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US Schools Move to Break Up Central Administrations

[USA Today] — Just last week I quoted a report on the decentralization of higher education in, of all places, the Socialist Republic of Vietnam. Another important story on educational decentralization that appeared last week just came to my attention: reporter Del Jones’s article “Schools take a lesson from big business” in the March 9th edition of USA Today.

The only objection I have to the story—and it’s an important objection of style, if not of substance—is that it pitches decentralization as “taking a page from the book of business.” Decentralization is not the right thing to do because it’s a business idea; it’s the right thing to do because it’s a good idea, for education, for business, even for the military. Decentralization rewards creativity and individual initiative, it enhances loyalty and long-term institutional stability, and it promotes thrift and responsible financial management. (When was the last time you heard thrift recommended as a virtue in higher education?)

I think the most stunning comparison in the story is this one: “The Catholic schools in New York City have a central office staff of 22. The public schools have 10 times as many students, which should translate into a central office staff of 220 … but the actual number is 25,500.” That’s more than 25,000 lost positions for teachers and other front-line educational personnel.

The article is a long one, but it is well worth reading. The spirit that animates the supporters of decentralized public schools is the same spirit that animates the residential college movement.

Schools take a lesson from big business

Of ideas for improving the public schools, none sounds more dull and dreary than decentralization.

Yet since DuPont introduced decentralization to business nearly 90 years ago, large companies have stumbled across few ideas that have better withstood the test of time. Now, momentum is building from New York City to San Francisco to Miami to decentralize public schools and drag them into the 1920s.

There are 12 school districts in the USA that have more than 10,000 teachers, and that’s not counting non-teaching employees. Companies that grow past 1,500 employees start to bulk up at the center and become bureaucratic, says UCLA management professor William Ouchi.

Just as General Electric’s Jack Welch spent much of his 20-year career as CEO fighting bureaucracy to create an environment of small companies at the behemoth corporation, some school systems are recognizing that principals know their neighborhoods. Decentralization, often called autonomy, takes billions of dollars away from superintendents and the legions of central office minions and turns it over to those schools and principals.

The movement goes back 30 years to Edmonton, Alberta, where principals today control 92% of the money, and local voters have consistently indicated in school board elections that they will have it no other way.

But elsewhere the movement has been slow. Public schools have the luxury of resistance because they can’t go out of business. “Unlike the woolly mammoth,” schools can persist in a state of failure, says Ouchi, a longtime proponent of the push. Also, not every neighborhood school, principal and teacher welcomes the accountability that decentralization brings. It may sound nice to be in charge of a $10 million high school budget until you find out that you, not school boards and superintendents, take the heat for tough choices, such as cutting funding for the school band.

Decentralization is, however, starting to make inroads into giant school districts. In January, New York City decided to increase the number of schools in its autonomy zone from 58 to more than 200, turning the nation’s largest school system into a serious player in the decentralization movement. Today, Miami-Dade County Public Schools (No. 5) will hold committee meetings with the goal of giving 18 schools freedom from district control to tailor their staffing and purchasing. That decision is to be made by the school board next week.

Seattle and Houston (No. 8) decentralized 10 years ago, followed six years ago by San Francisco and St. Paul. Boston and Chicago (No. 4) have small experiments. Oakland jumped in with a district-wide program last year, and Hawaii (No. 10) started it statewide this year.

School boards have it under consideration in Charlotte (No. 24) and Las Vegas (No. 7), says Ouchi, who gained respect in 1981 when many were predicting that the runaway world economic power of the future would be Japan. Ouchi refuted the defeatism in his business best seller Theory Z: How American Business Can Meet the Japanese Challenge. His refocus today on education is attracting other top management experts into the field, and — for the first time in 50 years — the Academy of Management Journal ( concentrated on public education in its January issue.

“When I was principal of a big high school in Los Angeles, I never saw the damn phone bill,” unless asked to reprimand someone for making “bizarre calls to Afghanistan,” says Michael O’Sullivan, president of the Associated Administrators of Los Angeles, a union for principals.

Many principals prefer it that way, and the annual turnover rate for principals edges up from 12% to 15% when decentralization is introduced, Ouchi says.

A new breed of principals

But those who leave are often replaced by principals like Clover Codd, 31, who sees decentralization as entrepreneurial.

Codd is in charge of a $1.6 million annual budget at Loyal Heights Elementary in Seattle, where schools are autonomous, dollars follow students, and parents can choose within geographic clusters of six to eight schools. “I like to think my job is on the line,” if test scores were to plummet at Loyal Heights for consecutive years, says Codd, who saved the school enough money to hire a part-time counselor to work with students on mental health.

That’s the way it’s designed to work, Ouchi says. Under decentralization, the heat might get turned down at night or the gym floor might go another year without refinishing. In the past, if a school made such efforts to save money, the funds would only be sent back to the central office to be spent by someone else. Now it stays where it may mean a part-time reading instructor. When substitute teachers are paid by headquarters, teachers call in sick more often. When money saved on substitutes comes back to the school, absenteeism falls 40%, Ouchi says.

Principals at high schools in New York City’s autonomy zone have given up assistant principals, guidance counselors and attendance clerks. But they have been able to add so many teachers with the same budget that the number of students a teacher sees each day has been driven down from 160 to 60, Ouchi says.

This flexibility to redirect resources is a lesson DuPont learned after it took its World War I gunpowder profits, expanded into an unwieldy conglomerate and nearly went broke, says John Smith, a Lehigh University professor who specializes in the history of industry. As a last resort, division heads were given control of their budgets and promoted or fired based on division profits and losses. Today, companies such as Texas Instruments give semi-autonomy to just about everyone with managerial authority. Decentralization spurs innovation and creativity by making supervisors “the master or mistress of their own destiny,” says Texas Instruments Vice President Marcia Page.

But even in business, decentralization is a work in progress. Sara Lee struggled when it became the ultimate in decentralization, a holding company for independent divisions that made everything from Wonderbras to Jimmy Dean Sausage. New CEO Brenda Barnes says the company was so decentralized that there was no knowledge-sharing or camaraderie from one division to another. She is trying to balance the efficiencies of decentralization while getting Sara Lee’s 137,000 employees to feel part of the whole rather than islands. Barnes says decentralization makes sense for public schools, but it can’t be used for everything. For example, information technology “has to be centralized, or you wind up with a hodgepodge that doesn’t talk to each other,” she says.

Ouchi says schools have no choice but to decentralize if they want to succeed. Since 1932, the number of public school students has doubled to 50 million, yet the number of school districts has declined from about 127,000 to 16,000. New York City and Los Angeles now have budgets as large as Dell Computer or Johnson & Johnson.

Ouchi’s reputation from Theory Z gave him the clout to raise $1 million for ongoing research on decentralized schools. He concludes that they consistently outperform traditional public schools. For example, math and reading scores have improved more in decentralized Houston than in Los Angeles, both large school districts with similar demographics. But accurate comparisons are never easy in education and have proven subject to manipulation. In this case, Houston was found to be undercounting its dropouts.

Criticism clashes with praise

“Decentralization is a terrible idea that would be a disaster,” says A.J. Duffy, president of United Teachers Los Angeles. Too many principals and assistant principals are “demigods who take credit for what teachers do and blame teachers for what goes wrong,” and they would become more “mean spirited” if given the power of the purse, he says.

Decentralization works in industry, Duffy says, because employees can find a similar job elsewhere if they have an abusive boss. “You can’t do that in schools,” he says. “You either work there, or you become a welder.”

But decentralization probably serves to weed out bad principals, says former astronaut Sally Ride, who straddles the worlds of education and business as the owner of Sally Ride Science, which encourages girls to pursue science and math careers. Ride concurs that there are bad principals, which is why there “is value in having their feet held to the fire.”

Ouchi points to large private school systems, which decentralized long ago. The Catholic schools in New York City have a central office staff of 22. The public schools have 10 times as many students, which should translate into a central office staff of 220, Ouchi says, but the actual number is 25,500.

Educators such as Duffy find decentralization one more business intrusion on schools when “the Delphis, the Enrons, the WorldComs” prove that business is far from the perfect role model.

Critics worry that principals could skim money from schools, but that has proved unfounded, probably because $500 to an individual school is a lot of money and would be noticed, whereas it’s a rounding error in the $13 billion Los Angeles Unified School District, Ouchi says. Even those like former Los Angeles principal O’Sullivan, who agrees that decentralization is a good idea, say it’s just another flavor of the month that will be implemented and abandoned with each new mayor and superintendent.

Ouchi sympathizes and agrees that schools have long been whiplashed by one idea replacing the next. But he says decentralization will stick, as it has for 30 years in Edmonton, because schools and parents resist new regimes if they attempt to take back the money.

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