Wall Street Journal
February 12, 1999

Charter Schools Are Starting to Prod
Public Schools Toward Competition

By JUNE KRONHOLZ
Staff Reporter of THE WALL STREET JOURNAL

MESA, Ariz. -- Here's the theory: Make neighborhood public schools compete for students with the charter schools that are opening around the country, and they'll improve. Just as surely as competition produced better cars, lower long-distance rates and stuffed-crust pizza, it will produce better schools, too.

Here's how it's working: For years, Mesa parents camped in overnight queues, entered their names in lotteries, took their places on waiting lists -- all to win their children a spot in one of the school district's two elementaries that used a back-to-basics curriculum. Then, a back-to-basics charter school opened in the neighborhood, and in short order, Mesa opened a third back-to-basics campus, will soon open a fourth -- and to make sure everyone knows about them, is taking out ads in the newspapers, the Yellow Pages and on movie-theater screens.

"That's the nature of a marketplace," says James Zaharis, superintendent of the Mesa Public School District, which sprawls across 200 square miles of reclaimed desert east of Phoenix. "You have to serve your client base."

Schools of Thought

Charters are taxpayer-funded schools that are managed independently of the school-district bureaucracy by parents, entrepreneurs or civic groups, among others. Thirty-four states have passed legislation allowing charters since the idea caught on six years ago, and President Clinton has called for 3,000 charter schools to be operating by 2002, up from 1,100 now.

Proponents tout charters for lots of reasons. They're nimble: In many states, charters aren't bound by teachers' union rules or school-district regulations, so they could become R&D labs for new teaching methods. They're an alternative for kids who don't fit into one-size-fits-all neighborhood schools: kids with discipline problems, pregnant girls, youngsters who need more structure or less structure, those who crave more math.

But with parents increasingly uneasy over the performance of the public schools -- yet reluctant to abandon them -- the sales pitch with perhaps the loudest ring is that charters will provide a jolt of competition that will force the public schools to improve. It's the stuffed-crust pizza theory: Faced with defections in their customer base, the schools will deliver a better product to regain their market share.

"It's not new theory," says Caroline Hoxby, who teaches the economics of education at Harvard University. She compares schools to community hospitals, another longtime public monopoly that has been forced into competition, with wider choices and cost cutting among the results. "It can work," she adds.

Mixed Results

How well, though, remains to be seen. Charter enrollments are still too small, charters are still too much on the fringe and too little money is being diverted to charters from public schools to worry most school boards. Prof. Hoxby predicts a school district would have to lose between 6% and 9% of its enrollment to charters to feel real pressure to compete. Arizona, with 274 charter schools, more than any other state, counts fewer than 4% of its youngsters in charters.

Then too, charters often take pressure off crowded public schools. And school districts, "by temperament and training and work rules and resources, aren't set up to manifest a free-market response," says Frederick Hess, a professor of education and government at the University of Virginia in Charlottesville. When 5% of Washington, D.C., children deserted the public schools for charters last fall, the school system -- among the most woeful in the country -- fought the chartering of new schools, but did little to win children back by firing awful teachers or improving reading scores.

Still, there are signs that school competition is beginning, even if this isn't the cola wars. Eric Rofes, a researcher at the University of California, Berkeley, studied 25 school districts for signs of competition, and found that a quarter of them made big changes to their programs because of charter schools. The Grand Rapids, Mich., school district started an environmental-sciences middle-school program when an environmental-sciences charter opened nearby. Lansing, Mich., began all-day kindergarten, and Williamsburg, Mass., began after-school programs when charters opened in their districts. After a charter in Orleans, Mass., bought vans to ferry its students to community activities, the public high school did the same thing.

Arizona's Wilson elementary school district, which goes only through eighth grade before feeding its students into Phoenix high schools, was so distraught that its graduates were dropping out of ninth grade that it chartered a high school of its own. One hundred youngsters enrolled this year; 92 are still there.

Anticipating Change

And then there's Mesa. Stretching across three cities, two Indian reservations and miles of farmland, the Mesa school district is the biggest in the state, with 71,000 children. Solidly middle class, predominantly white and English-speaking, Mesa students score above state and national averages on reading and math tests and on the college-entrance SAT exam. Dropout rates are well below the state average, and almost everyone who graduates goes on to college or technical school.

Still, sniffing the winds of change in Arizona, Mesa began thinking about competition even before the first charters opened in 1995. Under Arizona's open-enrollment laws, youngsters can attend their neighborhood school, any other school in the district, any other district that has vacancies or a charter. The state government, rather than local taxes, provides most school financing, and wherever a youngster goes to school, the state appropriation of about $4,000 a year follows him. With that incentive, schools with empty seats began recruiting for students in neighboring districts a few years ago, and districts quickly realized they faced problems if even a few students transferred -- leaving overhead costs the same, but suddenly cutting revenues.

Mesa also has a history of parent activism that keeps the district's attention. Twenty years ago, a group of Mesa parents who were dismayed by the teaching experiments then sweeping the country -- new math, team teaching, classrooms without walls -- petitioned the district to return at least one school to a traditional curriculum. The district's administrators and board of education refused -- until Mesa taxpayers elected a new school board.

With charters on the horizon, "we knew we were going to need some alternatives" to neighborhood schools, says Beverly Potter, director of the Sunridge Learning Center. Sunridge is a bankrupt strip mall that Mesa bought on the cheap and converted to a campus for four alternative schools in 1995. One of the first of those -- snuggled into space formerly occupied by a dry cleaner, a hair salon and a sandwich shop -- was a Montessori school.

Montessori is an elementary-school program where children learn at their own pace, in a classroom with kids of several ages. It favors a hands-on approach -- doing projects on the floor, rather than by reading books at a desk. "The parents were pushing for it," says Mrs. Potter.

But Montessori schools are expensive to start because of their out-of-the-ordinary supplies, and teachers are hard to find because they have different certificates from those in public schools. The idea languished until the charter-school law passed, and Mesa calculated the enrollment drain if a Montessori charter opened in the district. It quickly opened one Montessori that filled with 175 students, and then a second on the other side of town.

In the former chiropractor's office at Sunridge, Mesa also opened an alternative high school. In the evenings, 187 teenagers, some of them former dropouts, work at self-paced computerized lessons at the school. On Fridays, 170 home-schooled youngsters use the same building and technology for lessons their parents feel ill-equipped to teach. Under Arizona's financing formula, Mesa gets a pro-rated allocation -- $800 a year for each home-schooler -- for kids who otherwise might never appear on the school rolls.

With charters looming, Mesa also rethought its kindergarten program. For years, Mesa accepted only those youngsters who were 5 1/4 years old in September, even though Arizona was willing to pay it for children who were just five. "We thought they weren't ready for school," says Dr. Zaharis, the superintendent. But with Mesa's schools already full and the district growing by 9% a year in the late 1980s, adding up to 5,000 youngsters and four schools annually, it also had little incentive to take still more kids.

Then, charters began taking five-year-olds into kindergarten, and "in this new marketplace, we knew we had to compete," adds Dr. Zaharis, who uses terms like customer base, right-sizing and full-service when he talks about the new atmosphere wafting through his schools. Now, Mesa offers two years of kindergarten, giving parents the option after the first year of holding their children back or sending them on to first grade.
 

A Fundamental Threat

Mesa's biggest competitive threat, though, came from the back-to-basics schools, which are especially popular with the district's big Catholic and Mormon communities. Back-to-basics schools are flourishing around the country, and vary widely in how and what they teach. But Mesa's Ben Franklin back-to-basics program uses phonics -- the old sound-it-out technique -- to teach reading, and rote and memorization in math. It teaches history instead of the more value-laden social studies, and uses classic children's books instead of modern novels, which are heavy with tales of social wrongs. There's a dress code, and even kindergartners sit in desks, in straight rows that face a teacher and chalkboard.

Mesa had two Ben Franklin schools with 1,600 students, and waiting lists for both when a group of parents and teachers broke away to start the Ben Franklin Charter School five years ago. "We thought education would benefit from some competition," says Eddie Farnsworth, a lawyer and father of seven daughters who is chairman of the charter.

The charter's first campus is a cluster of tidy, sandy-colored aluminum portables that sit behind a little city museum and across a dusty intersection from the clearing where Mesa's Mormon pioneers first settled. Mesa calculates that 48% of the children it loses to charters leave for back-to-basics schools, so it quickly opened a third public Ben Franklin to compete with the Ben Franklin charter. The charter opened two more campuses, each with 500 youngsters. And now, the public Ben Franklin is clearing land for a fourth site. "That's just market-driven competition," shrugs Marc Mason, the comfortably disheveled principal of the public Ben Franklins.

Just how big that market may be isn't clear. Arizona's board of education says there are perhaps 25 charters in the Mesa district, and that statewide, another 60 or so charters will open next year. But many of the charters are small, and Mesa says it knows of only 911 youngsters who left its schools for charters last year. (It concedes there are others it can't track because they started charter school as kindergartners or left the district without asking for a transcript.)

Although Mesa's alternative schools like Montessori and Ben Franklin have their avid supporters, they account for less than 5% of the district's enrollment. And for all the interest in charters, Mesa says that one in five children who leave its schools for charters eventually come back. None of the new schools, charter or public alternative, is going to replace the neighborhood school with its convenience and social network, insists Dr. Zaharis.

Still, with the district's growth down to 1% a year, and a new high school ready to open with seats to spare, Mesa is wooing parents with ardor uncommon in a public service. All school employees, from bus drivers to principals, now take customer-service workshops. Two percent of their pay depends on whether they live up to customer-satisfaction and performance goals that range from returning phone calls to boosting reading scores.

Counselors are out looking for drop-outs, and urging them to enroll in the Sunridge evening high school. Mesa is expanding special programs and so-called theme schools: a magnet school with an arts curriculum now has 749 students. And the district has started an ad campaign to tout its academic and sports success.

Ads at the local cinemas cost a hefty $4,000 a month, but after a recent screening, parents from a neighboring district called to say they were switching their two youngsters to Mesa, crows a district spokeswoman. That means Mesa will gain $8,000 in state funds next year, another district will lose -- and they'll both have a reason to try harder the year after.