Food for Thought: Building a High-Quality School Choice Market

The neighborhoods of Southeast Washington, D.C., are among the poorest in the city. There, the grocery stores, banks, restaurants, and other institutions that suburbanites take for granted have long been in short supply. In recent years, however, government and nonprofit agencies have begun turning things for the better. A brand new, government-subsidized shopping center recently opened on Alabama Avenue, providing one of the few full-service grocery stores in the area, along with a new sit-down restaurant and mainstream bank branch.

But reformers are finding that such initiatives won't fix decades of market dysfunction overnight. Not far from the new Super Giant grocery store and Wachovia Bank are older businesses that continue to draw a steady stream of customers—corner stores that sell little fresh food, fast-food outlets that serve meals low in nutritional value, and tax preparation firms and check-cashing outlets that charge high fees. Markets are complicated, and improving them requires more than just creating incentives for new providers to set up shop.

This is equally true in the market for public education. The growing charter school movement has spurred the creation of new education organizations like the Knowledge Is Power Program (KIPP), which recently opened a shiny, new 85,000-square-foot facility four miles north of the Super Giant. KIPP has become a national model of high-quality, urban education, posting impressive achievement gains with low-income student populations. Sixty-six new KIPP schools have opened in 19 states and the District of Columbia in the last 15 years. KIPP is what school choice proponents claimed would happen with market-based reforms in education: entrepreneurial educators successfully teaching the students who need help the most.

But KIPP is an outlier among its peers—many other charter schools in the district have been unable to achieve such impressive results. Just around the corner from KIPP, a recently restructured charter school shares space with a church in a small, unimposing brick building. Over the door hangs an easy to miss sign with the school's new name—The Howard Road Academy of Excellence. The previous charter school occupying the space gave up its charter after the D.C. Public Charter School Board threatened to shut it down due to financial mismanagement. That school also posted some of the lowest student-achievement scores in the city, with just 13 percent of students scoring proficient on the city test. Its failure serves as a warning to those relying on the free market alone to improve education in low-income, urban neighborhoods.

And while choice advocates predicted that the increased competition from charter schools would produce substantial improvements among nearby traditional public schools, this often has not been the case. Despite the fact that over 20 percent of the public schools in the neighborhoods surrounding KIPP are charter schools, the traditional public schools in the area still post some of the lowest student-achievement results in the city.

Government programs that bring in private sector firms like Giant or nonprofits like KIPP can increase the supply of market options in low-income communities. But such subsidies will not, in and of themselves, ensure that all of those options will be high-quality. Nor will they guarantee that consumers will make good choices and utilize the newer, better options that come along. Functioning, well-designed markets improve higher-quality supply and higher-quality demand.

Reformers working to improve banking and food services in the district's low-income neighborhoods and around the nation have already learned these lessons. In recent years, they've moved aggressively to provide sophisticated market analysis to private sector firms, making the case that poor neighborhoods represent an untapped source of profits. They've forged strong connections with local community organizations that reach out to new consumers and help customize services to meet local needs. They've provided crucial start-up funds for small businesses and have encouraged these businesses to be flexible in how and where they serve residents. And they've worked hard to build knowledge and expertise among the consumers who drive demand.

To be sure, the for-profit retail and nonprofit education markets are not identical. But many of the strategies used by reformers to improve markets for banking and food services could nonetheless benefit public education. As district and community leaders, charter school authorizers, and policymakers expand the marketplace of schools, they would be well-served by learning from these innovations. Nearly 20 years after the first charter schools were founded, it has become increasingly clear that opening up markets to new providers is only the first step in dramatically improving the supply and demand for great public schools.

This research was funded by The Annie E. Casey Foundation. We thank them for their support but acknowledge that the findings and conclusions presented in this report are those of the author alone and do not represent the opinions of the foundation.