The Applicability of Market-Based Solutions to Public Sector Problems.

MF01/PCO2 Plus Postage. Educational Economics; Educational Policy; Elementary Secondary Education; *Free Enterprise System; *Organizational Theories; *Private Sector; Public Education; *School Based Management; School Choice; School Restructuring This paper examines the ways in.which privateand public-sector location affects organizational structure and functions, and the implications for school reform. It identifies the differences that are often overlooked when policymakers utilize market-based organizational reform models to address public school problems. Two fundamental questions are asked: How useful are market-based rodels in addressing public-sector organizational problems? ; and What organizational characteristics are central to the successful implementation of market-based organizational reform efforts? The paper first discusses two theoretical perspectives--organizational ecology and resource dependency--to explore the specific organizational features likely to result from market and public-sector contexts. The next part examines two current market-based educational reform models--school choice and school-based management. The analysis suggests that market-based models are potentially useful for addressing public-sector organizational problems. However, the models should be applied with care, recognizing the underlying conditions present in the private sector that may or may not be present in public schools. The public educational system is constrained by: (1) the lack of an educational "market"; (2) the weak link between school performance and funding; (3) operating procedures and organization that are structured to manage existing environmental resource dependencies; (4) a locus of control that stresses strict control over inputs rather than outcomes; and (5) diverse organizational goals. Two tables are included. (LMI) r's 00 rI 00 U S DEPARTMENT OF EDUCATION Ohre d E cli,cai onsl FieSea,cn and Imp.o. ernent EDUCATIONAL RE SOURCES INFORMATION CENTER (ERIC) ge<tiuS document has been teoroduced as . 7coge,,,. eedunghe,,,h the person 0, otganaaion Eknot changes nave been made to . np.O. e teOtoduchon Quality Po.nt S of wevr or options stated m ih.s doc ',lent do not necessary terueSent ott,CIe, OE RI oosdon pr oolCY -PERMISSION TO REPRODUCE THIS MATERIAL HAS BEEN GRANTED BY TO THE EDUCATIONAL RESOURCES INFORMATION CENTER (ERIC) The Applicability of Market-Based Solutions to Public Sector Problems Carolyn Kelley University of Wisconsin-Madison 1025 West Johnson Street, Rm 1186E Madison, WI 53706 608-263-5733 Paper presented to the Association of Public Policy Analysis and Management Annual Research Conference, Chicago, Illinois, October 27-29, 1994. The research reported in this article was supported by the Consortium for Policy Research in Education (CPRE) Policy Center, (Grant No. OERI-R117-G10007), the Finance Center (Grant No. OERIR117-G10039), and by the Wisconsin Center for Education Research, School of Education, University of Wisconsin-Madison. The opinions expressed in this article are those of the author and do not necessarily reflect the views of the U.S. Department of Education, Office of Educational Research and Improvement, the institutional partners of CPRE, or the Wisconsin Center for Education Research. L3EST COPY AVAILABLE 6 The Applicability of Market-Based Solutions to Public Sector Problems Carolyn Kelley University of Wisconsin-Madison Educational administrators and policymakers often suffer from a kind of research myopia, ignoring research evidence collected in other sectors that may provide insights and information on potentially useful approaches in education. The experience of organizations operating in the private sector can provide valuable information for the development of high performing educational organizations. Recently, educational researchers have applied research findings from the private sector to models of public school management, governance, and