Portfolio Management Fails in New Orleans

Supporters of Portfolio Management have held up New Orleans as a model for what they are advocating.  They argued that every city should be like New Orleans in which a single, super-regulator could oversee a portfolio of schools to ensure that only quality schools are opened and expanded while bad ones are closed.  The Portfolio Manager could also issue regulations to govern school discipline, admissions, special education, and transportation as well as ensure “coordination” among the schools.

ednext-may16-blog-neworleans-mapIt was a beautiful dream until we woke up this month to discover that the Louisiana legislature is transferring responsibility for all schools in New Orleans from the Recovery School District, the city’s Portfolio Manager, to the locally elected Orleans Parish School Board, which has repeatedly declared its hostility toward charter schools.  This hostile school board will assume all responsibility for opening and closing all schools as well as continue regulating discipline, admissions, special education, transportation and other matters it deems necessary.  The fox has officially been awarded the keys to the hen house.

Those in denial about this failure cling to provisions in the state law that say charter schools will maintain their operational autonomy even after the school board takeover. But these declarations protecting autonomy are likely to be as meaningful as the Kellogg–Briand Pact declaring that war is illegal. If the school board can open and close schools as well as issue a host of regulations about their operations, they effectively control their operations.

A big problem with building a centralized authority — a Portfolio Manager — to govern all schools is that you cannot count on the good guys being in charge of that process forever.  Eventually, in this case barely a decade later, forces hostile to school choice will assume control of the Portfolio Manager and begin to strangle choice.

If only someone had warned backers of Portfolio Management about these dangers!  Oh wait…

In general, centralized, monopoly regulators are more susceptible to capture than decentralized, multiple regulators. The problem with portfolio districts is that they are trying to be one ring to rule them all…. The ability to control who operates all types of schools and what regulations govern them is too much power not to attract bad people to it or to corrupt those who possess it.

The solution is to decentralize power so that schools are governed by multiple regulators…. When that power is dispersed, it is too hard to capture all of them and they compete with one another to keep regulations reasonable. This is the logic behind separation of power and federalism. It is the virtue of Tiebout choice. The superiority of dispersing and checking power was understood by the founders. It was understood by Montesquieu. It was really Woodrow Wilson who launched a full-frontal attack on the idea of dispersed power and it is his progressive descendants who continue to this day to believe that they can wield the One Ring for good.

Arizona provides an alternative model for how to create a large and successful charter school sector.  Rather than building centralized machinery for controlling all schools of choice, like the Portfolio Manager in New Orleans, which can be captured by forces hostile to school choice, Arizona has multiple authorizers and light regulation.  No one will be able to capture the authorizers in Arizona and turn that machinery against them.

Of course, because choice creates its own political constituency, the charter schools in new Orleans will not collapse or be strangled immediately.  But the Portfolio Management approach has built the regulatory infrastructure to hassle those schools, prevent new ones from opening, and slowly squeeze them out.  At the very least, the progress of the charter sector in New Orleans will stagnate.  In Arizona, where charter schools will not have to run the gauntlet of a hostile regulator, that sector is likely to thrive.

Despite the fact that Portfolio Management is now one of the most popular reforms and despite the enormity of the setback in New Orleans, there has been relatively little discussion of this development in the blogosphere.  It’s bad enough not to have anticipated the rather predictable failure of Portfolio Management, but reformers can’t even acknowledge the failure.  How are we supposed to learn from this and avoid similar mistakes if we can’t even acknowledge that Portfolio Management has experienced a dramatic political failure in New Orleans

— Jay Greene

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