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Bistany Involving the Private Sector in Public Education: An International Experience

CADE April 2012

Good afternoon. I am pleased to be here today and to be a part of this important annual conference.

Around the world, education and its power to shape the future, specifically a countrys economic future, is a topic on nearly everyones mind. It was a topic that was touched upon this morning; it is also the topic of recent studies that have shown the power education wields. The latest information from the U.S.

Census Bureau, for example, shows that an individual in the U.S. who has completed a bachelors degree will earn over one million dollars more in a lifetime than someone who has only completed secondary education. Eric Hanushek, scholar and prolific writer and researcher, also found this correlation between education and income in a study he co-authored in 2007. He writes that educational quality has powerful effects on individual earnings. The study, which examines the role of quality

education in economic growth, also shows the potential of education to impact national economies. His report shows that
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education has a significant effect on the distribution of income, and on economic growth, a correlation that is supported by the findings of Harry Patrinos, the Lead Education Economist at The World Bank.

Economists and researchers are not, however, the only ones to have identified the important link between education and a sustainable, healthy economy. It is a link that is recognized by all of us at this conference, a diverse audience that is dedicated to continuing the dialogue on how to improve education and committed to exploring innovative ways to raise education standards for the masses.

Preparing all youth today with the knowledge needed in order to become employable, productive members of society with the skills to keep pace with change in the future is the basic role of education. Fulfilling this role, however, is a challenge that has

grown more complex in step with the growing complexity of our

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lives and in view of a myriad of other associated challenges. In Panama, some of these other challenges include building enough schools equipped with sufficient resources, having enough trained, dedicated, and effective teachers, and providing equitable access to quality education.

Panama is not alone in facing and trying to overcome challenges in education. Indeed, although the challenges may have been different, governments around the world have tried for decades to provide education to the masses and raise standards. To

address the challenges, some governments have spent more money on education; others have experimented inconclusively with lowering class sizes, while still others have looked to increased parent involvement or improved access to technology in the classroom to raise standards. The sad fact is, however, that after decades of attempts to improve education, standards remain stagnant in most countries, if not in decline. So what is the answer? How can we effectively educate the masses,
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raise education standards, and best position nations for a future of economic health and stability?

I am here today to tell you, based on SABISs more than 125 years of experience in education in both the private and public sectors around the world, that we believe that the key to reversing the declining trend in education standards; the key to meeting the challenges facing education today; the key to educating the masses and creating an employable workforce is to widely engage the private sector in public education through public-private partnerships.

SABIS, as many of you may know, is a global education management organization. We currently manage schools in fifteen countries on four continents and educate more than 60,000 students. SABIS has been directly and actively involved in public-private partnerships since the early 1990s. SABIS got involved in the PPP arena when the charter school movement
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began in the U.S., and as the public-private partnership model gained momentum, SABIS became an integral part of PPP initiatives in the United Arab Emirates as well as in the semiautonomous region of Kurdistan in northern Iraq. This experience has led to valuable insight into the benefits of involving the private sector in public education.

The value and benefits of involving the private sector in public education are the same as in any industry: private sector

involvement fuels innovation, drives competition, and is justified by the access it provides to a whole new sector of the community. These are the principles that have led many countries to engage the private sector in areas like tele-communications, housing, power, and roads, where the private sector now plays an important role. Within the appropriate framework, these same

tenets support the wide-spread engagement of the private sector in public education in order to effectively educate the masses and achieve improved standards.
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As is inherent in an environment of competition, involvement of the private sector in public education ensures a healthy, productive, and natural race for effectiveness and innovation, with private education providers competing against each other to identify and implement the best means of educating students. Schools that are more effective in producing results that equitably serve the masses, add maximum value to students while operating in an efficient and sustainable manner, earn strong external exam results, and have a growing list of vocational schools and universities its students are accepted to and prepared for will flourish.

In looking to SABISs experience in public-private partnerships, an example of the benefits of competition when involving the private sector in education can be taken from the U.S. They chose to involve the private sector through the creation of charter schools, public schools that receive funding from the government yet do not have all of the operational constraints of traditional
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public schools. Since emerging in the early 1990s, the U.S. charter school movement has grown to encompass 5,700 schools that educate over 1.9 million students today. Many of these charter schools are achieving significantly better outcomes than those achieved in traditional public schools.

Drawing on SABISs experience in the U.S. charter school market, it, however, would not be realistic of me to paint an entirely rosy picture. It would be remiss of me to overlook the

challenges the US public-private partnership has faced and continues to face. These challenges are ones which Panama and other countries considering wide-spread involvement of the private sector in public education can learn from. Among the challenges is that in the U.S., a charter cannot be awarded to a private operator, but must instead be awarded to a non-profit charter school board, which acts as a middle man, adding an unnecessary component to the partnership. The way the system is set up creates an environment rife with micromanagement from
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the board and riddled with their interference without any means or intention of holding them accountable. The result is that

experienced, successful operators have to spend too much time dealing with overzealous boards rather than engaging in the implementation of innovations that can help students achieve higher standards. In striving to obtain higher education standards, disparate funding for charter schools in the U.S. is another issue that is hindering the benefit of a public-private partnership there. A comprehensive study recently done by the Center for Education Reform showed that charter schools across the U.S. receive only 61% of the funding afforded to traditional public schools. And yet recent reports show that U.S. charter school students are attaining measurable success in comparison to students enrolled in traditional public schools.

In order to reap the full benefit of wide-spread private sector involvement in public education, there must be a commitment to funding to funding parity; to funding without the threat of
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increased taxation, per pupil funding reductions, or mandates on profit use. Because effectively engaging the private sector

means to accept one of its primary motivations. Call it whatever you wish the fear of losing your shirt; the money motivator; the skin in the game. However euphemistically referred to, the

private sector has a financial motivation to ensure that its contributions yield valuable, measurable, sustainable, and

scalable results. As long as the private sector operates schools that flourish, there should be no financial limitations and certainly no disparity in funding.

While I stress the importance of having no financial limitations on wide-spread private sector involvement in public education, I also stress the importance of having a clear system of checks and balances built into the partnership. For example, it is clear that the public sector, or government, should take responsibility for monitoring results and holding private operators accountable.

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It should adopt a deregulated process and allow private companies to use the approach they consider most effective, but it should be clear that everyone will be held to the same objective standards. There should be indeed, there must be

autonomy with accountability because one without the other only serves to impede optimum performance and erect barriers which undermine the partnership and challenge involvement.

To demonstrate my point, let me draw on SABISs experience in the public-private partnership arena in the UAE, where at the projects zenith SABIS operated 35 public-private schools. The UAE is a country that recognized the potential of public-private partnerships in education, but one that unfortunately bound the wings of the project and kept it from taking off. The UAE PPP held operators accountable for results, but gave them no autonomy to achieve targets. PPP schools, for example, were required to operate with underperforming staff without any authority to train, sanction or remove them. PPP schools in the
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UAE were also required to use a standard curriculum and methodology with no scope to use materials or approaches that were proven to be more effective. In short, the project there,

while envisioned as one that would take advantage of the strengths on offer from the private sector, was hindered by regulations and a reluctance to truly engage the private sector in real partnership.

It is not enough to simply engage the private sector and then expect it to yield results. In the same way that there needs to be clear roles and responsibilities, there also needs to be clear expectations to govern engagement. As I have already stated, wide-spread private sector involvement should not be stifled with unnecessary regulations; nor should all kinds of barriers be erected to impede entry. Let me go back to the U.S. to illustrate my point. In one U.S. state that is struggling with falling education standards, innovation through the establishment of charter schools is actively being hindered by a process that requires
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charter schools to be approved by school boards who have a vested interest in keeping charters out. One writer recently

characterized it as being as absurd as the notion of requiring Burger King to seek approval from McDonalds before opening another restaurant. Private sector entry indeed, involvement at any stage should be free from unnecessary barriers in order to harness its potential to raise education standards of the masses and contribute to building a promising economic future.

In order to get the full benefit of widely involving the private sector in public education in Panama, it has to be done in the spirit of commitment long-term commitment to true partnership. This true partnership is best exemplified in SABISs experience through its involvement in the PPP project in Kurdistan, Iraq.

As you are all likely aware, the Kurdish region of Iraq has had an extremely tumultuous past. Simply surviving one day and waking up to see the next one was a challenge that its people faced until
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the recent period of peace ushered in the opportunity to rebuild the nation. There is an unwavering commitment to re-establish a well-educated population, undoubtedly strengthened by the regions past. There is no doubt that public-private partnership in education is key to re-building Kurdistan. As a result, education is placed on the highest pedestal. There is no interference from unions or special interest groups. Educations high-priority status is understood by absolutely everyone, from the top government officials to the newest teacher or administrator recruit. There is no micro-management. Roles are clearly defined and have been from the outset. There is no mistrust. The private sector is given full autonomy with imbedded accountability to achieve set objectives. One objective is to offer all instruction in English in PPP schools in order to prepare students who have the knowledge and skills to compete on a global scale. A second objective of the partnership with SABIS is to build teacher capacity in the country. Through a detailed professional

development program, local Ministry of Education teachers are

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trained in the English language, content mastery, effective use of technology in the classroom, and instructional methodology. The public and private sectors are working there in true partnership to put in place a solid foundation on which to build Kurdistans future.
Individuals around the world have come to recognize the inextricable link between an educated populace and sustained economic viability. Efforts to improve the education of the masses today, however, encounter some unprecedented challenges - a growing population, a lack of schools, a paucity in human resource training and skills, and global competition just to name a few. At SABIS we believe that these challenges can only be overcome by widely engaging the private sector in public education. Through public-private partnerships that are based on true partnership and exist in a well-managed framework, all of the resources, expertise, and benefits of the private sector can be leveraged to provide Panamas population with equitable access to quality education and to help secure Panamas economic future.
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