Why Aren't There More Private Schools?

Why Aren't There More Private Schools?  This is a conversation my dad and I have had any number of times - as he has sat on the board of a number of public and private schools / districts and I have, given frequent moves, oven shopped for schooling for my kids.

The first, perhaps most obvious answer is that there is not that large of a market, because few people can afford to pay two tuitions for their kids (i.e. public school tuition via property taxes and then a separate private school payment).  But, I think that that answer is wrong.  This country is tremendously wealthy, both on average and at the top end.  Most really good private k-12 schools are oversubscribed -- with competitive entry requirements and long waiting lists.  We have all heard stories about New York City schools where you have to practically go straight from the act of conception to the admissions office to have a chance to get the kid in.

I have my own experience with this, in many cities, but take Seattle for example.  In the east side suburbs, their are 3-5 high quality private elementary schools, and for the most part, they are all way oversubscribed.  One of them admits something like 6% of applicants.  And charges $10,000+ a year for kindergarten and more for later years.

What other industries are there where 94% of the demand for a $10,000+ product goes unmet by new entrants?  And unmet for decades, not just in a short period of mismatched capacity?  Just look at iPods - how many people jumped into the market with copycat products when they saw the popularity of this product, and Apple's inability to keep up with demand?

But what really got me thinking about this problem was when I moved back to Phoenix.  Despite having my kids in some of the best schools in every city we have lived in, the absolute best is, of all places, here in Phoenix.  How do I know it is the best?  Well, my son went to kindergarten at this Phoenix school, and then we moved to Seattle for two years.   In Seattle, we went to what was supposed to be about the best elementary school on the east side -  Gates sent some of his kids here, as did the McCaws, and many other people who could afford any place they wanted.  At the end of second grade, the school told me my son could have skipped second grade, which means he could have skipped first grade there too.  In two years, he never learned anything more than he learned in one year of kindergarten in Phoenix.

There are two other interesting things about this Phoenix-area private school, beyond just its excellence:

  • It is by far the cheapest we have ever attended, less than half what we paid in Seattle and well under the average per-pupil spending in public schools
  • It is for profit - not a charity or foundation.  It has no donations, government grants, endowments, etc.  It runs itself for profit, it is inexpensive, and the education is great.

The school is not perfect -- it has a strong focus on academics, without the big theater programs or art programs or photography classes you might find in a large public school, so we have to supplement that stuff outside of school.  But my point is, why aren't there more schools like this?  Why aren't people jumping in to fill this market?  This is more than of academic interest to me.  I am a big supporter of school choice, but to support choice you have to believe that private schools will be created to meet the new demand vouchers would open up.

Thus it is with great interest that I saw this post at Marginal Revolution about the barriers to starting a private school.  They link this article from the Reason foundation.  The Reason Foundation argues that a lot of micro-regulation, particularly zoning, limits private schools, especially when zoning boards are dominated by people who have an interest in protecting public schools from competition.

In the context of my Seattle story earlier, by the way, note this proposal that came out a while back to actually ban private school (and church) construction in large parts of the county that Seattle is in. 

UPDATE:

There were several responses to this along the lines of 'so what - everyone has to navigate basic permitting processes'.  That may be, but my experience is that zoning is stacked against private schools, even before you consider the proposed total ban on private school construction described in the article I linked above.  For example, in the Seattle eastside suburbs, one private school that needed to move to larger quarters was unable to find a site within a 20 mile radius where they were allowed to build a private school.  Residential zoned tracks did not want more traffic from a school, and they were not allowed to have a school with little kids in most commercial zoned tracks.  The point is that private schools face permitting hurdles that go beyond what most businesses face, and, as I mentioned earlier, most zoning boards are packed with people who have a vested interest in not allowing new private schools to be built anywhere.

  • http://www.a-musing.com Highway

    I was talking with my wife about this subject, and came to a lot of the conclusions about the barriers to new private schools. One of them seems to be that unless you have something of an 'excuse' to start a new school, like a religion, you're forced to jump through so many hoops that you 1) have no hope of breaking even, or 2) end up just like the public schools.

  • mw

    I think a big part of the answer is that people are already buying an elite education for their kids at public schools by buying to expensive neighborhoods in upscale communities.

    The pattern here for the wealthy in an upscale university town is expensive private daycare (possibly through kindergarten or 1st grade) then on to the neighborhod public elementary where, it is almost literally true that all the kids are above average and test scores are at the top of the charts. There's something of a bifurcation at the middle school level--since middle schools are neither neighborhood based, nor tracked like the high schools (with separate accelerated and AP courses for top students), so more of the wealthy are looking for private school for those three years. But many then bring their kids back to the public high schools--which offer a greater range of advanced courses and other advanced programs (award winning orchestras, state champion sports teams, yadda, yadda).

    There are several private schools in the district, and I don't think there are serious permitting barriers (the Catholic school, for example recently moved into a new building). The loudest recent complaints, in fact, have been from residents near the site of a proposed new *public* high school.

    Bottom line--in many parts of the country the public schools where the rich live are damn good. Competing with them on a much smaller per-pupil budget isn't an easy task.

  • jdcjr

    I'll tell you why: Schools are in the "people business". You must treat students like people, rather than labor units. NCLB tries to make students into test score generators in order to make distinctions amenable to profitable arbitrage by private schools, but the kids have seen right through this, and many are beginning to rebel. Shame. All the years of public educators sweating blood trying to establish a high-level learning environment are being undone for political reasons by people (and I use the word quite loosely) who really could care less about children being left behind. Better to have supported, nurtured, and expanded the magnet school concept. Just dropped in to comment. Thanks.

  • http://www.analysisparalysis.typepad.com Bart Bullock

    Interesting question on private schools.

    I certainly do not believe that zoning restrictions are the major entry barrier. Sufficient profit potential would overcome this very quickly.

    Education is very labor intensive and it is tough to gain operating efficiencies. Many businesses outsource or develop new technologies to improve profit margins, something not possible in a traditional school environment where live teachers are the major cost. At the same time, while waiting lists may abound in some areas, there seems to be a limit on how much parents are willing to pay. Is there a magic number?

    Compare this with recent successes by online universities that can leverage their talent with technology and are able to build national brands.

    Having said this, I do know of a single shop K-12 private school in our area that is profitable. They underpay their staff (usually young teachers) and overcharge their students (many of whom are members of the elite tennis academy next door whose parents are in Europe or the Northeast). They found a niche and exploited it.

  • http://www.cosmetictimes.com sarah

    I agree with you.

    I'll tell you why: Schools are in the "people business".

    You must treat students like people, rather than labor units. NCLB tries to make students into test score generators in order to make distinctions amenable to profitable arbitrage by private schools, but the kids have seen right through this, and many are beginning to rebel. Shame. All the years of public educators sweating blood trying to establish a high-level learning environment are being undone for political reasons by people (and I use the word quite loosely) who really could care less about children being left behind. Better to have supported, nurtured, and expanded the magnet school concept. Just dropped in to comment. Thanks.

  • jaren

    nah

  • heather stratz

    Can I ask what school your son went to in Phoenix? We are from Seattle and moved to Phoenix eight months ago - we have a niece moving down from Seattle this summer and starting KR - would be great to know. Thanks!

  • Rosie

    My family will be moving to Phoenix this year so I'm looking for a good school for my kids. Can you share the name of the Phoenix private school your son went to? Thanks

  • http://www.halladayeducationgroup.com Douglas Halladay

    Hello,

    There have been a number of excellent comments on the challenges faced by school founders in starting their own school. The mechanics of school formation can be extremely challenging to any group of dedicated school founders. In today’s complicated education environment, the need to work smarter and be ready for the day-one of school opening is critical and can’t be replicated. With proper pre-planning and controls in place over the projects life cycle, founding groups can be better prepared to form the school of their vision, and manage costs and project development efficiently and effectively, establishing the foundation for a legacy school.

    For those seriously interested in taking the next step in starting a school, you can go to my web siteand download several free reports on "Starting a Private School":
    http://www.halladayeducationgroup.com/services.php?sub=school_formation#topheader

  • http://www.locateaprivateschool.com Jason

    I ran across this site for locating private schools in the USA. http://www.locateaprivateschools.com

    Hope this helps.

  • http://www.locateaprivateschool.com Jason

    Sorry, private school website is.

    http://www.locateaprivateschool.com

  • http://www.halladayeducationgroup.com/services.php?sub=school_formation#topheader Doug Halladay

    Without a good foundation and groundwork, a structure will collapse. That's why establishing an independent school requires exceptional planning, preparation, experience, and a commitment to a clear vision.

    The mechanics of school formation, expansion, or merger of schools can be challenging and rife with pitfalls. In today's complicated education environment, the need to work smarter and be ready for the first day of school operation is critical and can't be repeated. With proper pre-planning and controls in place over the projects life cycle, founders can be better prepared to start the school of their dreams, and manage costs and project development efficiently, establishing a a solid foundation. Halladay Education Group is a professional consulting firm dedicated to providing customized strategic solutions for founding groups who want to start their own school. With our collective experience of specialized professionals in the education sector and our knowledge and wisdom in starting and leading schools, we can guide a group through the enormous challenges that they will face. Why take on the pitfalls that every group faces in starting a new school, when you can utilize our services and focus on the big picture; bringing your dreams to reality.

    HEG’s services will assist founding Boards and School Leaders with the basic elements needed to start, merge, or expand a new school. HEG can assist you from beginning to completion, or simply share our individual expertise with:
    - Development of a Compelling Vision
    - Create the Strategic Plan, Mission, Values, Goals, & Operational Plan
    - Establish School Society, Non-Profit Status, Bylaws, Constitution, & Incorporation
    - Build Credibility & Awareness in the Community
    - Recruit & Educate the Board & Senior Administration on Exceptional Leadership, Governance, & Team-Building
    - Develop the Business Plan & Target Market
    - Market Research to Ensure the Vision Meets Existing Community Demand
    - Support Development of the Facility Needs, Design, Site Search, & Lease/Purchase
    - Identify Personnel Needs, Executive Search, Staff Recruiting, Job Descriptions, & Contracts
    - Ongoing Evaluation & Support for the Head
    - Establish Faculty Appraisal System & Professional Development Plans
    - Build the Education Program
    D- etermine Combinations for Starting Grades & Phase-In Stages
    - Develop the Marketing Plan to Drive Enrollment, Public Relations, Competitive Positioning, & Admissions Process
    - Establish Comprehensive Fund Raising Plan
    - Support Development of Strategic Financial Plan for the Formation & Operational Stages
    - Devise School Schedule & Timetable
    - Establish Student Management, Record Storage, Accounting, & Reporting Systems
    - Support Procurement Process for F.F.E.
    - Prepare Policy Manuals for Staff, Students,& Parents
    - Establish Timelines & Project Management System in Formation Stage

    Benefit to You

    As you can see, the tasks required to start a school are extensive and specific to this unique education sector, and can be costly if not implemented correctly. By utilizing our services, we add value in many ways -- you take advantage of professionals who have a proven background in leading independent schools and are experienced in the mechanics of starting schools. With our know-how, we can put together a solid business plan, maximize enrollment and fundraising, align decisions with the vision, and ensure that a new staff supports the mission.

    Halladay Education Group’s
    mission is to ‘Help You Achieve Greater Success.’ We want to
    become your trusted advisor, a
    partner as invested in your future as you are.

    FREE Offer
    Contact us today for a F-R-E-E 1-on-1 60 minute consultation certificate and our 2-part Special Report on the ‘13-Steps to Starting Your Own School.’’

    Contact us at:
    P: 604-868-0002 │ F: 1-866-472-8737
    E-mail: info@halladayeducationgroup.com
    http://www.HalladayEducationGroup.com