The New Landscape of Educational Privatization in the Era of NCLB: Educational Privatization Has Received Great Attention in Recent Years. Most Often, the Focus Is on Companies That Manage All Aspects of School Operations. but Ms. Burch, Mr. Donovan, and Mr. Steinberg Examine the Rise and Impact of Specialty-Service Providers That Perform Specific Functions for Schools or Districts

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PRIVATIZATION is a buzz word in education circles. It covers a broad range of activities, initiatives, programs, and policies, including charter schools, vouchers, and the contracting out of services and management. Educational privatization has a long history in the United States. (1) In the past two decades, much media and scholarly attention has been devoted to the educational management industry. Educational management organizations (EMOs) are comprehensive in nature and include companies that manage entire school systems or entire schools. These firms typically assume full responsibility for all aspects of school operations, including administration, teacher training, and such noninstructional functions as building maintenance, food service, and clerical support. Edison Schools, the brainchild of entrepreneur Chris Whittle, is perhaps the best known of the EMOs.

However, educational privatization has implications for public schooling far beyond what is evident in the efforts of today's EMOs. The next chapter of educational privatization is being written by firms of a different kind, which have tended to receive much less attention from researchers and the press but cannot be ignored. These are the specialty-service providers. (2)

Specialty-service providers contract to fulfill specific educational functions. Their products and services range from software for tabulating and reporting test scores to the design of instructional materials. In contrast to other forms of privatization, such as vouchers, school districts maintain direct control over funds paid to specialty-service providers and, in theory, control the use of those funds through the design of requests for proposals and the establishment of contracts.

No Child Left Behind (NCLB) is just the most recent effort in a decades-long national movement to give the private sector a larger role in school reform. However, NCLB is distinctive in that it requires, not simply permits, some local school systems to contract with private providers for services. Across the U.S., test publishers, software companies, and research firms are swarming to take advantage of the revenues made available by NCLB. Such well-established firms as ETS have been joined by a newer breed of providers whose product design and marketing strategies have been informed by the Internet. These later firms have names such as PowerSchool, Brainade, and Orion's Mind. Many begin as start-ups and then, once they demonstrate their profitability, are acquired by conglomerates such as publishing houses. Like their counterparts among the EMOs, the firms gaining prominence under the new educational privatization are drawing on political networks, new technologies, venture capital, and government revenues to become major suppliers of services to school systems.

Among the accountability measures faced by schools that fail to meet NCLB's specified goals is the requirement that they offer students the chance to receive after-school remedial instruction from private service providers. It is more than a little ironic that, while NCLB puts real teeth into its accountability policies for schools and districts, it offers little guidance or meaningful sanctions for strengthening the accountability of private firms that are increasingly responsible for providing such tutoring.

To analyze the role of NCLB as a driver of current developments in the K-12 education market, we examined market-trend data from the education industry and from annual reports (1997-2004) filed with the Securities and Exchange Commission by publicly traded key suppliers. (3) We identified four dominant domains of contracting with specialty-service providers in the K-12 education sector: test development and preparation, data management and reporting, remedial services, and content-specific programming.

In investigating these four domains, we collected data on the roles of both governmental and nongovernmental organizations. …