International Evidence on Public-Private Partnerships to Improve Access and Quality in Education

1. International Evidence on Public-Private Partnerships to Improve Access and Quality in Education Harry Anthony PatrinosWorld BankOctober 2007

2. Public-Private Partnerships: Defined • No fixed definition of PPPs • Definitions differ in terms of scope and formality of arrangements • Various definitions: “risk sharing relationship based upon an agreed aspiration between the public and private sectors to bring about a desired public policy outcome.” – Commission on UK PPPs “cooperative venture between the public and private sectors, built on the expertise of each partner, that best meets clearly defined public needs through the appropriate allocation of resources, risks and rewards.” – Canadian Council for PPPs

3. Common Elements • Formal arrangement with contractual basis • Involve public and private sectors • Outcome focus • Sharing of risks/rewards between public and private sectors • Recognize complementary role of public and private sectors

4. Role of Government in Education • Rationale for government involvement in education: • Externalities • Capital market imperfections • Agency concerns • Equity • Information asymmetries • Government has a variety of policy instruments at its disposal in order to meet its policy objectives: • Ownership/Delivery • Funding • Regulation/Information • PPPs recognise that governments can meet their policy objectives using different service delivery models – not just ‘traditional’ public finance/public delivery model

5. Financing and Provision

6. Benefits of Public-Private Partnerships • Increase efficiency – improved performance incentives and increased competitive pressure • Improved quality of service delivery • Secure specialized skills that may not be available in government agencies • Overcome public service operating restrictions – obsolete salary scales, out of date civil service work rules, etc • Permit quicker response to changing demands and facilitate adoption of service delivery innovations

7. Benefits of PPPs (cont’d) • Benefit from economies of scale regardless of the size of the government entity • Allow government agency to focus on functions where it has a comparative advantage • Increase access, especially for groups who have been poorly served under traditional forms of service delivery • Increase transparency of government spending by making the cost of services more visible

9. Examples of Education PPPs • Government contracting with private schools • Private management of public schools • Infrastructure PPPs • Vouchers/subsidies • Public/private sector affiliation arrangements • Private sector regulation • Innovation and research PPPs

10. Examples of PPPs

11. Examples of PPPs (cont’d)

12. Contracting Models in Latin America

13. Programs • Private management of public schools • Management contracts, professional services, operational contracts • Charter schools, concession schools, etc. • Involves governments or public authorities contracting directly with private (for- & non-profit) providers to manage public school • Schools remain ‘free’ to students – no fees • Schools responsible for all aspects of school operation • Used mostly in disadvantaged areas • Contract for education of specific students • Vouchers, scholarships, direct funding of private (& public) schools

14. Evidence on PPPs • Limited rigorous evidence on impact • Ideal evaluation involves random assignment & use true control group or natural experiment • Much debate over impact of vouchers in Chile and USA, remain controversial • Many studies on impact of charter schools, though few randomized trials

15. USA: EMO Managed Schools/Enrollments

16. National Charter School Research Project 2007

17. Fe y Alegría Schools in South America

18. Concession Schools, Bogota, Colombia • Private schools contracted to manage poorly performing public schools • 25 schools serving over 26,000 students – disadvantaged students • Autonomous • 15 year contract • Designed to overcome problems faced by public schools – inability of schools to hire own staff, lack of labour flexibility, bureaucracy • Schools paid $500 per student per year – below public school unit cost

19. Evaluation of Proposals

20. Monitoring & Evaluation • Inspect school property administration • Supervision visits to observe adherence to pedagogical norms and standards • Independent evaluation of finances to see if academic objectives met

21. Impact Evaluation • Propensity score and matching estimation technique (Barrera 2006) • Hypotheses: • Dropout rates are lower in concessions schools than in similar, public schools • No effects (yet) or small ones on test scores • Nearby schools have lower dropout rates than public schools outside the influence of concessions

22. Test Scores Public schools have lower test scores Concession and public non-concession schools are “similar”

23. Findings • Strong evidence of a direct effect of Concession Schools on dropout rates and some evidence that they had an impact on dropout rates on nearby public schools • Positive impact on students’ test scores relative to those in public schools • Dropout rates were 1.7 points lower, while mathematics and language scores were 1 point and 2 points higher than students in similar public schools

24. Dropout Results: Impact • Matching: • 10 nearest estimators, common support, balance groups • Direct Effect: reduction in 1.7 points dropout rates • Indirect Effect: reduction in 0.82 points

25. Test Results: Impact • Matching: • 10 nearest estimators, common support, balance groups • Effect over math test scores: improvement of 2.4% • Effect over language test scores: improvement of 4%

26. National Voucher Program, Chile • Nationwide voucher program implemented in 1980 • Applies to public & private schools – secular & religious • Monthly payments made to schools on per-student basis • Voucher schools must follow operational guidelines (basic facilities, certified teachers, class size) • Vouchers cover most or all tuition at eligible schools

27. Enrollments Shares, Public vs Private Schools, Chile

28. Test Score Effects from Selected Studies on Chile Voucher Program Source: Adapted from Bellei (2006)

29. “When Schools Compete, How Do They Compete?” • While private enrollment rate increased by 20 points, greater impacts in larger, more urban, wealthier communities • Hsieh and Urquiola (J Public Economics 2006) use this differential impact to measure effects of unrestricted choice on outcomes using panel data for 150 municipalities • They find no evidence that choice improved average outcomes (test scores, repetition, years of schooling) • They do find evidence that voucher led to increased sorting, as the “best” public school students left for private sector

30. More on Chile • Finding a rule about arbitrary assignment to treatment that mimics randomization is very important (Hoxby 2003) • Researchers need to find control schools that were excluded from the reform for some reason that is uncorrelated with factors that affect their future performance • Such arbitrary exclusion can sometimes be found in policy rules or natural events • In some school choice reforms, no arbitrary exclusions exist • When Chile introduced school choice, same law applied across entire country so variation in choice entirely endogenous, and no pre-treatment data exists • Thus, researchers have neither pretreatment trends nor arbitrary assignment to treatment, and none of studies on Chilean vouchers is sufficiently credible to be given much weight

31. Colombia: Plan de Ampliación de Cobertura de la Educación Secundaria (PACES) • Introduced in Colombia in early 1990s • Provided 125,000 vouchers from 1992-1997 • Offered vouchers to students entering 6th grade, start of secondary school • Key elements of program: • vouchers available to children from low-income families who had attended a public primary school & accepted at private school • renewable subject to satisfactory academic performance • value = $190; half the cost of private secondary school • school received voucher funds directly from the bank • schools were allowed to charge top-up fees; and • there was minimal regulation of private schools

32. PACES Voucher, Colombia • Voucher program designed to give students from poor families access to secondary schooling (Angrist & others 2002, 2006) • Randomized trial – students randomly selected through a lottery system and given vouchers to attend secondary school • Findings: • Lottery winners were 15-20% more likely to attend a private school, 10% more likely to complete 8th grade and scored 0.2 standard deviations higher on standardized tests • Program effects larger for girls • Program cost less than the unit cost in the public sector • Longer-term positive effects – lottery winners more likely to take college entrance exam • Increase in (proxy) high school graduation rates of 5-7 percentage points, relative to a base rate of 25-30%

33. PACES Voucher, Colombia

34. PACES Voucher, Vocational • Voucher skeptics argue that even if vouchers benefit recipients, they do so by improving their peer groups at the expense of others’ • Therefore they do no benefit society as a whole • This requires that voucher recipients have more desirable peers than they otherwise would have • Bettinger, Kremer, Saavedra (2007) look at applicants for whom winning voucher did not lead to attending schools with peers with • superior observable characteristics • They focus on those who applied to vocational private schools • Lottery losers were more likely to attend academic secondary schools • Find that lottery winners had better educational outcomes, including higher graduation rates & reading test scores • Casts doubt on argument that voucher effects operate entirely through improving peers available to recipients

36. Contracting Guiding Principles • Enabling policy, regulatory • Split purchaser/provider role • Capacity of contract agency • Transparent, competitive selection • Staged selection process • Performance measures, incentives, sanctions • Effective contract monitoring • Providers maximum flexibility • Long-term contracts with providers • Independent evaluation World Bank 2006