Only Business Leaders Can Drive Sustained K-12 Improvement

Here in Colorado, we spend $9 billion dollars each year on our K-12 schools. Our four-year high school graduation rate is 79%. But just 25% of those graduates met all four college and career ready benchmarks on the 2016 ACT (note that these are the low benchmarks, not the higher ones for prospective majors in science, technology, engineering, or math). That is a stunning gap.

The consequences of each year sending tens of thousands of unprepared kids into a harshly competitive world are already clear. They include rising social safety net spending (leaving less for infrastructure, higher education and other needs), worsening inequality, increasing social and political conflict, and growing pressure for more steeply progressive taxes on individuals and businesses.

In an age of rapidly improving technology and relentlessly intensifying global competition, these consequences will soon grow exponentially worse if K-12 education doesn’t dramatically improve.

In his book, “The Knowledge Capital of Nations”, Stanford’s Rick Hanushek concludes that in today’s digital economy, “long-run economic growth is overwhelmingly a function of the cognitive skills of the population.”

Specifically, Hanushek has estimated that improving K12 performance in Colorado could double the size of the state’s GDP. If we want a growing economic pie in the future (which would surely help us to address many of the other problems we face), then we cannot avoid the urgent need to do a much better job of educating our children in the present.

A recent bipartisan report from the National Conference of State Legislators put it bluntly: “Most state education systems are falling dangerously behind the world in a number of international comparisons and on our own National Assessment of Educational Progress, leaving the United States overwhelmingly underprepared to succeed in the 21st century economy” (“No Time to Lose”, August 2016).
In light of the dire situation we face, it makes no sense for K-12 leaders to keep comparing their performance to the past. As many failed companies could tell them, celebrating a slight improvement in results versus last year is self-deluding when the gap between current performance and future requirements is rapidly widening.

With few exceptions (e.g., Alberta and Massachusetts), most states have at best seen minor improvement in K-12 performance over the past decade, despite increasing spending on schools and a host of new legislation and policy changes.

If we are ever going to improve K-12 and avoid the dystopian future that lies ahead, we must confront the root causes of the problem and what it will take to overcome them.

In another column, I have addressed the first issue in depth (see Why Do So Many School Districts Fail to Improve?).

In this one, I’ll make an equally important point based on experiences in Alberta and Massachusetts: K-12 performance will never substantially improve unless and until states’ business communities get far more deeply, aggressively, and publicly engaged with education leaders than they have been in the past.

Regardless of location, K-12 leaders traditionally make the same three requests of business leaders: (1) Give us donations; (2) Testify at the legislature in favor of higher taxes and spending on education (with no links to better achievement results); and (3) Offer internships and jobs to our graduates (regardless of how well they are prepared for them).

Many K-12 leaders also stress their desire to “collaborate” with business leaders. What too many business leaders don’t understand is that they are speaking in code.

In the K-12 context the admonition to “be collaborative” means the same thing that it does when you hear it at a company in grave need of a turnaround. Its real meaning is “avoid conflict”, lest you be accused of the grave offense of “not being collaborative.” But avoiding conflict also means avoiding painful change, which inevitably results in no performance improvement.

In private sector turnarounds, there are always other options, like Chapter 11 or the sale or liquidation of the company. Not so, unfortunately, in the case of public school districts.

In too many cases business leaders go along with K-12’s game, trying to be collaborative and complying with the district’s requests. Only later do they ask in frustration why district performance (yet again) hasn’t improved, and why even more of their job postings are failing to attract qualified candidates.

Here’s what I tell them.

On the bright side, it isn’t hard to find high performing schools, as measured by achievement growth (a function of school value added), rather than achievement proficiency (which is often largely a function of student socio-economic characteristics).

High performing schools are almost always characterized by the high expectations they have for every student, and the strong supports they provide (usually in partnership with the broader community) so that every student can meet them. And in these schools, everyone usually walks the talk; there is a refreshing lack of hypocrisy. These are the schools that give us hope, and prove that substantial K-12 performance improvement is possible, if still far too rare.

Unfortunately, it is far more challenging, almost to the point of impossibility, to find high performing school districts. As Nicholas Bloom and other researchers have shown (e.g., “Management as Technology?”), good management practices are critical to high performance. And too many school districts lack them.

Contrary to what K-12 leaders claim, in most cases a lack of resources isn’t the core problem. The painful truth is that districts usually confuse financial accounting with cost accounting. While they pride themselves on making their general ledgers transparent, they have only a minimal understanding of how their economic costs (including both direct expenses and the value of employee time) are related to the activities they perform, and the impact these activities have on student outcomes.

If you don’t believe me, ask a superintendent how much their district spends on teacher professional development (again, including both direct expenses and the value of employee time), what metrics they use to measure the performance of this activity, and what return on investment they receive on it. Few if any will be able to answer that question, even though multiple studies (e.g., “The Mirage”, by the TNTP organization) have found that the economic costs are very high and the returns are either low or negative.

Like any underperforming organization, K-12 leaders only deserve more taxpayer funding when they can demonstrate (rather than simply claim) they are using their current resources efficiently, and when they have begun to show improved performance results. And any additional resources invested in K-12 should be clearly linked to even higher performance targets, not simply handed over with no strings attached.

Beyond cost accounting problems, business leaders who take a closer look at school district operations usually come away shaking their heads the many other management shortcomings they find. These usually include goal setting, strategy, and budgeting; managing uncertainty; innovation, continuous improvement, and technology integration; talent development; and using data and research evidence to drive decision making — just to name some of the usual suspects.

Unfortunately, leaders whose only experience has been in K-12 will almost never improve these critical processes on their own, and typically prefer to defend the failed status quo while demanding taxpayers invest more money in it.

Nor will parents organize a big push for district performance improvement, because most of them fear that if they complain too aggressively their children will pay the price.

Politicians aren’t going to push for it either, because they fear offending teachers’ unions and other supporters of the status quo, who can and will organize against them in their next election campaign.

Finally, the actions of most non-profit K-12 reform groups are constrained in three important ways.

First, their focus is almost always on state policy, not district implementation. Second, in most cases the talented staff at these organizations lack significant management and implementation experience, particularly in large, complex organizations. Third, advocacy groups are often funded by donors who either prefer to focus on state policy rather than district implementation issues, and/or are averse to the conflict that is an inherent part of the messy business of substantial performance improvement.

Too many business leaders recognize all these constraints on improvement, but still believe that the nation’s K-12 problems can be solved through the aggressive expansion of charter schools (or vouchers).

Unfortunately, this is highly unlikely, for three reasons.

First, as was painfully demonstrated in Massachusetts, at both the local and state level opponents of charter schools aren’t going to let up. In fact, the rate of charter school growth is slowing.

Second, there are still too many single-site charter schools in the United States whose performance is not substantially better than comparable district-run schools. With a limited number of notable exceptions like KIPP, DSST, Success Academy and others, the United States currently lacks enough charter organizations with a demonstrated capacity for building and sustaining networks of high performing schools.

Third, and perhaps most important, there are critical obstacles that make it difficult to build these networks. School facilities are hard to find and often expensive, leaving too little budget to fully deliver a charter’s educational value proposition. Equity capital (including donor capital) to support network development and growth is in short supply, particularly for charters focused on serving suburban students. Even scarcer are experienced business leaders who are willing to take significant cuts in pay to support the growth of what are, in reality, multimillion dollar, multi-site professional services organizations (a related problem is that, just like private sector entrepreneurs, too few charter founders appreciate the importance of strong management to successful scale ups).

Unless all these obstacles can be overcome, it is hard to see how charter expansion can materially reduce the widening gap between current K-12 performance in the United States and what will be required in order for our children, companies, and communities to survive and thrive in the new global economy that is rapidly emerging all around us.

The unavoidable truth is that only sustained, substantial, and aggressive engagement by the business community — as was the case in Alberta’s and Massachusetts’ successful experiences — has the potential to catalyze K-12 improvement on the scale that is needed in the United States.

For business leaders, this raises perhaps the most important public policy question they will ever face.

The fundamental challenge is how best to allocate scarce resources between actions to mitigate the causes of an emerging threat, and actions to mitigate its potential consequences.

Thus far I have described the first approach. However, with a few notable exceptions, business leaders in the United States have chosen not to substantively and aggressively engage with K12 to improve the nation’s education results. This suggests that their scarce resources are largely being directed towards mitigating the current and future consequences of K12’s continuing failure to substantially improve.

Two pieces of evidence support this conclusion. The first is the extent to which jobs have been and continue to be relocated to other nations with higher performing education systems. The second is accelerating investment in advanced technologies that reduce the amount of labor required to perform a wide range of business processes.

To be sure, I am far from the first to highlight these trends (e.g., see this excellent report from Bain, “Rise of the Robots” by Martin Ford, or “Only Humans Need Apply” by Davenport and Kirby). However, too few of these forecasts have fully explored the harsh implications of business avoiding the challenge of improving K12.

These include significantly lower levels of aggregate demand (as in the absence of better education results, more extensive automation will, on average, likely reduce employment and/or depresses workers’ disposable income), much higher social safety net spending, and far higher taxes.

In a world of much lower revenue and much higher taxes, the critical (and substantial) uncertainty is whether companies will be able to cut costs deeply enough and/or raise leverage high enough to sustain acceptable returns on equity.

In sum, the business community’s decision not to engage much more substantially and aggressively in K12 performance improvement looks like a very risky bet.

Tom Coyne is a private sector executive. For 17 years, he has invested all his volunteer time in K-12 performance improvement at the school, district, and state levels.