Should Education Be a For-Profit Business?

Throughout the past few years, K-12 schools around the country have been slashing budgets as state and national education funding has dropped.  At the same time, however, legislation in many states (including my home state, Michigan) has loosened the restrictions on charter schools.  In some places, this is creating a rush to begin schools run by for-profit organizations.  While some people laud the notion of for-profit schools, saying competition will help foster innovation and make all schools better, many people are concerned about the fact that any profits being taken by corporations running schools takes away from the total number of dollars available to actually educate students, thereby reducing the quality of education for everyone.

Count me in the latter category.

Here in Michigan, we have a massive problem with teacher pensions.  Right now, for every dollar paid to a current teacher in salary, a Michigan public school district must also pay 24.46 cents as a retirement contribution to support retired teachers from this state.  Next year that is expected to jump to 27.37 cents on the dollar.  Just two years ago, the rate was “just” 16.94 cents on the dollar.  This is unsustainable.

This is also why I’m against for-profit charter schools here in Michigan.  For-profit charters are not required to pay into this retirement fund.  (Force them to pay into the fund, and I’m no longer against these schools.) As a result, every new charter that begins here in Michigan diverts students (and therefore teachers) away from the public school system.  Thus there are even fewer current teachers paying into the system, and the retirement rate will soar further.

In this climate, of course charter schools can turn a profit.  Next year, they could simply do everything a public school would do and pocket 27.37% of their combined teachers’ salaries as profit.  But in doing so, they are also worsening the unsustainable retirement contribution rate for the public schools throughout the state.  Until this is changed, for-profit education should not be permitted here in Michigan.

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Posted in: Education, Teaching