When Sen. Bernie Sanders (I-Vt.) recently unveiled his education reform plan, it predictably castigated charter schools, claiming that they were “privatizing public schools.” Sanders joined a long line of leaders who tar charters with the privatization brush. Before, during and after the Los Angeles teachers strike last winter, union President Alex Caputo-Pearl did so repeatedly. “The charter school movement,” he declared, is “a vehicle for billionaires to privatize the system and undermine the public district.”
His teachers constantly repeated the charge. Even Rep. Alexandria Ocasio-Cortez (D-N.Y.), who represents the Bronx and part of Queens, threw in her two cents, tweeting in support of “these LA teachers striking against privatization.”
National union leaders Randi Weingarten of the American Federation of Teachers and Lily Eskelsen García of the National Education Association regularly add to the chorus. From the picket line in Los Angeles, Eskelsen García went so far as to announce that “the billionaires who are behind this [chartering], the venture capitalists, the Wall Street guys, are out to make money on public schools.” (For the record, California outlawed for-profit charters last year.) And in the District of Columbia, Washington Teachers’ Union leaders raised the issue against Chancellor Lewis D. Ferebee during his nomination hearings. “My real concern here is privatization of public education,” Washington Teachers’ Union executive board member Signe Nelson told the D.C. Council.
But if a publicly funded service is delivered by a private organization, does that make it a private service?
Is Obamacare a private program because most services it funds are delivered by private hospitals, clinics or doctors? How about Medicare and Medicaid? Are our roads and highways, all built by private organizations with public funding, public or private?
The answers are obvious. When union leaders and politicians repeat their “privatization” mantra, they reveal just how far behind the times they really are. Fifty or 60 years ago, public monopolies delivered most of our publicly funded services, but today, most people want more efficient, effective methods.
Do the math, and it’s clear that a majority of publicly funded services are now delivered by private organizations.
Consider the federal government. In fiscal year 2017, it spent $3.98 trillion. Of this, almost half went to payments rather than “services.” The former include social security checks, unemployment compensation, retirement benefits, payments to farmers, interest on the debt, and many others. Of the remaining $2 trillion or so, more than $1 trillion went for health care — Medicare, Medicaid, Obamacare and the Children’s Health Insurance Program — most of which was delivered by private doctors, hospitals and clinics.
A majority of the almost $600 billion defense budget was spent contracting with private companies. Of the $72 billion the federal government spent on higher education — for Pell grants, work-study, student loans and the like — a big portion went to private colleges and universities. (Of more than 7,000 postsecondary institutions that participate in federal financial aid programs, only about 28 percent are public.)
More than 80 percent of the $50 billion we spent on housing assistance went to private landlords, and most of the $93.5 billion we spent on transportation went to private contractors (almost half to highway construction alone). NASA spends roughly $20 billion a year, and as one agency history put it, “From its establishment to the present, NASA has contracted with the private sector for most of the products and services it uses.”
Add it all up, and about three-quarters of the $2 trillion the federal government spent on services was delivered by private organizations.
State governments spent about $1.94 trillion in 2017, but almost a third was from the federal government. So without double-counting, states spent about $1.34 trillion. Subtracting pensions, debt service, welfare and other non-service activities knocks out more than $300 billion. Of the remaining $1 trillion, $215 billion went to Medicaid and $14.4 billion to the Children’s Health Insurance Program, mostly to pay private health-care providers. Transportation consumed an additional $108 billion, most of it contracted out. (Three-quarters of new public investment in transportation goes to highways and roads, and almost all of that work is done by private firms. The rest goes to air, rail and water transportation, for which private companies are also very active.) Add in human services, housing and economic development, and it’s safe to say that more than a third of state-funded services were delivered by private organizations.
Local governments spent $1.6 trillion in 2016, but more than a third came from state and federal governments, leaving just over $1 trillion. If we subtract pensions and debt service, the total is well under $1 trillion. Surveys done by the International City and County Management Association indicate that between a third and a half of all city and county services are delivered by private organizations. Think about road building and maintenance, garbage collection, recycling, water and wastewater treatment, much of which is contracted out to private companies.
Public education is the largest chunk of local spending. Seven percent of students attend charters, others attend private schools with public vouchers, and 9 percent of spending goes to construction, renovation and equipment, all provided by private companies. Add in preschool, busing, food service and building maintenance, much of which is contracted out, and perhaps 20 percent of local education dollars go to private organizations.
Taking all three levels of government into account, this kind of “privatization” is actually more common than public delivery of services.
It is widespread because it has many advantages. Allowing public leaders to shop around for the most cost-effective service providers helps them squeeze more bang out of every buck. It substitutes competition for monopolies. It helps governments insist on accountability for performance because they can let contractors go if their quality lags or their costs get too high. And it preserves maximum flexibility to respond to changing needs.
This is simply the way we do business in the public sector today. Public education was late to the game, but with chartering, 21st-century methods have finally arrived. In truth, charters are just as “public” as Obamacare, Medicare and Medicaid. They are accountable to public school boards and other public authorizers; they are tuition-free; and they must accept all students (or use a lottery to choose if demand is too high). Indeed, because many district magnet and exam schools select their students, one could argue that charters are more “public” than these district schools.