PPS’s Economics Problem

(and a little history)

Short Version

Charter schools get more money per capita, are held to less rigorous standards, can choose to admit or deny students, and are often less scrutinized than public schools. By creating a tuition-free competitor to public schools along with these looser standards, charter schools have dramatically changed the financial challenges that PPS faces. The community proposal employs a regional choice model that enables students and families to maintain choice in their education while increasing equity. It allows us to compete more fully with the variety of options offered by charter schools.

Below is a deeper and more thorough discussion of basic economic analysis and history.  

How We’ve Always Operated

Historically our district has operated in a model that relies on attendance zones and feeder patterns. Meaning, where you live dictates where you go to school. This model ‘worked’ (in that it functioned as designed, including the inherent racism built into it), for a very long time in many cities and counties all across the country. Of course there were ups and downs, some districts that did better than others. School performance varied within districts, but compared to what we see today, the attendance zone model of urban public schools was functional.

Then something changed - availability of Charter School options. We’ll come back to that.

Basic Economics

About that economics problem. Without getting into the weeds, the basic principle of economics is the balancing of a supply curve and a demand curve in a market to reach equilibrium (where the two curves or lines intersect). These two curves work in opposing directions - as price of a good/service goes up, willingness of a producer to supply goes up but demand goes down, and vice versa. Various market forces can move or reshape those lines.

Economics of Public Education

A public service like education is not quite the same as the sale of goods/services in the market, but the basic concepts work similarly. One unique thing about public schools is that historically, it was essentially a monopoly market - in each district, only one provider offered all public education. That makes that supply curve essentially a vertical line on the chart - the “willingness to supply” based on price etc is removed because the school is required to educate all who apply and live in the district. They don’t get the same kind of choice as a private business. Demand is affected as well, but not as dramatically - people can choose not to go (legal or not), choose to use it as daycare and not engage, choose to be committed, etc… but they’re limited in choice as there is only one provider and education is mandatory until graduation or 18yo in PA.

But, we don’t have a complete monopoly. There have been private schools the whole time, but they are only generally accessible to those with the financial resources to utilize them. What that does, essentially, is create a market within a market - there are two demand curves instead of one. For the purposes of discussing public school enrollment, we can ignore the private supply curve for now. The point is, there is another provider in the mix, however that provider is generally only available for the more privileged families in the district. This also shifts the model slightly, in that the “price” component of it is more accurately represented by the economic means (income) of the families. Those with means can choose to leave public schools for private schools, while most others cannot. This depletes this population in the district and leaves a higher concentration of low-SES pupils in the public schools, as well as higher concentrations of special needs, etc which are more expensive to educate. The cost per student goes higher and higher as this happens.

With this model, we still had a monopoly-like structure for the majority of the city, but options for the more affluent. The model “worked” in that in functioned somewhat well at it’s intended purpose - segregation, racism etc all intertwined as they were.

The chart below shows a bit of what it looks like after adding in private schools (as well as the ability to pay for private tutoring - not the subject of this post). This can be a bit complex, but the main thing to note is that the supply line at the top left is not accessible to the majority of the population, who are left with the vertical supply line at the center of the chart - public schools - as their only realistic option. There is a novel worth of nuance we could dive into here, but this isn’t even the particularly problematic situation yet.

Historical Context

PPS made efforts to start desegregating schools even before Brown v BOE. Our school district was actually a leader in this, in some ways - look up the history of Schenley among other efforts. However, we still did not fully desegregate. PPS despite its successes in some efforts, also strangely resisted the state mandate to desegregate for more than a decade. The primary purpose of the initial introduction of our current magnet programs was to desegregate our neighborhoods (it wasn’t primarily about thematic learning). We did this, along with gerrymandering attendance zones, to try to force our then very segregated neighborhoods to integrate in the schools.

Magnets actually did help to desegregate - in part via natural choice, but also because they were initially allowed to reserve spots by race to force it. That is no longer legal. Without this mandated racial mix, the result over time has become that magnets have become a way for parents with the privilege of a lot of time and ability to navigate the arduous PPS magnet application process, to dominate the system and leave marginalized families behind even further. We need to correct the inequity of access in our district.

The gerrymandering of attendance zones only caused chaos as people abandoned some areas and flooded into others, or out of the district entirely, to get into the schools they most desired. In particular, the wealthier can buy into neighborhoods to get their kids into the “best” perceived schools, while lower SES families cannot afford to do so.

Today, our neighborhoods are still quite segregated by race and socioeconomic status. Our attendance zones breed inequity, and magnets are well intentioned in some ways, but easily manipulated by the privileged. PPS is experiencing a divide that has been and will continue to slowly erode the system, if changes are not made.

But, we’re not done yet.

Enter… Charter Schools

The first charter school in the US opened in 1992, then PA passed charter law in 1997, and Pittsburgh’s first charter school opened in the Northside in 1998. This brings us back to economics, after that brief history detour.

Charter schools changed EVERYTHING in how we need to think about public schooling. But we haven’t changed how we think about public schooling.

Why does it change everything? Think about those supply and demand charts again. It would be getting into some pretty complicated economics to show all the various curves and explain how they interact, but the underlying concept is simple. Now, we have an option similar to that private school supply line, but instead it is zero cost and open to all residents in the district, not just the economically advantaged. Charters do not have to follow all the same reporting practices, do not have to provide the same level of accommodation for special needs (which in some cases is very expensive), but they can take the public funds for anyone who wants to apply and is accepted. We just shifted from a market that primarily functions as a closed, monopolistic market (unless you have significant means to buy your way out of it), into one with consumer choice for every resident in the district. Now, not only can privileged people choose to pay for private school and have a better shot at magnet accessibility, but all income level residents can choose “not PPS” and not need to pay extra to do so. We have an open and competitive market now. Nearly 30 years since the introduction of charter schools (and 40ish years of magnets), people have gotten very accustomed to having some choice in their education - both magnets and charters offered that, and those who could navigate the systems to take advantage of those options did… a lot.

The current district proposal eliminates (almost all) magnets, and relies entirely on the old neighborhood school model, complete with its attendance zone gerrymandering, which is majorly disruptive to neighborhoods and the city as a whole. This is a double-whammy impact to PPS. Families who want to have some choice for whatever reason - family member is close to another school, thematic learning opportunity, desire for a more diverse school body, friend goes there, like the principal… whatever the reason - will not likely just give up all choice because they’re told to - they’ll pick a charter instead. Privileged families in the gerrymandered areas you’re trying to incorporate into a school will move to get into the attendant zone of a perceived “better” school, or leave the district entirely, or enroll in private school. Those neighborhoods that were forced into a school attendance zone they did not want to be in will face economic decline. We’re not guessing here - this is exactly what has happened, and will continue to happen again, every time we try this. Then, to add insult to injury because it predictably didn’t work, we get to do this all over again in 5-10 years due to more segregated, inequitable schools, but now we’ll have even fewer students, be under-utilized, and need to go through closures and restructuring yet again.

More Economics

Back to economics again. There are two primary overarching systems of thought about how to interact with and drive an economy (this is mostly a political perspective of economics, not nerdy more nuanced economics schools of thought). Supply side vs Demand side. Supply side economics is commonly referred to as trickle down economics. This is the concept that if you give the rich and corporations tax breaks, low regulations, etc, they’ll produce more goods, create jobs, etc and the economy grows. This is magical thinking that is mostly just a tool the wealthy use to line their pockets in the short term (long run it causes collapse that brings everyone down, but that’s another story). Demand side economic thinking says that if you create the conditions for higher consumer demand, the supply will come to fill it. There is always capital looking to be leveraged for gains, so if there’s an unmet demand, supply will come. This is actually how economics work in the real world. Simply put, it doesn’t matter how much stuff you create, if the customer doesn’t want it or can’t afford it. Trying to drive things from the supply side never has lasting or meaningful benefits to society as a whole - only to the rich who stand to benefit from short term gains of lower taxes and deregulation.

So how does this apply to public education? Charters made us move from a model of essentially no competition where we don’t have to think about all this economics stuff all that much, to a model with substantial and growing competition. We don’t control charter law (its state level), we don’t have to agree with it (advocate with the state for reform if you don’t like the current laws), but we do have to accept that it is the reality - we have to play the hand we were dealt. What is in those cards now is real competition from charter schools, combined with a “customer” base that has become accustomed to having some degree of choice within PPS via the magnet system.

While ensuring that all of the neighborhood schools have an excellent, well resourced baseline academic offering is a necessary and fantastic goal that we share, leaving that one school as a family’s only PPS choice (we’ll ignore Montessori and CAPA for the moment), is a supply side economics approach to fixing the problem. You can’t address attrition that way in an open market like you could have in a more monopolistic style market. When the economic structure has adapted to having choices, and you remove PPS options that those families strongly desire to best meet their specific needs, many will pick “other,” IE charter schools. This model might work if it was the 50s, 60s, 70s because of the functional monopoly. It will not work today. We need to think differently, adapt to the current times (we’re 25 years late on that already), and develop a demand-side way of approaching the challenges we face. By doing so, we can not only retain students in the district, but actually serve them better for their particular needs. Simultaneously, we drive a much more substantial trend in the opposite direction - people coming back to the great offerings of PPS from their (mostly) under-performing charter schools, as well as attracting families back from private schools.

A Better Way Forward

Our regional choice model is firmly rooted in all of the above, on a foundation of making all of our great opportunities equally accessible to all residents, while retaining enough boundaries to be fiscally responsible in doing so. It is a plan to create diverse schools through choice, not force. It is a plan to offer more than the bare minimum at all schools, but that quality base education at all schools - plus some unique things at each school that suits their interests/needs so they are excited to be there. It is a plan where nobody gets left out when choosing which schools are best for them. It is a plan that will retain far more families than the current district proposal. It is a plan that will adapt to the ever-changing needs of the community these schools serve, drawing people back into the district. It is a plan that sets kids up to create a pathway through PPS that fits their needs, sets them up for life, and doesn’t sacrifice social networks to do so (particularly in how we handle access to our great CTE programs right now). It is a plan that balances our school utilization across a region. It is a plan that balances class sizes across a region. It is a plan that engages our families, communities, teachers, etc to buy in to the school and its mission - these are the BEST drivers of student outcomes.

It is not a perfect plan. Not everyone will always get their top choice, and some might leave. But any challenge this plan faces in that vein, would instead be greatly exaggerated versions of the same problems in the current district proposal.

We need to be bold and innovative and adapt to the conditions of today. The current proposal is literally the exact same system that is failing in just about every urban school district across the country right now, and has been failing PPS for decades, only with “let’s do it a little better with better resource distribution and meeting the minimum standards of art, music, gym, etc at every school.” Those things must be the default assumption of ANY proposal, not the main target. We can do that, we can do it equitably, we can do it somewhat efficiently (excellence will fix the financial problems better than austerity, so we can’t be too stingy here), but we can’t do it using the same old strategies that we already know don’t work in the era of charter schools.

Families Know Best

We would be remiss to not mention, that we do not begrudge any family choosing the school that is best for them and especially for the needs of their child. While we are very critical of the unfair playing field that charter schools has brought into our schools, we understand that every parent needs to do what is best for their kids. For some, charters might currently be that answer. We don’t have control over the state laws that govern charter schools, but PPS does have control over how it responds to the hand it was dealt. We desire PPS to develop such an attractive district, full of options to meet the many varied needs of our residents, so that most people choose PPS because it is the far better option than the charters that compete with us. We can accomplish this, but we need equitably accessible options to our students and families to do so.

Complete Picture

PPS has many, many great pieces of this puzzle already in action. We need to completely rearrange the pieces to make a complete picture that works for all, rather than our current scenario where little segments of the puzzle that work well for a minority of students while the rest of the pieces are in disarray or even upside down. The current proposal is more akin to shuffling them around on the table and flipping them all right side up, while also knocking many onto the floor (attrition). We can, and we must, do better by all the little ones in our great city than just turning the pieces right side up and shuffling them around. We can make a picture that works for all, by thinking differently about how we arrange the good pieces we already have, plus fixing some of the broken ones. The old models won’t work, we need to think bigger and with more innovation.