Some of the most widely discussed and controversial proposals for reforming American schools focus on the twin themes of giving local schools more operational autonomy and forcing them to compete for students. Proponents of charter schools and voucher plans argue that schools must be liberated from the controlling hands of educational bureaucrats. If such operational freedom is combined with parental choice, the argument goes, both the means and the incentives will be in place for schools to deliver quality teaching and learning.
Domestic evidence that would confirm or discredit this proposition is scarce. The charter school movement in the United States is too recent and current voucher experiments too small to shed any light on the likely consequences of bringing them to scale. What policy makers need is evidence from a large-scale and long-term experiment with self-governing schools operating in a competitive environment.
Fortunately, such evidence exists. In 1989, New Zealand, under a Labour government, abolished its long-standing, and bureaucratically stifling, centralized system of school governance and turned operational control of each of the country's 2,700 primary and secondary schools over to locally elected boards of trustees dominated by parents. Two years later, a newly elected National government, pursuing an aggressive New Right agenda, ratcheted the reform stakes up a notch by abolishing enrollment zones and giving parents the right to seek to enroll their child in any public school. These changes persist to this day.
New Zealand's experience with what were collectively known as the Tomorrow's Schools reforms has direct relevance to the school reform debate in this country. With 3.8 million citizens, New Zealand has the same population as that of the median American state, and its Ministry of Education is thus the functional equivalent of a state education department under our decentralized system. New Zealand has similar social, cultural, and political traditions, and, perhaps most importantly, it has a significant minority population, with Maori making up 14 percent of the total and Pacific Islanders another 6 percent. The urgent educational and other problems faced by urban Maori in Alan Duff's wrenching book and the subsequent movie Once Were Warriors offer striking parallels to the situation in our own inner cities.
During five months in early 1998, we had the opportunity to assess the impact of the Tomorrow's Schools reforms in urban areas through visits to nearly 50 schools, analysis of government data, and interviews with political and educational leaders at the national and local levels. We believe that New Zealand's ambitious and bold reforms provide a number of powerful insights for the U.S debate.
It is important to note at the outset that schools in New Zealand are generally happy with their new self-governing status, and virtually no one wants to go back to the highly controlled system of the past, when schools could not even make unilateral decisions about the color of classroom walls. Parental choice has also been hugely appealing, and it has had a profound impact on enrollment patterns.
One tool for measuring the magnitude and nature of enrollment changes is New Zealand's system of assigning decile rankings to schools based on the socioeconomic and ethnic characteristics of the students they attract. These deciles were developed so that supplementary funding could be distributed to the schools with the most challenging-to-educate students. Low-decile schools serve large proportions of minority children and students from disadvantaged backgrounds. Students in high-decile schools tend to come from predominantly affluent and European families.
Research by us and others shows that, in the minds of New Zealand parents seeking to evaluate schools, a high-decile ranking--and hence an attractive mix of students--is a proxy for academic quality. As a result, since the advent of choice in 1991, there has been a distinct upward shift in enrollment, with low-decile schools facing declining rolls and high-decile schools growing in size.
To deal with oversubscribed schools, New Zealand allows any school with more applicants than places available to draft an "enrollment scheme" spelling out the criteria it will use for selecting students. Because such schools have become increasingly common over time--by 1997 over 50 percent of urban secondary-school students were in schools that had enrollment schemes--the system has effectively shifted from parental choice to one in which schools do the choosing.
Because New Zealand does not carry out systematic national testing, we cannot determine whether the combination of self-governing schools in a competitive environment has increased average student achievement. It seems fair to surmise, though, that teaching and learning may well have improved at the high end of the scale, where schools with enrollment schemes can handpick students and target teaching to them.
Although New Zealanders clearly enjoy the empowerment of self-governance and parental choice in their state school system, the new system has generated some serious concerns that policy makers are now being forced to address.
First, the combination of self-governing schools in a competitive environment has increased ethnic polarization of the state education system. Although both European and minority families have participated in the movement from low- to high-decile schools, the former have been more aggressive in taking advantage of the choice option than have Maori or Pacific Islanders. Thus, ethnic minorities have become increasingly concentrated in low-decile schools.
Between 1991 and 1996, for example, the share of minorities in decile 1 primary and intermediate schools in the capital city of Wellington rose from 76 to 82 percent--a shift that cannot be explained by changes in ethnic residential patterns as measured by census data. At the secondary level, even greater changes occurred, although the patterns were a bit more complex as some minorities moved from decile 1 to decile 2 schools while Europeans fled from both. The net effect was a large increase in the proportion of minorities in the low-decile schools. Piecemeal evidence from a ministry-financed study indicates that school enrollments have also become more segregated socioeconomically.
From the point of view of parents, moving up the decile scale in choice of school is understandable and even rational. Higher-decile schools are likely to attract higher-quality teachers, and their mix of students could well generate positive spillover effects on student motivation. The result, however, is that schools with a large percentage of minorities are at a competitive disadvantage in the marketplace in attracting students. Moreover, evidence shows that the terms of enrollment schemes and the cost of transportation have limited the access of minority students to the upper-decile schools.
One can reasonably ask whether the increased ethnic and socioeconomic polarization is a problem. We believe it is. The Hippocratic oath taken by new physicians begins with the declaration "First do no harm." While state school systems cannot be expected to solve all social problems, they should at a minimum not exacerbate existing inequities. Ideally, they should serve to offset them. Although other countries might design a competitive system somewhat different from New Zealand's, the forces unleashed by parental choice, including the use of student mix as a proxy for academic quality, are likely to push systems toward greater ethnic and socioeconomic polarization under any circumstances.
A second concern has to do with winners and losers. By definition, in any competitive environment some participants will be successful, and others will fail. That's the way markets work. We observed situations in New Zealand where two schools operating on a level playing field were engaged in vigorous competition for students, which probably redounded to the benefit of both. In a comfortable suburb of Wellington, for example, Heretaunga College has increased its enrollment at the expense of nearby Upper Hutt College. Both are viable high schools, though, and the competition appears to have energized them both.
The problem is that the playing field is not always level. Difficult-to-teach students--those from poverty-stricken homes, those whose English is weak, those with learning difficulties--are concentrated in schools at the bottom. Statistics on students who are suspended for disciplinary reasons show that they are far more likely to move down the decile ladder than up. The result is a widening of the gap between the low- and high-decile schools in terms of the mix of students they serve and their average test scores on school exit exams.
New Zealanders describe the loser schools as "spiraling" downward. Once they begin to fall behind in the educational marketplace, downward spiraling schools find their problems compounding and feeding on each other. Lower student rolls mean fewer teachers, which mean a less attractive academic program, which means even fewer students. Schools become losers; so do the students and families served by them.
The question thus arises whether it is defensible--on moral, practical, or other grounds--to organize the delivery of public education so that it is clear from the outset that, when the system is working properly, the problems of some schools will be seriously exacerbated.
Two conditions might justify such a policy. First, if competition led to an overall improvement of the system as a whole, the losers would still be winners in absolute terms. The second condition would be realized if the Ministry of Education, aware that competition leads inevitably to unsuccessful schools, stood ready with a safety net to provide assistance once schools began to fail. Neither condition, however, was present in New Zealand.
Our third concern relates to the balancing of legitimate but competing interests. Any state educational system has a multitude of stakeholders, from students and parents to employers and the body politic. The original Tomorrow's Schools reform plan called for a number of mechanisms to balance these interests, including the creation of community forums to deal with local conflicts and the use of lotteries to decide which students would be admitted to oversubscribed schools. Largely for political reasons, however, these mechanisms fell by the wayside.
Instead, primacy was given to the rights of current parents in a particular school. Thus, when the boards of several primary schools decided to add two more grades so their parents would not have to send their children to the local intermediate school--decisions with significant consequences for other schools and parents in their areas--they were free to pursue their own self-interest. The new system also showed its faith in the capacity of an educational marketplace to balance competing interests by giving oversubscribed schools the right to accept and reject students with little reference to how their decisions would affect other schools or the system as a whole.
Over the years, as the consequences of this laissez-faire approach became clear, the Ministry of Education was forced to make some changes. Primary schools no longer have carte blanche to add grades, and new regulations guarantee access to "a reasonably convenient school."
Perhaps most importantly, political embarrassment over spiraling schools has forced the ministry to intervene directly to assist troubled inner-city schools even though there is nothing in the theory of self-governing schools in a competitive environment that would justify such intervention. Rather than attempting to reconcile theory with the plight of spiraling schools, Ministry officials have simply conceded that such a system simply will not work for 10 to 20 percent of schools. Specifically, they have acknowledged that autonomy and choice cannot, in and of themselves, meet the challenges of troubled urban schools.
Are the results from New Zealand inevitable? Not fully. In retrospect it is clear that different policy decisions could have been made. The United States and other countries need not follow New Zealand's lead in giving schools control over enrollment schemes, for instance. Nevertheless, given family concern about the mix of students, there is likely to be intense pressure for ethnic polarization in any system of parental choice.
Any market-based system is also likely to create losers unless the government takes explicit action to improve teaching and learning in those schools. It is noteworthy that low-decile schools had operational autonomy, strong incentives to improve the quality of their offerings, some good managers, and, under a progressive funding system, more funding per pupil than high-decile ones. Still, they were unable to compete successfully
The clear conclusion is that school autonomy and strong incentives to attract students are not sufficient to overcome the serious challenges faced by schools with disproportionate shares of low-performing students. Policies are needed that address more directly the challenges of teaching and learning in such schools.
Institutions or procedures also can be introduced to balance competing interests. One example is the "controlled choice" plans in Cambridge, Massachusetts, where parents list their preferences for particular schools, but assignments are made centrally with an eye toward balancing the racial makeup of schools and other factors. A system of "contract schools" could potentially provide another model. The point is that explicit attention to the balancing of interests of various stakeholders is needed. The invisible hand does not work.
The architects of Tomorrow's Schools put their faith in simple governance solutions to complex questions of educational quality, and they found them wanting. Any country that seeks to follow New Zealand's lead would do well to understand the limitations of market-based reforms and to build in appropriate safeguards from the start. ¤