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Minister takes aim at free school 'profits'

TT/The Local/pvs · 25 Feb 2011, 09:25

Published: 25 Feb 2011 09:25 GMT+01:00

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"Loopholes in the legislation has meant that free schools can elect not to have a library, student counseling, and school nurses. As they get just as much money as the municipal schools, the owners have been able to withdraw the financial surplus," he told the Dagens Industri daily.

Björklund acknowledged a degree of naivety from the political centre-right in regards to their view of independent schools.

The minister has previously announced a parliamentary inquiry to look into how free schools which fail to meet accepted standards can be prevented from taking out profits.

"It is important that the parliamentary inquiry into profits and quality of private schools gets started as soon as possible," the Swedish teachers' union - the largest union in the private sector with 14,000 members - said in a press release in response to Björklund's statement.

Despite Björklund's assertion that loopholes in the law have been used to generate profit at the expense of quality, it appears unlikely that the review will result in a ban on investment funds owning schools.

The three largest free school enterprises - Academedia, John Bauer and Pysslingen - are all owned by private equity firms.

"You can not say that the Wallenberg group, which is the ultimate owner of Academedia, would not be able to run private schools," Björklund told DI.

Academedia CEO Marcus Strömberg does not think the education minister's statements contain anything new.

Story continues below…

"He (Björklund) has been very clear that they want to focus on quality and have in place a clear legislation that tightens quality standards, and that it should be equal for all actors. And that is something I think is very positive," he said.

With regards to Björklund's views on private equity firms as owners of free schools, Strömberg said:

"I have no idea. What is important when you run a business in the schools sector, is that you have sound, long-term, serious owners. Others will have to judge who they be."

TT/The Local/pvs (news@thelocal.se)

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Your comments about this article

10:27 February 25, 2011 by just a question
and I do agree. Economic results are the main goals of free schools. Education comes second. Your children will learn more in a public school run by people that don't care about how much money they can save every month.
10:33 February 25, 2011 by isenhand
Imagine that! Free Schools out to make profit! Isn't that exactly what they should do? Profit first!
11:05 February 25, 2011 by HYBRED
Privately run anythings first goal is profit. Everything else is secondary. It doesn't matter if is a school or a kebob stand.
11:22 February 25, 2011 by RobinHood
The purpose of a private company is to make money for its shareholders.

Profit and quality are not necessarily incompatible. Many profitable private companies in many industries offer very high quality. Those that don't usually die off, those that do go onwards and upwards.

Similarly, private schools have an incentive to offer quality, if they do not, their students will abandon them for better alternatives. If a private school achieves the necessary level of quality, it will succeed, its students will benefit, and its shareholders will make money. Win, win, win.

Sadly, but inevitably there will be failures; state schools fail too sometimes. The difference is that private schools have a much stronger incentive to succeed, than state schools which continue to function whether they are successful or not, to the dertiment of those unlucky enough to study and work there.
11:26 February 25, 2011 by engagebrain
Why are we surprised that a private company will operate at the limits of the law to maximize profit.

The problem is that it is very hard to specify everything a company is required to do - you might think a library is important but unless the contract requires one, there won't be one. Then are 12 books in carboard box a library ? - a for profit company may well argue that it is. and so it goes on, close one loophole and they find another - which becomes the core activity. Children may get educated, by only it company has no other option..
12:26 February 25, 2011 by David S
It's perfectly alright for private schools to be interested in profit. In theory, competition should drive them to deliver good service. In practice this isn't happening because supply is still low and demand so high. We're currently dealing with our son's private pre-school and have discovered the owners are funneling millions into their own "management companies" whereas the publicly available annual report, and stories from the teachers, shows them spending *nothing* on new supplies.

They've been threatened with being taken over by the local kommun and in response to parent's being in uproar over all we have discovered, they wrote a letter to parents threatening to close the school immediately but maintain their lease on the property, leaving it empty, if they didn't get the support of the parents! They went on to say the parents would therefore be to blame for the subsequent loss of jobs and daycare places!

This is absolutely outrageous behaviour.

The government should require that all schools that are funded by the government have "open books" that can be inspected by any person at any time.
12:53 February 25, 2011 by UScitizen
@ David S

I don't know where you live but that's outrageous! Why don't you contact Mr. Björklund and show him the evidence of the owners funneling millions away, and show him the threatening letter you were sent. Surely something could be done.
20:49 February 25, 2011 by Carbarrister
I think the minister needs to go back to school and take an economics course and not the marxist version: competion will improve quality of for profit schools in if public schools students they should be made to improve their quality not eliminate competition. He is concerned" that there are several indications that profit takes precedence over quality." Does that mean that that the quality is alyways higher in public schools? Do I believe some for profit schools may have no areas for improvement. I suspect that neither are correct. Consider the comment of David S "It's perfectly alright for private schools to be interested in profit. In theory, competition should drive them to deliver good service. In practice this isn't happening because supply is still low and demand so high." Why is the demand so high if public schools deliver consistently higher quality? If parents come to believe that quality is lower in private for profit schools then demand will drop as they transfer their children out. This will happen quickly. What you need to be alert to is the minister and others seeking anticompetitive tactics such as imposing regulations to artificially limit the supply of private schools by increasing their costs. Clearly the Swedish teachers' union sees them as a threat. This probably means that the independent schools require a bit more of teachers - expecting the teachers to teach and not treating them as part of the communist workers of the world movement.
11:14 February 26, 2011 by Rebel
I think a lot depends on the motive of the founders of a school. Sure, profit is necessary -- just as profit is the desire of artists, doctors, etc. However, there are people who set up schools with the desire to provide a unique learning experience for the kids who enroll in their school, and there are people who set up schools in order to make money -- with the hope that they look as though they are delivering a good product.

So just like in restaurants, you have small, friendly places that offer you something special, and you have fast-food chains that give you a standard product, and survive through selling high quantity. I think we know that as education goes there are corporate schools out there that look like a fast food chain. These are the ones who need to be put under the magnifying glass of public scrutiny.
02:35 February 27, 2011 by dunce
I doubt your teachers union is any different than our teachers unions in the usa. Their real concern and complaint is the competition. If these schools are not burdened with the same regulations then they will have funds for more teaching resources and education accomplishments will improve rather than quality suffer. Maybe that is why they used the word quality because it does not necessarily mean educational accomplishment and they are talking about other things.
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