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 / Summer 2006 / Issue 43(originally published by Booz & Company)


William G. Ouchi: The Thought Leader Interview

Everything is open. You cannot escape from that kind of accountability. Nobody who is unable to perform can withstand that kind of public scrutiny.

S+B: Should measures like that have been part of No Child Left Behind as well?
I don’t know if America was ready. You first need to have New York and Seattle and some other places try it, and let people see how it works.

S+B: Has your view on accountability changed in the three years since Making Schools Work was published?
In the wake of the Sarbanes-Oxley earthquake in American business, I have come to realize that there are no reporting standards in the education business. When senior executives at Enron, Tyco, or WorldCom filed fraudulent reports to the shareholders, they faced criminal prosecution. If a superintendent and a school board file fraudulent reports about the progress of their district, nothing happens. It’s not a crime. There are no penalties.

Take spending, for example. In every district we study, my team and I always find that school districts spend 30 to 50 percent more per student than they report to the public. The graduation rate in big cities, like Chicago, New York, and Los Angeles, runs about 50 percent, but those cities all reported 88 percent. If a student stops coming to school, they typically send a letter recommending that the student enroll in a GED program; and then they stop counting that individual as a student. They don’t have to follow up and find out if the student received the letter, let alone whether he or she acted on it.

Finally, districts commonly test only 60 or 70 percent of their students, the good test takers, and report that result as their performance. That was the point of the No Child Left Behind law. Now schools are required by law to test 95 percent of all groups — white, black, Latino, Asian Pacific, Native American, English learning, and special-education children — and report all the results to the public. It’s creating a furor, because people for the first time are finding out what’s going on and they are horrified.

Making a Difference

S+B: Those results drive many businesspeople to suggest that schools should be privatized, through vouchers and similar structural solutions. What’s your opinion?
There are 50 million public school children in America. Fewer than 30,000 of them are on vouchers. Why are we even discussing this? We have had two initiatives on the ballot in California to establish a voucher system. The first one had a campaign budget of $50 million and lost 70 to 30. The second one had a campaign budget of $70 million and lost 70 to 30. There is a message here: The public doesn’t trust vouchers. They believe that one way or another, perhaps in a way we cannot presently anticipate, vouchers will produce a vastly more economically segregated schooling system than we have even now.

My guess is that when competing schools, including charter schools, private schools, and religious schools, get a share above 20 percent of the local student population, they will become a genuine competitive threat to the district establishment. And then schools improve. But it doesn’t have to be private competition; I’m all for charter schools. In Seattle, by the way, 47 percent of the children attended private school in 1995. Public schools have taken back eight market share points from them since then.

S+B: What would you suggest to a businessperson who wants to make a genuine difference in education?
If you go on the board of a company for the first time, what’s the first thing you do? You get to know the articles, the bylaws, the P&L, the cash flow, and the balance sheet. You need to do the same with schools. Businesspeople haven’t a clue how much their school district spends per child. They don’t know the graduation rates or the test scores. Instead, they walk into a classroom and say, “I want to help.” How naive.

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