A Swedish firm has worked out how to make money running free schools
Jun 12th 2008 | stockholm | from the print edition
BIG-STATE, social-democratic Sweden seems an odd place to look for a free-market revolution. Yet that is what is under way in the country’s schools. Reforms that came into force in 1994 allow pretty much anyone who satisfies basic standards to open a new school and take in children at the state’s expense. The local municipality must pay the school what it would have spent educating each child itself—a sum of SKr48,000-70,000 ($8,000-12,000) a year, depending on the child’s age and the school’s location. Children must be admitted on a first-come, first-served basis—there must be no religious requirements or entrance exams. Nothing extra can be charged for, but making a profit is fine.
The reforms were controversial, especially within the Social Democratic Party, then in one of its rare spells in opposition. They would have been even more controversial had it been realised just how popular they would prove. In just 14 years the share of Swedish children educated privately has risen from a fraction of a percent to more than 10%.
At the time, it was assumed that most “free” schools would be foreign-language (English, Finnish or Estonian) or religious, or perhaps run by groups of parents in rural areas clubbing together to keep a local school alive. What no one predicted was the emergence of chains of schools. Yet that is where much of the growth in independent education has come from. Sweden’s Independent Schools Association has ten members that run more than six schools, and five that run ten or more.
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The biggest, Kunskapsskolan (“Knowledge Schools”) opened its first six schools in 2000. Four more opened last autumn, bringing the total to 30. It now has 700 employees and teaches nearly 10,000 pupils, with an operating profit of SKr62m last year on a turnover of SKr655m.
Like IKEA, a giant Swedish furniture-maker, Kunskapsskolan gets its customers to do much of the work themselves. The vital tool, though, is not an Allen key but the Kunskapsporten (“Knowledge Portal”), a website containing the entire syllabus. Youngsters spend 15 minutes each week with a tutor, reviewing the past week’s progress and agreeing on goals and a timetable for the next one. This will include classes and lectures, but also a great deal of independent or small-group study. The Kunskapsporten allows each student to work at his own level, and spend less or more time on each subject, depending on his strengths and weakness. Each subject is divided into 35 steps. Students who reach step 25 graduate with a pass; those who make it to step 30 or 35 gain, respectively, a merit or distinction.
Again like IKEA, no money is wasted on fancy surroundings. Kunskapsskolan Enskede, a school for 11- to 16-year-olds in a suburb of Stockholm, is a former office block into which classrooms, open-study spaces and two small lecture-theatres have been squeezed (pictured). It is pleasant, but basic and rather bare. It rents fields nearby for football and basketball, and, like other schools in the chain, sends pupils away to one of two specially built facilities for a week each term for home economics, woodwork and art, rather than providing costly, little-used facilities in the school.
Teachers update and add new material to the website during school holidays and get just seven weeks off each year, roughly the same as the average Swedish office worker. “We don’t want teachers preparing lessons during term-time,” says Per Ledin, the company’s boss. “Instead we steal that preparation time, and use it so they can spend more time with students.”
Many schools would be horrified to be likened to IKEA, but Mr Ledin goes one better. “We do not mind being compared to McDonald’s,” he says. “If we’re religious about anything, it’s standardisation. We tell our teachers it is more important to do things the same way than to do them well.” He then broadens the analogy to hotels and airlines, which make money only if they are popular enough to maintain high occupancy rates.
One selling point that any parent of a monosyllabic teenager will appreciate is the amount of information they will receive. Each child’s progress is reported each week in a logbook, and parents can follow what is being studied on the website. And the braver among them will be keen on the expectation that the children take responsibility for their own progress. “Our aim is that by the time students finish school, they can set their own learning goals,” says Christian Wetell, head teacher at Kunskapsskolan Enskede. “Three or four students in each year may not manage this, but most will.”
Performance monitoring is also important within the company: it tracks the performance of individual teachers to see which ones do best as personal tutors or as subject teachers. It offers bonuses to particularly successful teachers and is considering paying extra to good ones from successful schools who are willing to move to underperforming ones.
Kunskapsskolan’s do-it-yourself style of education may soon be available outside its home country. In March it was named preferred bidder to run two “academies”—state-funded schools run largely free from state control—in London. If they go ahead (negotiations with the government are proving fraught), they will be run by a not-for-profit arm, since for-profit ventures are banned from Britain’s academies programme. The firm also hopes to open low-cost independent schools in Britain, where it can offer the full Kunskapsskolan experience, free of state meddling.
Lessons for politicians
Schooling is, in one respect, a very safe business: parents will always want their children educated and future demand is relatively easy to predict. So unsurprisingly the returns are solid, rather than stellar: Mr Ledin quotes an average return on capital of 5-7% a year. But like any business with a single customer, there are risks, too—and when that customer is the state, the biggest ones are political. If a future government, hostile to school choice, changed the rules, that would be the end of this nascent market.
Carl-Gustaf Stawström, the managing director of Sweden’s Independent Schools Association, is sanguine. The school reforms are popular with parents, he says, and politicians know they meddle with them at their peril. More plausible would be a change to the rules so that independent schools had to match the methods and curriculum of state schools more closely, or perhaps even a ban on profits.
The latter sounds bad, says Mr Stawström, but would not really amount to much: companies could split themselves into non-profit schools and a profit-making body that supplies services, such as teaching materials and consultancy (MORE)