International Contracting and Purchasing by jym67032

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									Contracting for the Delivery of Education
Services: A Typology and International
Examples

PEPG-World Bank Conference Mobilizing the Private Sector
for Public Education
Harvard University
Cambridge, Massachusetts
5 October 2005
Norman LaRocque
nlarocque@nzbr.org.nz
Financing and Provision


                                Provision
  Financing           Private               Public

  Private        Private schools     User fees
                 Home schooling




  Public         Vouchers            Traditional public
                 Charter schools     schools
                 Contracting out
Contracting Defined




 A purchasing mechanism used to acquire a specified service, of a
      defined quantity and quality, at an agreed-on price, from a
               specific provider, for a specified period.

                                   -      Taylor (2003}
Four Types of Contracting in Education


   Private management of public schools.

   Government contracting with private schools for delivery of
   education services.

   Public private partnerships for infrastructure.

   Private sector administrative and curriculum support.
Potential Benefits of Contracting


   Increase efficiency – competitive pressure.

   Allow governments to take advantage of specialized skills that
   might not be available in government.

   Overcome operating restrictions – eg. obsolete salary
   limitations, antiquated civil service restrictions.

   Permit quicker response to new needs and facilitate
   experimentation with new programs.
Three Forms of Contracting


   Management Contracts: Government contracts with provider
   to manage existing service using government infrastructure and
   staff.

   Operational Contracts: Government contracts with provider to
   operate existing service using government infrastructure, but
   private sector staff.

   Service Delivery Contracts: Government contracts with
   provider to deliver specified services.
Typology of Direct Government Provision versus Private Sector Delivery




                                                                                  Who Provides
  Delivery Arrangement       Who Defines Service?   Who Delivers Service?                                 Who Finances Service?
                                                                                 Inputs/Infrastructure?




Direct Government
                                 Government             Government                Government                  Government
Provision




Management Contracts             Government            Private Sector             Government                  Government




Operational Contracts            Government            Private Sector       Private Sector/Government         Government




Service Delivery Contracts       Government            Private Sector             Private Sector              Government
Private Management of Public Schools


  Private management of public schools – relatively recent phenomenon in
  education.
  Involves governments or public authorities contracting directly with private
  (for-profit or not-for-profit) providers to operate a public school.
  Schools remain „free‟ to students.
  Contracting arrangements tend to be used in most disadvantaged areas.
  Examples include:
    •   Education Management Organizations and Charter Schools (USA)
    •   Fe y Alegria (South America)
    •   Concession Schools of Bogota (Colombia)
    •   Academies Program (UK)
    •   Transformed Schools (China).
Education Management Organisations (EMOs), USA

  535 schools being managed by 59 EMOs
                                                      History:
  and nearly 240,000 students in 24
  states/DC in 2004/05.                                  •   Began early 1990s - EAI
                                                         •   Initial setbacks (eg. Baltimore)
  Edison Schools, National Heritage
                                                         •   Setbacks in 2000/01 – Edison
  Academies and White Management are
  largest providers.                                         Schools financial situation
                                                         •   Recovery.
  Two forms of contracting with schools
  (Figure 1):                                         Growth in recent years – number of
     •   Direct. EMOs are contracted directly by
         local school board to manage a public        schools up by factor of four between
         school                                       1998/99 and 2004/05 (Figure 2).
     •   Indirect. EMOs manage charter schools        Chicago Public Schools (Renais-
         either as the holder of the school charter   sance 2010), Denver Public Schools,
         or under contract to the organization that
         holds the school charter.                    Philadelphia.
  Latter form becoming more common – in
  2004/05, 86% were privately managed
  Charter schools.
     Figure 1: Forms of EMO Contracting

Direct management       Indirect management
     contract                 contract
                           School board
School board
                             Charter
                           organization




  Management                 Management
   contractor                 contractor

  School                      School
                    Figure 2: EMO Managed Schools/Enrollments, 1998/99-2004/05

                    600                                                                          300,000
                                                                                          535

                    500                                                       463                250,000

                                                                   406
Number of Schools




                    400                                  368                                     200,000




                                                                                                           Enrollments
                                               285
                    300                                                                          150,000
                                     230

                    200                                                                          100,000
                           135

                    100                                                                          50,000



                      0                                                                          0
                          1998/99   1999/00   2000/01   2001/02   2002/03    2003/04   2004/05

                                    Schools Under EMO Management            Enrollments
Charter Schools, USA


   Public schools that are freed from much of the regulation that applies
   to standard public schools (eg. zoning, curriculum, industrial
   relations), in exchange for accountability requirements.

   Often with specialist focus or mission – at-risk kids, arts, science, etc.

   Publicly funded, but not for capital. Schools remain free to students.

   Fast growing area (see Figure 3) - first Charter school opened early
   1990s. Now have 3,343 schools with nearly 1 million students.

   Management can be contracted out to for-profit/not-for-profit providers.
Figure 3: Number of Charter Schools, USA, 1992/93 – 2002/03
Concession Schools, Bogota (Colombia)


  Management of poor performing public
  schools is turned over to private institutions
  with proven track records of delivering high
  quality education.
  25 schools serving over 26,000 students
  (see Figure 4).
  Autonomy over school management.
  Serve disadvantaged students.
  15 year contract.
  Designed to overcome problems faced by
  public schools – inability of schools to hire
  own personnel, lack of labor flexibility,
  bureaucracy.
  Schools paid $US500 per student per year
  – well below what public schools are paid.
Figure 4: Enrollment Growth, Bogota Concession Schools, 2000-2004

                30,000


                                                            26,308

                25,000
                                                   23,117

                                          21,430

                20,000           19,374
  Enrollments




                15,000




                10,000

                         7,007


                 5,000




                    0
                         2000    2001     2002     2003     2004
Fe y Alegria Schools in South America


  Fé y Alegría (FyA) established in
  Venezuela in 1955 by Jesuits.
  Operate formal pre-school, primary,
  secondary and technical education
  programmes in poorest communities
  in Latin America.
  Government pays teachers and
  principals. Non-government sector
  pays for the rest.
  Schools in 15 countries, 1.2 million
  people in FyA network (around
  500,000 in formal education), 31,000
  staff.
  Growing enrolments (Figure 5).
Figure 5: Enrollment Growth, Fe y Alegria, 1980-2003

  1,400,000



  1,200,000



  1,000,000



   800,000



   600,000



   400,000



   200,000



         0
            80
            81
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            92
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            00
            01
            02
            03
         19
         19
         19
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         19
         19
         19
         19
         19
         19
         19
         19
         19
         19
         19
         19
         19
         20
         20
         20
         20
Government Contracting with Private Schools for Delivery of
Education


   Government sponsorship of students in private (Côte
   d‟Ivoire)

   Alternative Education (New Zealand)

   Educational Service Contracting (Philippines).
Government Sponsorship of Students at Private
Institutions (Cote d‟Ivoire)

   Government sponsors students to attend private schools given lack of places
   at public secondary schools. Key elements of the scheme are:
     •   private schools are paid on a per-student basis. Payment rises with student's
         education level ($US200+)
     •   students in lower/upper secondary, as well as technical and professional training
         are eligible. Applies to both religious and secular “chartered” schools
     •   placement of students is linked to school performance.

   116,210 students in 1993 to 223,244 in 2001 – 92% growth.
   Public financing of private schools: $26 million in 1993 to $39 million in 2001
   In 1995/96, 40% of students in private institutions were state sponsored.
   Private primary schools receive subsidies.
Alternative Education (New Zealand)


  Alternative Education (AE) funds delivery of education in non-school
  settings for school-age children who have become alienated from the
  education system.
  Introduced in 1997.
  Schools can contract private providers to deliver AE.
  Over 3,100 students were enrolled in AE at some time during 2003.
  200 AE providers at start of 2004 – up from around 120 in 2001/02.
  Schools are funded for AE on a per-student basis through contracts
  with the Ministry of Education – $US7,500.
Educational Service Contracting (Philippines)


  Educational Service Contracting (ESC) – government contracts with private
  schools to enrol students in areas where there is a shortage of places in public
  high schools.
  Administered by the Fund for Assistance to Private Education (FAPE), a private
  not-for-profit organization.
  Certification program for schools participating in ESC.
  280,000 students in 1,500 schools.
  Number of ESC recipients increasing (see Figure 6).
  ESC numbers increased by 50,000 in 2004/05 and per-student payment
  increased to PhP4,000 (from PhP2,500).
  Other contracting schemes exist at tertiary, school and early childhood
  education level.
Figure 6: GASTPE Recipients and Schools, 1986/87-2003/04

   300,000                                        1,600

                                                  1,400
   250,000
                                                  1,200
   200,000
                                                  1,000

   150,000                                        800

                                                  600
   100,000
                                                  400
    50,000
                                                  200

           0                                      0
           19 /87

           19 /88

           19 /89

           19 /90

           19 /91

           19 /92

           19 /93

           19 /94

           19 /95

           19 /96

           19 /97

           19 /98

           19 /99

           20 /00

           20 /01

           20 /02

           20 /03

                   4
                /0
       86

             87

             88

             89

             90

             91

             92

             93

             94

             95

             96

             97

             98

             99

             00

             01

             02

             03
      19




                       Recipients   Schools
Public Private Partnerships (PPPs) for Infrastructure


  Increasingly common form of procurement for large infrastructure projects in the
  education sector.
  Key characteristics:
     •   private sector partners invest in school infrastructure and provide related non-core services
     •   government retains responsibility for the delivery of core services such as teaching;
     •   Government/private sector arrangements governed by long-term contracts – usually 25-30 years
     •   contracts specify the services the private sector has to deliver and standards to be met
     •   service contracts often bundled – finance, design, building, maintenance and employment of non-core staff
     •   payments are contingent upon the private operator delivering services to an agreed performance standard.

  Different types of infrastructure PPP exhibit varying degrees of private sector risk and
  responsibility: BoTs, DBFO, BOO, etc.
  Private Finance Initiative in UK is largest PPP program – 102 education deals signed,
  with a value of approximately $US3.6 billion.
  Other examples include New Schools Project (NSW, Australia), P3 Program (Nova
  Scotia, Canada), Offenbach Schools Project (County of Offenbach, Germany),
  Montaigne Lyceum (The Hague, Netherlands), JF Oyster School (Washington DC).
Private Sector Administrative & Curriculum Support


  Contracting out of Local Education Authority (LEA) Functions, UK
    •   forced or voluntary outsourcing to the private sector
    •   20 of 150 LEAs in England have had functions outsourced (eg. schooling improvement,
        literacy/numeracy, support services)
    •   accelerated by 2002 order authorizing the contracting out of 103 LEA functions.

  Pitágoras Network of Schools, Brazil
    •   school improvement package that offers integrated curriculum, management and technical
        support to affiliated schools
    •   supports public and private schools – 350 schools and 150,000 students.

  De La Salle Supervised Schools (LASSO), Philippines
    •   administrative, academic and spiritual assistance to private schools serving predominantly
        middle and low income students.

  Sabis Network of Schools
    •   schools in network retain their financial and administrative independence, but implement the
        Sabis Educational System, an internationally focused curriculum
    •   31 schools, 28,000 students.
Evidence on Contracting


   Evidence across a number of sectors that contracting can lead to lower
   costs and improve performance, if done right.
   But little evidence on the experience of contracting with private sector
   for education:
    •   Limited research on contract schools
    •   Most evidence is qualitative/descriptive in nature
    •   focused on design and implementation of education contracting, rather than
        education outcomes.

   More sophisticated evaluations in the area of Charter schools (eg.
   Hoxby and others). Results inconclusive – studies show
   improvements, no change or deterioration in performance.
   Health sector further ahead in terms of rigorous evaluations.
Contracting for Education: Guiding Principles


  Enabling policy, regulatory,      Performance incentives and
  strong legal                      sanctions
  Split purchaser/provider roles    Effective contract monitoring
  within government                 framework
  Ensure the capacity of the        Give providers maximum
  contracting agency                flexibility to operate

  Transparent, competitive          Introduce longer-term
  process for selection             contracts with providers

  Staged process for selection of   Secure independent entity to
                                    evaluate
  providers
  Establish appropriate
  performance measures
Conclusion


  Many examples of contracting in education.

  Not arguing that contracting always the best option, but can play a role
  in the mix of choice-based policies.

  Little evidence to date on impact of contracting on education outcomes.

  Works better under some conditions than others.

  Politics of contracting in education is hard.
www.educationforum.org.nz

								
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