Is the Charter School Movement Dead or Mostly Dead?

September 19, 2018

(Guest Post by Matthew Ladner)

So what should we make of this:

The above chart comes from Robin Lake’s Education Next piece on the slowdown in charter school growth in the Bay Area. This article focused on three culprits: facility challenges, internal challenges and political backlash. There were several interesting nuggets in the “internal challenges” section, for instance:

Charter advocates in the Bay Area seem to subscribe to a “survival of the fittest” ethic, which holds that because running a successful charter school requires so much capacity, if potential operators are scared off from pursuing an application without a lot of handholding, it’s probably for the best. This was a reasonable strategy in the early days when the supply of savvy entrepreneurs was plentiful and charters were booming, but it may be time to look deeper for quality operators and provide more support.

Translation: I had my legal department cut and paste from their last 700 page charter application, if you don’t have a legal department too bad.

Then:

Meanwhile, the funding community is not sufficiently supporting these smaller players to make it worth their while. In interviews, many leaders told us they believe that the Bay Area’s supply of effective schools is limited today by the philanthropic funding strategies used in the past. In particular, there is a consistent perception that single-site schools and school leaders of color who are not tied into local funder networks have historically not been connected to dominant funding channels.

Translation: It’s easier for large philanthropic foundations to write big checks to other big organizations than to seed mom and pop operations.

Further hampering growth, the charter leaders we interviewed said that start-up dollars are the hardest to come by in the communities they consider most viable for charter school expansion. Operators are finding it easy to access philanthropic funding in urban Oakland and San Francisco, but see those places as “over-saturated” and gentrifying. By contrast, in the less urban area of western Contra Costa County, there are more available facilities and a growing population of students that match most charter schools’ target populations—but fewer opportunities to access philanthropic dollars to start up new schools.

As one charter-school operator said, “People are moving farther and farther away from cities [because they can’t afford to live there] and into poor-performing school districts. An organization like KIPP—if they want to double in the next five years—they’ll need to go in these areas. But charters are not going there because there is no funding there.”

Translation: America is morphing into Paris, France whereby the wealthy people live in the city and the not-wealthy in the suburbs or exurbs. Philanthropists have yet to appreciate just how quickly this is happening.

Like any complex phenomenon, the charter school slow down certainly has more than one explanation. None of these factors would seem to explain why the last few states to pass charter laws have opened few to no charter schools, why the highly ranked Indiana law that passed in 2001 still hadn’t met the minimum subgroup reporting requirements for NAEP in 2017 (you can often get scores for male Asian students as a point of reference) etc. In other words Lake’s look into the SF area was informative, but perhaps not fully revealing.

As a determined optimist, I’m going to say that the charter movement is only mostly dead, which means it is partially alive. Let’s get him to Miracle Max quickly however because it doesn’t look good…

 

 

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AZ Charters CeleNAEP Good Times Despite District Creaming

August 20, 2018

(Guest Post by Matthew Ladner)

The full implications of this new analysis from the Arizona Charter School Association showing that Arizona charter schools receive district transfers who are below statewide averages on AZMerit, and send students to districts who are on average above the statewide average, can only be fully appreciated in the context of additional data.


Quick play by play on the above chart: 85,000 students transferred between public schools between the 2014-15 school year and the 2015-16 school year. The AZMerit tests were given in the spring of 2015, before the students transferred to a new school in the Fall of 2015 for the 2015-16 school year. The sending sector in other words owns the score.

A huge part of the ongoing Two-Minute Hate against Arizona charter schools has been the notion that they are engaging in systematic creaming. The problem with this story is that the above chart reveals it to not only be false in aggregate, it also reveals it to be the exact opposite of the truth. On net the districts are sending out below average students to charters, and receiving above average students in return. The districts, in short, are guilty of precisely the charge hurled (without evidence) against charters. This is not to say that there aren’t individual schools, district and charter, doing bad things, but the net of everything everyone is doing appears to be district not charter creaming.

The part about charters sending above average performing students to districts deserves a special mention. A part of the litany against charters involves an obsession over high-school attrition rates in BASIS. This has always been off base, as only a small percentage of Arizona charter students attend BASIS, and BASIS is basically the Green Berets of academics. The Green Berets have an attrition rate as well, but the people who complete the training are deadly military professionals. Arizona students are very active (85,000 total transfers in a single year in a ~1.2m student system) and do so for a large variety of reasons- social, athletic, academic etc. I’ve always thought that the students who don’t complete BASIS were likely to have been better off for the experience, and lo and behold that seems to be the case statewide across charters. In other words, when the 8th grade BASIS student chooses to attend a comprehensive school to play football as a 9th grader and brings above average academics with him, the proper response from the district should be one of gratitude rather than condemnation. When the statewide scores show districts to be sending away low-performers in droves (to both charters and other districts btw) the complaint positively reeks of hypocrisy.

But I digress…

Another part of the two-minute hate litany would have us believe that a child with disabilities has never crossed the threshold of an Arizona charter school. If however one goes to the state’s AZMerit data file, you find the statewide percentage of district children with disabilities stood at 11.1% and at 9.73% in charters on statewide ELA exams. The percentages are similar in the math exams. In a similar fashion there is a difference in rates of limited English proficiency, but nothing like what the blaring telescreen would have us believe: 6.3% for districts and 4.4% for charters.

What about the part when the double-plus good duckspeaker screams through the telescreen to tell us that charters are bastions of White segregation? Try again: 55% of charter students are non-Anglos compared to 63% of Arizona district students. There is a difference, but both sectors are majority-minority, and neither looks like either Vermont (or North Scottsdale).

Some of the difference between charter and district performance is certainly explained by differences in student demographics but here is the next shoe to drop in the AZMerit data: every single subgroup available scores higher in charters than they do in districts. Native Americans, Latinos, African-Americans, Asians, Whites, ELL, SPED, FRL etc. students all score higher in AZ charters than in AZ districts. Some of the difference is certainly owing to demographic differences, but nothing close to all of it.

So turning our attention to the above chart and pairing it with NAEP, it makes the NAEP data seem even more impressive when you consider the fact that Arizona districts are sending below average performers to charters, and charters are sending out above average performers. Despite that, NAEP shows us things like this:

So for those scoring at home, Arizona charter schools educate a majority-minority student body, receive only about $8500 per pupil in public funding, receive low-performing students on average from districts, and send higher than average performing students to districts and…scored higher than Massachusetts on the 2017 8th grade NAEP exam plus demonstrated the best 2009-2017 improvement in the country.

I fully expect our friends in the Arizona charter school skeptic community to doubt the AZMerit analysis. My recommendation to them is to file an open-records request with the Arizona Department of Education for the same data file. Crucial findings such as this deserve scrutiny and replication. The evidence currently available leads to only one conclusion: Arizona charters are working extremely for the students fortunate enough to attend them.


Another Myth Bites the Dust

August 17, 2018

(Guest Post by Matthew Ladner)

The Arizona Charter School Association analyzed public school migration patterns for 85,000 kids who switched among public schools by their prior AZMerit scores. And well this is what it looks like:

So kids transferring from Arizona districts to Arizona charters have below average AZMerit scores. Those transferring from charters to districts have above average AZMerit scores. This is to put things mildly not consistent with the litany against charters that claims that Arizona charters are engaging in massive creaming of students. If anything, this data suggests the opposite: that if there is creaming occurring, it seems to be in the direction of districts creaming charters.

Mind you the creaming thesis already had huge problems, the first of which being math. When you see scores improving in both district and charter schools, it makes it very difficult indeed to argue that charters have circumvented lottery requirements (which districts don’t have) to only get the high flying academic kids. If this were the case it would have been a really neat trick to see Arizona districts showing better gains than the national average despite some of the nation’s largest Great Recession funding cuts, despite a continuing trend into deeper majority-minority states and despite losing tens of thousands of their top performing students.

The average transfer from district to charter having below average scores in fact might in part explain the district gains we see, but then you get back to those charter gains…looks like they are having a lot of success getting kids who were off track back on it.

I would be very interested to see the average grade level by transfer group in this data. My guess would be the average district to charter transfer student is an elementary student, and that the average charter to district student is more of a middle school student. In any case, when you are taking in lower than average kids and sending back higher than average performing kids as a sector, this myth is…


AZMerit 2018 release and Johnny Rotten says RELAX (80s Extended Dance Mix)

August 8, 2018

(Guest Post by Matthew Ladner)

Another hope feeds another dream 

Another truth installed by the machine.

A secret wish, a marrying of lies

Today comes true what common sense denies.

-Propaganda

Some predictions of doom age better than others. The “Arizona Public Schools are heading for destruction” mantra falls squarely in the post-Pistols Johnny Rotten odd rap/disco experiment quality side of things imo. Since 2016 the not-so-secret wish of some in Arizona has been to make the 2018 elections all about K-12 and its terrible failure. And well…

…the election year ain’t over yet so expect more double-plus good destructo speak. Sigh.

Meanwhile, back in mere reality the reports of Arizona public education’s demise appear to have been greatly exaggerated, given that the academic results continue to rise. Recently the Arizona Department of Education has released the 2018 AZMerit exam results. Both district and charter scores continued to improve.

The Arizona Republic greeted the news glumly:

Many Arizona schools kicked off the new school year this week with some bleak news: The majority of their students last year failed the state AzMERIT test. 

State testing data shows the same trend lines in students’ performance that schools have seen every year since the AzMERIT test debuted four years ago. There was incremental growth in overall reading and math scores, but the majority of kids failed.

This is a bit much. The passing bar on AZMerit is set high. Only half the kids in Massachusetts score proficient on NAEP, but you don’t see them wringing their hands over it, and with good reason. Massachusetts has Japan like scores in a NAEP/PISA equating study:

Arizona charter schools have Massachusetts-like NAEP scores, so let’s call it in Japan’s neighborhood. Plus the districts are getting better as well. Must….resist…urge…to…include…more….bad…80s…music…resistance….futile!

That 2011 study had Arizona as a whole between Latvia and Greece and alas in the real world you don’t leap over Latvia one day and put South Korea to shame the next. Put me in the “keep the incremental progress coming and let’s count our blessings” camp si vous plait.

My advice is to ignore the propaganda and relax, the election year silly season won’t last forever, it will only seem that way.

 


Now Would be the Time to Add That Position

August 2, 2018

(Guest Post by Matthew Ladner)

As longtime JPBG blog readers may or may not be aware, one of my hobbies is college football, specifically Longhorn football. One of my favorite posters on the Orangebloods site goes by the handle Orbea and focuses on financial information in his posts, and this recent post in particular struck me:

This is a post about sentiment. This is a post of how frequently it is the case that when investment management companies close funds, fire managers, and change strategies it marks the end of a trend and the start of a new trend in the other direction. 

But first some prior examples. These are done from memory. Because of that I likely have some of the details a little off, which in no way is a detraction as the gist of the story is basically correct. 

Tom Jackson
Tom Jackson was a deep value equity manager with an impeccable track record. In the late 80’s or early 90’s he was hired by Prudential Mutual Funds to manage their flagship equity mutual fund, the Prudential Equity Fund. He went on a tear for the first half of the 1990’s, won a couple of awards, and was on the cover of investment magazines (that in and of itself is a sign that a trend is over). Then in 1996 Technology stocks took off and Jackson started to lag badly. By 1998/99 Jackson was holding a third of the fund in cash because there were no deep value stocks to buy. In early 2000 Prudential fired Jackson and revamped the strategy of the fund to be a large cap growth fund. 

Of course, Prudential fired Jackson at the wrong time. Large cap growth tanked over the next three years while deep value went up.

Michael Metz
Michael Metz was the Chief Investment Officer for Oppenheimer (the brokerage firm, not the mutual fund company). In the first half of 1998 Metz recommended selling stocks because valuations were ridiculous and buying the 10 year Treasury. The official investment position of the firm was not to own equities but to own the 10 year. Unfortunately, stocks went on a tear to the upside for the next two years and bonds went down in value. In the early 2000 Oppenheimer sacked Metz and recommended selling bonds and buying stocks.

Of course, Metz was ultimately correct. Over the 5 year period from 1998 to 2003 the 10 year Treasury handily outperformed the S&P 500

Third Avenue Focused Credit Fund
Third Avenue management company was found in 1986 by Martin Whitman. Whitman was often called a revolutionary deep value manager with a speciality in small cap stocks. Often times deep value involved buying bankrupt bonds or distressed bonds. In order to expand their mutual fund offerings, sometime after the last recession, Third Avenue decided to open a junk bond fund. Since the bias of the company was in deep value and distressed securities the fund was chock full of the worst bonds imaginable. The fund did well for a few years, and then credit spread started to widen. Credit spread really widened on low tier debt (which was basically all the fund held). From the summer of 2014 through December 2015 the fund cratered. In December 2015 Third Avenue, in a surprise move, decided to close the fund and liquidate the holdings.

Of course, the decision by Third Avenue to close the fund came within 45 days of the bottom in junk bonds. 

A tip of the hat to @mm1966 who pointed out to me that the name of the fund was the Third Avenue Focused Credit Fund and not the Third Avenue High Yield Fund. 

Andy Hall
Hall was referred to as the God of the energy and oil markets. He rose to fame when he earned a $100 million bonus in 2008 as an energy trader at Citi. He went on to start his own hedge fund. For a number of years Hall racked up huge gains in the energy markets. Then the 2014 oil price collapse happened. Hall looked to be recovering from the collapse until the 2017 decline in oil prices happened and his fund lost 30% of its value in the first half of 2017. In July 2017 Hall shut down his primary hedge fund stating that $50 a barrel oil was the new normal.

Of course, the fund was shut down within weeks of the 2017 bottom and oil is now at $70.

Vanguard Changes The Strategy Of Its Precious Metals Fund
Vanguard just announced that it is changing the investment direction of its Precious Metal Fund. The new name of the fund is Global Capital Cycles Fund (whatever that is). The rationale for this change was to (and I quote) “to broaden the fund’s mandate and diversify the portfolio”.

Over the last seven years the fund has lost 60% of its value, which was right in line with the GDX (the gold miners ETF). 

This a recurring story with investment manage firms. By the time an investment firm throws in the towel on an asset class, then the bottom in that asset class is not far away. 

So, if you don’t have a small position in precious metals and miners – now would be the time to add that position.

Why post this on an education policy blog? I’m not sure but I’ll just leave this here in case anyone wants to consider the possibility that they sold their “Let a Thousand Flowers Bloom” stock prematurely:


The Way of the Future: Self-Reliance (with equity?)

August 1, 2018

(Guest Post by Matthew Ladner)

In a previous post I basically made the case that a majority of American states failed to show much academic progress between 2003 and 2017 and that the nation’s fiscal problems are closing in fast. While state constitutions guarantee K-12 funding, making it about as close to a permanent institution as you get in American life, the looming crunch in state budgets between K-12 and Medicaid/Pension shortfalls does not look to be pretty. For instance, consider these projections from the Texas Comptroller’s Office:

I won’t bother to dig up the likely increased size of the Texas K-12 population that they will be attempting to educate with a smaller percentage of the budget, but you get the point: austerity is a safe assumption, and there aren’t any other states that would sit as the world’s third largest oil producer if ranked as an independent country. Things may be generally bigger in Texas, but the problems may be even bigger elsewhere, making austerity a safe bet. Austerity isn’t necessarily bad for student outcomes but the same can’t be said for politics:

Nevertheless, state funding austerity seems very likely. So where does this leave the future? Jay used the phrase “hybrid homeschooling” years ago to describe practices by upper-income families to supplement the educate of their children. These parents enroll their children in schools, but then pay out of pocket for a variety of tutors, Mathnasium, Kumon, club sports and various other educational/cultural enrichment activities. The United States certainly does not have the after-school-school culture of East Asia, but the well to do have been using a multi-provider approach to education for a long time, and in fact it is ubiquitous to the point of seeming unremarkable.

Then let’s revisit the 2015 article from Wired documenting the rise of home-schooling in Silicon Valley Money quote:

“There is a way of thinking within the tech and startup community where you look at the world and go, ‘Is the way we do things now really the best way to do it?’” de Pedro says. “If you look at schools with this mentality, really the only possible conclusion is ‘Heck, I could do this better myself out of my garage!’”

Check out Cottageclass.com. Cottage class will help you find anything from a summer camp to a nanny-share to a private tutor or a micro-school. It’s well worth some of your time to click on various options. I’ve heard it described as Airbnb for education, and it is fascinating. Crucially, it includes user reviews to help parents navigate what is a growing universe of options. If all of this sounds reminiscent of ESAs, it is only because it is. For instance, Adam Peshek wrote in a Fordham Wonkathon:

An ESA doesn’t require committee hearings to decide where funds should be sent. It doesn’t require a school board meeting to vote on whether or not to cut the music program. Feel like your child isn’t exposed to enough music education? Pay for it. Little Stevie is falling behind in math? Get a tutor. If you’re in high school, use an ESA to pay for Advanced Placement courses to get a leg up in college, or use it to earn an industry certification so that you can graduate high school with an employable skill. An education savings account allows personalized learning to move from catch-word to reality.

That’s why we cannot implement these programs with the mindset of standardization. The ESA program needs to be seen as an innovative way to bring new options to K–12 parents—one designed to allow parents to maximize each child’s unique learning abilities by offering the educational path that suits them best.

Increasing numbers of families seem to be taking the a la carte approach, and like the Silicon Valley feature, they are doing it with their own money.

North Carolina for instance is an interesting place to keep an eye on. North Carolina has adopted both large charter and private choice programs, but thus far they can’t keep up. North Carolina keeps statistics on homeschooling, and it is interesting that other choice options can’t keep up with it. In 2007 there were 71,566 home-schooling students. In 2017-18, the figure was 135,749. This increase came despite the state taking a cap off of charter schools in 2010, and a doubling of charter enrollment. North Carolina lawmakers also created a statewide voucher program and (very recently) an ESA program for special needs students in the intervening years, but homeschooling is more prevalent than either charter or private school attendance in the state. Charters and private choice programs are growing, but they alone are not scratching the itch. District enrollment meanwhile has been flat for years despite rapid population growth.

The most interesting space these days lies within the space between a home-school co-op and a micro-school private school. The rumblings about the demand for micro-schools grow increasingly audible. Justin Cohen quoted Andy Calkins of the Next Generation Learning Challenges:

“It wouldn’t surprise me if, 5 to 10 years from now, everyone looks at this and thinks, ‘That grew a whole lot faster than I thought it could,’” he said. “There is a slice of the market that is not being served by public education. They’re saying, ‘The public schools don’t work, [and] I can’t get into the charter schools.’”

Predictions are tough, especially when they are about the future. The last decade and a half has broadly disappointed in improving public school outcomes, and the next decade and a half looks tougher rather than easier. A broad trend towards self-reliance and multiple service providers rather than one stop shopping in K-12 is already underway. Parents are not waiting on policy innovation, but policy innovation will be necessary to address equity concerns. Micro-schools often cost less than traditional private schools, and offer more options, but they do cost money.

States like North Carolina, with a statewide voucher program for low-income students and two different private choice programs to help students with disabilities, are ahead of the curve on the equity front. Florida likewise has a tax-credit program for low-income children and two programs for children with disabilities. States with these policy mixes create the possibility of economically integrated private schools options. States without them, not so much.

Let’s see what happens next.

 

 


Education Reform 2003 to 2017: Modest Success/Epic Failure so What’s Next?

July 23, 2018

(Guest Post by Matthew Ladner)

Having had some time to reflect upon the 2017 NAEP, let’s take stock of things. In this we should keep in mind our broad ignorance between policy changes and state NAEP trends- and the same goes for average school quality. NAEP gives regular 4th and 8th grade scores in math and reading, and all 50 states have participated since 2003. 8th grade scores are more likely to reflect school quality than 4th grade scores in my opinion, as the students have more years of schooling. I’m not sure what to make of positive 4th grade score trends that do not result in higher 8th grade scores for instance. So this in essence a window into what we have to show for American K-12 reform 2003 to 2017 in 8th grade math and reading by state:

So what to make of the above chart? The below chart eliminates a lot of clutter by only including the states with statistically significant gains in both math and reading 2003-2017:

 

So 19 out of 50 states demonstrate statistically significant gains in both 8th grade math and reading. Notice also the absence in the second chart of mega-states Illinois, New York and Texas (although it is good to see California and Florida making it in). Texas has as many K-12 students as the 20 smallest states combined and annually adds approximately a Wyoming public school system sized number of new students. Florida has half as many students as Texas and California is still larger than Texas.

Since we don’t know the relationship between policy and academic trends, we are limited in the conclusions we can draw with confidence. Having said that, policies that have been broadly applied across all 50 states apparently suffer from severe limitations in their ability to move the needle academically. All 50 states for instance have adopted state academic standards and accountability exams, but most states have failed to move the needle on 8th grade scores. Even if we were feeling incredibly generous and made the wild assumption that none of the second chart gains would have happened in the absence of testing, a failure rate of 62% after 14 years is a far cry from leaving no child behind.

Mike Petrilli and Peter Cunningham recently offered up “where do we go from here” think pieces. I think Mike has some interesting ideas, but Peter’s call for a vast increase in spending is broadly unrealistic imo given the nation’s trillions of dollars in unfunded pension and entitlement liabilities, 10k Baby Boomers per day reaching the age of 65, etc. In normal times, Mike’s incremental adjustments might make a lot of sense, but we don’t live in either normal times, or in times that are going to allow some Great Society on Steroids increase in K-12 spending.

A much more difficult scenario may loom whereby the district system continues to resist reform, reformers continue to push reforms the public does not care for, and severe funding needs for increased health care spending leads to a broad reduction in per pupil spending.  State constitutions guarantee K-12 funding, but whether or not they will be creating schools that the vast majority of parents will continue to entrust with their children, I don’t feel as confident about. There are hopeful signs in the NAEP from state charter sectors:

…but the rate of charter growth has slowed substantially nationwide. Of particular disappointment are the last several state charter laws to pass that produce very few charter schools. Even states with relatively fast growing sectors have large wait lists. There are alas limits to what we can realistically hope for from a charter movement that has to a large degree lost its way by prioritizing cartel behavior over the interests of children on wait lists imo.

The private choice movement enjoyed a strong run earlier in the decade, but has since ran into political headwinds. Many private choice programs exist, but most remain modest in scale. The case for private choice remains as strong as ever, and the need will continue to grow, but the looming state funding crisis is coming fast. In four years, half of the Baby Boom generation will have reached the age of 65, and by 2030 all of them will be there. They have called dibs in advance on all plausible funding increases and a whole lot more.

So what is next? An increasingly likely scenario in my mind is that state district systems retain their flaws but loses a significant part of their funding and that choice systems continue to fail to meet existing much less expanded demand. In such a scenario an increasing percentage of families may decide to fend for themselves. Call them home-schools, home-school co-ops or micro-schools, my spidey-sense tells me that we should expect to see a great many more of them in the years ahead. I’ll write more about this in a follow-up post.