds as follows: The first section summarizes the historical background of the public-private division of responsibility for education in the Netherlands. The policy of privatization is seen as a response to diverse tastes about education, stemming from basic cultural (religious) differences, in a political setting where no one group was in a position to impose its preferred product variety on the others. This is consistent with a hypothesis I am testing in a multicountry study: that degree of reliance on private provision of quasi-public goods is positively related to cultural (particularly religious and linguistic) heterogeneity in democratic societies. It also is relevant to the discussions, found in several previous chapters, of why families choose private schooling.

Cross-Subsidization in Higher Education: Does it Pervert Private Choice and Public Policy?

During the 1950s and 1960s American higher education underwent a major change in size and structure, with a vast expansion in enrollments and increased emphasis on graduate training and research, relative to undergraduate teaching. This chapter explores the implications of this changing product mix for our understanding of costs, subsidies, financing methods, and decision-making structures in higher education. We ask the following questions: . . . 1. How did universities finance their production of graduate training and research (G and R), which usually do not bring in enough revenues to cover their costs? 2. What differences, if any, were there in the behavior of public and private universities regarding the shift toward G and R? 3. How did this change in product mix affect relative costs in universities versus two- and four-year colleges, which still specialize in undergraduate teaching? 4. What are the implications of this analysis for our understanding of the costs and benefits of education and for future public policy? For example, to what degree do state legislators and private donors control the product mix in higher education and who ultimately gains from the resources they provide?. . . Specifically, I characterize universities as multiproduct nonprofit organizations (NPOs) engaging in the teaching of undergraduates as a profitable activity, in order to subsidize graduate training and research, which are loss-making but yield direct utility to them. Cross-subsidization by NPOs, then, is an alternative to direct government funding of socially beneficial goods such as research, under certain circumstances. With certain differences that we shall note, this characterization applies to public and private institutions, and the term NPO is used for both in this chapter. At private universities, during the 1950s and 1960s, profits were generated mainly by huge tuition increases, made possible by rapidly rising demand, as we shall see below. State universities, too, engaged in cross-subsidization to finance G and R. However, since state universities often do not control or retain tuition revenue, their main device was a decrease in teaching cost per student.

Public Policy Toward Private Schools: A Focus on Parental Choice

Not since the 1920s has our society faced so much controversy about public policy toward private elementary and secondary schools. Then, the major issue was whether private schools should be allowed to exist as alternatives to public schools. That issue was resolved in Pierce v. Society of Sisters, in which the Supreme Court upheld the right of parents to choose private schooling, and thus foreclosed a public monopoly. Today, our mixed system of private and public elementary and secondary education confronts increasing pressures for both fiscal and regulatory change. Most prominent in public debate are proposals for tuition tax credits and voucher systems and challenges to government regulation of private school teacher qualifications, curriculum, and admission practices (especially as the latter affect racial segregation). Two major public policy issues have replaced the issue of whether private schooling should exist at all: (1) To what extent should government encourage or discourage the choice of private schooling, that is, what balance between public and private schooling should government try to achieve? (2) What differences between private and public schooling should government promote or prohibit? Despite this change in emphasis, todays debates echo those of the 1920s in many respects. Just as the proponents of the 1920s laws restricting private schools feared that those schools would harm efforts to Americanize the children of immigrants, some argue today that private schools exacerbate social, economic, racial, religious, and ethnic divisions within the society and that aiding private schools will increase such undesirable effects. Now, as then, advocates of private schooling rest their arguments on the rights of parents to direct their children's education and on the benefits to society of diversity in schooling. Most dispute claims that private schools increase social stratification to any greater degree than do the public schools or that they are less effective in creating good citizens. One of the major factors that distinguishes today's debates from those of the 1920s is the greater attention paid to the impact of private schools on the quality of education.

Private Choice and Public Policy in Nonprofit Education

As several other volumes in this series on nonprofit organizations help us appreciate the importance of the private nonprofit sector in U.S. society, economics, and politics, we surely must recognize the weight of education within that sector. Quantitative profiles of the nonprofit sector are still sketchy, but the best figures show that education is one of the big four arenas of nonprofit activity, along with health, social services, and religious organizations, and perhaps (with health) even one of the big two. Data on salaried employees are illustrative. Private education’s total of more than one million puts it second behind health within a nonprofit sector that accounts for 8% (and growing) of these employees. And yet, even such figures give very conservative estimates of the significance of the nonprofit sector generally, and education in particular. For one thing, institutions such as private schools often rely heavily on voluntary work. More important, these institutions obviously serve many millions more than they employ. Turning to education alone, enrollment figures give an idea of the private nonprofit sector’s size. (By “schools” we will mean primary and secondary schools; see note 11.) As Erickson’s chapter reports, private schools hold at least 10% of total school enrollments, their more than five million students spread out over roughly 18% of the total system’s schools. And Geiger’s chapter reports that the private share is even more impressive at the higher-education level. There, the more than two million private students account for roughly 22% of total enrollments, distributed over roughly half the system’s institutions. Yet most observers of private education, including the two just cited, would argue that such numbers understate its significance. This significance derives from offering something different from the public sector, something often thought superior and influential, but something at least desired and supported by a substantial number of actors. In any case, behind such figures lies an intricate maze of private choices, made by students, their families, and others, as well as an intricate maze of public policies, at once responding to and shaping those private choices.

Finance and Function: Voluntary Support and Diversity in American Private Higher Education

A revolution has taken place in the past generation in American assumptions about higher education: It has virtually become a universally accepted responsibility of government to make it possible for all qualified students to attend college. This shift in opinion has been translated quite tangibly into the bricks and mortar of greatly expanded state and municipal university systems, as well as an extensive network of local community colleges. As a result, the 50% of student enrollments that the public sector claimed in 1950 has grown to nearly 78% in 1985. By the somewhat artificial measure of “market share,” the private sector would seem to have lost more than half of its clientele. In the more meaningful measure of actual students, however, private colleges and universities have more than doubled their enrollments during this period. In fact, during the latter part of the 1970s the private sector added more students than did its much larger public counterpart. The private sector clearly still plays a vital role in our system of higher education. But just what might that be? This simple question admits of no simple answer. More than 1500 private colleges and universities cater to students of widely differing ages, aspirations, and abilities. They offer some 300 bachelor’s degrees, not to mention additional programs on the graduate-professional level. From another angle, one might note that public higher education is a responsibility of the states. Thus, there are actually fifty public sectors in this country, each of which (save that of Wyoming) is complemented by an array of private institutions. Not all of these state private sectors are terribly different from those of neighboring states; but regional contrasts are nevertheless stark between, for example, states where private higher education has evolved alongside large and prestigious state universities and those eastern states where private schools have long been predominant. The functions of private higher education in the United States are obviously complex.

Alternative Private-Public Blends in Higher-Education Finance: International Patterns

Several of the preceding pieces in this volume have analyzed policy debates concerning the financing of school systems. The policy debates are no less intense when the focus turns to higher education. Many arguments run in parallel fashion between educational levels. Some differ by matters of degree, while others differ fundamentally. Whatever the parallels in argumentation, there are striking differences in actual practice between levels. In the United States, private schools depend much more on private finance than private higher education does, while public schools depend much more exclusively on public finance than public higher education does. The panorama appears to be different in many other nations that have both private and public sectors. Their private schools seem more likely than private universities to receive public funds and their public universities seem nearly as likely as public schools to depend almost exclusively on public funds. In U.S. higher education there is considerable debate concerning the appropriate blend of private and public financing for each sector. The problem has become especially acute as enrollments decline, federal and state governments seek to cut costs, and concern spreads about higher education's equity effects in serving privileged groups out of general revenues. There is a good deal of reference to different economic theories, social values, and political constraints. But there is almost no consideration of how policymakers elsewhere have approached the problem. Of course, financial policy outside the United States is made within private-public parameters that are different from those faced by U.S. policymakers, but cross-national comparisons may help stimulate, or even orient, crossstate comparisons within the United States. More importantly, cross-national experience could at least help put our policy choices into perspective. For example, few in the United States support either 100% private or 100% public funding. An economic theory that tends to favor private over public funding may simply tell us to increase our present private share if that share is “low.”

“Private” and “Public”; Analysis Amid Ambiguity in Higher Education

When a well-bred Yale alumnus like William F. Buckley, Jr., sardonically suggests that his alma mater donate itself to the state of Connecticut (“To tell the truth, I don’t know that anything much would happen.”), some conventional assumptions require reexamination. Chief among these is the much ballyhooed distinction between “private” and “public.” Analysis reveals serious ambiguities. We lack an agreed-upon notion of what defines our types. Different observers define the private-public split by different criteria. In fact, criteria are usually implicit and fuzzy, but even when they are explicit and clear, they vary. What defines a private institution for one observer does not do so for another. And the problem goes beyond this definitional conflict. As will be shown at least for higher education, no behavioral criterion or set of criteria consistently distinguishes institutions legally designated private from institutions legally designated public. Surely this volume’s chapters, on both schools and universities, arrive at no such criteria; instead, as discussed below, several provide evidence of increasing private-public blurring. In a desperate attempt to reassert its distinctiveness, the U.S. private higher-education sector has recently rebaptized itself “the independent sector.” The new nomenclature, while it brings private higher education under a terminological umbrella widely used by the U.S. nonprofit world, contributes nothing to definitional clarity. It is simultaneously intended to legitimize the private sector’s claim to the public dollar (by downplaying privateness) and yet to distinguish that sector from the public sector by emphasizing its autonomy from government. The first aim, of course, undermines the second. Looking abroad seems to frustrate yearnings for clear definitional usage. England, for example, long noted for its paradoxical labeling of private and public secondary education, offers an ambiguous picture at higher levels as well. All the universities, even those financed over 90% by the government, form what is still frequently called the autonomous or private sector, distinct not from public universities but from the technical sector of higher education (which is consensually considered public). Increasingly, however, one hears England’s universities identified as public.

Federal Policies for Private Schools

The appropriate governmental relationship with private education has been the subject of controversy for many years. Some argue that parents should be able to choose private or public schools for their children without financial sacrifice and that the limitations on public financial support for private schools should be eliminated. Others maintain that financial support for private education is an improper use of public funds, that aiding private schools is unconstitutional, and that aid to private schools could have undesirable social consequences. Even among those who endorse some private school support, there are major disagreements over what the limits should be, what forms of aid are desirable, and what should be expected of private schools that receive public support. The policy debate concerning federal aid for private schools has shifted during recent years. Where once it focused on including requirements for program services to private school students in federal education legislation, most of the current debate centers around new types of aid arrangements which would enhance educational choice. The impetus behind this refocused policy debate is threefold. First, the federal government is funding limited services to children attending private schools. The major federal elementary and secondary education programs include provisions requiring the equitable provision of services to eligible students attending private schools. As a result, there is now an established relationship between the federal government and private schools. Second, over the past few years there has been a significant increase in concern about the quality of American public education and the effect that a virtual public monopoly over education has on educational achievement. Third, the concern that without federal assistance private schools would disappear has subsided. As shown in the Erickson contribution to this volume, the latest available figures indicate that enrollments in private schools as a percentage of total elementary and secondary school enrollments have stabilized. This paper traces the evolution of the federal role in the area of private elementary and secondary education finance and examines critical issues that relate to the possible expansion of federal funding for private education.

Comparisons of Private and Public Schools: The Critical Role of Regulations

The rising cost of publicly provided social services had led many analysts to conclude that government agencies are inefficient suppliers of services, both because they do not maximize output from existing resources and because they respond only very sluggishly to changes in the level and composition of demand. These analysts often couple this diagnosis with the prescription that private nonprofit organizations should play a larger role in delivering many social services. In debates over the wisdom of this type of reform, advocates often introduce statistical evidence on the comparative performance of public and private organizations, concluding as a rule that the performance of the private providers is superior. The central theme of this chapter is that much of the performance differences between public and private providers of social services stems from differences in the regulations they face, and the resulting differences in the characteristics of the clients they serve. The evidence in support of that conclusion presented here focuses on one social service, education. The reasons are twofold: The data on the determinants of performance in that sector are of relatively high quality and the issue of governmental policy toward private sector providers of educational services is currently a topic of much public interest. But, as I intend to show, the themes developed in the context of the education sector have relevance in other sectors as well, especially as one confronts the problem of designing an appropriate set of regulatory policies. A recent, highly publicized study reported that the education offered in private high schools is of higher average quality than the education offered in public high schools. The analysis in this section demonstrates that a large part of the observed quality difference is due to differences in the composition of student bodies, and that these differences stem to a significant extent from differences in the regulations pertaining to public and private schools.