October 14, 2003

William Ouchi, Professor of Management at the UCLA Anderson School of Management, says decentralization of schools is a key to improving education.

There is a lot of talk about school reform these days. Some focus on pay. Others look at classroom size. Still others want to increase teacher and principal accountability.

William Ouchi, a professor of management at UCLA's Anderson School, takes a more business-like approach to the problem. In a landmark study outlined in his new book, Making Schools Work, Ouchi found that the biggest obstacles to improving education are large, centralized school bureaucracies.

In an examination of 223 schools in six cities – from the massive Los Angeles Unified School District to much smaller Catholic archdiocesan schools – Ouchi found that the schools whose students performed best had the most decentralized management systems. In these schools, the principals – not central office administrators – controlled school budgets and personnel.

Does it work?

Ouchi pointed to three innovative school systems he examined in Edmonton (Canada), Seattle and Houston. These systems were once plagued by the same problems that trouble Los Angeles, New York and other big-city school districts: poor test scores, flight to private schools and high dropout rates.

But leaders in each city changed their systems, moving control from a centralized office to individual schools. Principals were allowed to put money where they thought it would do the most good. In essence, they were allowed to act as entrepreneurs and make decisions based on their school's unique circumstances.

The changes have produced significant, lasting improvements in these districts, Ouchi said. In Edmonton, for example, where school principals now control 91 percent of their budgets (compared to 6.7 percent for Los Angeles school principals), test scores are up and parents, teachers and students are all much happier with their schools.

"They have put private schools out of business," Ouchi said. "That, to me, is the acid test."

In Seattle, 43 percent of children were in private schools in 1970. Today, that is down to 35 percent. In Houston, whose students consistently outscore those of Los Angeles by nearly 10 points in both reading and math, test scores are way up.

The key, Ouchi said, is what he calls the Weighted Student Formula, whereby every student is evaluated and assessed a certain dollar value in educational services. If a school has more nonEnglish-speaking students, for example, the principal can put more money into classes that help them learn English. Or it could go to hire tutors to teach at-risk students. The bottom line, he added, is money is put to its best use for each school.

"Every group of children is different," Ouchi said.

He said he has worked to help reform the Los Angeles Unified School District, whose students typically score near the bottom of national tests, but without success. He called LAUSD "the most centralized education system in the country, other than Hawaii." (Los Angeles spends only 35.4 percent of its budget on teacher pay, while Houston spends 48.5 percent and Edmonton spends 55.8 percent on teachers.)

But, he argues, if reform can work in places like Houston and Seattle, it can work in Los Angeles.

"It makes me angry, because I know other schools can be as good, but aren't," Ouchi said.

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