The Role and Impact of Public-Private Partnerships in Education

What Do We Know About Public-Private Partnerships in Education? 33
management and private finance initiatives
require partners to make large initial capital
investment in the construction of schools,
limiting their ability to produce substantial
changes in enrollments.
Vouchers, subsidies, and private operations,
in theory, can have significant effects
on education outcomes as discussed further
in the next section. In contrast, private
finance initiatives can only influence education
outcomes to a limited extent because
the link between infrastructure inputs and
education outcomes is weak: changing
only infrastructure—without changing
the pedagogic methods and teaching—will
have little or no effect on final outcomes
(Hanushek 2003).
Equity is an important consideration in
the design of PPPs. There are those who fear
that increased choice will benefit only betteroff
and better-informed families, even if the
program is ostensibly targeted to the poor.
Better-informed families, it is argued, know
which schools have the best outcomes and
facilities and are, therefore, the best option
for their children. In other words, school
choice may result in students from more
privileged homes becoming segregated in
the best schools, thereby further improving
their own outcomes, while other students
are left behind in ever-deteriorating schools
(Fiske and Ladd 2000). Nonetheless, several
programs reviewed in chapters 1 and 2
explicitly target low-income students, families,
and communities, and all contracts can
have a clear redistributive objective as long
as targeting is part of the agreement between
the public and private sectors. Clearly, this
feature of these contracts has to be carefully
monitored by the public sector to avoid the
segregation effect.
Some evidence suggests that the private
sector delivers high-quality education at
low costs around the world. Indeed, the
correlation between the private provision
of education and high values for indicators
of education quality is positive. Using data
from the OECD’s Programme for International
Student Assessment (PISA), Woessmann
(2005) showed that public schools
produce lower test scores than privately
managed but publicly funded schools do. As
a result, partnerships between the private
sector (as the operator of schools) and the
public sector (as the financier of schools)
can increase enrollment while keeping
the education budget low. With regard to
private finance initiatives, the major argument
in their favor is cost savings. The
cost savings generated by the other types
of contracts depend on the specifics of the
contract (for example, the face value of the
voucher) and the private sector’s effectiveness
in delivering the service.
Intermediate effects
and final outcomes
PPP programs affect school outcomes in
two different ways. First, PPP programs can
be expected to affect how schools function
internally and, specifically, how they allocate
their resources. Second, students and
their families are likely to react to the new
incentives that are inherent in, for example,
voucher programs, leading to a reallocation
of students among schools.
The theoretical literature on the topic
suggests that there are four ways in which
the private provision of public services
affects educational outcomes (see LaRocque
and Patrinos 2006; Savas 2000; Nechyba,
2000; Epple and Romano 1998). Each
study analyzed certain critical variables to
assess the actual effect of a PPP program
on education outcomes. The following four
conclusions may apply slightly differently
to each of the four kinds of PPP contract—
private management, vouchers, subsidies,
or private finance initiatives:
1. PPP contracts give schools more flexibility
in how they manage and provide
education services than the public
sector alone does. Generally, the
public sector gives schools very little
flexibility in hiring teachers and organizing
schools, so a flexible PPP contract
can make it possible for schools
to create a better fit between supply
and demand.
Two of the school’s management
decisions are critical—how teachers
Delivered by The World Bank e-library to:
unknown
are IP : hired 192.86.100.35 and how the budget is allocated.
30 Mar 2009 In general, 12:16:23 schools operat-
Mon,
ing under a PPP contract have more
freedom in teacher hiring and firing
(c) The International Bank for Reconstruction and Development / The World Bank