K-12 Public Education Needs a University of Phoenix

This year’s college football national championship game will be played in Glendale, Arizona at the University of Phoenix Stadium. What is ironic is University of Phoenix doesn’t have a football team. In fact, this university has no sports programs at all. Founded in 1976, the University of Phoenix is a for-profit, private company and has grown considerably, producing more than 171,000 alumni. In 1989 it was the first university to offer course work online. As of October 2006 is has an estimated 280,000 students, or “customers” as founder John Sperling delights in calling them.

In September 2006, University of Phoenix agreed to pay $154.5 million over 20 years for the right to put its name on the Arizona Cardinals' new NFL stadium, previously named Cardinals Stadium. University of Phoenix graduates include the NBA’s Shaquille O'Neal who earned an online MBA in 2005 and Mary Peters the U.S. Secretary of Transportation.

What would our government-managed K-12 education system look like if it were open to choice and competition like colleges and universities? We would expect costs to go down and quality would go up. The major reason the government-managed K-12 education system is so costly is that there is no profit. This sounds paradoxical yet makes perfect sense when looking at the reality of what actually occurs in bureaucracies versus private enterprises. It comes down to incentives.

Profit is what increases quality and reduces costs. On the other hand, government protected monopolies increase costs and ignore quality. The former Soviet Union provides the most obvious example of what to expect when bureaucrats outnumber entrepreneurs.

As a general rule when private enterprise replaces government monopolies, costs drop by around 40 percent. If we expect any real improvement in public education productivity, we must replace bureaucrats and politics with entrepreneurs and open markets. This could be accomplished by giving parents vouchers and tax credits.

According to the Idaho State Department of Education the taxpayers are charged over $8,000 per student per year under the current monopoly system. Why not offer a $4,000 voucher or tax credit and see what American creativity and entrepreneurship could do to provide taxpayers with a much better value.

Remember, if public education was as productive as the computer industry in terms of improving quality and reducing costs over the last three decades, the cost of providing 12 years of education would be less than one cent instead of over $100,000. Furthermore, it would take less than one second to provide.

We hope to see Boise State play for the national championship some day, maybe in the University of Phoenix Stadium. In the mean time, enjoy what capitalism has done to improve higher education, produce satisfied customers, and create wealth.