Michigan Governor's Education Summit, Remarks by Eli Broad, Lansing, MI

September 15, 2004

Thank you, Governor for that kind introduction. Thank you, as well, for all of the great work you and your team are doing to improve the lives of all the citizens in the Great State of Michigan.

Michigan has a very special place in my heart. I grew up in Detroit. My family moved here 65 years ago when I was six years old. I attended public schools, and I got my undergraduate degree from Michigan State University. I loved my time at MSU because the campus was filled with the spirit of possibility - that any one of us - the children of immigrants, assembly-line workers and farmers - could go as far as hard work and a bit of luck could take us. To this day, I still believe that the business and personal success I have attained is due to the education I received and the values I learned here in Michigan.

I am delighted to be back in my home state to talk about an issue that is the single most important domestic problem facing our nation today. And that problem is the failure of our public school systems to give all children the education they deserve and require.

Because I was fortunate enough to receive those educational opportunities so many years ago, I felt the best way I could give something back to society was to create a foundation with the singular focus of transforming public education in America's large urban school districts. That's the mission of The Broad Foundation. My family believes that there is no more important contribution we can make to our nation's future than a determined, long-term commitment to addressing the most complex and critical civil rights issue our nation faces today - educating our children.

I am very passionate about this topic, so I intend to be candid. After being around now for 71 years, I feel there is little time to be subtle when it comes to the future of our country.

We are facing a crisis unlike any that has ever before faced the United States. We risk becoming a second-class nation. What I'm going to talk about today will probably make you uncomfortable. It might even make you defensive. But I hope that in the next 45 minutes, you will realize that we need a wake-up call to change the situation in public education.

Let me first give you a little background. As you know, it has been over 50 years since the Supreme Court's decision in Brown versus Board of Education; it has been more than 20 years since the publication of A Nation at Risk.

Yet, the bottom line is that our nation is still at risk because our public school system, particularly in our nation's urban areas, has shown little, if any, improvement in the last 50 years. Student achievement is too low, and achievement gaps between income and ethnic groups are too wide.

Too many of our public schools are no longer characterized by the three Rs but by the three Ds - dropouts, drugs and discipline problems. Too many children cannot read or do math well enough to hold a decent job; too many children are woefully unprepared for any type of post-secondary academic work; and too many of our next generation of young people do not have the knowledge and skills necessary to become productive citizens.

When schools do not educate, there is a ripple effect across every aspect of our economy and society. When our education systems fail, they contribute to poor health, crime, violence, poverty, dependence, hunger and despair. Every person in our nation pays the price through higher prices, higher taxes, larger insurance premiums, social decay, workplace accidents, and unemployment. Our communities pay - and pay dearly, year after year, again and again -- for the effect of poor achievement in the schools.

I know you'd like to think otherwise, but most schools - even those in Michigan - are falling down on the job of educating our youth. On the 2003 National Assessment of Education Progress -- or NAEP, also known as the nation's report card -- 4th and 8th grade reading scores in Michigan were just at the national average. Michigan students excelled in 4th grade mathematics, but by the 8th grade, those gains were gone, leaving Michigan at the national average in math, too. Michigan is and should be better than average. You know it, and I know it. So what are we going to do about it?

Now we've talked and talked about this challenge. We have certainly studied it to such an extent that we could probably fill the Capitol Building to the top of the dome multiple times over with all of the reports and research on the crisis in education.

Are things any worse today than they have been before? We Americans have been criticizing our school systems for years. Criticisms came with the launch of Sputnik in 1957 and the publication of A Nation at Risk in 1983.

I strongly believe that the education challenge we face today is fundamentally greater I told you a few minutes ago that the United States risks becoming a second class nation. Let me tell you why.

As you are all aware, with the advent of free trade and the transition from an industrial to an information economy, many of the middle class manufacturing jobs have left or are leaving this country. This is painfully evident here in Michigan, which was one of the first states that was hardest hit by outsourcing. In two recent speeches on education, Federal Reserve Chairman Alan Greenspan noted that competition from abroad continues to rise to the point that domestic demand for our lowest skilled workers continues to diminish. Their jobs can and will continue to be sent overseas. The modern economy values not what we can grow or manufacture with our hands, but the innovations we can produce with our minds.

We now have two types of workers: service workers with limited skills who are in low demand, earn low wages and frequently face unemployment during down cycles in the economy; and knowledge workers who are in high demand, earn significantly more money and have more opportunities for advancement.

In 1950, 80% of jobs in the U.S. were classified as "unskilled." Today, an estimated 85% of all jobs are classified as "skilled," according to the U.S. Chamber of Commerce Center for Corporate Citizenship.

Our public education system is failing our young people. According to U.S. manufacturers, 40% of all 17-year-olds do not have the math skills, and 60% lack the reading skills to hold down a production job at a manufacturing company. We're even seeing knowledge jobs being exported to countries like India and Singapore. We face a crisis of epic proportions if we continue losing those jobs because our young people are uneducated.

Democrats and Republicans recognized the need for vast improvement and passed No Child Left Behind, which is hardly perfect and could use more funding, but is a necessary step in the right direction.

If student achievement doesn't improve, and if the ethnic and income student achievement gaps persist, we risk a lower standard of living, a weaker economy and a faltering of our democracy and society. The stakes are unbelievably high. There is the real chance that America will become like many second- and third-world countries, where a bimodal distribution of wealth between rich, upper middle class and poor creates political strife. The health of our democracy relies on bridging the gap between the skills of the middle class and those of the poor. Public education is that bridge. It is the connection that binds our society together.

I hate to be blunt - well, actually, I like to be blunt since it catches people's attention - but Michigan should have learned its lesson long ago from the auto industry. You lost significant jobs - even entire lines of business -- when they were shipped overseas to more productive, cheaper, more efficient facilities. You -- better than any other state -- should realize that if you don't take radical action to stop the exodus of jobs or industry, the ramifications are far-reaching and long-lasting. And we stand to continue losing significant jobs if our children lack the basic skills.

We need to pay attention to how other countries are educating their children. We spend more per child in the United States than any other country in the world. Are our children better educated? No. In fact, their academic performance ranks at the bottom of the list of industrialized nations. That's embarrassing. But more than embarrassing, that threatens our very way of life in this country. In a span of just 20 years, we have fallen to the bottom of the pack.

We're not going to fix the problem overnight. But the status quo is unacceptable. The systems we have in place are not working. The sluggish, unwieldy school district bureaucracies are inefficient. Many labor unions have become obstructionist in holding teachers accountable for student performance. The leadership we have in place is failing. Something radical has to be done.

I want to read you a quote from a former president of the American Federation of Teachers. This came from a column he wrote in the Wall Street Journal. "It's time to admit that public education operates like a planned economy, a bureaucratic system in which everybody's role is spelled out in advance and there are few incentives for innovation and productivity. It's no surprise that our school system doesn't improve: It more resembles the communist economy than our own market economy."

Now this sounds like somebody who gets it, doesn't it? Well, let me tell you, the AFT president who wrote that column was Albert Shanker, and he wrote that in 1989. Yes, 15 years ago. The problems still exist today, and in fact the crisis has worsened. We need to wake up to the crisis and do something about it. We can't afford to wait another 15 years.

I'm now going to tell you how I think we need to revolutionize our nation's public education system.

At The Broad Foundation, our mission is to dramatically improve K-12 urban public education through better governance, management, labor relations, and competition. While our focus is on urban education, the principles underlying our mission apply to all school districts. We believe that a strong governing body, combined with a talented CEO and senior management team, can make a profound difference in turning our school systems from lackluster bureaucracies into high-performing public enterprises.

We believe that healthy competition has raised the quality of higher education in the U.S. and can do the same for our K-12 public school system. Michigan is to be congratulated for being one of our nation's leaders in providing parents with competitive education alternatives, through public charter schools.

Our Foundation focuses on school system leadership - and here I'll draw a parallel to private industry: we focus on a school district's board of directors (its school board members), senior management (who are the superintendents and central office staff), front-line managers (the school principals), teacher union leaders, and city, state and federal policy leaders. We make strategic investments designed to raise the level of excellence of school system leaders. We do this because we believe that these individuals have the power to lead the bold, innovative, large scale change required to ensure that every American child -- regardless of ethnic background or economic circumstance -- receives an education that successfully prepares him or her for college, the workforce and productive citizenship.

The individuals who we put in positions to lead teachers are critical to the success of the education enterprise. Let me use another analogy from private industry: teachers are on the front line. Day in and day out, teachers tough it out in the classroom teaching one child at a time, one class at a time. They provide the individual building blocks of learning for their students. In business, if a company has great workers on the front line but a poor plant manager, a less-than-competent company president and a board comprised of the president's cronies, chances are pretty high that it won't be a successful company. Likewise, if school managers are poor leaders, if the superintendent is ineffective, and if the school board is inattentive, the public education enterprise as a whole will eventually collapse.

Schools and communities are intertwined. We cannot have great communities without great schools. We will have neither without great leadership at the school board level and the superintendent level.

We need a wake-up call in how our school districts are governed. In America we have nearly 15,000 school districts. Elected local school boards govern the vast majority. Most Americans support the current school board system and believe that this system keeps the schools connected to the community.

I disagree. I would argue that by separating the school board from a city's governance structure - its mayor and city council -- the schools are actually more disconnected from the larger community than they would otherwise be.

In fact, very few people in a community can name their school board members. Oftentimes, the individuals who seek election to school boards are preoccupied with their own political ambition or with the success of the football team or with getting a friend's son a job in the system. They are not focused on improving student achievement and supporting efficient and effective management of the public school enterprise.

In most cases, school board members do not have the experience and skills to oversee these multi-million-dollar or multi-billion-dollar school districts. Just to give you an idea of the size of these school systems, consider this: If the New York City Department of Education budget of nearly $13 billion was a company, it would be high up on the Fortune 500 list. The New Orleans school district has a larger budget and more employees than any business or government entity in the entire city. The school district budget in Milwaukee is more than $1.2 billion. These large urban districts operate transportation fleets, run food service activities, and oversee numerous construction contracts -- operations that rival many well-known companies. The Detroit public schools have a nearly $2 billion annual budget. Yet, these school district governing bodies have no experience governing anything of significant size.

Many people believe that elected school boards are an important component of local democracy in action -- and that may be the case in smaller communities. I believe that public education is too important to be left to political wannabes, well-meaning parents and those who get elected with a specific adult agenda in mind.

School board members tell me all the time that they serve on a great school board. But when I ask them about specific student achievement results in their district, they say things like "It is not very good" or "We're just beginning to see some positive results in some areas." I ask you - how can you have a great school board when your student achievement results are not very good? This is like a corporate board patting itself on the back while the company is headed toward bankruptcy. When the "average" achievement numbers look pretty good, but the gap between poor students and those from affluent families is widening, the school board is failing.

When year after year, minority children in your schools are not performing at the same levels of excellence as white students, the school board is failing.

I am a strong believer in mayoral control in large urban districts. Progress is being made in school systems like Chicago, New York City, Boston, Norfolk, Cleveland, Philadelphia, all of which have appointed boards - or no boards at all. Many of these boards have only advisory power. While many people believe this will reduce democracy, I believe it will enhance it. Everyone in a community knows who the mayor is. Hardly anyone knows who is on the school board. By putting the mayor in charge of the schools, the citizens will be able to hold a single person politically accountable if the schools are not successful.

And while The Broad Foundation is investing heavily in improving the capacity of elected boards through The Broad Institute for School Boards, I believe that meaningful progress in urban education in many places will have to come from governors and big-city mayors who take responsibility for underperforming school systems and operate above the local fray.

In looking at the question of leadership in schools, I first want to tell you a story. In starts with a city, similar to many in the Midwest. Throughout the 1950s, this city was successful. There was a strong supply of middle class jobs, and the citizens had a very good quality of life. But in the 1960s, the economic environment began to change. The city's main industry moved out of town. There was high unemployment. When hard times hit, people turned on one another. The city continued to deteriorate through the late 1980s. Race relations were strained. And the school system was failing its children, of whom more than 90% qualified for the free and reduced lunch program. The test scores were some of the lowest in the state. The 2002 Standard and Poor's report on the school system said that the district "generated exceptionally below-average student results with exceptionally above average spending per pupil."

Almost three years ago, as the state was getting ready to take over the schools in this city because of the poor performance, the school board took a risk and made a bold change by hiring a non-traditional superintendent to radically reform and fix the schools. This superintendent was the first non-educator hired in the state. She was welcomed by all the constituencies as a top quality leader, someone who would serve as a change agent.

Just two years later, there has been marked improvement in the city's students. Math proficiency has improved 45 percent, and reading proficiency has climbed nearly 40 percent. The schools in this district are close to achieving their AYP targets - six years early. There is a renewed sense of optimism. The superintendent was so successful in making changes and making connections with the community, that the voters in the city approved the first school bond measure in 21 years.

By now you probably have figured out: the state is Michigan; the city is Benton Harbor; and the superintendent is Paula Dawning, who I would like to recognize at this time. [APPLAUSE] Paula can tell you it wasn't easy, but she was persistent in her quest to improve the academic achievement of her students. Thank you, Paula, for all of your hard work and dedication, and congratulations on your success.

I tell this story not only to praise Paula and her team, although they deserve a lot of praise for their success, or to congratulate my Foundation, as she is a graduate of the Broad Center's Urban Superintendents Academy, but also to ask: Why was she the first non-traditional candidate hired in the state of Michigan? And Michigan, by the way, was a leader in eliminating certification requirements for superintendents and principals.

We need a wake-up call in the management of our schools. That means we shouldn't just select someone who has been a long-time teacher or a coach or someone who loves children. We have to look outside the system for new talent and individuals who have real experience and training in finance, management, systems and labor relations.

So we need to fundamentally rethink who is hired as a superintendent or principal, how they are trained, and what real authority they have to truly impact student achievement.

In Chicago, Paul Vallas, Mayor Richard Daley's budget director, turned around the city's school system and is now working as CEO of the Philadelphia School District. Alan Bersin, a former U.S. Attorney, has been successfully running the San Diego City Schools for over five years. General John Stanford improved the Seattle schools. Joel Klein, the former U.S. Assistant Attorney General, has embarked on what may be the most ambitious school system reinvention in the history of American public education in New York City with more than one million students and a nearly $13 billion budget.

We must have more districts that are willing to select non-traditional leaders trained outside the traditional school district culture. It is important to note that this is not unique to K-12 education. For example, when IBM hired Lou Gerstner as their CEO, who would have guessed that the CEO of American Express and RJR Nabisco would lead technology giant IBM to unprecedented success?

We also need a wake-up call in the latitude we give to managers. We have to start compensating teachers on a performance basis rather than on seniority. I know that some unions don't like to hear that, but introducing true accountability is essential to ensuring that student performance improves.

And we need to allow principals and superintendents to place teachers where they're needed. The greatest need is in our inner city schools where the achievement gap among income and ethnic groups is the widest. It's the same as in business, where strong line managers are moved to areas of production that are in need of improvement. But we need to reward those individuals who successfully increase production, or in the case of education, who improve the performance of our students.

The problem in public education is not going to be solved overnight. And it's not going to be easy. It will take drastic action at every level - by policy-makers, educators, communities and parents - who believe as strongly as I do that the very fiber of our country's existence is at risk.

As Governor Granholm said in her State of the State Address this year -- it is time for the local schools to break the mold.

The challenge is great, and time is of the essence.

Saving our schools requires bold steps, even risky steps. We must rely on new and sometimes unproven leadership and ideas for change. And communities must take the risks necessary to find solutions, change the culture of school districts, and education the next generation of students.

We must ensure that our 21st Century workforce does not struggle to survive on the skills of a past century.

We must provide all young people - from every walk of life and every part of our country - with the education and skills necessary to succeed.

By looking anew at the way we govern and manage our school districts, we can fulfill the promise of the Brown decision so that every child - every child - receives the education they deserve.

My thanks to Governor Granholm for the invitation to speak with you today, and I thank you for your interest and attention.