Private vs. Public School – A Policy Perspective
Definitions
We make a distinction here between Privately Run Public School often referred to as a Charter or Independent School, and a Publically Subsidized Private School. Models for both of these exist in vast majority of the world. Historically, the only examples of schools in Iceland outside of the publically run schools have been a small handful of publically subsidized private schools. For the first time last year, a new experimental charter or independent school was created whereby a public school was bid out for a private party to run. It was a dramatic step in Iceland because of a lack of knowledge and tradition of Independent Schools, but also because of the fair but uncustomery bid process by which the service providers were selected.
Advantages and Disadvantages
There are some disadvantages to independent schools but none that cannot be overcome with the right regulatory and financing policies. For example, ensuring equal access of education whether a child´s family is rich or poor can be easily addressed by policies through non discrimination policies in the intake of the children and equal funding of the independent sector.
Policy makers are finding out that they not only can overcome the inequalities, private provisions in education can help generate better results from the disadvantaged students. Independent schools are well known for their impact on generaring a healthy competition, innovation and variety in all schools. Independent schools tend also to be more efficient in the use of resources, and over time, a country can save funds by lowering expectations also from the public sector schools. More and more evidence shows, independent schools also outperform public schools in terms of test scores, drop out rates and academic achievements even after controlling for differences in student intake (see for example, Learning from Europe).
Privatization of Education in Iceland
Icelandic educational policy does not accept privatization of compulsory schooling as a given. Consequently, less than a small fraction of one percent of all Icelandic children are in private schools, which are all subsidized by the public sector. All of the five such existing schools are in the city of Reykjavík and they are over a decade to a century old.
Last year, for the first time in Icelandic history, a publically funded independent school (Charter school in the US definitions) was created in the city of Hafnarfjörður by a pro-privatization government. Just a year later, the school was taken over by the city again when a new government completely opposed to privatization came into majority. Even in its first year, the school became quite popular with its children and parents with over 95% percent of the parents showing a moderate to high approval rating in a Gallup survey. There were opposing forces though, and the country´s teachers´ union which has been quite opposed to any private participation in education, worked against the school´s existence. Subsequently and throughout this last year, there has been much debate nationally on the pros and cons of privatization in education.
The main advantage of a private school in Iceland is that parents have a choice whether they bring their children to that school or not and for that choice, they have to pay at least some of the costs. In many countries, however, choice is available in the public sector itself or in publically funded private schools, so that parents do not have to pay additional costs to afford a choice.
If the hverfi schools in each town, and better still, across neighboring towns could open up to each other and children be allowed to move between these schools, data from other countries shows that this alone would create some competitive spirit among the schools. If, at the same time, the budgeting for each school was done on the basis of the number of children, as many towns in Iceland are now beginning to do, this should further create the circumstances for innovation and variety in schools, even without private sector participation. However, most innovation and benefit will come when there will be independently run schools that are fully subsidized by the government and no differences are created between them and the publically run schools. We discuss some country experiences below.
The Dutch Example
An outstanding example of this is the Netherlands where over 70% of the children in primary and secondary schools are in independent schools. International comparisons have shown the Dutch students to perform among the best in Europe (IEA and TIMMS 1997, 2000). Furthermore, a relatively high degree of competition has evolved between the large number of schools, resulting in a comparatively high degree of variety and diversity.
The Dutch education system is centered around the user, providing children and parents a nationwide choice of either independent or public (government-run) schools. Both public and independent schools receive the same kind of funding from the government. Moreover, there are very few barriers for independent providers/organizations who wish to enter the education market by setting up new schools. The outcome has been a generally user driven education system where education is provided mainly by independent organizations while being financed by the government.
Freedom of choice is not a new phenomenon in Holland. Freedom has three aspects:
The per pupil cost of public and private schools does not differ much. Compared to other OECD countries, government spending per pupil, in 1998 was equal to 3795 US $ in primary education and 5304 US$ in secondary education.
Parental ‘topping up’ is neither required nor allowed. The government pays 100% of the cost of educating.
The amount of money that follows a child is not identical but is weighted. Children from disadvantaged families and poorer neighborhoods receive extra funding. The system is different from the voucher system in that the payments to a school are invisible to the parent but are given to the school automatically. Investements in building and maintenance are also provided by the government equally to both public and private schools.
The Danish Example
Denmark spends a large proportion of its GDP on education, 8.3% in 1998. Per pupil expenditure in Denmark is among the highest in OECD countries. Independent schools receive funding based on the number of pupils. Not all parents pay the top-up fees. Poorer families can apply for a free place in the independent schools and are exempt from all user fees.
The increasing dominance of the independent schools in Denmark since early 80´s is challenging the public schools. Now, nearly 12% of the children attend independent schools. Indeed, allowing parents to send their children to independent schools and have a large proportion of the cost covered by central government has clearly paved the way for a real alternative to the public schools.
Even though there is absolutely no reason why per pupil budgets cannot be set in public schools, no such reform has been implemented largely due to resistence from teachers´ union and the local authorities who feared a significant loss of power. (CHECK WITH STEINUNN if they did this in Hafnarfjordur and get exact details and per pupil costs, what about differences in areas). GET RECENT DATA ON DENMARK. Samband Islands Svetafelag (union for municipalities).
Per pupil expenditure in public and independent schools in Denmark
Source: Danish Ministry of Education, 1999. ISK Conversion using current exchange rate, not adjusted.
The liberalized supply-side policy applying to independent schools in Denmark has resulted in great diversity among independent schools, which according to OECD is unparalled in the world. (Hepburn 1999). During the 1990´s this policy resulted in the establishment of 39 independent schools, while simultaneously some 171 public schools were closed down – an 8% increase in the number of independent schools and a 6% decrease in the number of public schools (Danish Ministry of Education, 1999).
In terms of the demand side, that is, parent choice, the policies applying to public and independent sector are very different. In the public sector there are at least two insitutional barriers to entry. First is that the parents right to choose is not secured by law. The second is that local councils can overrule applications from parents wishing to move their children to outside the catchment area (the equivalent of Hverfi in Iceland). Opting for independent schools therefore is an increasingly popular option. In November 2001, when for the first time a study was done to evaluate the performance of students in public versus independent schools. The results show that students in independent schools perform better than public schools. Among the 50 best performing schools in Denmark 22 are independent schools (www.uvm.dk/_skoledata). Denmark is one of the few countries in OECD that does not participate in TIMSS (International Mathematics and Science Test).
Although parents are generally satisfied with public schools, parents on average are MORE satisfied in independent schools. Indeed a remarkable 86% of the parents say they are satisfied or very satisfied with their school (Danish Ministry of Education, 2000). More specifically, when parent satisfaction is compared on various issues, such as teacher skills, and parent influence on schools, parents with children in independent schools are more satisfied than parents with children in public schools on almost all issues (Danish Ministry of Finance 2000). This suggests that independent schools are more responsive to parent demand than public schools.
Conclusion – All in all, the independent school sector and the reform of the vocational schools in Denmark provide fine examples of how to combine parental choice with a per capita system of finance resulting in desirable outcomes such as lower per pupil costs, higher pupil performance in exams, and higher parent satisfaction. For-profit companies in either country cannot receive government funding. While 70% of students in the Netherlands and 12% in Denmark are attending independently run but publically funded schools, the OECD average is 10.6% of primary and secondary.
England spends about 5% of its GDP on education which is about the average of OECD countries. The privately funded sector only accounts for about 7% of primary and secondary children. Although private schools are also closely regulated, they do not have to follow the national curriculum, and have more freedom concerning teacher employment and other administrative matters (Walford, 2000).
Rather than increasing standard policy of raising spending in public schools, the pioneering policies in other countries show us that modest changes to the incentive and organizational structures can produce dramatically better results.
Education is one of the most important issues facing any government and increasingly parents worldwide are demanding greater choice. In a recent BBC report on education in the UK the conclusion was that ‘the key to educational reform is the redesigning of the system around the user: this will entail a shift away from producer centered systems towards consumer centered system of education.
Definitions
We make a distinction here between Privately Run Public School often referred to as a Charter or Independent School, and a Publically Subsidized Private School. Models for both of these exist in vast majority of the world. Historically, the only examples of schools in Iceland outside of the publically run schools have been a small handful of publically subsidized private schools. For the first time last year, a new experimental charter or independent school was created whereby a public school was bid out for a private party to run. It was a dramatic step in Iceland because of a lack of knowledge and tradition of Independent Schools, but also because of the fair but uncustomery bid process by which the service providers were selected.
Advantages and Disadvantages
There are some disadvantages to independent schools but none that cannot be overcome with the right regulatory and financing policies. For example, ensuring equal access of education whether a child´s family is rich or poor can be easily addressed by policies through non discrimination policies in the intake of the children and equal funding of the independent sector.
Policy makers are finding out that they not only can overcome the inequalities, private provisions in education can help generate better results from the disadvantaged students. Independent schools are well known for their impact on generaring a healthy competition, innovation and variety in all schools. Independent schools tend also to be more efficient in the use of resources, and over time, a country can save funds by lowering expectations also from the public sector schools. More and more evidence shows, independent schools also outperform public schools in terms of test scores, drop out rates and academic achievements even after controlling for differences in student intake (see for example, Learning from Europe).
Privatization of Education in Iceland
Icelandic educational policy does not accept privatization of compulsory schooling as a given. Consequently, less than a small fraction of one percent of all Icelandic children are in private schools, which are all subsidized by the public sector. All of the five such existing schools are in the city of Reykjavík and they are over a decade to a century old.
Last year, for the first time in Icelandic history, a publically funded independent school (Charter school in the US definitions) was created in the city of Hafnarfjörður by a pro-privatization government. Just a year later, the school was taken over by the city again when a new government completely opposed to privatization came into majority. Even in its first year, the school became quite popular with its children and parents with over 95% percent of the parents showing a moderate to high approval rating in a Gallup survey. There were opposing forces though, and the country´s teachers´ union which has been quite opposed to any private participation in education, worked against the school´s existence. Subsequently and throughout this last year, there has been much debate nationally on the pros and cons of privatization in education.
The main advantage of a private school in Iceland is that parents have a choice whether they bring their children to that school or not and for that choice, they have to pay at least some of the costs. In many countries, however, choice is available in the public sector itself or in publically funded private schools, so that parents do not have to pay additional costs to afford a choice.
If the hverfi schools in each town, and better still, across neighboring towns could open up to each other and children be allowed to move between these schools, data from other countries shows that this alone would create some competitive spirit among the schools. If, at the same time, the budgeting for each school was done on the basis of the number of children, as many towns in Iceland are now beginning to do, this should further create the circumstances for innovation and variety in schools, even without private sector participation. However, most innovation and benefit will come when there will be independently run schools that are fully subsidized by the government and no differences are created between them and the publically run schools. We discuss some country experiences below.
The Dutch Example
An outstanding example of this is the Netherlands where over 70% of the children in primary and secondary schools are in independent schools. International comparisons have shown the Dutch students to perform among the best in Europe (IEA and TIMMS 1997, 2000). Furthermore, a relatively high degree of competition has evolved between the large number of schools, resulting in a comparatively high degree of variety and diversity.
The Dutch education system is centered around the user, providing children and parents a nationwide choice of either independent or public (government-run) schools. Both public and independent schools receive the same kind of funding from the government. Moreover, there are very few barriers for independent providers/organizations who wish to enter the education market by setting up new schools. The outcome has been a generally user driven education system where education is provided mainly by independent organizations while being financed by the government.
Freedom of choice is not a new phenomenon in Holland. Freedom has three aspects:
- Freedom to establish schools, which means anyone can set up a school,
- Freedom of conviction, meaning that the principles on which the school was founded could reflect educational, religious or political conviction or ideology regardless of the beliefs of the state or church.
- Freedom of organization which meant that the organization of teaching and teaching methods could be decided upon by the school.
The per pupil cost of public and private schools does not differ much. Compared to other OECD countries, government spending per pupil, in 1998 was equal to 3795 US $ in primary education and 5304 US$ in secondary education.
Parental ‘topping up’ is neither required nor allowed. The government pays 100% of the cost of educating.
The amount of money that follows a child is not identical but is weighted. Children from disadvantaged families and poorer neighborhoods receive extra funding. The system is different from the voucher system in that the payments to a school are invisible to the parent but are given to the school automatically. Investements in building and maintenance are also provided by the government equally to both public and private schools.
The Danish Example
Denmark spends a large proportion of its GDP on education, 8.3% in 1998. Per pupil expenditure in Denmark is among the highest in OECD countries. Independent schools receive funding based on the number of pupils. Not all parents pay the top-up fees. Poorer families can apply for a free place in the independent schools and are exempt from all user fees.
The increasing dominance of the independent schools in Denmark since early 80´s is challenging the public schools. Now, nearly 12% of the children attend independent schools. Indeed, allowing parents to send their children to independent schools and have a large proportion of the cost covered by central government has clearly paved the way for a real alternative to the public schools.
Even though there is absolutely no reason why per pupil budgets cannot be set in public schools, no such reform has been implemented largely due to resistence from teachers´ union and the local authorities who feared a significant loss of power. (CHECK WITH STEINUNN if they did this in Hafnarfjordur and get exact details and per pupil costs, what about differences in areas). GET RECENT DATA ON DENMARK. Samband Islands Svetafelag (union for municipalities).
Per pupil expenditure in public and independent schools in Denmark
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Source: Danish Ministry of Education, 1999. ISK Conversion using current exchange rate, not adjusted.
The liberalized supply-side policy applying to independent schools in Denmark has resulted in great diversity among independent schools, which according to OECD is unparalled in the world. (Hepburn 1999). During the 1990´s this policy resulted in the establishment of 39 independent schools, while simultaneously some 171 public schools were closed down – an 8% increase in the number of independent schools and a 6% decrease in the number of public schools (Danish Ministry of Education, 1999).
In terms of the demand side, that is, parent choice, the policies applying to public and independent sector are very different. In the public sector there are at least two insitutional barriers to entry. First is that the parents right to choose is not secured by law. The second is that local councils can overrule applications from parents wishing to move their children to outside the catchment area (the equivalent of Hverfi in Iceland). Opting for independent schools therefore is an increasingly popular option. In November 2001, when for the first time a study was done to evaluate the performance of students in public versus independent schools. The results show that students in independent schools perform better than public schools. Among the 50 best performing schools in Denmark 22 are independent schools (www.uvm.dk/_skoledata). Denmark is one of the few countries in OECD that does not participate in TIMSS (International Mathematics and Science Test).
Although parents are generally satisfied with public schools, parents on average are MORE satisfied in independent schools. Indeed a remarkable 86% of the parents say they are satisfied or very satisfied with their school (Danish Ministry of Education, 2000). More specifically, when parent satisfaction is compared on various issues, such as teacher skills, and parent influence on schools, parents with children in independent schools are more satisfied than parents with children in public schools on almost all issues (Danish Ministry of Finance 2000). This suggests that independent schools are more responsive to parent demand than public schools.
Conclusion – All in all, the independent school sector and the reform of the vocational schools in Denmark provide fine examples of how to combine parental choice with a per capita system of finance resulting in desirable outcomes such as lower per pupil costs, higher pupil performance in exams, and higher parent satisfaction. For-profit companies in either country cannot receive government funding. While 70% of students in the Netherlands and 12% in Denmark are attending independently run but publically funded schools, the OECD average is 10.6% of primary and secondary.
England spends about 5% of its GDP on education which is about the average of OECD countries. The privately funded sector only accounts for about 7% of primary and secondary children. Although private schools are also closely regulated, they do not have to follow the national curriculum, and have more freedom concerning teacher employment and other administrative matters (Walford, 2000).
Rather than increasing standard policy of raising spending in public schools, the pioneering policies in other countries show us that modest changes to the incentive and organizational structures can produce dramatically better results.
Education is one of the most important issues facing any government and increasingly parents worldwide are demanding greater choice. In a recent BBC report on education in the UK the conclusion was that ‘the key to educational reform is the redesigning of the system around the user: this will entail a shift away from producer centered systems towards consumer centered system of education.