Education Privatization: The Basics Dr. Clive Belfield NCSPE

Why is the state involved in education? To meet society’s needs for equity and social order But, the state system may be too inefficient at producing education that meets these needs

What is privatization? Privatization is the transfer of an activity from the government to the private domain: Transfer of responsibility for providing education, from the state to private companiesTransfer of responsibility for providing education, from the state to private companies Transfer of responsibility for regulating education, from the state to individual familiesTransfer of responsibility for regulating education, from the state to individual families Transfer of financing of education from the state to individualsTransfer of financing of education from the state to individuals

Why might privatization be a good idea in theory? Private companies have stronger incentives to: Reduce costs Reduce costs Innovate Innovate Meet parents’ preferences Meet parents’ preferences Families have stronger incentives to: Choose the education that they feel is the best Choose the education that they feel is the best Individuals reap most of the benefits from education, so they should expect to pay for it independently

Evaluating Education Privatization in Practice To fully evaluate education privatization reforms, it is important to ask four questions: Does the reform offer freedom of choice? Does the reform offer freedom of choice? Does the reform generate social cohesion and civic order? Does the reform generate social cohesion and civic order? Is the reform fair to all social groups? Is the reform fair to all social groups? Is the reform efficient in delivering education? Is the reform efficient in delivering education?

Examples of Privatization Reforms There are many reforms to privatize US schools: Charter schoolingCharter schooling Home-schoolingHome-schooling VouchersVouchers Tuition Tax CreditsTuition Tax Credits Private SchoolingPrivate Schooling For-Profit Schooling and Educational Management OrganizationsFor-Profit Schooling and Educational Management Organizations Each of these reforms has different implications for improving school systems. For further information on each of these reforms, see the NCSPE home page at ncspe.org