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University of Wisconsin Center for Cooperatives
Research on the Economic Impact of Cooperatives
The structure and scope of education cooperatives vary widely, reflecting the diversity of educational institutions in the U.S. Educational cooperatives may serve a collective purchasing function for educational institutions. Other cooperatives included in this sector directly deliver educational services to the children of parent members. A few are worker cooperatives, with teachers as member owners.
Public school districts are empowered by individual state statutes, creating many different organizational approaches to delivering educational services. State, county, municipal, and town governments, as well as independent school districts, may all have a role, depending on a given state’s legislative provisions.
More than 15,000 public school systems were identified in 2002 (U.S. Bureau of the Census, 2002.). In 2005, public school systems encompassed >97,000 public elementary and secondary schools (U.S. Department of Education, Educational Institutions). In addition to public schools, there are almost 29,000 private elementary and secondary schools, and 6,463 post-secondary institutions identified as participating in Title IV Federal financial aid programs. (U.S. Department of Education, Educational Institutions). Another 1.1 million children were home schooled in 2003 (U.S. Department of Education, Homeschooling).
The decentralized nature of the public educational system provides many opportunities to achieve purchasing efficiencies through cooperative arrangements. About 620 educational service agencies (ESAs) have been created in 42 states to more cost-effectively provide programs and services to member school districts (Association of Educational Service Agencies). ESAs are frequently self-identified as “cooperatives” or “collaboratives”.
ESAs enable member districts to cost-share in programs such as special education and professional development, many of which may be state or federally mandated. ESAs may also perform a collective purchasing function by aggregating demand and negotiating more favorable contracts for a wide variety of supplies, and may streamline administrative costs associated with following mandated contract purchasing procedures.
There are also educational purchasing cooperatives that exist independent of state statute, and serve the college, university and private school markets, as well as school districts in states without ESAs. These cooperatives also aggregate demand, negotiate contracts that provide better terms for their members, and provide assistance in meeting public procurement requirements.
Education cooperatives also encompass schools that are organized using cooperative principles. Parents, as the members who use the school to educate their children, exercise control over that process by direct involvement in all aspects of the school’s operations, including its board.
Several teacher cooperatives exist within the educational sector. As worker cooperatives, they provide a greater degree of autonomy and control over how the teacher members practice their profession. In contrast to implementing an externally developed instructional program, teachers develop and execute an educational program as part of the contract between the teacher cooperative and a public charter school. The cooperative also provides administrative services and is responsible for both the financial and academic success of the school.
ESAs are nonprofit entities with memberships composed of school districts in a defined geographic location. Authorized by state statute, they are financed by some combination of payments from member districts and contract fees for service (Association of Educational Service Agencies), and are also eligible to receive state and Federal monies. ESAs are governed by a representative board; however, as public entities, they are subject to regulations and oversight procedures required in the public procurement process. ESA structure is often dependent on state statute, and boards may include appointed officials from state or local governing bodies as well as elected or appointed representatives from participating member districts. Ex-officio members may also have authority over some decisions.
Other educational purchasing cooperatives may be associated with membership in an affiliated professional association. These organizations may be incorporated as cooperatives and operate on a cooperative basis, distributing patronage dividends or certificates of equity based on purchase volume. Those serving school districts not included in ESAs may be incorporated as nonprofit corporations, and have both elected and appointed members on their board.
Cooperative schools typically are incorporated as nonprofit, tax-exempt organizations, even if they are within the public school system. Parents of the children attending the school comprise the membership of the cooperative, and may be asked to contractually commit to classroom, administrative, and fundraising assistance, participate in general membership meetings, and elect a board of directors from the membership. The board may include other community stakeholders. In the case of charter schools, the school district or other appropriate government entity typically is represented on the board. Member financial obligations may vary, depending on the fundraising needs of the school, and whether it is private or public.
Teacher cooperatives are governed by an elected board of directors that may include school and at-large representatives as well as educators. Given that teachers are public employees and may have significant benefits, in some cases teachers have maintained their public employment status while being a member of a teacher cooperative.
Some ESAs self-identify as cooperatives or collaboratives, and all ESAs use a representative board governance structure to achieve mutually beneficial cost-savings for members. However, the degree to which ESA boards are subject to public oversight and reporting pose questions about their classification as cooperatives.
The list for education cooperatives come from primary research. The decision to include ESAs was made after population discovery was complete. As a result, some self-identified ESAs are included, but the list of ESAs is not comprehensive. Further research may examine more closely the nature of collaborative government entities in sectors such as education.
All economic data was obtained from survey work undertaken by the UWCC and Guidestar. The survey response rate for education cooperatives was 30.6% and all reporting cooperatives provided us with 2007 fiscal year-end data. The data collection and survey methodology is discussed in detail in the Data Collection section in the Appendix.
Table 4-3 shows that we have data for 121 education cooperatives and collectively these firms account for >$428M in assets, nearly $700M in sales revenue, and pay >$300M in wages. There are nearly 10,000 employees and nearly 15,000 memberships. As Table 4-3.4 shows, by extrapolating to the entire population (390 firms) and adding indirect and induced impacts to this activity, education cooperatives account for >$1B in revenue, nearly 15,000 jobs, >$500M in wages paid, and nearly $700M in valued-added income.