How Can Decentralized Systems Solve System-Level Problems? An

ABSXXX10.1177/0002764215591182American Behavioral ScientistBuerger and Harris 591182research-article2015

Article

American Behavioral Scientist 2015, Vol. 59(10) 1246–1262 How Can Decentralized © 2015 SAGE Publications Reprints and permissions: Systems Solve System-Level sagepub.com/journalsPermissions.nav DOI: 10.1177/0002764215591182 Problems? An Analysis of abs.sagepub.com Market-Driven New Orleans School Reforms

Christian Buerger1,2 and Douglas Harris1,2

Abstract One of the biggest changes in New Orleans after Katrina was observed in the public school system. In this article, we describe the massive overhaul of the public school system in New Orleans post-Katrina and examine the types of problems that this type of decentralized market-oriented system will be most likely to solve as well as those it may struggle with. As examples, we use problems facing New Orleans public schools, namely, student discipline, information sharing with parents, and especially the human capital pipeline, to illustrate the challenges a regulated market system presents. We then present and apply to those cases a general framework for thinking about which of these types of problems a decentralized system will be best able to solve.

Keywords public schools, New Orleans, market model, Katrina

Introduction Hurricane Katrina was one of the greatest tragedies in American history. With the New Orleans population scattered around the state and nation and the future of the city in doubt, state and local leaders realized that schools would be central to attracting

1Tulane University, New Orleans, LA, USA 2Education Research Alliance for New Orleans, New Orleans, LA, USA Corresponding Author: Christian Buerger, Education Research Alliance for New Orleans, 1555 Poydras Street, New Orleans, LA 70112, USA. Email: [email protected] Buerger and Harris 1247 people back to the city. Given the prior failures of the city’s school system, state leaders also decided that a radical new approach should be attempted. Within months of the hurricane, and even before most of the population returned, almost all the city’s public schools were turned over to a state agency, the Recovery School District (RSD); essentially all public school employees were fired; the teacher union contract was nullified; and attendance zones were eliminated. Eventually, almost all the schools were turned over to charter management organizations (CMOs). Each of these changes was highly unusual, and collectively, the shift was without precedent in American history. It even came with a new name, the “portfolio district” (Bulkley, Henig, & Levin, 2010; Hill, 2006; Levin, 2012), echoing the economic theories on which it was built.1 In the pre-Katrina period, New Orleans operated under a very different system. As in almost every other major U.S. city today, New Orleans public schools were governed by a single, locally elected school board responsible for setting policy and hiring a superintendent to carry out that policy and manage schools. A teacher union negoti- ated with the board and superintendent over labor contracts that established employ- ment due process rights, work rules, and compensation schedules. Students were assigned to schools based on the neighborhoods in which they lived. While the RSD and a few charter schools existed pre-Katrina, the change represented a major shift from the traditional model, in which schools answer to local voters through demo- cratic accountability, toward regulated market accountability, in which schools answer primarily to parents and state government officials. One of the main concerns with such a market-oriented system is that it might make it harder to solve system-wide problems and therefore might make the city’s educational structure less resilient to disaster and social dysfunction. Decentralization with large numbers of relatively small organizations requires coordination, which may make it difficult to solve problems. In competing against one another, for example, schools might ignore the way in which their actions affect other schools and students (“externalities”). By decentralizing decisions from a large district to a large set of organizations, such as CMOs and other nonprofits, it may be difficult for any individual organization to garner the resources necessary to solve large problems on its own (“economies of scale”). Finally, even when organizations are willing to work together and resources are sufficient, it may be difficult to negotiate and enforce agreements among so many organizations, all of whom are uncertain about what the others will do (“transaction costs”; Levin, 2012). But the above economics-based perspective is arguably too narrow to assess the efficiency and resiliency of the portfolio approach. In this article, we analyze the New Orleans school reforms by considering both the obvious advantages of decentralization—flexibility, productive competition, and openness to various school operators—and whether such a system can overcome the disadvantages of limited economies of scale, high transaction costs, and unhelpful competition. Put differently, can the multitude of organizations involved in running schools in a portfolio model compete productively and collaborate when necessary? Under what circumstances 1248 American Behavioral Scientist 59(10) will problems get solved through cross-organization cooperation? In addressing these questions, our analysis can guide policy makers in deciding which problems should be addressed through centralized government and which are more likely to be solved organically through informal cooperation among a large set of nonprofits. We analyze the changes in the New Orleans school system through the lens of a broader range of social science theories, encompassed in “actor-centered institutionalism” (Mayntz & Scharpf, 1995; Scharpf, 1997). The framework defines institutions as a system of rules structuring interaction between actors based on legal rules or social norms (DiMaggio & Powell, 1983; Meyer & Rowan, 1977; Scott, 1995). Institutions help us understand the behavior of actors because they determine which actions are required, prohibited, permitted, and encouraged (Ostrom, Gardner, & Walker, 1994). Actors, the other important building block in this framework, are characterized by capabilities and action orientations. Capabilities are defined relative to specific outcomes, include all resources allowing an actor to influence policy, and are created by institutional rules that define competencies and grant or limit rights of participation, such as veto rights. Action orientations are perceptions and preferences toward a certain policy (Scharpf, 1997). Actor-centered institutionalism turns out to be especially useful in understanding the New Orleans school reforms because it allows us to incorporate both individualis- tic theories from economics (economies of scale, externalities, and transaction costs) that Levin (2012) shows to be important, while also accounting for factors such as trust, politics, ideology, and the role of government, which we argue may be equally significant in analyzing which education roles or functions should be centralized or decentralized in a portfolio district. We describe the institutional settings pre- and post-Katrina by using two types of governance structures: markets and hierarchies. These categories help us analyze general strength and weaknesses of governance structures and compare them with the situation pre- and post-Katrina in New Orleans. We then provide examples of problems that emerged and how actors have responded to them. We conclude with a more general framework for understanding the relative advantages and disadvantages of decentralization—and specifically, the traditional school district and portfolio districts.

Traditional School Districts as Hierarchical Governance The traditional American school district, sometimes described as the “one best system” (Tyack, 1974), is a type of hierarchical governance structure that responds to external shocks through centralized coordination and administrative controls (Powell, 2003; Williamson, 1975, 1991). In theory, when the world outside the organization changes—due to an external shock, such as a hurricane—a hierarchical organization can adjust quickly as the top of the hierarchy has control over inputs and knowledge about the production process. Such a system can be efficient, especially when leaders are benevolent and have the best interests of society in mind (Scharpf, 1997). Buerger and Harris 1249

Theoretically, hierarchies also rely less on legal means to resolve conflicts (Williamson, 1975, 1991). Because employee roles are malleable, roles and responsibilities can be adjusted with external conditions and internal needs. Employees and their superiors can exit their implicit contracts at any time without legal repercussions. The reliance on implicit contracts reduces transaction costs that come in market settings where responsibilities have to be clearly spelled out in explicit contracts, requiring more extensive negotiation, performance monitoring, and of course legal fees (Williamson, 1991). Transaction costs are lower with hierarchical governance where contracts are implicit and self-enforcing. However, hierarchical governance structures create limited incentives to produce efficiently (Williamson, 1975, 1991). Gains and losses cannot be attributed to a single unit or individual, and there is no direct competition to induce behavior in the interest of the organization. Also, information does not flow freely through the different organizational levels. The leaders of the hierarchy lack the information to create effective administrative controls or, conversely, become overburdened by the amount of information, leading to ill-informed and unresponsive decisions or interminable delays (Hayek, 1944; Scharpf, 1997). Because those lower in the hierarchy also lack incentives and autonomy to act on a full set of information, the result is likely to be opportunistic behavior among employees, including reduced effort (Eisenhardt, 1989; Jensen & Meckling, 1979). Administrative controls and professional norms may help limit these problems, but they may be insufficient to prevent inefficient behavior. In short, whether hierarchies can unlock the potential of their coordination and create social benefits depends on how well they solve the information and incentive problems (Scharpf, 1997). In the case of school districts, the above efficiency problems may be compounded by the fact that districts are run by publicly elected school boards (Chubb & Moe, 1991). When government policy is based on election returns, the interests of diverse electoral bodies are difficult to represent and special interest groups often dominate the voting process. To overcome these problems, outsourcing and contracting have become prominent policy choices (Brown & Potoski, 2003). For example, it is now common for local governments to contract out waste management or information technology services. The portfolio model and charter schooling generally are also examples of this contracting approach; government agencies have other organizations run schools, and the contract specifies what student outcomes and financial benchmarks must be achieved and what rules must be followed for the government to allow the contractor to con- tinue operations. Below, we discuss how the potential strengths and weaknesses mani- fest themselves in pre-Katrina New Orleans schools.

The Orleans Parish School Board Prior to Katrina, the incentive for Orleans Parish School Board (OPSB) to improve student performance was apparently low. In the 2004-2005 school year, Orleans Parish public schools ranked 67th out of 68 Louisiana school districts in mathematics and 1250 American Behavioral Scientist 59(10) reading test scores in the Louisiana accountability system. With the exception of a few high-performing selective admissions schools, most public schools in the decade before Katrina were low-performing (Boston Consulting Group, 2007, using Louisiana Department of Education performance data). In the 2004-2005 school year, 63% of public schools in New Orleans were deemed “academically unacceptable” by Louisiana accountability standards, compared to just 8% of public schools across Louisiana. The graduation rate for Orleans Parish public schools was 56%, 10 percentage points below the state average (Boston Consulting Group, 2007, using Louisiana report cards 2004-2005). One explanation for the weak performance of New Orleans schools is the absence of administrative controls typical for hierarchical governance structures. In 2003, a private investigator found that the school system inappropriately provided checks to nearly 4,000 people and health insurance to 2,000 people. Some of those who col- lected checks were according to the district records retired, fired, and even dead. In a 4-year period, the school district allocated more than 15,000 erroneous checks, costing the district $11 million (Thevenot, 2003). Common control practices, such as audits, were not done on a regular basis (Burns & Thomas, 2009). Common procedural practices, such as handbooks, were either not updated or did not exist (Louisiana Legislative Auditor, 2004). In 2004, the Federal Bureau of Investigation issued indictments against 11 people for criminal offenses against the district related to financial mismanage- ment. Among them was a former school board president who accepted $140,000 in bribes in exchange for supporting the district’s purchase from a particular vendor (Russel, 2008). Poor performance at the top of the hierarchy was a major contributor to the problems. Disputes between school board members, between the board and the superintendents, and between the board and other organizations, including governmental entities, community groups, and parents, were common (Thevenot, 2005b; Thevenot & Rasheed, 2004; Williams, 1996). Furthermore, school board members were often involved in day-to-day school management and were accused of micromanaging superintendents (Thevenot, 2000, 2002). These concerns are not uncommon in school districts nationally (Chubb & Moe, 1991). Meanwhile, there was limited coordination of basic operations. At the beginning of the new 2005 school year, 200 teachers were not assigned to classes (Capochino, 2005). School buildings were deteriorating (Boston Consulting Group, 2007), and even toilet paper was missing in the schools (Thevenot, 2005a). Frequent leadership changes added to the general disorder in the school district. Eight superintendents served between 1998 and 2005 with an average tenure of just 11 months compared to the 36 months national average for urban district superintendents (Boston Consulting Group, 2007). Despite the assumption that conflicts can be relatively easily solved within a hierarchical governance structure, Orleans Parish was often embrolied in legal action, including corruption scandals (RSD, 2006). More generally, the problems with the district during the pre-Katrina period highlight the fundamental weakness of hierarchies: They lack good incentives. We now focus on the portfolio district as a potential alternative. Buerger and Harris 1251

Summary of the Post-Katrina Initiative: Portfolio Districts as Regulated Market Governance In contrast to hierarchical structures, the portfolio district is a modified market governance structure where incentives to produce efficiently are strong (Williamson, 1975, 1991; Powell, 2003). As consumers “vote with their feet,” organizations compete with one another to ensure survival and generate revenue and market actors work autono- mously to react to external shocks (Williamson, 1975, 1991). There is no need to rely on “benevolent” leaders in this situation because the leaders of market-based institutions have to compete in order to survive. The information problem is also more limited within organizations because competition helps ensure the efficient production of services. On the other hand, there are ways in which it is difficult to coordinate in a market. As Levin (2012) notes, this is a particular problem when the actions of one organization affect others.2 Thus, markets may respond quickly to external shocks but in ways that harm other organizations or do not lead to an overarching solution. For example, organizations might selectively release information about their success to attract more stakeholders, consumers, and political support. In these cases, collective action across organizations—such as the government requiring that organizations provide standardized data to monitor successes—may be necessary. While the interests of individual organizations may fail to align to facilitate this type of information sharing, there are documented cases where organizations have used information systems to overcome information problems, reduce transaction costs, and facilitate coordination (Dahl & Lindblom, 1953; Eisenhardt, 1989; Schotter, 2008). Even with information systems, it can be expensive and time-consuming to negotiate and enforce contracts, especially where litigation is involved (Williamson, 1975, 1991). In markets, it may be difficult to determine who is legally responsible for some forms of harm, which opens the door to additional forms of opportunistic behavior that benefits institutions but not consumers/stakeholders. Mutual trust and shared values are effective mechanisms to avoid legal costs and contain opportunistic behavior (Nohria & Ghoshal, 1994), but a side effect is that coordination will emerge only among those actors who trust one another, to the exclusion of others. Even when some groups trust one another, others may be excluded because they lack the resources and skills necessary to negotiate and compromise. Therefore, coordination among some actors can reinforce unequal distributions of resources, skills, and human capital (Scharpf, 1997). This type of exclusion creates a sense of inequity that raises particular concern in education.

The Portfolio System in Post-Katrina New Orleans Looking at the Orleans Parish school system after Katrina, the incentive to improve student performance appears to be greater under the new governance structure. In the 2012-2013 school year, Orleans Parish ranking on student achievement improved dra- matically, to 38th out of 70 Louisiana school districts (Cowen Institute, 2013). 1252 American Behavioral Scientist 59(10)

The failure rate of the past has apparently become the success rate of the present. Currently, 34% of schools are considered failing by the state’s standards. In addition, more students are graduating on time. Right before the storm, New Orleans public schools had a 12th grade dropout rate of 16.8% compared to a statewide rate of 7.6% in the 2004-2005 school year (Louisiana Department of Education, 2005). However, the overall dropout rate has declined to 6% compared to statewide rate of 5%.3 While there have been questions about whether these changes all reflect effects of the reforms on student achievement, these measured improvements are noteworthy.4 Whatever the effects, it is also important to recognize that portfolio models are really hybrids of hierarchical government and market organizations. Schools are authorized and overseen by the OPSB and Louisiana Board of Elementary and Secondary Education. The three authorizers determine which schools open and which close due to low performance,5 but they leave day-to-day operations to CMOs and individual charter schools. Thus, we see the portfolio model as a regulated market governance structure. Another general characteristic of market governance structures is its reliance on courts and the judicial system to overcome conflicts within the marketplace. While several lawsuits have been filed, these have been driven more by issues of compliance with state and federal law rather than by contract disputes of the sort we might expect in a market-oriented system. The bigger legal issue may be the lack of clarity regard- ing which government agency—the local OPSB or the state RSD—is responsible for certain processes and outcomes. However, as these are government agencies, the issue is not about the market structure, but the governance structure. This reinforces that the new system still involves a heavy dose of government but a distinctive one.

Examples of System-Level Problems and Solutions Under the Market System The regulated market approach does not provide explicit coordination mechanisms between actors. Nevertheless, the actors in the portfolio system have created several informal networks to coordinate activities with centralized services, student discipline, provision of information to parents, and teacher pipelines. We present these four problems and ways in which portfolio actors have responded to them. When shifting to a decentralized system, it can be difficult for each school to develop its own expertise in areas like accounting, professional development, curricu- lum, facilities support, teacher recruitment, and legal affairs. One potential response to decentralization then is for like-minded schools to band together on their own to develop this expertise. CMOs represent the most obvious example, but other types of organization have also emerged. An example is the Eastbank Collaborative of Charter Schools, which was created by seven principals of OPSB schools after Hurricane Katrina. In the 2013-2014 school year, 17 schools across OPSB and RSD were members of the collaborative. In addition to the above common needs, the group facilitates bulk/group purchasing to save money (Eastbank Collaborative of Charter School, Buerger and Harris 1253

2015). The organization is led by a director, governed by Board of Directors compris- ing member school leaders and funded by various philanthropic organizations. Student discipline is a more specific problem that emerged after the reforms. Schools in the reformed system take widely varying approaches to discipline, and some schools made headlines for having especially harsh policies. Anecdotes circu- lated widely about students being suspended from school for seemingly minor infrac- tions (Dreilinger, 2013a; Perry, 2014). Whether or not these are unusual events or represent larger patterns, there was clear concern about the lack of uniformity and fairness of discipline policies. While many school leaders were resistant and wanted to maintain their autonomy, there was enough pressure that the RSD and OPSB came together to create a citywide organization to hear appeals on expulsions and set common standards that applied to all schools6 (Vanacore, 2012). The creation of the policy is an example of voluntary coordination across government agencies and nonprofits in creating binding policies for all schools in New Orleans.7 For instance, full-year expulsion became limited to drug and weapon possession or sexual assault and battery that causes serious harm.8 Generally, schools recommending a student for expulsion submit documentation to an expert9 in order to ensure that the case qualifies. One officer handles all the hearings. The RSD manages the process, and schools pay a flat fee to participate (Dreilinger, 2013b). These policies, and perhaps other factors, have been associated with a 57% drop in out-of-school suspensions (Barrett & Santillano, 2015). A third system-wide problem was the lack of information for families as the system began to require families to choose among a variety of schools. Soon after Katrina, community organizations started to develop tools to provide information to parents. As in several other cases,10 the influential nonprofit organization New Schools for New Orleans supported the project and, with funding from philanthropists, was instru- mental in the development of the official Parents’ Guide to New Orleans public schools (Ruiz, 2012). The human capital pipeline is a fourth system-wide problem. There is widespread agreement among most actors in the system that teacher quality is the most important schooling factor influencing student achievement (Aaronson, Barrow, & Sander, 2007; Goldhaber, Brewer, & Anderson, 1999; Rivkin, Hanushek, & Kain, 2005) and explains a variety of life outcomes, such as college attendance and labor market earnings (Chetty, Friedman, & Rockoff, 2011, 2013). The importance of teachers has led to a nationwide movement for new approaches to human capital and personnel management, from teacher preparation to compensation and dismissal policies (Harris & Herrington, 2015). Locally, the issue has particular resonance because of the pre- Katrina teachers who were fired and because the new teacher pipeline in New Orleans relies heavily on alternative pathway programs such as Teach for America and TeachNOLA (a local group affiliated with the national organization The New Teacher Project). Though they have little experience or formal training and high turnover rates (Barrett, Harris, Lincove, & Strunck, 2015), they have extremely strong academic backgrounds, often from elite colleges, and are apparently willing to work the longer hours expected in many New Orleans charter schools. There is widespread concern 1254 American Behavioral Scientist 59(10) even within the pro-reform community that this model may be difficult to sustain, or at least that it will be insufficient to take the system to the next level of performance if high-quality teachers cannot be attracted, developed, and retained in the city.11 One partial response to the teacher pipeline problem has been the NOLA (New Orleans, Louisiana), Human Capital Collaborative, which consists of some of the largest CMOs in New Orleans. The goal of the network is to coordinate human resource and personnel management activities, including marketing strategies to attract personnel to the city’s public schools, exchange of knowledge and ideas, and sharing and analysis of personnel data. This collaboration too is a good example of how an informal network can emerge to solve a common problem. However, as we explain in the next section, the human capital problem may be harder to solve through informal networks alone.

Markets and Coordination Revisited Our theoretical framework suggests that the ability to solve problems depends on the ability to coordinate, which is more likely to occur when the interests of actors are relatively well aligned, when they view the problem in similar ways, and when they trust one another to follow through on agreements. It is not clear that any of these circumstances hold with regard to teacher quality. Based on our conversations with local school leaders, the human capital problem is defined in one of four ways, often in combination: (a) it is hard to keep effective teachers; (b) traditional university-based teacher preparation is inadequate; (c) charter school-level development efforts are too costly, especially with high turnover rates; and (d) the demographics of teachers do not match the student population.12 Each problem has a different implied solution. Shifting away from alternative preparation programs to university-based programs might reduce turnover. If this could be done through the many New Orleans universities, this might also address the mis- match between student and teacher backgrounds, because most of the city’s adult population is African American. However, the state of Louisiana evaluates teacher preparation pathways based on contributions to student learning (sometimes called “value-added”), and these publicly released analyses suggest that teachers from two alternative pathways, The New Teacher Project and Teach for America, are more effective than those from university-based programs (Gansle, Burns, & Noell, 2010; Noell & Gansle, 2009). Thus, there may be a trade-off between effectiveness and turnover, at least in the short run. A partnership between local universities and charter schools might be a solution. The relevant interests for such an approach do seem well aligned—schools need a sup- ply of effective teachers who want to stay in the profession and in New Orleans, and the universities need to generate enrollment and revenue. The problem is that university-based teacher preparation leaders tend to have different educational philosophies that rely more heavily on the judgment of teachers and less on standardized tests. Charter schools in New Orleans, in contrast, tend to be more data driven (Arce- Trigattii, Lincove, Strunk, & Harris, 2015), at least in part because test scores are such Buerger and Harris 1255

an important part of the accountability and charter school authorization system in New Orleans (Ruble, 2015).13 Given these different philosophies, and the desire and need for charter schools to generate high student scores, it is not clear how such a partnership between universities and charter schools would work. An alternative solution would be to build new local preparation programs that have the same instructional philosophy but to recruit students with local roots who want to make teaching a career. The national Relay Graduate School of Education has these goals in mind. Relay emerged from a group of charter schools in New York and shares an instructional philosophy with many of the charter schools in New Orleans. It also has the advantage of being a stand-alone institution of higher education that offers both master’s degrees and state certification. With either solution, there may be another hurdle: the racial divide. As in most cit- ies, New Orleans has a long history of racial inequality. Even before Katrina, the vast majority of White, middle- and upper-income households had begun sending their children to private schools.14 As a result, New Orleans Public Schools did not reflect the overall demographic makeup of the city. In 2005, 65% of New Orleans residents were African American, yet 94% of the students in public schools were African American (Boston Consulting Group, 2007).15 The issue of race was not only an educational issue but also an economic one. Educators earn middle-class incomes, and roughly 4% of the Black working-age population was employed by the schools (U.S. Census Bureau, 2000). Given the high unemployment rate among African Americans, and the low wages earned by those employed in the city’s tourism-driven economy, a position as a public school educator was one of the primary paths to the middle class. The decision to shift from school district model to a portfolio approach also had significant racial implications because the decision was made by leaders who are mostly White. This was followed by another decision to dismiss essentially all public school staff, about 71% of whom were African American (Barrett et al., 2015). The dismissal of educators was driven by a combination of factors: the impending OPSB bankruptcy and the difficulties in finding teachers after the storm (Smith, 2012), as well as the lack of support for the district by state government. Also, the reduced size of the district meant that at most, 29% of teachers could have been hired back right after the storm (Barrett et al., 2015). Nevertheless, the mass dismissal still meant that thousands of African American employees who could eventually have been hired back were not.16 Ten years after Katrina, 50% of teachers are African American, a drop of more than 20 percentage points from prior to the storm. The city’s reform community has recognized this problem and taken steps to recruit more minority teachers, although one of the most likely sources for such teachers would be the same university-based programs whose effectiveness has been called into question.17 It remains unclear whether decentralized system can address teacher quality, especially with the various actors in a decentralized system viewing the problem in different ways and with the conflicts that arise when considering solutions that might address one problem but make another worse. Traditional districts struggle with these same problems, though in different ways. School districts and teacher preparation 1256 American Behavioral Scientist 59(10) programs usually share similar philosophies and ideologies, in part because district leaders graduated from those same programs. On the other hand, given the poor performance of districts like New Orleans, and apparently of the teacher preparation programs, the ease of cooperation between districts and universities does not guarantee a successful outcome.

A More General Framework for Problem Solving In this section, we try to broaden the discussion and provide a general framework for understanding when the market/portfolio approach will be able to solve problems on its own—that is, when it will be resilient—versus when successful coordination across separate and decentralized groups will be less likely. We argue that problems will be easier to solve in a market/portfolio system first when there is limited need for coordination across organizations, that is, when individual action is sufficient. In these cases, transaction costs are low and competitive pressures will generally induce organizations to solve the problems on their own. Second, markets can solve problems when the various decentralized organizations share common goals and define problems in similar ways. Third, coordination among numerous decentralized organizations will be easier when there is trust and shared values among them. Finally, some needed cooperation may never emerge because some organizations do not have a sufficiently large stake in the matter—the externality problem. For example, because schools are held accountable for test scores, schools and CMOs have incentives to attract and keep high-scoring students, perhaps to the exclusion of other students. In this sense, competition is likely to make the problem worse, not better. In theory, these behaviors can be overcome by professional norms, a clear mission of eliminating achievement gaps, and a stated desire to serve the most disadvantaged students. But there is also evidence that these informal mechanisms will be insufficient. In one recent study, school principals acknowledged that they made attempts to recruit or push out certain types of students (Jabbar, 2015). While the reform community has taken steps to reduce this type of behavior, there is not yet evidence of their efficacy. Here, it becomes important to recognize that New Orleans is a regulated market model. Authorizers can take over the role as regulators and impose internal rules that force cooperation (or at least compliance) in certain areas. In the past several years, the RSD has stepped in to create centralized enrollment systems and processes for control- ling transfer, to avoid a “race to the bottom” where the system poorly serves those students who are most in need. RSD and OPSB, however, also compete over preemi- nence in the city, and cooperation may be limited in conflicts involving the distribution of resources or power. Louisiana Board of Elementary and Secondary Education and the state legislature and governor also have the ability to step in with regulations that may facilitate cooperation and solutions. Finally, the market system might fail to solve problems due to economies of scale. The more resources are required to solve a problem, the more that scale considerations come into play. Returning to the teacher pipeline issue, the problem is not only that Buerger and Harris 1257 preparing, recruiting, and developing teachers are expensive but also that the organizations perhaps best positioned to help—universities—are relatively small in size and have been subject to their own crises. In addition to suffering from significantly dimin- ished enrollment levels, Louisiana has made the largest percentage cuts to higher education of any state in the country.

Conclusion: Problem Solved? Can the New Orleans–style portfolio model solve problems arising from disaster and general social dysfunction? Are such systems resilient to external change? In some ways, the answer seems to be yes. These first 10 years since Hurricane Katrina have seen better student outcomes and majority support from citizens across racial groups (Cowen Institute, 2014). But is this system, originally thought to be a temporary fix, also a permanent solution? Can the system solve fundamental problems such as the teacher pipeline? Here, the answer is less clear. The fact that system leaders have iden- tified and tried to fix many problems that have emerged is a positive sign. In time, we will learn how well these solutions have worked.

Acknowledgments The authors wish to thank the John and Laura Arnold Foundation, William T. Grant Foundation, The Schleider Educational Foundation, Tulane University’s Murphy Institute and School of Liberal Arts, and an anonymous donor for financial support for all the research conducted by the Education Research Alliance for New Orleans (ERA-New Orleans). For their useful comments, we thank Ann Carpenter, Andrea Chen, Leslie Jacobs, Vicki Mack, Kent McGuire, Jeannie Oakes, Allison Plyer, Sanjiv Rao, Michael Ripski, Jen Roberts, Whitney Soenksen, Michael Stone, John Valant, and William Wainwright. We are especially grateful to Andre Perry who collaborated on an earlier version of this article. All remaining errors are the authors’.

Declaration of Conflicting Interests The author(s) declared no potential conflicts of interest with respect to the research, authorship, and/or publication of this article.

Funding The author(s) disclosed receipt of the following financial support for the research, authorship, and/or publication of this article: Laura and John Arnold Foundation, Grant No. 552456; William T. Grant Foundation, Grant No. 601662; The Murphy Institute at Tulane University; and The School of Liberal Arts at Tulane University

Notes 1. As Henig (2010) explains it, a stock portfolio manager churns stocks to maximize the return on stockholder’s investment. A portfolio district continuously closes lower performing schools and opens new schools or increases enrollment in high-performing schools to maximize the educational return on the taxpayer’s investment. 2. For more discussion on this point, see Levin (2012). 1258 American Behavioral Scientist 59(10)

3. The improved graduation rate in Orleans Parish in recent years may have had an effect on the murder rate there as well; for more discussion, see Frailing, Harper, and Serpas’s article in this issue. 4. As Harris (2013) points out, only comparing New Orleans test scores and rankings before and after the storm is not enough to make the claim that the reforms led to higher performance. Three factors may have inflated the scores: the population of students changed, test-based accountability may have distorted results (e.g., teaching to the test), and the pos- sibly higher quality schools students attended when they evacuated. On the other hand, students experienced disruption and trauma as a result of the hurricane that we would expect to reduce students’ academic outcomes. The role of these issues is being tested in other analyses. See also analyses by Stanford’s Center for Research on Education Outcomes (2013), which compare charter and noncharter schools during the post-Katrina period. 5. Ruble (2015) finds that 21 schools were closed by authorizers in a time period between 2005-2006 and 2013-2014. 6. Discipline decisions exert external effects in the sense that schools can potentially improve their own situations by expelling and otherwise “pushing out” disruptive and/or low-scoring students. If a student is pushed out, “the problem” is transferred to another school or CMO. 7. It is important to note that the state of Louisiana legally mandates that students who are a threat to safety have to be taken out of the classroom. Violations covered by the state law were included in schools’ policies on discipline, suspension, and expulsion (Louisiana Laws, 2006). 8. Other parts of the policy declare that students may be expelled for 3 to 6 months for violations such as theft of $500 or more, burglary with forced entry on school grounds, con- viction of a felony, or repeatedly threatening others’ safety. Furthermore, schools cannot expel students anymore for uniform violations, multiple suspensions, or the vague “willful disobedience.” 9. The expert is a former OPSB employee who worked on discipline issues prior the storm.. 10. New School for New Orleans was behind several other system-wide coordinated actions including the creation of the enrollment system OneApp. Furthermore, New schools for New Orleans assigns the federal grants for turnaround schools (Hall, 2015). 11. A recent study by Ronfeldt, Loeb, and Wyckoff (2013) shows that students in grade levels with higher teacher turnover score lower in both English language arts and math and that these effects are particularly strong in schools with more low-performing and Black students. Moreover, their results suggest that there is a disruptive effect of turnover beyond changing the distribution in teacher quality. 12. Available studies using observational data often do not show a relationship between students’ and teachers’ race. However, these studies do not cover the problem that lower performing Black students are more likely to be assigned to Black teachers. Studies by Dee (2004, 2005) cover this issue and show that race plays an important role for teachers’ perceptions of students. Furthermore, he finds that assignments to same-race teachers significantly increased the math and reading achievement of both Black and White students. 13. The discussion here refers only to broad patterns. Charter schools in New Orleans vary considerably in their educational philosophies. 14. By 2004, one out of three students attended a private or parochial school, a rate 3 times higher than the national average (Boston Consulting Group, 2007). 15. As in the rest of the country, race and class also overlap in New Orleans. While the city had a large African American middle class at the time Katrina hit, it also had one of the Buerger and Harris 1259

highest poverty rates in the country and the vast majority of those in poverty were African American. In 2005, 86.4% of African American students received free or reduced-price lunch, compared to only 44.9% of non-Black students in third through eighth grades. This relationship has not changed much. In 2012, 90.7% of African American students and only 48.5% of non-Black students received free or reduced-price lunch. See Harris and Larsen (2015). 16. Fifty eight percent of the teachers employed in 2008 were teaching in New Orleans before Katrina (Barrett et al., 2015). 17. Feeding into that problem are concerns about the local control of the system. Many education activists, school board members, and the public thought that the schools would be returned to the city after a certain period of time. The state’s decision to keep the schools has been often interpreted in terms of race (Jabbar, 2015). Furthermore, school leaders per- ceived a racist element in the decisions made about which schools would receive support or be shut down (Jabbar, 2015).

References Aaronson, D., Barrow, L., & Sander, W. (2007). Teachers and student achievement in the Chicago public high schools. Journal of Labor Economics, 25, 95-135. Arce-Trigatti, P., Lincove, J.A., Strunk, K., & Harris, D. (2015). Innovation and diverse program offerings in Orleans parish public schools. Unpublished technical report. Barrett, N., Harris, D., Lincove, J. A., & Strunck, K. (2015). Personnel and human capital practices. Unpublished technical report. Barrett, N., & Santillano, R. (2015). Student discipline. Unpublished technical report. Boston Consulting Group. (2007). The state of public education in New Orleans. Retrieved from https://www.bcg.com/documents/file15048.pdf Brown, T. L., & Potoski, M. (2003). Transaction costs and institutional explanations for government service production decisions. Journal of Public Administration Research and Theory, 13, 441-468. Bulkley, K. E., Henig, J. R., & Levin, H. M. (2010). Between public and private: Politics, governance, and the new portfolio models for urban school reform. Cambridge, MA: Harvard Education Press. Burns, P., & Thomas, M. O. (2009, September). Teaching in the storm’s wake: Post-Katrina public education reform in New Orleans. Paper presented at the annual meeting of the American Political Science Association, Toronto, Ontario, Canada. Capochino, A. (2005, August 1). Orleans Parish struggles to assign classrooms. New Orleans City Business, 26(3), 1. Center for Research on Education Outcomes. (2013). New schools for New Orleans year 2 report. Retrieved from http://credo.stanford.edu/pdfs/NSNOYear2Report.pdf Chetty, R., Friedman, J. N., & Rockoff, J. E. (2011). The long-term impacts of teachers: Teacher value-added and student outcomes in adulthood (No. w17699). Cambridge, MA: National Bureau of Economic Research. Chetty, R., Friedman, J. N., & Rockoff, J. E. (2013). Measuring the impacts of teachers II: Teacher value-added and student outcomes in adulthood (No. w19424). Cambridge, MA: National Bureau of Economic Research. Chubb, J. E., & Moe, T. M. (1991). Politics, markets and America’s schools. Washington, DC: Brookings Institution. 1260 American Behavioral Scientist 59(10)

Cowen Institute. (2013). New Orleans by the numbers: School performance scores, 2013. Retrieved from http://www.coweninstitute.com/wp-content/uploads/2013/12/NBTN.SPS_.2013.v2.pdf Cowen Institute. (2014). State of public education in New Orleans. Retrieved from http://www. coweninstitute.com/our-work/applied-research/state-of-public-education-report-in-new- orleans/ Dahl, R. A., & Lindblom, C. E. (1953). Politics, economics, and welfare. Herndon, VA: Transaction. Dee, T. S. (2004). Teachers, race, and student achievement in a randomized experiment. Review of Economics and Statistics, 86, 195-210. Dee, T. S. (2005). A teacher like me: Does race, ethnicity, or gender matter? American Economic Review, 95, 158-165. DiMaggio, P. J., & Powell, W. W. (1983). The iron cage revisited: Institutional isomorphism and collective rationality in organizational fields. American Sociological Review, 48, 147-160. Dreilinger, D. (2013a). New Orleans high school protests reopen suspensions debate. New Orleans Times-Picayune. Retrieved from http://www.nola.com/education/index. ssf/2013/12/new_orleans_high_school_protes.html Dreilinger, D. (2013b). New Orleans schools expel more students, but are more accountable. New Orleans Times-Picayune. Retrieved from http://www.nola.com/education/index. ssf/2013/08/post_197.html Eastbank Collaborative of Charter Schools. (2015). [Flyer]. New Orleans, La: Author. Eisenhardt, K. M. (1989). Agency theory: An assessment and review. Academy of Management Review, 14, 57-74. Gansle, K. A., Burns, J. M., & Noell, G. (2010). Value-added assessment of teacher preparation in Louisiana: 2005-2006 to 2008-2009. Baton Rouge, LA: Louisiana Board of Regents. Goldhaber, D., Brewer, D., & Anderson, D. (1999). A three-way error components analysis of educational productivity. Education Economics, 7, 199-208. Hall, M. (2015, February). When autonomous needs a system: How divergent actors in education shaped a new institutional system in New Orleans and beyond. Paper presented at the Association for Education Finance and Policy, Washington, DC. Harris, D. (2013, October). The post-Katrina New Orleans school reforms: Implications for national school reform and the role of government. Lecture conducted at the University of Michigan, Ann Arbor, MI. Harris, D. N., & Herrington, C. D. (2015). Editors’ introduction: The use of teacher value- added measures in schools new evidence, unanswered questions, and future prospects. Educational Researcher, 44(2), 71-76. Harris, D.N., & Larsen, M. (2015). The effects of the New Orleans school reforms on student achievement. Unpublished working paper. New Orleans, LA: Education Research Alliance for New Orleans at Tulane University. Hayek, F. A. (1944). The road to serfdom. Chicago, IL: University of Chicago Press. Henig, J. (2010). Portfolio management models and the political economy of contracting regimes. In K. E. Bulkley & H. M. Levin (Eds.), Between public and private: Politics, governance, and the new portfolio models for urban school reform (pp. 25-52). Cambridge, MA: Harvard Education Press. Hill, P. T. (2006). Put learning first: A portfolio approach to public schools (Progressive Policy Institute Policy Report). Washington, DC: Public Policy Institute. Buerger and Harris 1261

Jabbar, H. (2015). “Drenched in the past”: The evolution of market oriented reforms in New Orleans (Working paper). Jensen, M. C., & Meckling, W. H. (1979). Theory of the firm: Managerial behavior, agency costs, and ownership structure. In K. Brunner (Ed.), Economics social institutions (pp. 163-231). Hingham, MA: Martinus Nijhoff. Levin, H. M. (2012). Some economic guidelines for design of a charter school district. Economics of Education Review, 31, 331-343. Louisiana Department of Education. (2005). 2004-2005 school, district, and state dropout numbers and percents by grade level. Retrieved from http://www.louisianaschools.net/lde/ uploads/9692.pdf Louisiana Laws. (2006). Revised Statute 17:416—Discipline of pupils; suspension; expulsion. Retrieved from http://law.justia.com/codes/louisiana/2006/143/81024.html Louisiana Legislative Auditor. (2004). Orleans Parish School Board Audit Report. Retrieved from http://www.lla.state.la.us/PublicReports.nsf/86256EA9004C005986256F4A0054AB 01/$FILE/03101962.PDF Mayntz, R., & Scharpf, F. W. (1995). Der Ansatz des akteurzentrierten Institutionalismus. In R. Mayntz & F. W. Scharpf (Eds.), Gesellschaftliche selbstregelung und politische steuerung (pp. 39-72). Frankfurt, Germany: Campus Verlag. Meyer, J. W., & Rowan, B. (1977). Institutionalized organizations: Formal structure as myth and ceremony. American Journal of Sociology, 83, 340-363. Noell, G. H., & Gansle, K. A. (2009). Teach for America teachers’ contribution to student achievement in Louisiana in grades 4-9: 2004-2005 to 2006-2007. Retrieved from http:// www.nctq.org/docs/TFA_Louisiana_study.PDF Nohria, N., & Ghoshal, S. (1994). Differentiated fit and shared values: Alternatives for manag- ing headquarters-subsidiary relations. Strategic Management Journal, 15, 491-502. Ostrom, E., Gardner, R., & Walker, J. (1994). Rules, games, and common-pool resources. Ann Arbor: University of Michigan Press. Perry, A. M. (2014, July 7). Zero-tolerance policies are destroying the lives of black children. The Washington Post. Retrieved from http://www.washingtonpost.com/posteverything/ wp/2014/07/07/zero-tolerance-policies-are-destroying-the-lives-of-black-children/ Powell, W. (2003). Neither market nor hierarchy: Network Forms of Organization. In M. J. Handel (Ed.), The sociology of organizations: Classic, contemporary, and critical readings (pp. 315-330). Thousand Oaks, CA: Sage. Recovery School District. (2006). Recovery School District legislatively required plan. Retrieved from www.louisianaschools.net/lde/uploads/8932.doc Rivkin, S. G., Hanushek, E. A., & Kain, J. F. (2005). Teachers, schools, and academic achievement. Econometrica, 73, 417-458. Ronfeldt, M., Loeb, S., & Wyckoff, J. (2013). How teacher turnover harms student achievement. American Educational Research Journal, 50, 4-36. Ruble, W. (2015). Impact of school closures and contract turnover: Evidence from New Orleans (Working Paper). New Orleans, LA: Tulane University. Ruiz, L. (2012, October 14). Meet Aesha Rasheed, foot soldier. MSNBC. Retrieved from http:// www.msnbc.com/melissa-harris-perry/meet-aesha-rasheed-foot-soldier-part-2 Russel, G. (2008). Mose Jefferson is indicted in school bribes. Retrieved from http://www.nola. com/news/index.ssf/2008/04/mose_jefferson_is_indicted_in.html Scharpf, F. W. (1997). Games real actors play: Actor-centered institutionalism in policy research. Boulder, CO: Westview Press. Schotter, A. (2008). The economic theory of social institutions. Cambridge, England: Cambridge University Press. 1262 American Behavioral Scientist 59(10)

Scott, W. R. (1995). Institutions and organizations: Ideas and interests. Thousand Oaks, CA: Sage. Smith, N. (2012). The Louisiana Recovery School District: Lessons for the Buckeye state. Washington, DC: Thomas B. Fordham Institute. Thevenot, B. (2000, September 3). School board searches soul for $30,000. New Orleans Times- Picayune. Thevenot, B. (2002, June 14). “It’s time”: Schools chief Davis to leave. New Orleans Times- Picayune. Thevenot, B. (2003, November 6). Audit probes millions paid to ex-employees: Thousands got checks in past 4 years. New Orleans Times-Picayune. Thevenot, B. (2005a, August 14). Orleans schools scramble for 1st day: Officials race clock and shovel trash. New Orleans Times-Picayune. Thevenot, B. (2005b, April 12). School board OKs outside managers. New Orleans Times- Picayune. Thevenot, B., & Rasheed, A. (2004, January 27). School board president ousted. New Orleans Times-Picayune. Tyack, D. B. (1974). The one best system: A history of American urban education. Cambridge, MA: Harvard University Press. U.S. Census Bureau. (2000). Decennial Census 2000. Retrieved from http://www.census.gov/ main/www/cen2000.html Vanacore, A. (2012, July 16). Recovery School District to list behaviors that could get students expelled. New Orleans Times-Picayune. Retrieved from http://www.nola.com/education/ index.ssf/2012/07/recovery_school_district_lists_1.html Williams, L. (1996, September 25). School board watchdog curbed, citizen panel to lose clout. New Orleans Times-Picayune. Williamson, O. E. (1975). Markets and hierarchies. New York, NY: Free Press. Williamson, O. E. (1991). Comparative economic organization: The analysis of discrete struc- tural alternatives. Administrative Science Quarterly, 36, 269-296.

Author Biographies Christian Buerger is a postdoctoral fellow in the Education Research Alliance of New Orleans and Tulane University’s Department of Economics. His research focuses on topics in program evaluation, public management, and public finance. His recent projects examined the impact of charter schools on housing values and district expenditures. He received his PhD in public administration from the Maxwell School of Citizenship and Public Affairs at Syracuse University in 2014. He also holds a Master of Public Administration from the University of Connecticut and a diploma from the University of Potsdam, Germany. Douglas Harris is a professor of economics and Schleider Foundation Chair in Public Education at Tulane University. He is also the founder and Director of Tulane’s Education Research Alliance for New Orleans. His work on education policy has appeared in top academic journals in economics, sociology, education, public policy, and the general social sciences. His book Value-Added Measures in Education won praise from across the spectrum, from Bill Gates to Randi Weingarten, and was nominated for the National Grawemeyer Award in Education. In addition to being widely cited in the national media, his work influenced Obama Administration policy on a range of issues, including school performance measures, college ratings, college access programs, and community colleges.