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School Finance 101: Five Steps to Cagebusting Relinquishment and the Suburban School District of the Future!

As I explained in my previous post, relinquishment in the form of “chartering” has taught us much about how to “fix” urban school districts. But why should urban districts be the only ones to benefit from the wisdom of emergent “disruptive” models of school organization? Here, I provide an overview/preview of what may eventually become my defining academic contribution! How to fix the suburban school district. How to relinquish the leafy ‘burbs! So, here it is, in all its, glory, the rough outline of my forthcoming manifesto on Cagebusting Relinquishment and the Suburban School District of the Future!

Step 1– Hire a private management company(ies) to manage 100% of district operating funds and any/all subcontracted service agreements, including those addressed under Step 5 below. This will include all employee contracts as well as all additional vendor contracts. What’s really cool about this is that the Local Board of Education’s reported budget and annual financial report become one single line of expense – Contracted Services – to the management company. Nothing else need be disclosed to the public/taxpayers. The rest is at the discretion of the private management company, whose finances and contractual arrangements may not be subject to public access/review. The public only gets to see that one line – that lump sum payment by the board of education to the manager(s). In other words – Step 1 – Relinquish! ‘cuz relinquishment rocks!

Step 2– The local board of education and private manager quickly concoct a new school rating system that allows them to declare all schools to be failing, requiring that the schools be closed and reconstituted under the private manager. This bold “disruptive” step permits the private manager to establish its own employee contracts and recruit its own employees to fill the roles of the (crappy, self-interested, tenured, government employed) teachers and administrators immediately dismissed by the local board of education because their schools technically no longer exist. The private manager might, for example, choose to establish a feeder/pipeline relationship with an emergency/expedited training program for young suburban saviors (on the expectation of significant turnover to hold long run staffing costs down), or establish its own H1B visa processing entity to enable the schools to employ foreign teachers paid modest stipends. Because these are all employees of the private manager, and not “public” employees, reshuffling them, dismissing them (if they don’t leave fast enough to keep costs down), etc. is easy because many constitutional and statutory protections of public employees are irrelevant.

Step 3– the private manager establishes rigid no excuses discipline policies and written contractual agreements with parents and their children to abide by those discipline policies or face immediate dismissal. Like the employees, students/parents may be forgoing constitutional and statutory protections they would have in a government operated institution. Rather, discipline policy may be evaluated by the courts as a contractual agreement with the private provider, giving that provider wide latitude to impose draconian requirements if they so choose.

Step 4– the private manager and local board of education would probably want to declare the system to be one of district wide, open choice where each year, all families in the district rank their school choices and students are sorted by computer algorithm into assigned schools, regardless of proximity to home (or transportation costs systemwide). This way, when draconian school discipline policies get called into question, the board of education and private manager(s) can assert that the children chose the school to which they were assigned and were not forced to enter into this contractual agreement. The private manager might wish to operate a single building in a remote corner of the district for all kids who are dismissed from the various “no excuses” schools. Additional overflow facilities may be required over time. Costs might be held down in these facilities by making them online learning centers with 100/1 pupil/teacher ratios. No rules. No goals. Just a bunch of computers in cubicles where kids, can, if they see fit, log on to Children dismissed from any of the “schools of choice” may not require any due process, since they can land in one of the handy, dandy holding pens.

Step 5– Raise short term cash by selling off all of your facilities (& major capital assets) to a Real Estate Investment Trust. Imagine what you could do with all of that cash? Besides, annual maintenance and operations of a large district’s aging capital stock might be running you about $1,200 per pupil per year. Instead, you can lease the same buildings back from the REIT on a Triple Net Lease (paying lease + property tax* + maintenance) for an expense of, oh, around $3,000 per pupil, with expected annual increases. This, on top of the general management fee paid to the private school management company.

*that is, if these properties become taxable when owned/leased by a for profit REIT

Any takers? Scarsdale? Millburn? Blue Valley (KS)?

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Bruce D. Baker

Bruce D. Baker is a Professor in the Graduate School of Education at Rutgers, The State University of New Jersey, where he teaches courses in school finance polic...