Deborah Gist of Transcend and the XQ Institute and Victoria Andrews of Getting Smart joined me to talk about their report, “The Public Microschool Playbook: A New Actionable Guide for System Leaders,” a guide for public school districts interested in starting their own microschools. Our conversation explored the barriers districts face and highlighted solutions and real-world examples where microschools are already making a difference. My guests emphasized the importance of community engagement, starting small, and designing schools around the specific needs of students.

For those who have read my book From Reopen to Reinvent and followed my work, it’s no secret that I think many more districts ought to be operating a range of microschools rather than continuing to have a one-size-fits-all mentality around serving students. It seems like a big opportunity to increase student engagement—and by having a bunch of purpose-built and differentiated microschools serving different groups of students yet offering them through the district, you can also imagine still having the best of a big community with other offerings like sports teams and the like that might be a draw. How to do this, however, has been a challenge for many districts, so I was glad when this guide came out. I hope our conversation helps more districts move forward accordingly.

Michael Horn

Welcome to the Future of Education. I’m Michael Horn. You’re joining the show where we’re dedicated to creating a world in which all individuals can build their passions, fulfill their potential and live lives of purpose. Something we’re not accomplishing today. But two folks that we get to welcome to our show today, being dedicated to this work for a very long time and doing incredible stuff. So thrilled to have two friends here, Deborah Gist and Victoria Andrews. Deborah, obviously now superintendent in residence at Transcend and XQ Institute, but of course, you were the superintendent of Oklahoma’s largest public school district in Tulsa, your hometown, for many years and of course, commissioner of Education in Rhode island and many other things.

So first, good to see you Deb.

Deborah Gist

You too.

Michael Horn

And Victoria, you’re obviously a partner now focused on professional learning at Getting Smart, but you were the assistant director for an IB school, I think most recently before Getting Smart. So thank you so much for joining as well.

Victoria Andrews

Super happy to be here. Yeah. Can’t wait for the conversation.

Michael Horn

Well, we’re going to dive in because you all were part of Getting Smart Collective, Learner Centered Collaborative, and Transcend coming together to write, I think, a really important report, the “Public Microschool Playbook: A New Actionable Guide for System Leaders.” We’ll link to it, obviously in the show notes and up front, but it’s a really important playbook that encourages districts to get in the game, start creating microschools. And Deb, you’ve, I feel like actually I was in front of you a couple times from when From Reopen to Reinvent came out being like, districts should do microschools. And you’d be like, there’s not a playbook yet to get them to do it. So you guys have written that. Let’s, let’s dive in because I think it’s obviously incredibly critical. There’s a lot of interest in them.

Overcoming Educational Innovation Barriers

Michael Horn

Let’s start with the barriers, though, because you all note in the report that we’re not seeing a lot of district run microschools. You list several of them actually helpfully, but there’s not a, there’s not as many as there should be. So maybe let me start with you, Deb. And then Victoria, you jump in, like, what do you see as the big impediments or barriers that’s holding this back?

Deborah Gist

Well, I mean, I think honestly one of the very first barriers is just awareness and just a recognition of the why and what’s possible and how they could go about doing it. And then once a system leader, whether it’s a school district superintendent or a charter school leader or a leader of tribal schools or whatever the entity is, once they get the bug and they think, oh, I get it, like, I see how this could be such a game changer for my students, my teachers in our community, then you start encountering, you know, some practical kinds of things. And it’s everything from funding, which always comes up. It’s like, how do you set aside the seed funding in the long term, it really should be, but there are some things that people have to work through you. You might run into, depending on the state, on, on most of these actually certification challenges, like, you know, teachers of record and, and how that is done within the state, depending, depending on the design of the school, you might run into needing to figure out, you know, how you count courses, how you count attendance, you know, seat time issues and things like that. Then you have facilities. And again, you know, there are, there are typically in, in many districts.

There’s space available, but it’s figuring that out. And if you want it to be intentionally, which we actually recommend in the playbook, outside of the system, at least initially, you know, figuring that out and make. And then you have to work through, you know, safety concerns and all of the things. So we lay this out in the playbook. So I don’t want anyone to feel daunted by the that we’re talking about barriers right away. It’s. It’s very doable. And all those mechanisms that we touch on that I talked about.

And then you also have enrollment and the procedures and different things like that. All of that is very technical things that can be addressed, I think, helping to lead the adaptive change of helping people to think how. How do we do school differently and what do we have to let go of and what do we need to embrace? Because we all want to serve students for their whole unique selves. But the barriers sometimes can feel daunting, but we can help people address them.

Michael Horn

Victoria, what would you add, yeah?

Victoria Andrews

I would just liken it to, you know, everybody has a dream of owning a home. And you’re like, oh, I’m going to get a house that’s going to be three bedrooms, two baths. It’s like, there are so many different types of houses. There’s condos, there’s townhouses, there’s modular houses. So sometimes it’s just truly, you don’t know what’s possible. And so for a lot of leaders that are leading, they’ve got the blinders on. Deb can attest to this just like I can, where it’s like the day to day, you’re just like, I gotta make it through. And we need to do what we need to do to make sure that the kids are safe and the staff is supported.

And sometimes, unfortunately, innovation is the last thing on our minds. And so not even knowing what are the possibilities to attract different parents to engage students in a different way, just even knowing that this is an option and this is an avenue to do that.

Michael Horn

Yeah, no, that makes sense. So I want to double click on a couple of them because you talked about seed funding. That’s one I hear a lot from folks on the ground like, we are stretched as it is running flat out. And to your point, Victoria, like the urgent and immediate, maybe trumps the important in the long term that maybe we should be planning for. How do you go about getting seed funding? And then the other one I’d love you all to address, I’ll just name it. I hear a lot about union contracts or policies or procedures. Like how do you think about batting those down so you can create space for this?

Funding Small-Scale Education Initiatives

Deborah Gist

Well, I’ll start and then this is probably mostly a Victoria question, but I mean, there are resources available. Getting Smart is one. VELA has given out grids and they don’t need to be big. So the seed funding, you know, having led large systems, even though I led large systems that were constantly needing to, you know, cut budgets and figure out how to adjust and so forth, the amount of money that we’re talking about is doable. So it’s about will, it’s about saying like we are, it is worth it to set aside an amount of money or co fundraise for it or whatever it’s going to take to get this going. I think sometimes people think it’s just a tiny, tiny number of students. And, you know, how do we focus on that when we have this much bigger population that we’re serving? But it’s not just about those students. Even though it is.

It’s really about how we are adjusting the system overall. Quickly, on the union question, you know, obviously it varies from state to state and district to district in very dramatic ways. I know from personal experience, but I would say that microschools are about teachers. I mean, this is about helping the union leadership and the teachers that are part of that union leadership understand that this is about respecting the professionalism of educators and giving them an opportunity to work with communities to build the kind of schools that they really dream about. So I think it’s a doable thing. But Victoria knows more about doing that on a day to day.

Michael Horn

You’ve been in the trenches, Victoria. So because you all are getting smarter, funding support, supporting a lot of these. So, talk about that.

Victoria Andrews

We have and what is inspiring is that you see once people wrap their minds around that this is a possibility then you see that like innovation light bulb go off and it’s how can I be creative with the space and the staffing that I have? I think about Canyon City out of Colorado. So they have a microschool and it’s experiential learning and they take the young people on various trips across the country and even globally. And their staffing model is so that they’re on the block schedule. But if there’s an English teacher that one of that English teacher section is with the microschool. So it’s not the hiring of an additional person, it’s just being creative and flexible within the confines that you already have. And so that’s a perfect example of like how do we address, you know, space operations and staffing? What do you have? How can you be flexible? I think it goes back to the point we talked about earlier of just being confined, of thinking like this is the way that we’ve always solved this problem, this is the way we’re going to continue to solve this problem. But it’s like what if you kind of flip things on their head. I’ve seen other spaces switch to a four day school model to accommodate a microschool.

And what are, what are those kids going to be doing on that fourth day, I mean on that fifth day and how do you staff for that? To Deb’s point, you’re respecting those educators as indeed educators and professionals and pulling them into the conversation. There are tons of great examples all across the country of people that are navigating unions and navigating staffing models and schedules and sometimes again people just don’t know what’s out there. And so diving into the playbook, what I do appreciate is that we highlight so many examples that are, that you can still reach out to right now if you’re not clear or if there’s a hurdle that you can’t quite cross.

Michael Horn

So part of that is you also show the payoff right from this and you have this section on the benefits which pretty striking results called out. You had Edge, for example, a district run microschool within Liberty Public Schools in Missouri. You had some cool highlights that I would just encourage people to check out the report, spend some time with it and then you jump. And I think that’s the perfect segue because you just talked about that school in Colorado that by the way, I kind of want to go to now. So I just took a note. Like experiential learning, traveling around the country and world. Yes, please.

Victoria Andrews

Yeah, check.

Michael Horn

Right, check. But the first stage you have in all this is planning and you name some specific considerations. Competency based learning instead of seat time, you’ve got alternative accountability and assessment models. Thinking about the microschools goals and how those line up. Right. Expanding teacher cert. You mentioned that Deb, and a bunch of other stuff.

What’s involved in this planning stage in your mind and like why is it so critical to tackle early up front before you’re getting, before you actually like have a school in mind and you’re starting to actually put in place.

Community Needs Guide Micro School Launch

Victoria Andrews

Yeah. So, I mean I’m so glad you asked me this because this is where I’m working with a community of practice right now. And so many of those leaders are looking to launch a public microschool. The first question is, does your community want it? Because you can have this passion project and it can be shiny and have all the bells and whistles and it can be competency based and PBL and you guys can go across the country and you know you’re helping everybody. But if your community doesn’t want that, then it’s for you, it’s for the, you know, it’s for the adults, it’s for the school board, it’s for that passionate parent. So first and foremost is what’s your why and who is that for? And really honing in and we, not just for public microschools, but that’s something we’ve just learned from microschools in general. They are responsive to the needs of their community.

It wasn’t the ones that were just that cupcake fluffy like oh, I just want to do something cool. Like that’s just what you did, something cool for you and that’s in service to no one. And so we definitely don’t encourage that is really, really hone into your why and you’ll see that at the beginning chapters of the playbook of just like what are you doing? What’s your purpose? And the ones that have a level of sustainability like you highlighted. I was hoping you would bring up Liberty Edge out in Missouri. They, they looked at okay, why, why are young people leaving? What do families want? What are they asking for? And then they build a program that’s responsive to that. And so that’s what are highly, just start off with that why.

Deborah Gist

True.

Victoria Andrews

And don’t be afraid to ask the families because they’re going to tell you. They’re going to tell you where they’re going, why they’re going there, or even the young people, what do they want? What do they want that’s different? And then you can take that information and I don’t know any middle schooler or high schooler that’s going to be afraid to tell you exactly what they want when it comes to their education.

Michael Horn

Fair enough. Fair enough. You have this section that comes after right on the designing and it starts to get into this thing around like don’t make it one size fits all. Really fit the purpose. I’d love you both to talk about that. But also in the context of like, as you’ve, you know, been designing across the country, Victoria, like, what do you see as the biggest opportunities, Deb, when you put your lenses on leadership, like, where do you see the biggest opportunities to start? What populations? What are the whys that really grab communities right now that maybe are tuning out to the traditional options?

Deborah Gist

Yeah, I mean, it’s really endless actually. You know, in the microschool world, you see everything from, you know, Montessori programs for the littles to programs specifically designed for newcomers to more career and tech kind of focus school schools for older students. I mean it just, it. They could serve any group. And I think, you know, as Victoria was saying, just understanding your own community, what the needs are and what is most ripe. Hopefully systems, and not all systems have the capacity to do this, but larger districts, particularly if they’re losing enrollment, they know why they can track where their students are going. So analyzing that data and understanding, like people are voting with their feet, where are they going and why?

And then asking students as again Victoria said, the student, we need to listen to the student voice and engage them in design. So what is it that is keeping them from coming to school, staying in school, being engaged in school, and what would draw them in and excite them? So a microschool could be anything. It could be, you know, arts focus, sports focused. It could be for students with special reading needs or students who are over age and undercredited. You know, it could be any number of things that a community decides is the greatest need that they have at that moment.

Victoria Andrews

Completely agree, Deb. Some of the ones that I really do appreciate are like da Vinci Rise out of California, that microschool is part of a larger network. But they’re focused on those youth that are unhoused. They have to have a flexible schedule. If I’m a parent, if I’m a young person, and this is my second entry point back into school, I might have a kid or two and I might be working full time so that 8 to 5 or 8 to 4, 8 to 3 schedule is not going to work for me. But it doesn’t diminish their desire to want to graduate. It shouldn’t hinder them from getting a diploma or having access to work based learning opportunities or having an internship or an externship. Just because I have these additional responsibilities and if anything that I’m more dedicated because I have, you know, a higher calling to pursue for, so looking.

Designing Education for Diverse Needs

Victoria Andrews

I would say designing with, if you talk to your community and you figure it out and like Deb said, there’s so many reports and the data is there, but truly developing with a fringe in mind. So if you notice that your unhoused population is not being addressed through McKinney-Vento data, then what are you doing to support them? If you see that you’ve got a large amount of students that are coming back into the system or coming back into your learning environment that are newcomers to the United States, how are you supporting them? If you see that you have got a lot of, you know, mobility happening, like just dig into the information it’s there and then design with that population in mind. Does it have to be a hybrid schedule? Are there days where they need to be on campus? Do they need wraparound supports to make sure that they are successful? Do they need to meet with counselors? Do they need to be on an accelerated path? Do they need more opportunities to engage with work based learning opportunities so that there is a pipeline. So it’s not just I get my high school diploma, but what else is there afterwards? So really creating the microschool with those parameters.

Michael Horn

Hearing both of you talk about this and then Victoria, I love that phrase, focus on the fringe. I think it’s a really important one because these schools we’re talking about are like 25 to at most 150 students. So I think a lot of times the district leaders that I talk to, they have a mindset of like, oh, it’s got to be for everyone. But actually you can find these different segments, right, and you could theoretically run several different microschools, I imagine. So I’m, I’m sort of curious to hear you both reflect on, you know, could you have multiple microschools going? One of my observations is that there’s not a lot of focus on high school in the private microschool market.

But listening to both of you, you’re giving a lot of high school examples, actually. So maybe it’s different here. So I’m curious to hear you both reflect on that.

Deborah Gist

Yeah, I mean, my dream as a system leader was the school district I led was an authorizer for public charter schools. And you know, we developed and opened a public microschool in collaboration with a collaborative of parents. But my, but my dream was that we would get to a point where we could have almost a process like that, where community could come and say, this is our idea and we would offer them some kind of support with experts like the folks at Getting Smart or Transcend to come in and support them to get the specifics of the design in place, but to give folks an opportunity to say, oh, actually I know of a need. I have an idea. Whether it’s a student or a teacher or a parent or a business leader or whatnot. That’s one way of saying let’s have a, let’s have a variety of these. Let’s set a goal as a system to say we’re going to have three next year or we’re going to open one. Let’s, let’s pick the one that has the, that is most right.

There are different ways to do this. And it could be that you say, we have a need and we’re going to replicate this model because we tried it. So we’re going to, instead of try to grow it into a big school because that’s sometimes what we think. We think, well, we have this microschool. So now let’s make it a big school. You could say, well, we’re going to, we had this microschool that worked. Let’s have three more in different parts of the city that makes it more accessible to, to other students.

Victoria Andrews

You brought up a point, Deb, in that it doesn’t necessarily mean like, let’s just make a bunch, like, you know, the franchise model. It could be we’re a traditional comprehensive high school and we’re thinking about rolling out project based learning, but instead of flipping the whole system, let’s do a microschool of project based learning. And those teachers that are going to do it are then going to infiltrate the larger school system.

So if you have like two or.

Three years or even a full four years for that, then the likelihood of success will be higher because you’ve worked out the kinks with a smaller group before you launch it with a larger group. And so that’s another way to like, okay, now we’re going to roll out project based learning across our campus, or what did we learn? What are some of the mistakes we made on a smaller scale? I mean, Deb, you know, trying to redo a whole master schedule in the middle of the year literally incites fear in everybody. So instead of doing that small, you know, small test drive, a smaller experiment would be a great way to kind of scale the practices of a microschool.

Deborah Gist

Sort of the Edgecomb model. And then you have the in Issaquah with Heather Taliaq’s leadership,, that’s what I figured in mind, Victoria. But you know, they have a school within a school that Julia Bamba there leads and you know, they’re starting to explore, okay, how do we, you know what, who else might benefit from this model? But it was that, that high school, that secondary school within a school model as well.

Victoria Andrews

And like, let’s be honest because, and I know Julia, we both do very well. She, like, they started off in high school and they were like, okay, they had some challenges with enrollment and recruitment and they took those learnings. Actually, this would be better suited for middle school and pushing it down. So just because it didn’t work in that environment, they didn’t say, oh, microschools don’t work, throw the whole thing away. They took their learnings and they just moved it down to middle school. And I think that’s a great example. They didn’t consider that a failure. They took their learnings and then just moved forward.

Deborah Gist

And I think that’s such an important reason. It’s one of the many reasons why microschools are so important for public systems. We have to be more nimble. We have to be, have the kind of learning experiences where we’re serving a population, and we should be doing this everywhere. But it’s just harder when you have, you know, a thousand students versus fifty students to be able to shift gears. If something’s working, let’s do more of that. Let’s lean into it. If it’s not working, let’s fix it or stop it or whatever that might be to have that continuous improvement built into the system.

Michael Horn

Yeah, it seems like a huge thing that you guys are pointing to, right? This testing and learning, this iteration culture. I’m shocked often at districts that are like, tomorrow we’re all doing this and you’re like, wow, this is going to break in like a hundred ways. We can’t even imagine. Let’s start small before we try to go big. You also have the advantages of a coalition of the willing, not just of the teachers, but also the students who decided to show up. And that gets into the other piece. So you have the planning, designing and then implementing is the third part of this playbook.

And you bring up a lot of interesting things. Talk about launch, sustaining, strong culture, experience, like a whole bunch of things that people should check out. The one that just for this conversation I want to get into because it relates to what we’ve just been talking about is recruiting and enrolling students. Because those are two words that are not like heard that often in district settings because they don’t have to do it really that much. Right. And so recruiting and enrolling students, Victoria, like what, what are the big things to know there?

Victoria Andrews

Oh goodness. As a former dean who had to recruit students for her class, it’s you, you want to make sure it’s not just, you know, Deb and Michael are excellent students. So I want them in my program. But it’s Victoria the knucklehead. Like, hey,is this a good program for you?

Michael Horn

Like, I’m pretty sure you have it the wrong way, but keep going.

Deborah Gist

Yeah, okay.

Targeted Outreach for Experiential Learning

Victoria Andrews

My parents would probably argue not, but you want to make sure that you’re reaching out to not just the students that are going to just say that it’s just a good program, but also that it’s a good fit for. It might be better, you know, that experiential learning program might be better suited for the Michael’s and Victoria’s of the world because it’s more hands on learning and it’s because, you know, they have a mentor that’s in the community that’s going to check on them. So it’s a true village that’s taking care of them. So it’s, I know that like counselors and because again I have served in that capacity. It’s a lot to say, okay, we want you to ask and you know, recruit, but publicize it in a way that everybody is knowledgeable of it. So it’s not this very cherry picked society that gets access to this microschool because that’s a quick way to create more division in a space that’s already divisive. So, what’s the goal? Who is it for? How are you going to make sure that that group is indeed being served by it. Because even if you do create a certain program, but you don’t get those right students in there, they’re not going to give you the feedback that you need.

Like Deb said, to be agile and be nimble and to make those iterations using the design process. So recruiting is crucial. And like you said, Michael, most public schools are not, we’re not excellent at it because it’s like, hey, if you’re on a bus, you’re coming to my school. But when you think about a very specialized program, coaches recruit, the robotics teacher recruits, whoever has an exceptional extracurricular program, they recruit. And so taking that same kind of approach when it comes to a micro, public microschool would be excellent.

Deborah Gist

Yeah. More and more systems are creating, as we did in Tulsa, a unified enrollment system. And then using that enrollment system to help make those matches, to make sure that that access is there, that families easily can understand what their choices are, how to access those choices, and just having the microscope be a part of that overall system. So that ideally you get to a place where, whether it’s a microschool or a comprehensive school. Because even though not all microschools are right for all students, of course. But a microschool might not be right for all students. I mean, some students are going to thrive much more in a larger, more comprehensive school.

And so just making those matches, making sure the access and the awareness is throughout all families and students.

Michael Horn

So this brings us to the last question I want to ask because you have this bigger vision that microschools can really help scale change. And what’s so interesting about that statement though is by definition, a microschool is purposely designed not to scale, it is designed to stay small. But that they could have impact at scale is sort of the argument. And I can see many pathways through which that could happen, some of which maybe would undermine the innovativeness of the microschool, some of which might help the district innovate. I’m just really curious to learn from you all. How do you see impact at scale from following the strategy? Like, what is the pathway to helping every student, you know, have a better educational experience in front of them by pursuing this innovation through microschools?

Scaling Microschool Practices

Victoria Andrews

I think it’s a combination of what Deb mentioned and what I was talking about previously, like those practices that are done in that microschool can be taken to scale, while the microschool itself will stay small and agile. But the practices, whether it is competency based learning, a four day school week, whether it’s an internship program, whether it is whatever that you’re piloting that can be taken to scale. So that would be a way that it could have a larger impact. I think when we, in education, the way, the only way we tend to think about scale is like more numbers, like more, more, more. It’s like, hold on everybody. We’ve kind of seen that that doesn’t always work. But what are the practices? Maybe it’s the staffing model that you’re trying to get a grasp of.

Maybe it is team teaching in that microschool. Maybe it’s partner teaching. So what, what are those specific practices and having the cycles of improvement noted so that when it is taken to scale that you can say, okay, we knew that this was a challenge, this was an obstacle and we can kind of meet it head on. So that’s, that’s what I envision as a key component for implementing and then taking things broader than just the microschool.

Deborah Gist

Yeah, I think, yeah, for sure. I mean you might scale practices, but you might scale the school through replication or franchise, I think Victoria said, or through growth. You might say this is really working and it could work bigger. But there are some microschools that are so specific to a group of students that they just are going to be awesome where they are. And that doesn’t need to be the goal. I mean, the fact that you have a school that’s serving in a beautiful way, this niche group of students and families with a teacher who it’s also perfect for or more than one teacher, that that alone is success and ought to be something that our systems are willing to embrace. But I’m confident that whether it’s a standalone school or, or scaling practices or scaling the model itself, that this is a way of thinking about teaching and learning that is long overdue and that systems really, really need to consider because the way we are doing things now, we all, I think, recognize is outdated and we need to figure out ways we can better engage students and prepare them for today’s world and the world that’s coming in the future.

Michael Horn

Well, they are voting with their feet. So I hugely appreciate both of you, not just for writing this playbook, but then doing the work to help districts increasingly create these options. So there’s more, I mean, more availability, these options for every single kid to find the right school experience that’s going to work for them. So Victoria, Deborah, really appreciate you both and we for all you tuning in we’ll be back next time for more conversations like this on the Future of Education.

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Ethan Pollack from Jobs for the Future and Kevin Mumford, an economics professor at Purdue University, joined me to dive into Purdue’s innovative “Back a Boiler” Income Share Agreement (ISA) program. They defined what ISAs are, talked about how Purdue’s model aimed to make higher education more affordable and accessible, and discussed the findings from new research analyzing the program’s outcomes. Our conversation covered the program’s origins, regulatory challenges, its eventual pause, and what the data reveal about student outcomes, particularly regarding fairness, completion rates, and financial impacts for students from different backgrounds.

One of my takeaways? Based on the outcomes, it’s a shame that the initial momentum behind ISAs in the mid-2010s has stalled. But maybe there’s some hope now on the horizon with better guardrails in place for a resurgence behind ISAs.

Research Referenced:

* Distribution of Returns to a College Income Share Agreement: Evidence from Administrative Data

* Promising New Insights from Purdue University’s ISA Program

Michael Horn

Welcome to the Future of Education. I’m Michael Horn. And you’re joining the show where we’re dedicated to creating a world in which all individuals can build their passions, fulfill their potential and live lives of purpose. And part of that equation is thinking about how we pay for and afford what’s become a more and more costly higher education over time. So to help us learn about and think through some new research about what was a very interesting program to make higher education not just more affordable and accessible, but also focused on real value, in my view, our two individuals that we get to welcome today. First we have Ethan Pollack. He’s the senior director in the policy and advocacy practice at Jobs for the Future, or JFF as it’s commonly known, where he leads the Financing the Future initiative, which explores these new approaches to financing post secondary education. So, Ethan, great to see you.

Ethan Pollack

Great to be here.

Michael Horn

Yeah, you bet. And Kevin, we have Kevin Mumford, who’s an economics professor at Purdue University, also the director of the Research Center in Economics at Purdue. Kevin, great to see you and thanks for being here.

Kevin Mumford

Yeah, thank you. Happy to be here.

Michael Horn

Yeah. So we’re going to get into a bunch of things in a moment, but I wanted to sort of level set us start with the basics because we’re going to talk a lot about income share agreements today, ISAs, as they’re known, and we’re going to talk specifically about a program that was in effect at Purdue, the Back a Boiler ISA program, and a working paper that you published, Kevin, recently. But before we get into all that, I just want to make sure our audience is level set. We’re all on the same page. We know what we’re talking about. I know how I describe an ISA, and I see it as a pretty compelling alternative to a loan, at least on paper for a given individual. But Ethan, you’ve thought about this much more than I have. You probably have a much more concise answer.

So in brief, tell us, what is an ISA?

The Future of Education is a reader-supported publication. To receive new posts and support my work, consider becoming a free or paid subscriber.

Income-Based Student Loan Alternative

Ethan Pollack

Sure. So an ISA is, I think, best defined in contrast to, to what is more the standard, in particular, the standard in the private loan space, where in that latter space you really have fixed payment loans. Right. You have, you know, much more kind of like a mortgage. You’re paying a fixed dollar amount over a period of time. You have to pay back at the end of the, the, the loan you need to pay back the principal and then the interest. And ISA is different in a number of respects, but the main respect is that it is income based. You are paying on the basis of how much you earn.

So students are only making monthly payments if they earn at least a certain income threshold. They’re also making payments that are a percentage of their earnings. So if they earn above that threshold, they may pay a certain percentage. It can be anywhere from a couple percentage points. Some of the short term boot camps were charging pretty high income shares up to 17 percentage points. Purdue’s are much lower. And then the last feature of an income share agreement that’s unique is that it expires after a period of time. So it’s really de emphasizing this idea that you’ve borrowed a certain amount of money and you need to repay it with principal and interest and actually operates almost a little more like an equity investment where you’re paying on the basis of how well you do. And the person that, you know there, the, the entity that gave you that kind of, you know, financing that ISA is going to be, you know, receive a lot more revenue if you do well after graduation, and they’re going to then receive a lot less and they may receive nothing at all if you never earn above that earnings threshold.

Michael Horn

So a couple key things that stand out about that, right? It changes it from paying based on the cost or the expense to paying on the value, if you will, of it. And then there’s some more risk, obviously on the part of the institution as a part of that, it seems. Kevin, then, you know, ISA programs, they look different in different places. Ethan just alluded to that. They have different incentives and so forth. Tell us a little bit about the origins of Purdue’s spin on this through the backup boiler program and its specific mechanics as well.

Purdue’s Income Share Agreement Origins

Kevin Mumford

Sure. It, you know, it came about because of the president we had at Purdue at the time, Mitch Daniels. He had been asked in the spring of 2015 to testify before a House subcommittee. And in that testimony he had kind of a throwaway line about, you know, wouldn’t it be great if the university was doing something with income share agreements? And he got so much sort of press inquiry after that that he started thinking to himself a few weeks later, maybe, maybe we should really do this. There’s so much interest in it. So there was this funny episode where he calls in the head of the foundation and the chief legal officer for the chief lawyer for the university and says, let’s start an income share agreement. And they both were like, yeah, let’s do that. And they left the office, then turned to each other and said, what is an income share agreement? And they Googled it on their phone and the university just kind of, you know, he started the apparatus.

Twelve months later they started accepting applications and they launched the thing. You know, the idea was they’re going to allow it to be available to all majors. And in some majors people earn a lot more and in some majors they earn a lot less.

So they tried to price it according to what they thought the earnings would be in that major. They put all the majors into seven different bins and said if you’re in this kind of high earning bin, then we’re going to charge a lower income share rate. And if you’re in a lower income bin, we’re going to charge a higher rate. And the idea is to try to make it so that it would compete well with a Parent PLUS loan. They weren’t going to try to compete with the subsidized federal loan or the unsubsidized federal, the direct federal loans, but they were going to try to compete with the Parent PLUS because it has a higher interest rate. And the difference here would be, is that a Parent PLUS loan, the parents are the borrowers. Here it’s the student who is taking on this repayment obligation. And you know, there are some protections, like Ethan said, there’s a lower threshold, there’s an upper bound.

Nobody could pay more than originally it was 2.5 times the funding amount. Then it went to 2.3 times the funding amount. So that’s kind of the basic idea though, price it so that people would be paying back about what they would under a Parent PLUS.

Michael Horn

I didn’t realize. I actually did not know that. Yeah, that’s hysterical. I did not know that piece of it even. And then put it in context of like, you know, when this launched. Right. Why was it such a big deal at the time? How did it fit in? Right. With the larger movement? ISAs were gaining a lot of currency as an idea that might be this alternative to loans.

Give us a sense of why this was such an important program.

Ethan Pollack

Yeah, it was a really interesting time. So I was at the Aspen Institute at the time and I remember hearing about income share agreements and both thinking like, wow, these are like, this could be really exciting. This could totally kind of rewire how we do higher ed finance and workforce as well outside of the Title IV system. And also is like, this could also be kind of dangerous too.

Right.

We don’t have guardrails that are uniquely designed for income share agreements too. And there’s A lot of uncertainty as to which laws actually applied to ISAs. And so I was kind of in this middle camp of being really excited about the potential but also then having a bit of concern. But there was at this time, you know, when it was launched in 2016, there was this real interest in ISAs, you know, not just in higher education, but in particular, you know, this was also the rise of, kind of the time of the, of coding boot camps. And you know, with coding boot camps there, there, you know, a lot of the tech companies were feeling, look, you don’t need a college degree, we can, we can just teach you to code. And we know that you don’t believe us. So instead we’re going to take on the risk and attend my coding bootcamp. And if you don’t make above a certain, you know, amount, then you just don’t pay anything back.

Excitement and Backlash

Ethan Pollack

So I think that there was, that was happening in tandem then with the Purdue program. And but overall there was this really, especially when Purdue launched, there was this kind of real kind of boom lit and media excitement around income share agreements. But then there was also this backlash, right. And the backlash had a couple different facets which happy to get into, but I’ll gloss over it right now is just to say that, you know, there was some concerns around consumer protection and there’s some concerns around that this, you know, like any type of financing product could be used in predatory ways. I think that there, that most of the, you know, the actors in the space at that time like were trying to do the right thing. And I worked with, with many of those and in thinking about kind of where good best practices. But there were some bad actors too, right? I mean, you know, whenever you’re kind of, you know, introducing kind of a new product, there’s going to be either bad actors or people who just like, you know, are not fully understanding how this tool can be used. And so it, you know, I think that there was a real push towards using income condition financing, but it was done very quickly.

And, and I think that, and then as you know, what I lament is that the energy was really towards income share agreements for a while and then a few years later kind of was like, oh, I guess that didn’t work. And so it was, it was, it kind of like flamed out very quickly. And you know, this was kind of the origin of, of, you know, my partnership with Kevin was this feeling of like, you know, I don’t think we ever fully like studied this to see whether it actually worked or not. And everyone else just kind of moved on to the next shiny thing. And here we were saying, like, oh, we got a lot of data. We should actually, like, look at whether.

Michael Horn

Well, so I want to get to that in a moment. And you mentioned the controversy. We’ll come back to that in a moment as well, but sort of tangentially related. I think a lot of people think that the program ended because of a lot of the concerns around ISAs and so forth. Kevin and then Ethan, both of you chime in on this one, like, why did Back a Boiler—why did the program pause? What led to that? Kevin, why don’t you jump in first?

Kevin Mumford

Well, I mean, the most basic reason is that the university set this up very quickly by going with the service provider. So the service provider had been the one originating all the contracts. And in 2022, the service provider shut down and, and sold the existing contracts to another provider, but one that wasn’t, wasn’t able to or, you know, doesn’t have a business of issuing new contracts. So the university was in a situation where they said, well, we’re not sure how to issue new contracts, but we’ll continue to service the contracts we have. And I, I think that happening, like, right at the same time as when the president of the university was stepping down. The new president wasn’t opposed to this, but this was also not a champion of an income share agreement. And so the university would have had to, you know, find some other provider or, or set up the, the ability to do it on their own. And, they just haven’t put in the effort to do that.

I mean, I think part of it also was kind of because of the pandemic, and it’s because the university received a large amount of federal funding and to provide directly to students and the students that we’ve been advertising, or I guess you can’t advertise, but been offering this, this income share agreement to. They were the students who had already maxed out their federal borrowing, and that’s exactly who they decided to subsidize with the federal funds from the pandemic relief. And so there wasn’t a lot of demand for it right at that moment as well. And it kind of just contributed to saying, maybe let’s not issue new contracts, although if they were to revisit the decision today, that might be different. I also think a factor is the regulatory environment. There’s still just been an uncertain regulatory environment, which makes entering difficult.

Michael Horn

Ethan, what would you add in there? Yeah, I was gonna say, Ethan, what would you add to that last point? Because you’re much, you’re very deep into this regulatory questions around the status and the legality of ISAs and how they’re governed.

Ethan Pollack

Yeah. So ironically, the same year that Purdue paused was also the year that CFPB signed a consent order with Better Future Forward, which is a nonprofit ISA provider, mainly works with college access programs. And the consent order is they fined Better Future Forward $0 and thanked them for working with them. It took them BFF and CFPB a full year to figure out what is the disclosure for the Truth In Lending Act. It’s just focused on TILA. And so actually right around the time that Purdue paused was the same time that BFF published this, you know, this, this disclosure template that they said like anyone can use this but, but the, you know, the bureau has actually signed off on this as like a way to, to, to comply with TILA. So there actually that was a moment when there was starting to become more clarity. Since then, also California, Colorado had issued, have done rulemaking for the, on their own state basis to improve the regulatory clarity.

And then Illinois, actually just a few weeks ago, Governor Pritzker, signed legislation to kind of improve the regulatory clarity. But the main issue here is that, and what Purdue was really facing was that, you know, the rules governing these credit products were largely designed with fixed payment structures in mind. So you think of something like the Truth In Lending Act, you need to disclose the, you know, the APR, the annual percentage rate, you know, when you are, you know, presenting the loan or the credit product to the student with an income share agreement or even with something like an outcomes based loan. Because these can be structured still within a loan framework. You know, the federal IDR program is a really good example of kind of an outcomes based loan. Right. It’s a loan, but at the same time you’re going to be paying on the basis of your earnings. But if you have a product like that, what is the APR? Well, it depends on how much you earn after graduation.

So it’s really hard to know that when you’re first presenting this to a student, to a borrower. So that’s just one of the many ways in which the existing regulatory framework was really kind of poorly suited and created a lot of uncertainty. I think that in this uncertainty there was then also some criticism. So a lot of ISA providers were basically recognizing that it’s like, look, we’re not sure how to like disclose APR. We’re getting no guidance. We also feel like there’s a legal, you know, there’s. There’s some legal basis for us saying that, like, we’re just not subject to the Truth In Lending Act because we’re not credit. We’re more like equity.

You know, we don’t have principal, we don’t have interest. We’re just structured in a very different way that I think a lot of the consumer protection advocates got really freaked out by that because they, the precedent that there was a, what they saw as a credit product that was financing education that, you know, somehow you could kind of avoid complying with the, you know, all of the existing kind of consumer protection laws. Not all of them, but many of them specifically designed for, you know, student loans. They thought that as just like I saw that as a real threat, and I understand why they felt that way, but it really was just this regulatory uncertainty that was the underlying problem. They also had some concerns around things like what you might call kind of differential pricing or the underwriting. And so basically, if you are charging lower income shares in the contract to either fields of study, their majors, or graduate programs that have higher earnings, you could create some disparate impact.

There was a concern around that too. Again, this was all just theoretical. And, and then, you know, there was also, you know, then once Purdue had started, there were some examples of students that ended up paying more than they otherwise would have under Parent PLUS. Now we can guess why that was the case because they were earning a lot more than the average student. But nonetheless, there was a lot of stories and kind of newspaper and coverage around these specific students who really felt like. I felt like I overpaid. And so I think with that, that was also kind of part of, you know, as.

As Purdue was pausing, I think that that was the broader kind of, I would say, media context in which, in which kind of that decision was made. I can’t speak to, you know, exactly to what extent that was taken into account, but it certainly was something that was prevalent and, and certainly didn’t help the case for trying to really kind of continue this program.

Michael Horn

Well, so I want to dig into the research in just a moment, but quickly, Ethan, just on that because. Well, Kevin, essentially what you’re describing again is consistent with what you said up front, which is it’s really a last dollar program, if you will, of financial aid. Right. It’s not the first dollar competing against federal subsidized loans. And so that had something to do with the crowding out, if you will, from the federal funds that came in at the time. The second thing, though, Ethan, you talked about the regulatory uncertainty at the time. You talked about how it’s starting to resolve a little bit. Give us the, to the extent you’re able, give us sort of the quick snapshot of where do these vehicles, if they were to sort of make a comeback in the limelight, where would they live at the moment? Because this sort of lending classification has always felt kind of weird around this.

ISAs: Unique Loan Classification

Ethan Pollack

Yeah, yeah. So there’s a movement towards, I, I would say momentum towards resolving the question of are ISAs loans? To resolving it in the direction of they are loans, but they’re a unique type of loan. And so, and that, that kind of like solves everyone’s problem where, you know, there’s no claim that this is, you know, something that’s separate, but at the same time that you. So like the, a good example is the, you know, the Bureau’s consent agreement with Better Future Forward where, or the compliance plan where they said you’re a loan. But also they developed a very unique compliance plan for Better Future Forward, taking into account that it didn’t have any interest. And in fact there are certain boxes in the, in the temp, the TILA template that says the interest can range from,you know, in those two boxes from X to Y. And, and the Bureau ordered BFF to just put in NA into both of those boxes.

Michael Horn

Oh, interesting.

Ethan Pollack

Which, you know, if you’re a normal lender, you can’t do. But they, but it was a recognition that it’s like you’re not a normal lender. This is a unique type of product. California and Colorado when they did their rulemaking also reflected these are loans, but these are unique type of loans that deserve some, a specific type of treatment. And then the Illinois legislation that just very recently passed also treats these as loans, but unique types of loans. So I think that’s kind of the regulatory direction that we’re going on.

Michael Horn

Gotcha. Gotcha. Well, I can’t decide if NA is better than zero to zero.

Kevin Mumford

It’s using students, right?

Michael Horn

Exactly. So, okay, so now you have this research paper, Kevin, that comes out. We’ll link to it in the show notes. The working paper title is “Distribution of Returns to a College Income Share Agreement: Evidence from Administrative Data.” So this is actual evidence of the outcomes. First give us the origin story. How did the paper come about and what’s JFF’s connection to it? Kevin, why don’t you lead us off? And then, Ethan, supplement anything that should be supplemented?

Kevin Mumford

Sure. Well, I was actually away on a sabbatical when this program launched. I was focused on other research. When I’d gotten back, I read about it and thought, this seems interesting. So I contacted the group at the university working on it and just said, who’s doing your internal evaluation? I’m really interested to see. And they said, man, we set this up so quickly, we didn’t even think about that.

Nobody’s studying it at all. And so I said, well, could I see the data? And they said, sure. And they just sent it over to me. And so I thought, hey, this is great. And in 2022, I had a paper that was about selection into the program. What kind of a student is selecting in versus not. And it’s, again, it’s aimed at a small number of students.

There’s not very many that qualify because very few produce. Students actually hit the federal borrowing limits for those subsidized and unsubsidized direct federal loans. So there’s not very many students who even could consider. But I got data for all the students who were shown the terms that they saw this is what the income share rate would be for me, and then saw which ones decided to take it up on and which ones didn’t, and then looked at why some are doing it and some are not. That paper, I don’t know it, you know, 2022 is right at the time when nobody’s interested in income share agreements anymore. And so it’s. It’s still under review, but it hasn’t been one of these things that everybody seemed super interested in.

Renewed Interest in ISA Data

Kevin Mumford

And so Ethan contacted me recently and said, I think maybe there’s a moment, you know, maybe. Maybe people are interested in ISAs again. And don’t you still have all that data? And, yeah, I mean, there’s still a lot of data, particularly in that first paper there was nothing on who was paying back, what kinds of payments were we receiving? And he just said, I really think people would be interested to see how did this program do financially? I mean, did the university make a ton of money off of these students, or did they lose a lot of money on these students? And, you know, were there students paying back way more or way less than what you would anticipate from a, you know, private loan or a federal loan? And just. He just thought that people would be interested now. And so I’m always interested in doing research that people are interested in reading.

And he kind of convinced me it was worth putting in some effort for a bit on this project as opposed to all the other projects I could have been working on.

Michael Horn

Ethan, what would you add? Or, and, and perhaps also with an eye toward why the research is relevant now in your view?

Ethan Pollack

Yeah, yeah. Well, I’ll start off with that. That, you know, it’s, I mean there’s so many things happening that I think make this research relevant. Not just this research, but the Purdue ISA program. You know, if we had, if it hadn’t launched 10 years ago, I think people would be thinking now, man, we should, we should try to do something like this. Yeah. So the reason is I think a few fold. So, one, your institutions are facing demographic cliffs, right? So you have the, the number of traditional aid college students can be declining about 10% over the next two decades.

They’re going to have a huge drop off in international students too. You know, that can really put institutions in a tough spot. I know you’ve covered a lot of this in your podcast with Jeff, so listeners of both won’t be surprised by any of this. And then of course from the Big Beautiful Bill, a lot of the borrowing limits are going to have really big impact. So I published an analysis last week on GFS website. It found 1 in 10 students are going to be impacted by the caps and they’re going to be forced to either forgo education entirely or go to the private lending market. We know the private lending market has some really, you can get some cheap credit but oftentimes for many students it’s going to be more expensive. More importantly, it’s going to, you know, 95% of private loans require co-signers.

They all do credit checks, require certain credit score. And then in addition to that, it doesn’t have any type of the low wage borrower flexibility that, that the federal IDR program has or that ISA programs have, which is that, you know, if you become unemployed or you just, you, you end up having a lot lower income that you thought that you’re going to, you know, that you’ll pay less and you might pay nothing. Right. But with private loans, with some very rare exceptions, nearly all private loans you gotta pay regardless of what’s going on with you. Right. And they may do the per, you know, some, some deferments that you know, on a case by case basis, but that’s not really kind of like baked into the contract. Right. So it’s not a really firm protection.

And so, you know, we’re at this moment where it’s like, wow, we’re going to have so many students that are going into the private lending market. What types of products are they going to get? Don’t we want them to have types of products that are like kind of like ISAs that are kind of like actually the federal IDR program that have these types of low wage protections and in particular are also more accessible too because we know there’s going to be a lot of students that may just not qualify for private loans because they don’t have a cosigner, because they have bad credit. And ISAs are in particular forward looking as opposed to backwards looking. Right. They care less about the, you know, where you’ve been and more about where you’re going. What’s the program you’re enrolled in, what are the outcomes? And so the Purdue program, for example, it didn’t require a co-signer that was like really important to the model. Right. So for students that were not, that could not access Parent PLUS, then they could access something like this.

Right. So you know, I, I thought like this is such an important moment and like we also, instead of setting up a pilot and then studying it and it taking 10 years, like we just kind of, like we just kind of took a time machine, created the program that’s most relevant to today and then now we’ve got all the data, which is kind of a researcher’s dream. And so, you know, I you know, Kevin and I had talked before, but I kind of was like, we’ve got to get some data out here. Like this is, you know, this. Yeah, I think that people would be really interested in this. And it feels like the Purdue ISA program is now more relevant than ever, you know, both for policymakers, for institutions, for philanthropy, and then for researchers such as myself. And in particular it had gotten, you know, for the criticism. I was really interested to test the criticism because a lot of the criticism and a lot of the claims too, it was all based on speculation, right.

We didn’t actually have the research and I don’t like kind of making claims without a lot of your rigorous research. And so now we had enough data and I wanted to see like, was there any disparate impact? Maybe there was, like this would be really good to know, like how affordable was it compared to Parent PLUS? And so these were the types of things that Kevin and I were then able to, you know, figure out. So I think that Kevin was very much, you know, the primary researcher, and I was the one that was kind of enmeshed in the broader discourse, unknowing, kind of like this is what people would be interested in. You know, this is how it could, you know, your research kind of connect back to, kind of like, you know, to. Yeah. To actually be relevant.

Michael Horn

And so, Kevin, I want to start to get into what you found. Then in the report itself, it occurs to me it’s like an interesting sample of time because you both have some really hard economic times with a lot of job switching in those sample years. You have some boom times in there. So it’s like, it’s a very interesting set of years that I suspect you’re following these students. But talk a little bit about what you were looking for, the methodology, and then the findings itself.

Comparing Student Loan Repayment Options

Kevin Mumford

Well, the basic methodology is to look at the stream of payments coming in from those students that are participating in this program to see how much are they paying back. And then you need something to compare it to. So, you know, what I do is I take a traditional student loan and I peg the interest rate to be the same as the Parent PLUS loan. And say, what would a student have paid back had they been paying back a traditional student loan at that interest rate? And just do the comparison to see are they paying back a lot more, a lot less than they would have otherwise? And I think the time period you bring up is relevant because. Because there’s job switching, job loss, there’s uncertainty. The thing about the income share agreement is that when your income goes down, your payments go down, and when your income goes up, your payments go up. I mean, it’s adjusting to the economic conditions automatically and adjusting to your specific characteristics. Because if you lose your job and you’re unemployed for a period of time because of the pandemic or because of any reason, then the payments stop until you start working again.

And that’s just sort of built in, already. So some of the results might be colored by that. I mean, if this was sort of the best booming economic times ever, payments probably would have been higher than what we’ve actually observed. But what we observed is what happened. And there is, you know, there’s some movement up and down in people’s careers. The data comes in and, and I, I actually do it two ways because there’s a lot of ways to pause payments in this income share agreement. Again, if you’re unemployed, you’re not making payments. And, there are protections in student loans.

They’re maybe not as generous as an income share agreement, but. So one way I do it is I assume on the student loan that you just make every single payment as scheduled all the way through. And the other assumption is that anytime you pause your income share agreement, you would have also paused your student loan. And the truth is probably somewhere in between. And I compare the amount each student is paid and then the amount the university has received. And the amount the university has received is right around that same amount that they would have gotten if it was a Parent PLUS it’s a little bit less than that, which suggests that maybe they’re getting a sort of a less than a 6% internal return. On the other hand, income share agreement payments grow over time because they increase as the student’s income increases, and it naturally goes up over time.

So probably the university’s best payment years are still to come, and they’re not these initial beginning years. So it may be that the internal rate of return is a little bit higher by the time it’s all done, but it doesn’t look like the university made a lot of money. If anything, they probably would have done better just investing in the market. On the other hand, for individual students, the average student paid less in the income share agreement than they would have if they had gotten the traditional student loan at the Parent PLUS rate. But there are a handful of students at the top that paid back much more. So some students hit the cap. That’s they, they pay back 2.3 or 2.5 times the bar the amount that was originally funded. So some students are paying back a lot more, and that’s because those students have very good jobs and are earning really high incomes.

There’s a lot of students that are paying back a lot less, much, much less than they would have. And that must be because they, you know, decided to stay at home for a while. They’ve decided to do, you know, they’re stopping out of the workforce for whatever reason, and then you just don’t make payments while that’s happening. The average student, you know, is paying a little bit less than they would have under the Parent PLUS they’re doing a little bit better. And that reflects sort of the slightly lower rate of return that the university is getting on a whole.

Michael Horn

Super interesting. Ethan, before you jump in with some of your takes, one other question that I’m just curious about, Kevin, what was the impact on Black and Hispanic students and underrepresented students, because that was a big question that a lot of the consumer protection advocates were raising. And maybe you pull in some of your 2022 research on this too. Because if, if I’m recalling correctly, one of the speculations also was that some of these students, you know what Ethan just said, that it’s forward looking, not backward looking. True in theory, but maybe you would select out certain students that come from lesser advantage or less academically prepared or whatever it might be. And so perhaps they wouldn’t actually get to benefit from the protections that an ISA brings to the table. What have you found on all that?

Kevin Mumford

Well, I think we’re right to be concerned because it turns out this program has disproportionate numbers of Black and Hispanic students in it. And that’s, that’s probably because those are the students who are maxing out their federal borrowing. And, and, and so it is serving more minority students than the traditional student loan program is serving at Purdue. That said, in terms of the ISA repayment, those students tend to be getting a better deal, not a worse deal. That is just as we look at the stream of payments coming in, they seem to be paying back even, even more or less. Right? Like even less than they would have under the Parent PLUS program in comparison to the, the white student that is a participant. And so I think that, I think that we should be concerned about it because these programs are serving more minority students, but at the same time it seems to be give, offering them a better option, a better deal on average than, than it is for the, the equivalent white student. And that’s really not because there’s anything special that’s, that’s, you know, race or ethnicity focused about the program.

It just has to do with what the earnings look like afterwards. And because the earnings for the black and Hispanic students are a little bit lower than those of the traditional white student in the same program. That’s why they’re, they’re paying back less in this.

Michael Horn

Super interesting. Okay, Ethan, I’m curious your takes.

Disparate Impact in Income Agreements

Ethan Pollack

Yeah, yeah, I was just going to add to that. I mean this was always a concern, as Kevin said, I think really well, the concern around disparate impact was very valid. Whether it’s an income share agreement or even if it was just a loan that like any type of financing product, you know, this is why we have the Equal Credit Opportunity act, right. You know, is to make sure we know the history of your redlining and reverse redlining and that, you know, with an income share agreement it creates new potential opportunities to, you know, be violating, you know, fair lending laws and to be exacerbating, you know, you know, racial gaps. It is also the case that income share agreements can do the opposite and can actually, if designed well, can be more affordable. And so it was always this, this thing that, you know, when the Purdue program was being criticized for this, I felt like a lot of the critics had, you were voicing valid concerns, but they were drastically overstating their confidence in it where they were saying that the Purdue program is discriminating or the, the Purdue program or the ISAs.

I remember hearing from some consumer advocates that ISAs are inherently discriminatory. And again, it was all theory based. Right. And so, you know, this, you know, I, I kind of responded to that in 2022, published some research that we got the proprietary data from Leaf, which is a no longer, but was a servicer mainly of tech boot camps. And we did a disparate impact analysis that used the same methodology that CFDB uses when they’re figuring out disparate impact. And we found that there’s no evidence that there was any type of disparate impact here on racial or gender lines, but even still, like, it, it’s the, the frustration is kind of like, yeah, you should be concerned, but like, we don’t know until we actually crunch the numbers. And a lot of the critics just weren’t doing, you know, they didn’t.

And partly they just didn’t have the internal data right, but it should have been voiced as a concern rather than a conclusion. And so this is why kind of on the one hand, whenever we have concerns, we should voice that we should recognize the information we don’t have. Right. And recognize that, you know, we can have a concern without saying that this is bad. We need to wait for the research to come in, but then also we need to make sure that research is actually funded and, you know, it is prioritized and then do the research and then you kind of update your priors. And so, like, it’s really exciting that now we have enough data to be able to say, at least for now, it doesn’t seem like there was any type of, you know, of disparate impact at all, in fact, certainly for Hispanic students, Hispanic students, you know, we’re far more likely than white students to be in the having paid less than having paid more than Parent.

Plus, you know, this comes on the heels also of Kevin’s 2022 research which found that, you know, it looked at the impact of, of the ISA program on completion rates and found that overall completion rates were boosted by about 3 percentage points. But that was. Yeah, it was yeah, 6 percentage points for black students and 17 percentage points for Hispanic students. I think that the black student one may not have been statistically significant. Kevin, you might remember that better, but the Hispanic one was definitely, 17 percentage points is huge. So, you know, like this is a program that also is, you know, clearly benefiting students, you know, in terms of the completion is also more affordable and in particular more affordable for Eurasial minorities and then also is more acceptable accessible too. And we know in particular for black and Hispanic students, they’re going to be less likely to have either a good credit score or have available frontiers either.

Kevin Mumford

I just want to jump in because when you say that 17 percentage points, it makes it sound like it’s unbelievably large. But you got to remember that these students are the most at risk at dropping out. So these are students who, this isn’t about access to the university. This is, you know, they’re a junior or a senior who has now run out of borrowing ability. They can no longer get federal loans. They’ve come to the financial aid office saying, I’m not sure what to do here. And you think, you know, a student might come in and say, I’m thinking of a Parent PLUS, I’m thinking of this ISA. I’m trying to make the decision.

But what about the student that says, I don’t have a parent co-signer, I don’t have a parent that’ll do the Parent PLUS, you know, the private market, the private student lending market, they want parent co-signers as well. I don’t have anyone backing me. So it’s either drop out and go get a job for a semester and then try to come back, or it’s do this ISA. And it turns out the ISA is really, really effective at helping students stay in school. And so even though the university is not making money, I mean, I guess you could say they’re kind of losing money on this program because they’re not making what they would make by just putting the money on your market.

Michael Horn

Sure.

Kevin Mumford

I mean, but they’re getting a huge return in terms of students completing, students graduating. And that’s where the pressure is. I think if this is as a really cheap way to help marginal students complete, you know, universities should be thinking of this not as an innovative finance thing or getting or we’re going to make a lot of money off this. The Purdue experience suggests universities are not going to make a lot of money off ISAs. But if the university gets into it, the advantage is you’re helping a marginal student stay in school as opposed to dropping out to try to get some funding to pay their tuition.

Ethan Pollack

And even with the federal loans, you know with this kind of these new borrowing caps that are now in place, that’s going to be even a bigger problem for institutions.

Michael Horn

Well, I was going to say it probably becomes more important, right. To have these alternative vehicles out there in certain cases. Otherwise completion rates could plummet at the sort of the last mile, if you will, as you’re rounding the corner. As we start to wrap up here, I want to think about or hear your big lessons and takeaways and sort of where we go from here with this research out there. One of them that occurs to me is the importance of the design of these programs and maybe even, like, who is backing the finance. Right. Like the fact, Kevin, that you kept saying these are Purdue’s dollars, it seems like that are part of the program as opposed to an investor perhaps could be an important component as well. But I’d love your, like, wave the magic wand. What would you see done based on this research? What are the big highlights, takeaways, lessons that we should be thinking about?

University Funding via Philanthropic Investors

Kevin Mumford

I just want to say something. I’ll let Ethan take the big picture, but one thing is the university dispersed $20.8 million to these undergraduate ISA participants. And some of that money did come from some investors, but the investors tend to be sort of philanthropically motivated. These were foundations that were trying to see this thing started. They were also not expecting a big return on their money. That, you know, in terms of investors getting involved, I have a hard time seeing that there’s a huge play for this Purdue type of program because the return on investment at this price point was just not very large. What I see is universities putting their own resources into it seems to make a ton of sense because they could be putting it into sort of, you know, scholarship programs or expensive programs to try to keep kids in school. And instead you could, you could just provide this type of funding and they’re going to get their money back.

That’s the idea. I mean, I would love to see more universities try this.

Michael Horn

Well, it seems like a great way to, like an evergreen, if you will, fund that replenishes, even if it isn’t, to your point, as much as you could be earning, if you at least, you know, make back inflation or something like that, that might be worth it. Right. At the end of the day,

Kevin Mumford

yeah, that’s exactly right but, you know, in terms of big vision, maybe Ethan’s got more of a big vision.

Michael Horn

Well, so Ethan, what last word as we wrap up here? Big lessons, takeaways, magic wand you would like to wave and see done with this. Other questions we should be asking.

Impact Investment in Education Programs

Ethan Pollack

Yeah, so, I mean, first, to add to what Kevin said, I do think that, you know, not only institutions, you know, could put their own money behind it, but I do think that this can be a real good philanthropic play as well. So for, you know, for philanthropies in particular, impact investors who may be able to take less than market rate returns, I think the ROI , if you’re talking about a, you know, kind of a social impact ROI, which they’re going to be much more attenuated to, like, that can be really huge because, you know, this is something that can be an evergreen fund. And so they’re able to kind of get their money back, but at the same time they’re able to drive real impacts for students. And that’s something that I think that, you know, in particular, impact investors are always looking for those types of opportunities. And this seems like this is a perfect one for that. You know, more broadly, I think, you know, one of my lessons is that, and, and I don’t mean this as a criticism of, of Purdue at all, but I really love Kevin’s, you know, you know, Kevin talking about how he started getting involved in this is that the, you know, the, the research wasn’t baked in from the beginning. And I think that that’s something that’s not super, super unique. I think that I’ve seen so many either ISA or outcomes based loan programs that are all trying to do this type of kind of pay it forward model.

Oftentimes the research is not at the forefront, or maybe they start the program and then they’re like, okay, maybe now we’ll find a researcher. And I know as Kevin has talked about, if he had been tapped in from day one, he could have designed some more natural experiments to really get some really cool quasi experimental design. And he does do some quasi experimental design, but it was a little more happenstance. And to be able to kind of bake that into the beginning and do some randomization can lead to some really interesting results. And you know, if, if, you know, I think that oftentimes there’s a lot of people have really cool ideas that are really trying to, to build something new and they get really excited about starting to build. But I think what they forget is that if they’re really trying to drive impact, they need to recognize that the way you drive impact is by doing the thing and then having some really rigorous research that shows that it worked or that shows the ways in which it didn’t work so that the next person who wants to build something is able to learn from what you did. And otherwise, what we have is all of these, you know, people that are inspired doing kind of cool stuff, but it all kind of just like dissipates because they do it and then they know that they did it, but it wasn’t able to really scale up. And so it.

It’s really just like a plea for more research from, you know, on the front end. And then for us, you know, Kevin and I would also like to do more research on the Purdue program. There’s so many more research questions that we want to get into too, as well. So, you know, also there’s any philanthropic funders who are out there that want the third piece of artwork. We are available and happy to talk about all of the additional questions. We have this huge data set, you know, we already, they already did the work, and all we need to do is you just. We just want, you know, you know, we can spend some more time to really answer some really interesting questions there.

Michael Horn

Terrific. I love that you guys have invested in that side. It feels like it’s a lesson, and I’m going to call it a lesson in evergreen iteration, because sometimes out of research, we want the headline, did it work or did it not work? As opposed to, okay, what are the lessons learned? How do we keep improving right from there so that the impact over time is actually there? It’s not always convenient, I suppose, for the headlines, but it’s perhaps better for students. So, Kevin, Ethan, huge thanks for coming on here, talking about it. Huge thanks for doing the research, writing it up. You can also check out, Ethan, you had a blog, I believe, on the topic, headlined “Promising New Insights from Purdue University’s ISA Program.” So check that out as well. We’ll also link to it and for all you tuning in, we’ll be back next time on the Future of Education.

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In this episode, Danny Curtis interviewed Jonah Schenker, superintendent of Ulster BOCES in New York, to explore the launch of a groundbreaking new center for career and technical education at iPark87. The conversation dove into the innovative programming and community partnerships at the new center, the challenges of moving beyond traditional, industrial models of schooling, and the vital role of collaboration between educators, industry, and local organizations. Schenker also shed light on broader statewide reforms in New York around redefining student competencies, the importance of starting transformation with empathy and stakeholder input, and how these changes create new opportunities to equip students as designers of a better future.

Danny Curtis

Welcome to the Future of Education. I’m Danny Curtis and you’re joining the show where we are dedicated to creating a world in which all individuals can build their passions, fulfill their potential and live lives of purpose. And today to help us think through that, we welcome Dr. Jonah Schenker, superintendent of Ulster BOCES, which is a regional education services district in New York. And I’m really excited to have Jonah on today because he’s going to tell us about the innovative work that he is doing with his partner districts in New York, including the opening of a very new and very big center for career and technical education that’s playing an important role in a larger shift happening in New York towards rethinking student competencies. And so Jonah, thank you so much for joining us today.

Dr. Jonah Schenker

Awesome. I’m super glad to be here and actually recording from the new site as we were just chatting about. So I’m happy to be in space with you.

Danny Curtis

So cool. And we especially appreciate you carving out the time right now at time of recording. We are just leading into a new school year. So I’m sure this is a busy time for you.

Dr. Jonah Schenker

It’s always a busy time for schools as we think about opening but, but especially busy when you know, a new 140,000 square foot facility is, you know, just on, on the agenda as something to get opened as well.

Danny Curtis

So yeah, the big agenda item right there. Yeah, absolutely. Awesome. Well, I want to dig into that center in a second, but just to start, I’d love to hear about your journey to this work. What brought you to Ulster BOCES?

Dr. Jonah Schenker

Yeah, so you know, kind of the one minute overview, you know, I started my journey in school and I describe it as I was good at school, I knew how to do school. I don’t really recall, you know, what I was really getting at or, or absorbing. I recognize amazing teachers throughout that, but the learning style, the approach that that was always didn’t, didn’t feel right. And so I found myself gravitating towards shop class. I found myself gravitating towards clubs and extracurricular. But again I knew how to play the game. And so I got good grades, went off to college and did about two years and, and then left and spent my second two years of undergrad traveling around the world in an independent study.

Finished my undergrad that way and that was really where kind of the aperture opened up that there are more than, there’s more than one way to kind of get at this thing we call learning in school. Fast forwarding. Started my career at a new school startup in Brooklyn. Spent about five years there teaching. Taught for another three or four years after I left the city in Dutchess County, New York and then began my journey at Ulster BOCES 16 years ago as an administrator, assistant principal, teacher, coach and have worked through the progression of leadership all here at Ulster BOCES. So building principal and director and interim directors of portions of our entity that handle tech and professional learning. Had the opportunity to become the deputy superintendent here and then our superintendent at the time retired and that was the moment at which I had the opportunity to become the district superintendent.

And the district superintendent is an interesting role in a BOCES. One portion of the role is the CEO of the BOCES. So really handling like all the programming that we’re doing and then the other portion is a direct report for the commissioner through the New York State Education Department. And that’s the kind of two way conduit that offers or where we support districts in initiative that is coming out of the state education department and equally as important bringing up voice from the ground floor to help inform the Education department around decision making, policy and things like that. So it’s a different role. I’m very, very fortunate, wonderful board who supports innovation and about 10 years ago in one of my principalships I got the opportunity to start a school, a P Tech school, Pathways and Technology Early College High School. It’s a six-year program and, and that was really where I really began to become passionate around economic and workforce development, around the interconnectedness or the lack of interconnectedness of the entities that need to pull in the same direction on behalf of students if we’re going to really do this work. And that was done in kind of this micro school where we built out that model.

But tremendous amount of gains and I’m sitting here today in a center that represents the scalability of that same vision. And so I know we’re going to get to talk a little bit more about that, but I’ll pause there for you.

Danny Curtis

Yeah, yeah. That connects a lot of dots in the lead up to the present day. That day being just less than a week out from the opening of the new career and technical patterns at iPark87 as it’s called. Could you tell me more about the center and its services and give us a view into the story behind its development?

Dr. Jonah Schenker

Sure. So we run a ton of different types of programming that are student facing. We have a whole other, many other divisions that are non-student facing, workbook but focusing on the student facing career and technical education. So for the most part, students come to us in their junior and senior year as part of their journey through nine through 12 in our district, so in our county, our BOCES works with eight component districts. Those are the districts in our BOCES region. And so many of those students are progressing through the 22 credits and five Regents exams as part of the graduation requirements, which I know we’re going to get to later because that’s shifting as well. And they come up to us for either AM or PM and they’re engaged in career and technical education, automotive, culinary.

Revamping Vocational-Technical Education

Dr. Jonah Schenker

You know, we have, you know, all of the health occupations, a technology class, electrical, HVAC and go down the list, welding and, and they’re getting the technical skills. But also students are progressing through integrated academics as well. So they may be getting some math credits and science credits and English credits, et cetera and career in tech or as some, you’ll hear some people talk about VoTech or vocational tech is in the same kind of dilemma as our traditional education system where we are still very much for the most part operating in this kind of industrial model of schooling. And so we’ve been pushing on that for a decade across all of our programs. What should schools really be? What can schools be? And how do we move out of this industrial model of teaching and learning into something that’s more relevant for the students in order to prepare them for whatever next is. And so kind of going to the site here. The iPARK site is the former IBM site in Kingston, New York. So the story of that IBM, you know, headquarters, last I heard in, in this area of the facility, 6700 employees like you don’t go anywhere in Ulster county and have a conversation with somebody who didn’t move here, have an uncle or a cousin who were like worked here at the facility.

Revitalizing New York’s Industrial Communities

Dr. Jonah Schenker

And again my, you know, like many communities in New York, especially those with those kind of single massive industries that out-migrated, they left and it bottoms out a community, an economy, hope and really has been this for decades this legacy of failure where there had been several attempts to kind of think about how to revitalize this campus. The campus was turned over and purchased to National Resources who really did an amazing job at the cleanup from an ecological standpoint and making the site safe and working through that in partnership with many entities, county government and Environmental Protection Agency, etc and about eight years ago some conversations about like let’s take a look at this and, and some early conversations and some dialogues and again the ground is not always ripe for things to grow. And so that kind of fell short and then we took a break through that little period of time known as Covid and and I had the opportunity to step into this position and rekindle those conversations and kind of went at it with a little bit of a different strategy than prior and began to get steam on this concept. Right. And a lot of that I think is about preparation, meeting, opportunity, but also really the amount of groundwork to engage with our eight districts to see the why and the what and the how through transparent conversations rooted in what’s right for students, what’s right for kids. And so you know that, that took hold and we have become what will be the anchor, you know, for this campus.

The career and technical school that will be here is amazing. I was saying for a while like it’s going to be amazing but I keep reminding myself actually that today about an hour before this conversation our, we had gotten our co from the town some time back but, but our sign off from the New York Education Department and the commissioner came through so, so it’s no longer like when it happens, it’s here and happening and the school is amazing. But, the campus represents so much, is so much larger. Right. It is an ecosystem that brings together county government, industry, two-year and four-year colleges. And really this messaging that I’ve been talking about has been a metaphor. Now we have a physical representation of the commitment of what it takes to really do economic and workforce development which is in turn, that is, skills and workforce gap work.

It is community revitalization work, it’s economic mobility work. So plans here for millions of square feet for other industries to be site-based housing. We know housing and employer and, and future employees are two critical pieces. So let’s not talk about how to solve them, let’s build that. And so this is the beginning, too, a multi-phase project to again do that work. Really, really exciting. And I could talk a little bit about when you feel it’s right about again what’s the next phase in terms of that larger conversation or larger impact because the school is going to be magnificent and it’s going to do wonderful things. But I’m really thinking about how this becomes a model to replicate out because we are not the only community and geography that is facing economic and workforce development conversations as well as this type of revitalization from out migration

Danny Curtis

Yeah, yeah. I’m excited to get there. Before we do, I want to stay with one point you brought up around the opportunities that being in this space, this larger campus with all of these different organizations around, opens up for partnerships. Because obviously with blended career technical education initiatives, partnership is such a critical component, but also a huge sticking point for lots of places, districts that are trying to start these initiatives. Yeah. So I’d be curious to hear, how are you, first of all, what are you leveraging, what types of programming are you leveraging these partnerships to create? And how are you navigating some of those challenges, different schedules, norms, policies between these types of organizations to create productive collaboration?

Dr. Jonah Schenker

Yeah. And, and I’m, I’m really excited that you kind of asking that question because that is at the heart of either the solution or the dilemma that has been workforce and economic development because it requires efficiency and collaboration. Right. And I always make it a point to kind of do the disclaimer that the problem doesn’t lie with that. We don’t have really amazing people in all of these entities working really hard. The problem is in the coordinated efforts to actually get the work done. So that’s one piece. The other piece is how we define where this work and at what age this work needs to happen.

Before I go into that, because I think that’s really the segue into the model for that is kind of this site and what, what you were talking about, rather like the design principles of this site are based on, you know, height and space and light and inter and intraoperability. So, when industry partners come in here, they’re going to see their hopes and their feedback, their expertise in what the future of work needs to look like. Right. Like, we can’t. I think so often educators are charged with the job of producing students who are equipped to do whatever next is. But we don’t ask those people who are in the realm of next, what do you really need to see? Like, what do you really need to see when this student crosses the threshold to interview with you into a workforce, into a college classroom, into a military experience, into an internship or whatever the list is. We prepare them with a body of school things. And there’s not always an alignment between like what we teach and what is needed.

Which is why we hear we’re not getting employees or students coming to us that are prepared to do X. And it’s very simple. We just got to ask them the question. The piece that you surfaced, which is the private sector, community based sector, isn’t staffed or equipped to navigate the complex system of K12. And the schools aren’t equipped to navigate the outside world. And so all of this work historically is relational. I’m Jonah, I’m the guidance counselor. I have a great relationship with these two businesses.

Building Systematic School-Industry Partnerships

Dr. Jonah Schenker

It’s thriving. I’m getting some students experience, I get another job, I leave, it’s gone. And so our work and our model is about systems and structures, cadence and rituals and routines that are systematic, that move from the relational level down to the way a community acts and performs and behaves as part of their DNA, not in a one off meeting for a task, but how they consistently come together, bringing these entities who have historically had difficulty working together and making it really easy. Right? Like schools need to make it really easy for industries to participate and industries don’t want to do school things because that’s not what they do and schools don’t want to do that. So what’s the complementary relationship that needs to happen? And you know, I would suggest that, you know, as part of that and inherent in who we are is the single point entry for all of this work to happen. Right.

So we are suggesting, and every community and state has entities that they may not be titled the same but, but act as these intermediaries. So BOCES Board of Cooperative Educational Services is designed to get multiple entities to cooperate on behalf of whatever that service is. And so what we’re positioning again is that single point entry. Any child in Ulster county, regardless of whether they’re in our program or not, who needs an internship or a work experience. The industry and community field knows all I have to say is I’m looking for X. We are the conduit to K12 in the schools, the schools don’t have to worry about that. They just say, hey, we have 15 kids who need and we do the facilitation so that entities don’t have to be talking to.

Because an industry that wants to tap into schools here has to navigate eight superintendents, eight school districts, eight boards of education, each with their local context rather than the knowing just being like, hey, we need that partnership is the clearinghouse for all that to happen. And, I would suggest that the same model is true for mental health and the disconnect and access of services. It’s coordination, all right? It’s not, it’s not quality of service. So here we’ll begin to do that work. We’re also thinking about the model. Right there is this age-old stigma of career and technical education. We have those who can do school and are college bound and for those who can’t, we’ve got these other things.

Right. And I would argue that what we need to be moving towards is one skill set and many different opportunities to be able to engage in pathways to get there. Right. And the reason why we define that is because our school system, the industrial model, is built on a single academic pathway. Right. Like that’s the valued pathway. And then if you can’t do that, like we have all of these other options rather than saying all kids can. And here’s 15 different ways to, to connect a passion with a ken, with a pathway that are all going to be yielding a common skill set that we know is going to be critical whether you’re going to college, two year, four year, certification, into the workforce, that same list that we begin to surface.

Integration and Equity in Education

Dr. Jonah Schenker

So that’s exciting work on the ground floor. And you’ll see that we’re no longer going to have the students who are just in the H Vac bubble. We had an industry partner here yesterday and we got a little snippet video from him and he said, yeah, we don’t need just students who, you know, students in H Vac need to know welding and electric. And so you’ll see the proximity of classrooms that used to be siloed, opened up and, and it’s that again, that ability to work cross lines that isn’t, we’re not just saying that it’s present in schedules, it’s valued in space usage and it will be driven by kind of this next iteration and instructional model in this venue, career and technical education. And not that we’re, but it’s no different in our programs that are special education. The model of teaching and learning is different there. The canvas and the experience is just different than career and technical education. But, all of my programs are based on a very explicit driver of how we think about relationships, how we think about teaching and learning and all of that resting on access and belonging and equity and diversity.

Danny Curtis

A lot of really great stuff to unpack there. But especially appreciate this overarching point that these new resources are going to be accompanied by an innovation on the model. Because I think so often schools acquire new resources, bring in new innovations, but, but try to work it into the existing industrial model, as you said, and are disappointed when they aren’t able to produce the results that they’re looking for with these new resources in the old model. And so excited to hear that it’s accompanying a larger rethink. And I know that the center fits into a larger shift happening in New York where the state is rethinking the competencies that they want their students to develop. And I’m wondering if you could tell us about the role that Ulster Boces is playing in supporting his district and working towards that, that rethink of competencies and the timeline of that over the next few years.

Dr. Jonah Schenker

Yeah, so you are absolutely right. You know, New York. Let me kind of go, go back to a little bit of the timeline. We’ve been at this conversation and work and other systems in New York and beyond as well. But, we’ve been at this for about a decade. And again, in 2019, the Board of Regents, you know, put together what they call the Blue Ribbon Commission, a diverse group of stakeholders to rethink what it means to be a graduate here in New York. And in that, 12 recommendations surfaced, the board of Regents looked at those recommendations and charged the New York State Education Department with thinking about what this means. And in between, a little bit of a setback with again, that same Covid period and, and, and they refueled and regained.

But it’s a beautiful document, the process and the product. And so the New York State Education Department took those recommendations and, and and developed what they call New York Inspires, which is a framework that we are currently in that has kind of a planning phase and then three phases after that are based around how those 12 recommendations were distilled down to kind of these four transformations. One of those transformations is the adoption of the portrait of a grad. The portrait of a grad, those competencies you talked about students being academically prepared, creative innovators, critical thinkers, effective communicators, global citizens and reflective and future focus with, with adopted definitions. And that portrait was adopted just, just recently by the Board of Regents. Secondly, redefining learning and credits, learning experiences and credits.

Thirdly, moving to the decoupling of Regents assessments from graduation requirements and moving to a single transcript. So that’s kind of the body of work. And you know, just to, just to take a step back to where you started because it resonates really deeply with me and, and often, always where I start when I, whenever I have the chance to talk with school leaders or school people, which is, I don’t believe that we have an educator or teacher problem in this country. We have fine educators and teachers. We have a container issue that is the container in which we ask them to do their job is tragically outdated and flawed. And I would go as far as to say actually designed to not promote access and equity. Right. And so when you talk about those initiatives, any initiative or ideas or innovation, they are a veneer laid on top of our current foundation which is flawed.

And so none of, none of those initiatives or change work is going to take place when the foundation of school is based on numerical grading, which is designed to rank and sort students, which is an academic school year between September and June, depending on where you are in the country, that’s where it is here. Some start in August where 9, 10, 11, 12 grades stack on that, with requirements at the end of the year. So we’ve defined learning, success, passing and failure between September and June. And if you don’t do it, then you fail. Right? Like, and we can go down through all of these like systems that like school did to us that if we were able to navigate, we did okay. And if not and, and, and you can identify, I can walk into any third grade classroom in the country and identify a child within an hour that’s probably going to be able to navigate the system or not. Right? Because sitting still compliance, is, I mean you look down the drop down menus at that teachers have to give to students on report cards, right? Like you has difficulty paying attention in class, you know, can’t sit still. No, no.

Like the student who has difficulty paying attention in class just needs to move. Like when did we decide that movement was bad? Like so, I mean all of those, all of those things. So the New York Inspire is a game changer for changing that foundation. I believe I love all of the components of it. To me, out of all of the transformations, if we don’t get in transformation to Redefining Learning Experiences, right then we’re going to be looking at the application of all the stuff on how we’ve defined what a learning experience should be based on the model. So we’ve really done our work around thinking about those shifts that need to happen in classes where students are moving from just compliance to working on really meaningful project work to be of service to the community world, changing the audience. And I’m not discounting that content knowledge or literacy or math isn’t important. I’m just saying we need to value how we think about learning experiences as a mechanism to get there.

Empathy-Driven Educational Transformation Plan

Dr. Jonah Schenker

So in this rollout kind of getting around to kind of your final question as a BOCES, we’re charged with supporting districts in thinking about how do you do this work, whatever it might be. And I saw an opportunity in the rollout and what’s needed on the ground floor and before actually what we need to see teachers doing. We need to ensure that our leaders understand how to lead transformational work. And so we have had a long standing partnership with the Stanford D School design thinking, human centric design work, and began to put together not a prescription, but a playbook that outlined a process, a set of tools, questions that are anchored in this human centric design work. So that prior to schools just wanting to do the checklist of what we need to do for this New York inspires thing, they really engage in the needed work up front. That’s the driver to transformation, which is empathy. If we’re going to redesign a system or we’re going to design a system, then we need to talk to the people who we’re designing it for first to make sure that our design is answering the right question. And so it’s this beautiful document that aligns with the phases of New York that again, I kind of, I would attribute to kind of a choose your own adventure.

I don’t want it to be my way or my team’s way or our way. But what has to happen, where there can’t be flexibility is, we have to talk to people now. Here’s a selection of questions that you might ask.

Here’s a number of tools that you might consider. Take pieces of them, invent your own. But like, this is step one. And as we think about redesign a school, if we’re really going to do this work that’s going to be transformational, there’s students, there’s boards of education, there’s community members. There are community members who went through school who have a perception of school based on a single experience in a cafeteria or science class from when they went there. We need to engage them in the process. We have to ask them what went wrong, what didn’t work, right? Like, let’s not just ask the folks who school works for, but more importantly, let’s ask the folks who it’s not working for, what does it need? Because I’m a huge, a huge advocate in the design thinking for when we do design work. We need to design for those furthest from opportunity.

We have an epidemic of average in this country, right? Like everything’s designed around economics of doing the most amount of good for the most amount of people in the middle. And then we need to create all of these, like either enrichments or Interventions to get people back to middle. And it turns out actually if we just consider the design from those furthest from opportunity or what we call the extreme users, right? Like everybody benefits. It’s not a zero sum game. And there’s all those examples of that are used to highlight that, right? Like the curb cut design for mobility, you know, wheelchairs, et cetera. But, it turns out that the delivery person can roll their dolly up there. It turns out the someone who’s wheeling a bicycle, a parent or guardian or mother with a stroller.

Collaborative Education in New York

Dr. Jonah Schenker

I mean, we can go down the list like nobody lost out because we made those. We actually just thought more about making it accessible. And the same is true in all of those examples. So if we take the opportunity to engage all those voices in redefining what school could be, our work is to not come up again with one recipe, but engage with our eight districts, allow them each in their local context to do this work and kind of co-author the story of their community. But equally as critical is bringing those folks back together to share and stretch and tune and reflect together. And as they’re co authoring their individual stories and we’re bringing together, we’re beginning to sew a story together of Ulster County. And if all of the areas in New York are doing this kind of same thing, not necessarily using again, our playbook isn’t the only tool, but it’s a tool. And, and if we’re all beginning to do this work, then Ulster county and Dutchess county and Sullivan county and Westchester county, and we can go down the list, then the story of New York State begins to weave together.

And the fidelity of the initiative as it relates to its intentionality of actually transformation doesn’t come from here’s what you need to do, but it comes through the consistency of how we hold space, how we use process, the questions we ask, tools we use, and most importantly, leaning on that kind of first stage of empathy, moving into ideation and design and prototyping and then scalability, of course.

Danny Curtis

Yeah, I love this vision that you’ve set out, sort of starting with the human at the center and extending out to create a statewide change. And so to tie these two pieces together to round out our conversation here, I’m wondering how, as the state changes the container and the districts continue to do this work to reimagine learning in a more human centered way, how does it change the work that you’re able to do at the center at iPark 87 and what new opportunities does that unlock for you all.

Community Mobility and Economic Development

Dr. Jonah Schenker

Yeah. So again, kind of going back to talking about and having kind of fractals of this work, this becomes a hub for people to convene, to take a look at what’s possible. And the playbook that I talked about in, in terms of the transformation of, of school will be accompanied by another playbook that I hope to launch in January around economic and workforce development, around community revitalization, around economic mobility. And, and, and I believe that is the intersection of both of those where a, a new definition of what’s possible lies. When we begin to center here in Ulster county, the 20,000 students. Not, not the adult conversation, but the 20,000 students as the future of this county from an economy standpoint, from a work and economic standpoint, from a hope standpoint, and have school systems that foster and drive that. It is a new model for community mobility.

And so my, my hope and vision. Right. Like I continue to talk to the folks that touch all of this. The work that you’re doing is beautiful, but you’re trying to grow a tree that’s 30, 000 ft up in the air, and you, you haven’t tended to the roots, and the roots are our children. And, and so it’s that. I think it’s that merging that kind of goes into where I’m currently sitting. When we even talk about skills of the future, the skills and competencies and the conversation is like, what are the skills that we need to prepare students to be equipped to, you know, enter and enter this unknown future or the future of work or whatever it is. And, and I’m not talking about it like that in the moment.

Dr. Jonah Schenker

I’m talking about it as what are the skills that we ought to be preparing students to be the designers of a new future? Because I’m not sure that we’ve done our due diligence in taking care of what they’re entering, not entering a political conversation, but the world isn’t well, and so I don’t want to prepare students for this. I want to prepare students to make it better. And they can. And, but let’s get intentional about what those skills are. Let’s value them in space, let’s value them in schedules, let’s value them in time. And again, I believe it’s that intersection of these two playbooks that provides not a prescription, but a roadmap for what’s possible.

Danny Curtis

Well, I think that’s a really good call to action to leave this on. Jonah, thank you so much for sharing about this new model. I’m looking forward to watching it as this new center takes flight and continuing to follow these new reforms as they’re put into place. So, yeah. And good luck on the first day of school. I know it’s coming.

Dr. Jonah Schenker

Yes. Thank you. I’m going to jump out of here and we’ll keep setting up classrooms and get it ready. But I really appreciate the time, the questions and the opportunity. Thanks so much.

The Future of Education is a reader-supported publication. To receive new posts and support my work, consider becoming a free or paid subscriber.

Danny Curtis joined me as we dove into some of the recent education headlines that caught our eyes to explore shifts in K–12 and higher ed. We started by discussing efforts by the Future of High School Network and the Carnegie Foundation to move away from seat-time requirements toward competency-based and work-based learning. Then we shifted to diving into one of my favorite topics—Texas’s multi-classroom teaching model from Public Impact and Opportunity Culture, which enables teachers to earn six-figure salaries without leaving the classroom, and its positive impact on both retaining veteran teachers and supporting newcomers. We then talked about the value of play-based learning, especially in early literacy, and questioned some of the labels and dichotomies that people often draw between different instructional philosophies. Sometimes there are similarities that people don’t see when you crawl underneath the proverbial hood. Rounding out the episode, we analyzed ChatGPT’s new “study mode” as a potential tool for student learning and discussed the complexities and opportunities AI brings to education.

Publications Mentioned:

“The Race to Redefine the High School Learning Experience Is On”, The 74

“How Some Texas Teachers are Earning Six Figures Without Leaving the Classroom”, The 74

“The Science of Reading and Play Go Hand-in-Hand. Schools Must Make It Happen.”, The 74

“Understanding Value of Learning Fuels ChatGPT’s Study Mode”, Inside Higher Ed

Michael Horn

Welcome to the Future of Education. Those tuning in live, we're trying something new today. We'll see how it goes. It's sort of a throwback to the past, but I'm Michael Horn. You're joining the show where we're dedicated to creating a world in which all individuals can build their passions, fulfill their potential and live lives of purpose. And to help us think through that today, thrilled to welcome back Danny Curtis who is head of all things digital for the work that I do and wears a number of other hats as well. Danny, good to see you.

Danny Curtis

It's great to see you too, Michael. Excited to talk some shop today.

Michael Horn

I'm looking forward to it as well. We'll keep an eye on viewer comments if we're able to. But I know that there's been basically, we text a fair bit. We're always in touch on different things. A few articles that have bubbled up that caught both of our eyes. I think it's fair to say that we thought let's do one of these, riff on it, catch up on some of the headlines that may be driving the school year ahead. No matter where you are at this point, schools either started or lurking for K12 students and colleges, those with traditional calendars are back to school.

So this is like a hot topic right now. What's on your mind? Where should we, where should we go? I'm going to let you sort of run the show.

Embracing Competency-Based Learning

Danny Curtis

Yeah. So the first headline to cover today is an article out of the 74: The race to Redefine Define the High School Learning Experience is On is the title. And this is one that covers the efforts of the Future of High School Network, which is a network of schools led by the Carnegie foundation for the Advancement of Teaching that are transforming how we do high school in America. And it's part of sort of a larger effort by the organization to move away from our education system based on seat time requirements towards more competency based approach. And so it gives a close up look at how this type of shift is allowing students in one Houston area district to engage in much richer work based learning through a partnership with a local hospital there. And so obviously some of your favorite themes in there. Michael, what did you take away from this story?

Michael Horn

Yeah, well, a few things. One, obviously we've had Tim Knowles on Class Disrupted right before the head of the Carnegie foundation and Diane's obviously on the board. So this is a group that we pay a lot of attention to. In many ways they're making up for what at the time was a big innovation and now they're cardinal sin, right, of creating seat time as the measure of learning against which students progress and so forth. What I think is interesting about this is that we've seen a lot of, I think reinvention efforts around K8 learning, right? But now high school redesign, that was sort of a theme 15 years ago with the Gates Foundation. But this seems, Danny, to me at least like really interesting for how connected it is to work based learning experiences. And you and I have both been hypothesizing a lot that sort of a career connected learning for all, we've written about this, right, is a critical thrust. And so the way that they're actually creating real partnerships seems to me really interesting.

And then obviously there's a competency based element of this where they're actually looking at progress. I've curious your take on this, but I thought it was interesting that they started with the health system as that employer partner, which I think makes sense because healthcare is one of those places where there's like clear board exams, Gates, right, that like if you can pass those and have clinical hours and practicums, you can go practice. And so competencies that perhaps tie to an industry standard are maybe more likely to get liftoff, maybe more likely to get traction than say competency based or skills based hiring in a space where we don't even really know what the skills are. There's not like an agreed upon set of competencies or definitions or even how to measure them. And I guess that last thought, Danny, and then I'm curious, yours is like really exciting to see this work go through and to see work based learning pulled into the high school experience. Sort of flip that high school day. I think that's a really cool trend that I would like to see, every district in America I think.

What did you take away from it?

Danny Curtis

Yeah, a lot of similar thoughts. I'm excited about competency based learning for a number of reasons in a number of applications, including more traditional academic pathways and what it opens up for personalized learning. But I was really excited about the use case that they chose here, the work based learning use case, because a lot more districts and states are taking the career part of college and career readiness more seriously these days and are making moves to make that happen. But the seat time requirements that are still the status quo in most places are a serious barrier to that, because in this day and age, in this technology landscape, with technology moving faster than most schools can keep up with, work based learning is sort of a requirement for true career readiness in order to have the skills that you need to be job ready, in my opinion. Shifting to that competency based approach not only creates the latitude for students to be off campus and on the job site and working, but so much of the assessment of ability that happens on the job sort of defies these traditional modes of assessment and requires more of a competency based assessment mechanism. And I agree with you. I think that the healthcare, selection of a healthcare example in particular is especially valuable because within that field there are already some of those more competency based signals baked in that you mentioned.

Michael Horn

So you brought up an interesting point, I think on the assessment piece, which is to say in some ways we don't have to assess like granular knowledge and skills that sit below an experience. Like to your point, if someone's working on a, in a hospital, you know, behind a desk, doing whatever it might be, allied health work of some nature, we can assess like, did you do that particular job well right. Like literally more macro, if you will, competencies which could be more widely agreed upon rather than trying to break them down into lots of granular skills and trying to figure out what transfers and whatnot. Like that gets very technocratic quickly. This seems very interesting. Like could you check someone into a health system? Could you help, you know, take their vitals in the beginning, whatever it might be? That seems like something you can measure in a much more authentic way. And it's like authentically valued as well, I would think.

Danny Curtis

Yeah. And one thought I have coming out of that is like when you are preparing people for these workplace competencies, the need to put everything on that 4.0 GPA scales is also reduced. And so yeah, these different types of signals and different ways of measuring that that unlocks, I think creates a lot of opportunity in these types of partnerships.

Michael Horn

Perfect. All right, well, let's leave that one there. What else is on your mind as we go through the carousel? And we'll link to all these in the show notes. So folks getting this as a Substack email, they can check out the original source articles as well.

But go ahead, what's next on your mind?

Empowering Teachers Through Mentorship

Danny Curtis

So the next headline we have here is how some Texas teachers are earning six figures without leaving the classroom. This is another one from The74. These salaries are kind of comprised of two pay bumps. There's a new multi-classroom teaching model where teams of classroom teachers are led by one lead teacher who has demonstrated excellent outcomes typically. And they offer coaching, planning and curriculum development support. And for that, for taking on those increased responsibilities, they receive a pretty big pay bump, $13.5K on average. And then the other source of the increased pay is a Texas state fund that awards additional state funding to districts for each of their high performing teachers. And so this one comes to mind or you know, stood out as important one to be talking about because in an education system where teacher recruitment and retention is a persistent problem year over year, it seems like there's a pretty broad consensus that we need to do some rethinking of the teaching profession and teacher compensation, but maybe less agreement on the best way to go about that.

And so I'm curious, what's your read on this innovation out of Texas?

Michael Horn

I love it. Look, it's from Opportunity Culture group, Bryan Hassel's group in North Carolina, Public Impact. They do some great work there. The author of the story is with Public Impact as well. So it's an oped, but I think it's a great example, right? When you start to have team teaching environments, teachers taking on different roles, they don't have to leave the classroom completely. So we're not moving the talent out. As you know, that was an entire chapter in my book from Reopen to Reinvent that the T in teaching is for team. I think this is a really important part of rethinking schools is really thinking of teams of teachers that are working together with lots of students and able to bounce off each other.

And then there's a really other, you know, this other cool perk of it, right, which is that you can actually raise salaries as well for the, the really experienced veteran teachers that are doing great stuff with kids. I think it's all positives here, I guess, is my take Danny

Danny Curtis

Yeah, I agree. A lot of the focus of the article was around the benefits of keeping more senior teachers in the classroom and allowing them a role that they can sort of grow into that matches their level of expertise. And obviously there are all sorts of benefits that come with that. But I'm also really excited about what this means for younger teachers and teachers that are earlier in their career. The teacher turnover rate within the first two years of beginning the profession is way too high. And as a former beginning teacher myself, I know it's hard to get in front of the class when you're just figuring out and kind of learn the craft in front of an audience, and it requires a lot of support. And so the idea of having a master teacher who's kind of rotating throughout these classes and providing the support in all of these really important, meaningful ways and having some really clear structure around that. I'm really excited about what that means for supporting these teachers into getting to that point where they're the lead teacher and they're the experts.

Michael Horn

So you were teaching in the Bay Area, right, as a, when you first got your start, would this sort of structure have kept you in longer in your view?

Danny Curtis

Yeah, you know, there's a lot of factors at play, but certainly would have made my first year in the classroom more productive and probably a little bit more enjoyable. That first year of teaching, I think is notoriously difficult on a lot of teachers. And so having a person that can be in your classroom there to provide support on short notice is really important. I was through Teach for America, so I had more resources available to me than most. But having someone designated to be there for you, that's actually in the building, I think makes a world of difference. I'm also really excited about what this might mean for teacher training models. We were talking earlier about sort of work based learning, and I think schools is one area where there's a lot of potential here, specifically in teacher apprenticeship programs. Obviously apprenticeship programs are really dependent on having this type of mentor, mentee model.

And so I'm excited about what this means, sort of structuring teaching teams where you already sort of have that system in place, what it could mean for the flourishing of teacher apprenticeship programs and how that and following an earn and learn model can also help defray the costs of getting into this profession. Because for many, it's the salary considerations that can serve as an obstacle to getting into teaching. But for many others, it's also the upfront cost of education. Yeah, just structuring it in this way I think will do a lot to open up avenues to teacher apprenticeship in a lot of districts and states.

Michael Horn

Great point. And Reach University, obviously, and others that could pop up to fill that and create space in the structure, right, for those sorts of teachers. That's a really great observation.

And so it gets a little under my craw for a different reason, which is I think you have this world that has popped up where people have said, quote unquote, “science of reading” is important, right? Phonics, phonemic awareness, like build those building blocks, right? And then as they get older, content knowledge becomes really important to help them be good readers. I totally buy that. And then their next statement is direct instruction is the best way to do it. And when they say direct instruction, they mean like a whole class, one to many model as they're doing that regardless of the fact of like I've mastered maybe, you know, some set of phonics and I'm struggling with something else and you're like racing ahead and I'm holding you back or vice or you know, vice versa and not acknowledging that like if actually I accelerate past certain competencies without actually having mastered them, that's going to be a huge problem in later years, right, when I'm trying to read and so forth.

Rethinking Play-Based Learning

Danny Curtis

The next article we have here is on play-based learning. It covers how play based learning can be leveraged to enhance evidence based reading instruction and covers the positive outcomes that guided play can have, not only on the academic side of things, but also soft skills, durable skills like self regulation, social skills. And it profiles some programs, including one near you, Michael, in Boston. And so this feels like a really exciting development. Learning is more fun and students learn more. Is there a catch?

Michael Horn

Yeah, I don't think so. I know the authors of this piece as well, big fans of theirs, Carly Roberts and Meghan McCormick. What I would say on this is a couple things. One, this article sort of gets at one of my boogeymen, if you will, Danny. And so it gets a little under my craw for a different reason, which is I think you have this world that has popped up where people have said, quote unquote, “science of reading” is important, right? Phonics, phonemic awareness, like build those building blocks, right? And then as they get older, content knowledge becomes really important to help them be good readers. I totally buy that. And then their next statement is direct instruction is the best way to do it. And when they say direct instruction, they mean like a whole class, one to many model as they're doing that regardless of the fact of like I've mastered maybe, you know, some set of phonics and I'm struggling with something else and you're like racing ahead and I'm holding you back or vice or you know, vice versa and not acknowledging that like if actually I accelerate past certain competencies without actually having mastered them, that's going to be a huge problem in later years, right, when I'm trying to read and so forth.

Then you have this moniker. And sort of their point would be, well, look, it's pretty clear you shouldn't have open-ended exploration without like clear lessons. And I would agree with that, right? But I think you can agree with that and reject the notion that it has to be whole class and so on the play-based thing. On the other hand, I'm not sure play-based learning is like the best way to describe what I suspect is going on here. And I don't know, there's nothing quite enough information.

But I guess the way I would put it is if you dropped into a Montessori school, you would often call reading instruction or instruction there in general, people often call it play based. But I actually think it mirrors what we know from direct instruction, but in very small groups, as few as one kid to, you know, four or five kids. And what happens is that the teacher, you know, takes out the materials you're going to be playing with, quote, unquote, shows you what they are used for. So like these are not just for anything. This is how we use them. This is the purpose, right? And actually does the lesson. There's a worked example, right, where the kid goes along with the teacher, actually like working together through a worked example and then the kid practices on the concept or whatever's being learned right, through the materials and quote unquote plays with it. And there's often, in Montessori anyway, some self-correcting mechanism so you don't actually like, you can't just skate by and not master it. There's like a way to check the work, if you will, to make sure that you're really mastering it. And then you can build in repetitions till you really show mastery of that competency standard, whatever it is that you're trying to learn. And so in some ways, I guess like what caught me about the piece was there's like a—we have these labels that we use in education and we try to pit them against each other where if like we peeled the onion back a couple layers, we might see like we're not having the fight I think we think we're having. And there's a lot more common ground. But there is like some nuance and some difference that I believe can create the personalization and, and yes, play right, like agency, ownership by a kid that can really engage them and follow like what we've learned about that works well from direct instruction and quote unquote, science of reading and so forth. And so I guess I'm struggling a little bit how to capture this Danny in a soundbite. But I think the article is really onto something and like we should take it as a pause to peel back the onion and get below these buzz phrases maybe that have become such lightning rods in different directions in the education space. Does that make sense, your thoughts?

Danny Curtis

Yeah. Yeah, that makes a lot of sense. This is in reality a best of both worlds situation. It's important that people understand that and don't take this bifurcated view of it. I want to latch onto one piece of what you said around the potential for engagement. And I think that that is a really important word in the education world right now as we are in this continued challenge of chronic absenteeism. There's more numbers that came out saying, yeah, the absenteeism problem has gotten slightly better in the last year or so, but it still remains way below or way higher than pre pandemic numbers. And so it's an issue that we continue to struggle with in the education world.

You can't start too early. In fact, I think that relying on or finding strategies like play based learning that fan the flames of curiosity and fun and engagement in students in the early years, it can be a much more effective and probably easier than trying to reignite that spark in that love of learning later on. I'm really excited to hear that this is kind of taking hold in the younger grades.

Michael Horn

Yeah. And it's interesting, right? Like, I think the folks that would be like, full, whole class, core knowledge, science of reading, they would say, like, actually learning how to read is engaging and exciting in its own right. And so maybe you don't need, like, the play and so forth. And to them, I might say, like, I actually agree with you. And why not make it even more engaging with agency around those principles that we know are proving to work more and more for learners. And like, you know, to your point, like, we. This can be a

Both and conversation. And I'll tell you what is disengaging to someone when they feel like there's no chance that they have any concept of what's being talked about at the front of the class. And they have complete, like, I get. And I'm all for raising expectations, but they, they're just like, I've concluded I. I'm worthless. I can't get this. I can't figure it out.

They've checked out completely. Or the opposite that I've quite frankly seen quite a bit as well, where the kids, like, are you kidding? We're doing this again? Like, I mastered this a year ago. Maybe it was at home. Like, I don't know where they learned it, but they're like, this is. I'm bored out of my mind. School stinks. Like, I'm disengaging from that. Why would we even play with that? Like, we don't have to, is the thing.

I think that you're saying, like, we can take the elements of what we're learning from the research and put them into really engaging environments that engage small groups, individuals, where they can really be part of the learning process. And we know that learning is work and you have to be actively engaged to do it. So, like, why would. Why would we ignore that? I think, is your point.

Danny Curtis

Yeah, yeah. No, spot on. And so, Michael, unless you have more on this. I know we had.

But I guess the way I would put it is if you dropped into a Montessori school, you would often call reading instruction or instruction there in general, people often call it play based. But I actually think it mirrors what we know from direct instruction, but in very small groups, as few as one kid to, you know, four or five kids. And what happens is that the teacher, you know, takes out the materials you're going to be playing with, quote, unquote, shows you what they are used for. So like these are not just for anything. This is how we use them. This is the purpose, right? And actually does the lesson. There's a worked example, right, where the kid goes along with the teacher, actually like working together through a worked example and then the kid practices on the concept or whatever's being learned right, through the materials and quote unquote plays with it. And there's often, in Montessori anyway, some self-correcting mechanism so you don't actually like, you can't just skate by and not master it. There's like a way to check the work, if you will, to make sure that you're really mastering it. And then you can build in repetitions till you really show mastery of that competency standard, whatever it is that you're trying to learn. And so in some ways, I guess like what caught me about the piece was there's like a—we have these labels that we use in education and we try to pit them against each other where if like we peeled the onion back a couple layers, we might see like we're not having the fight I think we think we're having. And there's a lot more common ground.

Michael Horn

Let's do this fourth one. I know you've been interested in this other topic, so why don't you bring us. Why don't you talk us through it?

ChatGPT Study Mode

Danny Curtis

Yeah. So there was a recent article Inside Higher Ed on the new tutor function from ChatGPT. It's actually called the Study mode, and I quote here. It's intended to provide a more active learning experience, mimicking the type of Socratic dialogue students may expect to encounter in a lecture hall and challenging them to draw on information they already know to form their own nuanced analyses of complex questions. But the article then goes on to point out that students that are using this study mode sometimes need to sort of prod it to ask the right questions and that actually if you pressure the study tool enough, it will actually just give you the answer. And so I think that there are two questions that come to mind reading this one. The first is, is this a useful tool? And I think whenever an AI tutor like this comes out, you can cue the voices saying this isn't as good as in person instruction.

But to that question, I think that that's a bit off the mark. I think the question that we need to be asking is, is this better than the alternative for many students, which is nothing at all in many instances. And so the increased availability and accessibility in terms of cost for many students to a tool like this creates a lot of value. And are there ways that the technology could be improved for now, certainly, and I'm sure that it will. But on the question of is it valuable, is it a useful tool for students, I would expect that it already is a value and will only continue to get better.

Michael Horn

Yeah, it's a really good point. And you're taking the disruptive innovation lens there, right? Which is better than the alternative. Nothing at all. Don't judge it by like, as a final form factor. It's going to get better. And there was a lot of snarkiness on X around this launch because people were saying, like, I mean, who the heck is going to opt for study mode when they could just get the answer from ChatGPT itself? Fair enough. And I confess I piled on a little bit there as well. But I think if I hear you right, maybe what's interesting about it is like, let's offer it in the same way we offer Khanmigo as a specific app almost right? Like, hey, this is going to help you get better at X, it's going to help you get in the reps, it's going to help monitor and so forth, whatever it is, and coach you accordingly.

And if it's like, in that constrained environment where I can use this app, as opposed to like broadly going on to ChatGPT's app and like opting for study mode, okay, that's one thing. But if it's an app dedicated, this is something we're giving you as a tool, maybe that produces a different sort of use case or something like that. And to your point, better than the alternative, no tutor at all. Maybe that's the right way to think about it.

Danny Curtis

Yeah, yeah, that's my general point. I think you're touching on my second question here, which is, is this the answer to our AI challenge in education where students are able to just get the answer at the click of a button? And I think that the fact that you can actually pressure the Study Tool itself to give you the answer really points out the reality that AI at least hasn't yet been the answer to our AI challenges in education and requires really hard thinking about in this age of AI, what are the skills that students need to know and how can we go about crafting curriculum and assessments that can teach that when they have access to all of this information at the click of a button?

Michael Horn

Yeah, well, to be fair, by the way, I can pressure most human tutors to eventually give me the answer as well. But no, I think you're exactly right. You're pointing to the right thing, which is what are we asking of students? And I think the answer is different at different levels. Right. Like a novice learner, you know, I'm not sure the technology is as useful. I want you learning fundamental knowledge skills. Right. Of a particular discipline or whatever it might be, as you move into more of an expert in a particular field, more of a project.

Right. Application of that knowledge and skills would be super useful. And they're like, I want you using AI, frankly, to expand the realm of what you're able to do. Like, how do you use AI to do something more? I don't know what we'll call that knowledge and skill base, but to me, AI gets the most interesting, I think, as a force multiplier of what people can do and how it works with them, as opposed to, to your point, like, is it or is it not a hack to cheating or something like that? That's been around forever. We'll find lots of ways to cheat. Let's come up with more interesting assignments where it's not cheating, but it's actually using it to do something more that mirrors where we started this conversation, where education actually is getting closer to the way we actually, in fact work. I can't think of an employer right now who would be angry at you for bringing AI to better do what you're trying to deliver for them. That's frankly the expectation at this point, I think.

Danny Curtis

Yeah, totally. And that feels like a really good full circle moment to leave it on. What do you think, Michael?

Michael Horn

That sounds good. And for those tuning in, if you've offered comments, we apologize. We're not getting them in the platform that we have chosen to do this in. We'll be better next time.

Danny Curtis

Still working out the kinks.

Michael Horn

Yeah, exactly. We're still working out the kinks. That's what they say, in Pardon the interruption. Right. We'll do better next time, so we'll keep doing this, but if you've enjoyed the format, let us know. Let us know what you'd like us to comment on or stories you're seeing where you'd love us to just, hey, use some theory, use some experience, pattern recognition, whatever it is, to shine a light on something. We'd love to have that ongoing dialogue with all of you as well. So, Danny, thanks for doing this, and we'll see you all next time on the Future of Education.

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Bill Hansen, CEO of Building Hope, and Raphael Gang, Director of K12 Education at Stand Together Trust, joined me to discuss the launch of a pioneering microloan fund specifically designed for microschool founders. We explored the goals, mechanics, and early learnings from the pilot program, which offers low-interest startup loans to help microschool entrepreneurs navigate financial and facility challenges in the early stages. Our conversation highlighted the critical need for business fundamentals and sustainability within these innovative educational ventures, the vital role of technical assistance, and the importance of building scalable, sector-wide support for nontraditional school models.

Michael Horn

Welcome to the future of Education. I'm Michael Horn. You're joining the show where we're dedicated to creating a world in which all individuals can build their passions, fulfill their potential, and live lives of purpose. And today we're going to have a conversation with two leaders behind a relatively new micro loan program that is designed to support what I'll call the supply side of microschools. But we'll unpack that, I suspect, a little bit as we get in this conversation. Before we do that, let me actually introduce our two guests. We have none other than Bill Hanson. He's the president and CEO of Building Hope.

Bill, good to see you.

Bill Hansen

Good to see you, Michael. Thank you.

Michael Horn

Yeah, absolutely. And then we have Raphael Gang. Raphael is the director of K12 education at Stand Together Trust. Rafael, good to see you.

Raphael Gang

Thanks for having me.

Microschool Program Partnership

Michael Horn

It's great. Yeah, no, you bet. So let's dive in with the mechanics, basics, just so people know what we're talking about. As I understand it, this is the first of its kind fund for microschool founders. It launched with $675,000, I believe, in funding from Stand Together Trust with support from the Beth and Ravenel Curry Foundation, I think. Is that right? And then it's powered by Building Hope and it's essentially a low-interest loan program. And so I'd love to get the basics of this, like what are the loans for, how much are we talking, what's the structure of those loans, how many applicants did you get, how many did you give out, and so forth.

So maybe, Bill, why don't you lead us off and then Raphael, if anything to add, you can jump in on this.

Bill Hansen

Thank you, Michael, and just really appreciate the partnership with Raphael and with the Stand Together Trust. It's really been a pretty intense several months here getting this really, we're calling it a pilot or a demonstration program established to really help us learn a lot about this marketplace and the needs. And, you know, just with Building Hope's history in the public charter school movement, mostly, you know, the biggest barrier has always been both the financing and the facilities, and that is on steroids here with the microschool program. And so really the, you know, I really feel like we're in a learning process here to really, you know, help us validate those challenges that these entrepreneurs around the country are making and to really help solve the greatest needs that they have. And really the barriers to entry, which really have been, the logistics, the housing, if you will, and also just really the startup cost for them.

Raphael Gang

Yeah.

Michael Horn

And so let's talk about the loan itself. Raphael, why don't you jump in there? Yeah, yeah.

Raphael Gang

I mean, we were really excited. I mean, we spent two years looking for the right partner for this. So I would double down on Bill's, the appreciation for what Building Hope has done over the past six months or so, eight months, to build out the loan fund. And it's been a real process and you need a lot of trust and a lot of partnership to do something that's as ambitious and fast moving as this project has been. So, I mean, the loan fund, you know, we put out a very soft request to folks. We didn't do some big major advertising blitz. We went out through a network of partners that we talked to and we said, you know, who is looking for affordable capital, essentially? And we really were looking.

I think Bill makes a really good point there if we were looking to learn about the market as much as we were learning to help founders of microschools. We know that these microschools are out there. We are seeing through organizations like the national microschooling center and vela.org just tremendous growth in them. But we don't really have a grip on, well, what are their finances look like? What does their growth strategy look like? What are their needs? And so I was having a lot of conversations with folks where I'd say, hey, what do you need? And a lot of folks would come to us and say, I need capital. I need money. I need money to get started. Or I'm in my early days of my first few years of operating. I need capital.

Cash flow or ESA programs or voucher programs are coming online, but I need a little cash flow because they're on a delayed payment, things like that. So we really tried to structure the loan fund in a way where it acknowledged the reality of these folks that are on the ground and what their needs are. So we're not asking for immediate repayment of things. We went out and talked to those folks and we said, what's a loan? What's a timeline that makes sense and when should the payments happen? And Bill can talk more about the details of that, but we came in at 3% interest rate, which is a very generous interest rate, as anyone in the finance industry can tell you. But a lot of it was about like, well, we want to see who's out there and we want to learn about them. And so Bill and his team have done an amazing job of collecting that data and now using it to inform what we're doing. We're really excited.

I think we're on track to make about eight or nine loans by the end of the process. We'll probably still have a little bit of money left by the end of it, but I think we're in a really great place, to really get the money out the door. But, but as well, like really inform kind of where we go from here. Does that answer your question?

Michael Horn

Yeah, that does. So that. And you sort of teed up the next question, which is I think you got 53 applicants. So you're talking eight or nine folks will get loans.

Raphael Gang

Yep.

Michael Horn

What are they going to use the capital for? What are those repayment terms? How big are the loans? Like what, what order of magnitude are we talking about here? Bill, you want to take it?

Startup Loan Facilitation for Entrepreneurs

Bill Hansen

Sure. Well, the loans are, you know, probably going to be in the 25 to $50,000 range. And again, these are really startup costs that these individuals and entrepreneurs are needing to get through all of the regulatory processes, all of the onboarding of, of students and whatnot. So. And really the facilities is probably still the, I would say, the predominant need for it. And you know, I just really would also maybe just echo what Raphael was saying about the intersection of philanthropy and you know, we're a non profit organization, but we have, you know, three businesses that are, you know, we're the biggest financial advisor in the charter school business. We've got a nonprofit subordinated lending program, do a lot of work with the credit enhancement program for the Department of Education, the Small Business Administration, and really just trying to help navigate, you know, through these processes that they've probably never done before and you know, maybe just with their local banker and so, you know, trying to bring, you know, get the lowest cost loans available to them is really, I think one of the benefits of the partnership with philanthropy and a nonprofit organization involved in the lending business.

Raphael Gang

Yeah, I think we've got, you know, I think we had 258 application or interest forms. Interest forms. We had 100 folks start at the applications. We had 53 full applications that came through the process. And it looks like we'll get to about 8 to 10 loans distributed and they're going to be in that range that Bill talked about. We deliberately really said, let's keep the loan dollar amount low. These are microschools, they should be micro loans, so to speak. And we really felt like we didn't want to be a, we wanted to see how far we could stretch those dollars and really can that money be catalytic, especially at the earliest stages for folks.

But we saw that a lot of the challenges that are coming through with that were, were really about the business practices that founders were going through. There were challenges with facilities. Facilities are no doubt a real challenge that a lot of microschool founders deal with, especially at the front end of their process. But I think a lot of what we're seeing in the process has been the business fundamentals. And how do you help schools make sure that they have the right pricing strategy, make sure that their tuition is actually going to lead them to net income and that they are, they have good accounting practices. And what I think Bill and my team probably have said, we've said this to each other so many times, it's kind of hilarious at this point. But how much this reminds us of the early days of charter schools where there's so much energy and there's so many ideas and there's so many great people that are flowing into the the area. But the challenge of really having good business fundamentals, business practices, making sure that people are doing things the right way so that they are positioned to grow and positioned to scale and aren't taking on lots of credit card debt or taking out their 401ks and things like that, it's been a real learning curve around that.

Michael Horn

Well, so that actually is a question that I'm glad you, you just sort of alluded to that, Raphael, because something that I've observed is a lot of these school founders, microschool founders in some cases seem uninterested or uncomfortable with the idea of a business model and they're not necessarily thinking about sustainability. So I guess my curiosity plays into that, like how did you whittle from 53 applications to the eight or nine that will get it? What's the criteria you're using there? And I guess the second part of the question is why do loans instead of say, grants to these folks that you ultimately choose?

Raphael Gang

Yeah, Bill, I mean, you can talk about the rigor of your process. I think that's actually been one of the things that I think is the best thing about this product.

Bill Hansen

Yeah, number one, we're just very, very fortunate to have a terrific leader inside our organization, Allison Serafin, who is just, I can't even tell you the countless hours she spent. You know, I've actually lost Allison, who is our, she is our executive for all of our business development work. But she also happens to be probably one of the most detail oriented individuals I've ever worked with. And that's just been incredibly important as she's been pouring through these applications. But she also has the boots on the ground expertise of, you know, being in a school, serving on the state Board of Education in Nevada and others. And just really I think has the vision as well of understanding what the capacity building tools and the technical assistance needs are going to be of these schools and really what success can look like with these potential applicants. So even though we have our matrix and our different indicators of success, a lot of this is also just Allison's eyeball to eyeball contact with each of these organizations. And again, I just, I don't want to lose that and you know, what our diligence process has been about, but really just, you know, having that boots on the ground ability to understand, you know, what success, you know, can look like.

And really. And also I would just even say that it hasn't just been your typical banking approval process. I think the technical assistance that, you know, we've even been able to provide in schools, even those that, you know, maybe ended up on the cutting room floor, are still better coming through the process because of the learning along the way as well from what they need as entrepreneurs and small business leaders.

Raphael Gang

Yeah, I think Allison has done an incredible job of kind of, I would say, getting in the mud with the process while still holding, I think, a rigorous bar for what we think are credit worthy applicants. And I think it's that kind of clear as kind of approach where Allison has really adopted this approach. And Bill is, if anything, understating the number of hours when he says countless hours. But like, Allison spent so much time talking one on one with the founders, asking them about their models, getting into the weeds, learning about where, why is this on your balance sheet? Why is this in your budget? How are you structuring this? Why are you doing this? And so it benefits the loan fund overall because I think we now have a much more robust understanding of what the challenges are and what the needs are for these founders. And so we're better positioned as we move forward to provide even better technical assistance and things like that, that. But Allison has told me this repeatedly that there's many founders who ended up not getting loans through our process who at the end of that have said, thank you. Why hasn't anyone told me this till now? And I think that actually gets to your second question, Michael, which is we've really, I, you know, I speak as a member of philanthropy, so it's kind of like. But I think there's a way in which philanthropy can do itself no favors in situations like this, where grants are really great in certain forms of capital to help people start things, to grow things.

It's a great form of risk capital because obviously philanthropy doesn't expect the money back for the most part. But I think philanthropy can get into trouble when it is not thinking about how to create sustainability for the organizations it works with and how to encourage that really at every stage. And I would say, like, I've made this mistake in several partnerships that I've worked on and things like that, where I think we have a tendency to think the money is always going to keep being there. We don't need to have all the details worked out. We don't need to have the solid fundamentals of how is this school, how is this thing going to stand on its own feet at some point? And I think in all of the excitement around microschools and the excitement of, like, oh, look at this really cool environment. Look at this really great founder. Look at this really great community that they've built, I think we have, in certain situations, overlooked, like, well, do they have a viable budget?

Is the founder paying themselves a reasonable salary? You know, I don't think anybody gets into this to make millions of dollars.

Michael Horn

Sure, but it should be a sustainable thing you could do for several years.

Raphael Gang

Yeah, exactly. And so what we saw was, you know, a lot of founders doing great things. They had great families involved. Everybody's excited. And then you look at the business fundamentals of the budget, the cash flow, the reserves, the debt, all of those things. And it was really kind of heartbreaking, candidly, because we really felt like if someone had gotten to these folks earlier and someone had really talked to them and engaged with them and been really clear with them about, like, no, this is what it needs to look like. This is how the numbers need to add up.

This is how to do this. And so Allison has spent a lot of time and a lot of energy and a lot of emotional energy, I think, trying to be both this kind of firm, but firm support, I guess, to help founders through this process of understanding really what does sustainability look like for you? And is this actually going to help you. Is a loan which is, you know, just debt, basically, is that actually going to help you to get to a better place as an organization, or is that actually digging the hole deeper?

Michael Horn

Yeah, it's really interesting. And is this the right capital for you? I'm glad you guys are pushing on this and helping because this has been a big concern I've had with the space and sort of thinking of spaces. Bill, I want to bring you back in here because it's interesting to me that Building Hope has really been synonymous, I think it's fair to say, in the charter school space for a variety of school financing options, helping create custom facilities for charters, providing discounted services on and on. Right. And really just making it much easier to launch and then operate charters. So why move into the microschool space now and do this pilot like why that I won't say shift, but add on. Right. Of another sort of service that you all are providing in another sector.

Bill Hansen

Thanks Michael. I, you know, just came here a little over two years ago just really with agreement with our board that we really wanted to build on what made Building Hope special the previous 20 years. You know, we really helped Washington D.C. almost exclusively for the first 10 years of our existence. And you know, the low cost financing, the, you know, capacity building, the technical assistance, the construction side of things. And you know, and I really wanted to help us expand out, I think just the national. And again, I'll go back to, you know, former deputy Secretary of Education. I just really, you know, and I'm vice president of the State Board of Education of Virginia and just seeing the national landscape changing and also being a grandparent of 17 grandkids and going through Covid just looking for, you know, more choices, more opportunities, more just innovation in the sector.

Exploring Educational Opportunities and Innovation

Bill Hansen

And so I really worked with our board to look for some adjacent opportunities for us, whether it's in higher education with historically black colleges or the for-profit charter space or even other private schools. But you know, to me the microschool program, it's a little personal to, you know, I've got, you know, one of my daughters with five kids during, you know, Covid pulled her kids out of school, public school system and started homeschooling them. And you know, she was kind of led through a journey of, you know, cooperative schools and working with some religiously affiliated schools a couple days a week. But you know, really it was wonderful to see her entrepreneurial spirit kind of kick in, but also just the like minded, mostly mothers who you know, were trying to do the same thing. And you know, so I just am really grateful that you know, Building Hope, I feel like, you know, really the first 10 years, the second 10 years, also working with really important philanthropic leaders like the Albertson Foundation where I think we've revolutionized what's happened in Idaho and also in the state of Florida where we administer the School of Hope program there. Really just looking to, you know, take our capabilities and you know, large districts like D.C. large states, philanthropy, and just make a deeper impact across the board.

And so just I actually remember our first meeting, at a restaurant at National Airport. You know, and it just, you know, looking to, you know, these like minded folks that are really trying to change the landscape and to really, you know, help build opportunity for just, you know, and to really build upon the, the national landscape, that's just, I just think it's not going to turn around. I think, you know, we just have got to figure out how can we accelerate and amplify and, you know, the demand if it's out there and really bring, you know, different choices to, you know, families that have very different needs and very different approaches to, you know, how they want to educate their children.

Michael Horn

Well said, well said. So we've said multiple times, this is a pilot you're aiming to learn. You sort of dropped in some of those lessons along the way. But I want to more clearly ask the question, so I don't neglect that, of what are you learning? What are the big takeaways, lessons, anything that surprised you, uses of capital to something else. You know, you tell me what's jumped out. Raphael, why don't you kick us off?

Raphael Gang

Yeah, no, I mean, I think the big learnings have been that this business fundamentals question is really the core. And I think the same way it was the core question for the growth of charter schools. It's kind of the unsung story within the charter school sector is the work that folks like Building Hope did over the last 25 years. People don't talk about it, but it's like, yeah, that's how you build the new building. That's how you serve a thousand more kids here and 500 more kids here and all that kind of stuff. And it started, you know, people see the building and think that the building was the thing. It started with the business fundamentals being great. It started with families being there, but them having a really strong operating model and being clear about how they were going to make it work and how they were going to grow sustainably.

Promoting Sustainable Education Initiatives

Raphael Gang

And so I think that's the number one takeaway for me is we need to really think hard about how we encourage that sustainability on the front end. It's really hard once people are operating and if they're in debt or if they're in a bad lease or if they're in a bad situation around their finances, it's really hard to dig out of that, especially at the scale that folks are operating at. So I think we're really thinking long and hard about what does technical assistance look like in the future and also how do we encourage on a kind of more sector wide basis. And I think this is where thought leadership and some of the work that we're excited to do with Building Hope and the team comes in is how do we communicate what we're seeing? Like, this is what a good budget looks like, this is what a good net income looks like. This is what pricing and tuition models need to be. And there's people that have been doing this kind of work in charter schools and in private schools, right? You've got folks like, you know, Charter School Growth Fund and things like that. And you've also got folks like the Drexel Fund in the private school space that have done great work in both of these worlds around, like, how do you help people start strong? And I think what's really great about this is we now have data, we now have really strong data that tells us what does it look like to start strong and where we go from there. I think the other thing that I would say has been a big insight is that there's clearly demand.

Like people want this and people are excited about this. 250 interest forms, we had a hundred people on the webinar. We've gotten continued interest pretty much every week. We're getting people signing up and being like, when's it going to reopen? When's this going to happen? When's that? So I think we've found, you know, that was a question that I got internally is like, is anybody going to show up to this? Like, is this, you know, like, who's going to come to the party? And I was like, well, I'm not sure, but we're going to find out. And I feel like we had, we had a good party. We had a lot of people come to the party. And I think that feels really validating. And so the question is what? You know, how do we make that a great party where everybody leaves feeling great and feeling like they got what they, you know, they got some good food, they got some snacks, they're feeling bellies full, but they're not waking up the next day hungover, right? They're feeling good about where this thing is going to head.

Raphael Gang

And so I think that that feels really validating and good to kind of build the base of it. And I think the last thing I would say is that, you know, this project doesn't happen without the partners that we have. We had a bunch of partners that came together, the Curry Foundation, Building Hope, our team. But there's a lot of folks that were in this that were doing this work. You know, the Wildflower Schools foundation, they have been operating their own loan fund. We learned a tremendous amount from them about how they operate that fund and what is, you know, what does it look like? So we've been fortunate to kind of build on the backs of the work that Building Hope has done to date with charters and things like that. And so it's about learning lessons, but how do we really take those lessons and apply them appropriately to this very niche kind of group of people who, I think, for a long period of time, have essentially operated outside the needs of, like, actually getting capital.

Like, this is a very scrappy group of people. I mean, Bill's daughter included, right. Of like, you know, it's like, these are not people that call themselves entrepreneurs. They're not people that are like, I'm going to go out and build the next, you know, name your favorite school. Right. These are folks that were like, my kids were suffering during COVID and this is not working.

I need to build something better for them. And they didn't really realize it until after the fact. It's like, oh, there's like, 25 kids showing up at my house every day. Or, you know, we're doing something. Yeah. But to take that and that energy and turn it into a fundamentally sound business, I think that's the kind of head space that we're. You know, I think we're actually talking about really, like, change management. We're talking about changing people's identities of how they look at themselves.

Raphael Gang

Because a lot of the folks we're talking to, they're like, why would I need a loan? I'm not a. You know, I'm not a business. I'm not a. I'm not. I'm not one of those fancy people on Wall Street. I'm a mom who built something for my kids, and it just grew a little bit. And you're like, well, you got revenue in the hundreds of thousands of dollars.

You're looking like a business to me. So I think that's a big part of it is how do we help guide people through that process of something that's very different and make sure that they're ready for it. Right. We're not trying to set people up for failure. We're really trying to help people. But that's a big change for people to go through mentally and business wise.

Michael Horn

No, that makes sense. So let me ask a few lightning round questions as we start to wrap up here. And the first one would be, you both have mentioned other partners at the table, right? You mentioned Vela. You mentioned the National Microschooling Center. There's Wildflower. You mentioned. There's KaiPod. Right.

That will support entrepreneurs launching microschools. They're all doing different pieces of the puzzle. How does this vehicle fit in with all those different partners?

Raphael Gang

Yeah, I can go. I think we see it as an accelerant for everything that everyone else is doing. We see it as fuel on the fire. Right. Where we're adding a new perspective that hasn't really been at the table to date. Right. Wildflower has been doing it for their own folks. But we want to create something that really influences the sector and says, hey, this is what strong, sustainable microschools, or micro ventures, whatever they call themselves are.

Loan Partnership for Scalable Growth

Raphael Gang

And we chose this to be a loan, not a grant, because we know Vela is doing incredible work around that. And we wanted to do something that was really scalable and that we could grow. And that's why we were looking for a partner like Bill and the Building Hope team, because we knew that it was, you know, I might have my own kids and love, want to send them to a microschool, but I am not a finance expert. And we need, we need the expertise that these folks that the Building Hope team brings if we're going to really make a dent across the sector and make, you know, entrepreneurship available to so many more people.

Michael Horn

And I'm curious, Bill, from your perspective, like, another lightning round question of, like, who else should be at the table, you know, philanthropically? Like, what. What else do we need? What are the missing lanes that you're observing? You've seen lots of sectors, both in K12 and higher ed crest, and either make it or not. What. What other things should we be looking at?

Bill Hansen

It's both, you know, breadth and depth. I think as we learn, you know, it's gonna. We're gonna need to go deeper. You know, we're just, you know, one spoke in the, you know, the wheel of, even in the, you know, financial, operational and services side of the house, and I think philanthropy as well. And, you know, one thing we've learned too, I just think, and again, I really appreciate what Raphael said about, you know, just even the outreach to get this thing launched. You know, we did not run a national campaign.

We wanted to keep this manageable. We didn't want to tip over. We wanted to make sure, you know, that we were able to, you know, get a learning process in place. But, you know, but just a couple of things. You know, I don't think we had a viable applicant out of Texas or Florida, for example, but, you know, Virginia, which, you know, again, my home state is not a very positive charter school state. It's usually in, you know, the DRF category. And, but, you know, it's actually been at the lead here in terms of what we've approved. And I think that that's also going to be, you know, as we kind of dig into this, you know, I think we're going to see some things maybe geographically that, you know, will really lead us to different types of partners and, you know, where we are geographically and you know, possibly as well with, you know, I think there's, you know, just a strong infrastructure of, you know, women owned businesses, you know, leaders that I think that is a key to this sector.

And so I think, you know, there's going to be a lot that we're going to learn that might draw in, you know, those folks that, you know, maybe it's also maybe the SBA or, you know, some federal or state or other type of partners that could come into this. And, you know, just one other area too. I still feel like the regulatory beast out there of what these entrepreneurs have to overcome is an area as well where I think just getting some of that and, you know, Building Hope does that to some extent. But there's a lot of other regulatory and other challenges that are out there that I think could, you know, really attract some other partners to really help bring these and, you know, playbooks and whatnot to, you know, the entrepreneurs out there.

Michael Horn

Amen to that. Amen to that. Okay, last question, which probably just a one word answer, but you may both have a little bit more, which is you've done the pilot. Will there be another fund? Are we going to pony up for more?

Raphael Gang

Fingers crossed, yes.

Michael Horn

Fingers crossed, yes.

Raphael Gang

Yes. That is the goal. That is our goal that we want, we want to see that we want to make this even more available to more folks. And if anything, we want to go further on things like technical assistance, make it easier and faster for people to get feedback and be ready for capital.

Michael Horn

Terrific stuff. Terrific stuff, Bill.

Collaborative Growth: Foundational Years Ahead

Bill Hansen

Yeah, just the same, I just, you know, and again, I think getting the proof of, just to where, bringing other businesses and entrepreneurs, nonprofits, you know, to the table is going to be critical. So, I just, and again, I think the, hopefully the horse is out of the barn on this and, and just, again, if, how we can corral that and marshal the resources and the partnerships to really help us get where we all want to be in the next three to five years. And I do think the next three to five years are going to be really important in setting the foundation for this movement. And so just I agree. I should have just stopped the fingers crossed as well, but.

Michael Horn

No, but it's a critical time. I appreciate the role you both are playing, not just obviously with this fund, but throughout the whole ecosystem as we think about getting the structures in place so that this is not just sort of a small part of the offering, but it's a bigger part of the menu of choices that families have to make the progress that they need for their kids.

The Future of Education is a reader-supported publication. To receive new posts and support my work, consider becoming a free or paid subscriber.

Callie Riley of Cambiar Education, Ashley Beckner of Lemnis, and Matt Haldeman of DCDO join me to explore the evolving landscape of funding mechanisms for education organizations. Our conversation dove deep into the limitations of traditional nonprofit and for-profit funding pathways, as we highlighted how new, creative financing models can unlock greater impact, sustainability, and innovation. The guests shared insights from their respective organizations and discussed the need to expand the “menu” of capital options, especially for nonprofits navigating growth and scaling challenges. I see this as the beginning of a series of important conversations we need to be having—and hopefully we’ll see more of these folks discussing this in other venues over the next couple years.

Michael Horn

Welcome to the Future of Education. I'm Michael Horn. You're joining the show where we are dedicated to creating a world in which all individuals can build their passions, fulfill their potential, and live lives of purpose, which we are not anywhere close to, sadly. But the folks that we're going to talk to today are dedicated to helping create that world. We're going to hear more about that. But I want to give a little bit more of an intro than I normally do to these conversations because we're going to be talking a lot about the mechanisms for funding education organizations, both for profit and nonprofit. And as I see it, those mechanisms have expanded in some creative ways over the last several years.

Exploring Nonprofit vs. For-Profit Paths

And yet, in my view, there are still too many limitations from the available funding vehicles that exist that sort of constrain or compel these organizations to act in certain ways that either might not be in their interest or frankly, the interest of the positive impact that they hope to ultimately have. I've written about this before (see here). If you subscribe to my substack, you've read it. But I'm also not the only one who feels that way. And our three guests today are all working to offer different forms of financing in the market to really achieve a variety of aims. And our purpose today is to start to unpack how enlarging the pie for these different vehicles and introducing these different types of funding models can help several different groups. One of those is existing nonprofits in the education space. A second would be founders or entrepreneurs who are starting an education organization.

And they feel like they have to debate between non profit on the one hand and for profit, and then feeling like if they go for the for profit route, that that necessarily implies that they're going to have to take VC money at some point. And then the third, of course, is funders themselves, folks looking to deploy capital and get some combination of perhaps market returns and, or impact, whether philanthropically or through some other vehicle. And our purpose in today's conversation is really to unpack at a high level the opportunities for each of these folks, why the work that my three guests are doing could be exciting, why the status quo perhaps is a little too limiting and, and understand if these visions, you know, if, if what they're painting is so exciting, why isn't it happening quicker? What are the barriers to really realizing them? And I will say all of us, all four of us in today's conversation, we hope that if you're tuning in, if you're listening and you get excited by any of this, or you have questions about any of this that you'll reach out so that we can continue and frankly deepen the conversation significantly. Because I think it's fair to say that we all believe that there are some really exciting organizations that exist today that are doing breakthrough work on their teams that would benefit from alternative capital sources or structures and that there's going to be new organizations to come that could benefit from these things as well. And some folks might be very happy also with the status quo. This is not a sort of anti, it's a how do we enlarge the pie conversation. So with that as a longer prelude than usual on the show, let me introduce our guests. We've got Callie Riley.

She's the managing director at Cambiar Education and nonprofit education venture studio that is focused on student success for all. Cambiar has a goal of enabling a life changing impact for 1 million of the most vulnerable youth through their efforts. They do this through both supporting entrepreneurs to develop, pilot and scale their bold ideas, as well as to directly run initiatives that they do that build entrepreneurship, critical partnerships and innovative communities. So, Callie, great to see you. Thanks for joining.

Callie Riley

Thanks for having me, Michael.

Michael Horn

Yeah, you bet. And then our second guest is Ashley Beckner. She's managing director at Lemnis, a public charity that was recently established following the sale of the majority of NWEA's assets to HMH. Lemnis envisions a future of the unlimited learner where every young person can thrive in a time of dramatic change. Certainly describes right now. And they invest in and partner with organizations that share a vision for this future. So Ashley, good to see you.

Ashley Beckner

Thanks Michael. Excited to be here.

Michael Horn

Yeah, no, I'm glad to have you as well. And then our third is Matt Haldeman. He's the founder of DCDO, which stands for Dot Com Dot Org. It's a mission-driven organization that invests exclusively in nonprofits. And DCDO recently partnered with Lumos capital to help 501c3s increase their impact by transitioning into a public benefit corporation or spinning out a separate for profit entity. So Matt, great to see you.

Matt Haldeman

Thanks, Michael. Looking forward to the conversation.

Michael Horn

Yeah. And hopefully you all feel that way at the end of it as well. So let's, let's dive in. I actually want, like I said, a bunch of words, but I'd love you to deepen what I just said and in the introductions of each of you and talk really about the models that you've set up or are in the process of setting up and really the mechanics of how they work, who they're for, and so forth. Why don't we go in order of how I just introduced you, Callie, Ashley, and then Matt.

Student Success Through Nonprofit Investment

Callie Riley

Thanks Michael. I'll try to make this as short as I possibly can without all of my normal slides. So Michael gave a great introduction overview of Cambiar and my portfolio at Cambiar is focused on enabling 20 million students to experience directly or indirectly nonprofit-developed, high-quality instructional materials leading to increased positive student outcomes, particularly at the margins. So we're doing this by investing in key nonprofit HQIM developers to demonstrate the impact and increase the scale of their products and services as well as strengthening the sustainability of their organizations overall because we believe they're critical to keeping the sea level of quality high in the curriculum ecosystem. So critical to this has been the development of our Impact First HQIM Accelerator Fund officially launched this year, which has a range of investment vehicles that we can stack to provide long-term, patient, cost-effective, flexible capital to support scaling and sustainability of the nonprofits we support and incentivize key behavior and business shifts. So these vehicles include that we are able to stack operating grants, which use more flexible catalytic dollars to build capacity for newer but essential business operations, exploratory efforts such as early R and D for new products, convertible grants—so used primarily to drive shorter-term revenue, profit growth like new product development, new strategies essential to high growth opportunities, core operational shifts in their business models but with near-term metrics to drive innovation on time delivery and budget efficiencies and then two vehicles to support longer-term plans and strategic initiatives that are essential to impact scale and sustainability. The first is low-interest term loans never above half the market rate with very favorable repayment terms used primarily to fund organizations within their risk adjusted debt capacity. And the second is a recoverable loan so used primarily to fund organizations beyond their debt capacity.

And again, we combine those together. We engage in a pretty intensive strategy —operational financial diligence—with organizations that meet our pipeline criteria. So nonprofit core HQIM is starting an ELA in science right now to assess their long term plans, corresponding to the need debt capacity to create that package that we believe will help them reach their long term goals. And I'd be remiss that I didn't mention, too, that as part of the way we think about our investment package, we're also providing support in the way of complementary research and evaluation investments for all those who we invest in so they can help them demonstrate their impact and efficacy of their products and services as well as technical assistance and capacity building for the duration of our multi year partnership.

Michael Horn

Awesome. Actually before Ashley, you get in just two quick follow-ups there.

I think it's interesting the research piece because that's a huge hole we always hear is right like entrepreneurs, they want to show the impact but they can't. So I'd love you just to quickly double click on what that looks like and then the second one is on the loans that you're offering. You said long-term planning. Long term. Right. Sustainability. Like what are the timelines of those loans typically?

Callie Riley

Yeah, so I'll take it from the loan. And so those are looking at five year loans but not with principal repayment until after that five year mark. And so I think that's critical when we talk about this idea of favorable terms too and below market rate. So right now we're pegging that at 3%. And then on research and evaluation we just think having a strong, incredible evidence base to demonstrate impact of products is so incredibly important and needed in the field. We're hearing more and more of that from systems leaders. And so we are about to actually contract with a common evaluation partner that will work with every single organization that we have in our portfolio to design those research studies hand in hand. We'll have intensive co design, there'll be multi year studies and also allow us to think about trends across the portfolio and what we're learning to share out with the field about what we're learning, what we see and hopefully to really galvanize additional funders to invest more in R and D in the long term.

Michael Horn

Fascinating. All right, Ashley, sorry to jump in there before you get your answer, but I'd love to hear what you all are doing.

Ashley Beckner

All good, all good. I liked hearing it as well. Well, as you mentioned in my intro, Lemnis is a public charity that invests in mission aligned organizations dedicated to supporting this future where every learner can thrive in a time of dramatic change. And our approach in general was formed out of our board and our leadership team's experience running this large-scale nonprofit and thinking about kind of the type of capital that would have been helpful to them over the years to expand their impact. So I lead our Lemnis Collective, which is a specific area of the organization that brings those mission aligned organizations, both for profits and nonprofits, wholly under the Lemnis umbrella through mergers and acquisitions. Our goal is really to provide patient capital, long term stability, operational and strategic support and really allow organizations to focus on their mission, growth, impact and innovation and just be kind of an alternative capital source for orgs that may not fit with or may not want something that, that you talked about up front. The more traditional sources of capital. We're generally looking for partners with between 10 and 100 million in annual revenue, I know that's a pretty wide range.

Nonprofit Growth and Community Impact

Ashley Beckner

And when we're talking about nonprofits, we're really talking about earned revenue and thinking about business models where they want to leverage our capital for investments in growth and R and D. Right. So we're really looking for sustainable impact that we can supercharge with growth and innovation capital. And then from an impact perspective, as we think about the future of the unlimited learner, our team and our board has put a ton of thought and just kind of what we believe the world needs for that future. And one of the key things that we keep coming back to is really an emphasis on belonging and community, really creating that foundational component of holistic sense of well being that learners can build from in order to thrive and then helping learners build kind of those durable skills that stick over the long term as we enter this, well, I don't know if we're entering, if we're in it, but this time of dramatic change.

Michael Horn

Yeah. Again, I'll Matt, before you jump in, just a couple of follow ups. Ashley. One—so the 10 million to 100 million, like just so people are clear, that means not that you fundraised that last year, but that you have like a recurring model that charges customers, in other words, and is bringing that in. Is that right?

Ashley Beckner

Correct? Correct. Recurring revenue. Yes.

Michael Horn

Okay. And then the second question is when you talk about belonging, community, durable skills, is that across the education ecosystem, is that like, like as opposed to HQIM, which is K12 focused, are you looking at a K12, higher ed, workforce, like where do you draw those boundaries?

Ashley Beckner

Yeah, thinking about it pretty expansively. So definitely across K12, higher ed and workforce, when we think about belonging and community and the kinds of experiences and opportunities that we want to support learners with, a lot of where we think we can add value there, starts more in adolescence. So we talk about learners ages 10 to 26. But we know that, you know, many companies and organizations who operate in K12 don't decide that their work starts at the age of 10. So we're really open across that spectrum.

Michael Horn

Perfect. All right, Matt, dive in. Your turn to talk about what you are up to.

Matt Haldeman

Great. So 20 years ago, I'm a classroom teacher in the Bronx and I'm teaching a 14 year old how to read and we're sitting side by side and we're reading Hop on Pop. And he takes the book and he slams it on the ground and he says, Mr. Haldeman, this is a book for babies. And I totally understood why this teenager didn't want to read Dr. Seuss, but it was the only book I had in my whole classroom library that was at his level. And two years ago, I was introduced to this amazing nonprofit organization called Story Shares that had a library of books to solve the problem. Basically beginning decodable readers, but with themes and protagonists that would appeal to older students.

And I fell in love with the organization. And the founder of this nonprofit had a million great ideas, but she needed capital to make them happen. And so at the end of 2023, we made a deal. I invested in the company and we transitioned to a public benefit corporation, a mission driven for profit. It was about 18 months ago, and today we're about 50 times larger than we were at that time. It's simultaneously probably the best investment I've ever made. And then the impact that we've had, I'm extraordinarily passionate about. And it was such a great experience that I recently partnered with Lumos Capital.

And if you don't know, Lumos, they're a well respected investment firm. And they focus on education, learning, and workforce development. And together we're looking for investment opportunities exclusively in the nonprofit sector. So we're in search of nonprofit organizations that need some unrestricted capital to dramatically scale their impact. So perhaps leadership wants to go after some new products or develop a new product suite. Perhaps they're looking for additional support with distribution, marketing, or to compete with for profit competitors. Whatever the opportunity, we're looking for those investment opportunities, and then our goal is to both invest and then support the organization as it scales its impact.

Defining Funding Model Challenges

Michael Horn

Very cool. Okay, super helpful. Let's dive in. We did a much longer prelude up front than I'm used to, but I think it was really valuable for folks to start to, like, envision what this can look like. But I want to get a little bit into the problem like you, you know, you're all taking slightly different approaches, right, to these questions of different sources of capital, different structures for organizations. And I'd love us to start to like, define what is the problem that in your mind we're trying to solve. I talked a little bit about limitations of existing funding models, but like, let's sharpen that. What barriers do those actually create? And what is the status quo as you all see it, and why is it important to start to change that? In specific, Matt, maybe you lead off on this and we'll work backwards.

Matt Haldeman

Sure, sure. So the way I think about the status quo is the following. I bet somewhere there's a non profit leadership team right now. And let's imagine they're gathered in front of a whiteboard and they know what they're doing is working. And they say, all right, what are our strategies to scale this, significantly scale this? So they get out the whiteboard and they write sources of capital on the top and they write two things. So number one, they write earned revenue, and number two, they write philanthropy and they're done. They're like, all right, those are the two levers we have to really, to really raise capital.

And I think those are two great options. But really, maybe there are 10 options. And included in that list should be debt, joint ventures, mergers, IP licenses, revenue sharing, partnerships, and transitioning to a public benefit corporate operation. For my ultimate goal is to see that list of levers grow from 2 to 7, 8, 9, 10, that kind of thing. And when you talk, you asked about limitations, and when I tell people what I do around non profit investment, they usually expect me to say something like, oh yeah, the for profit model is just better. It's more nimble, something like that. And let me say really unequivocally, it's not. I've seen great performing non profits and great performing for profits, and I've also seen low performing on both sides.

But there are trade offs to both and there are limitations to both. And let me just talk, I'll just name three limitations to the nonprofit model. So number one, unless they have huge amounts of cash in the bank, most non profits can't operate at a loss over multiple years. For example, if you're in a really crowded space and you're trying to offer uber competitive pricing to build out market share, that can be a challenge. So that's limitation number one. Limitation number two is that most of the time nonprofits can't raise large amounts. I'm talking about seven or eight figures of unrestricted capital to finance a pivot or enter a new market or something like that. And then the third limitation is that nonprofits by definition can't give employees a chance to be owners in their own organization.

So at the end of the day, that's what we're looking for. We're looking for non profits where one or more of those limitations is getting in the way of them scaling their own mission.

Michael Horn

Super interesting. And it occurs to me as you're going through those, at least the first two, Callie, you're also like tackling that. So maybe you jump in next and then Ashley come in after that.

Callie Riley

Yeah, I was going to say I feel like what Matt named is also part of what we're trying to solve for. So obviously we're starting with high quality instructional materials, but really we're thinking about nonprofit financial sustainability overall. So we believe that sustainability and scalability, at least in the HQIM industry, requires patient long term growth capital that nonprofits don't typically have access to as Matt named. And it makes competing at scale really challenging. And we see those challenges as coming in really about four forms. One is that growth capital there's nowhere limited access to growth capital or equity like investments to support scale. Typical growth capital has meaningful potential returns to offset risk. Long term patient capital is not readily available to fund the investments needed to successfully scale an HQIM.

The second is access to debt. We think debt is really important. Existing standard market debt instruments beyond working capital lines are just not an optimal fit for most nonprofits in HQIM or I would argue most of the education ecosystem because there's limited ability to generate returns on capital over a short term period. Standard payback periods are too short, market interest rates are too high. I mentioned how we're trying to peg our terms too. The third is around innovation. The ability to drive impact through innovation and timely reinvestment we see as muted like limiting many organizations ability to compete with for profit counterparts.

So that means resource allocation decisions are made without the benefit of long term planning. This one is really key is that we want them to be able to make great decisions with enough time. Right. And creating and scaling HQIM requires a long investment cycle infrastructure. We're talking several years and then finally is around philanthropy. So philanthropy has historically funded projects versus business plans and funding for projects that include innovative product development are absolutely critical. However it doesn't associate or cover the costs associated with scaling and building the infrastructure like sales, marketing, partnerships requires significant capital and time to operationalize and succeed. So I feel like Matt is, we're kind of overlapping here in terms of the problems we're trying to solve from slightly different vantage points.

Michael Horn

Yeah, super interesting. I could go deeper but let's like Ashley, I want to get your voice in this as well.

Ashley Beckner

Yeah, I agree with everything that has been said so far and we'll touch on nonprofits for a minute but since the other folks have shared also we'll dig more into what the challenges I see around the for profit business model as well.

Michael Horn

Yep.

Expanding Creative Funding Solutions

Ashley Beckner

So similar to other folks I don't think there's any like specific problem with the capital tools that exist today. It's more that it's not a universe that is expansive enough for the sector in which we operate. That requires just more creative thinking and in terms of how we fund. Michael, like you shared up top too. I've had more conversations than I can count with impact driven entrepreneurs who ask the question like, here's what I want to achieve. Should I be a non-profit or should I be a for-profit? And that essentially means should I raise grant funding or should I raise venture capital funding? And I think to the things that Callie just shared, right? If you're talking about philanthropic funding, there are some incredible philanthropic funders that write big checks and stay around for the long term. But that really is completely dependent on just the people that are there desiring to do that. There's no mechanism that makes term nature happen. On the flip side, venture, you know, there's, there's companies out there that have raised, you know, maybe a round or two from venture.

They've gotten to a certain point and just the nature of the education sector has driven the growth to stagnate. Certain things to happen that create a condition where they're no longer able to access that additional funding. And so they have options on the table. Yes, there's strategic acquisition, but maybe there's more innovation and growth that's possible there with an alternative capital source. And that's really who we want to be. We want to say that if there's still impact there, like we're willing to get behind it and see what's possible with the next phase following this kind of point of growth or inflection that these organizations are reaching.

Michael Horn

And it's interesting off that, like a couple of thoughts occur to me, but one of them, Ashley, is like there's an implication that like there's something untapped in what they're doing or that they could be doing that's apart from the growth question. But they can't access it because the limited growth and you might even say, hey, it's cool if you stay at the 40, $50 million revenue. But what we're really interested in is unlocking this new thing that you could be doing or something with R and D or something like that. Is that the right way to think about why they would get exciting to you?

Ashley Beckner

Exactly. I mean, I think we're thinking about impact and I don't think that impact only comes in the form of a billion dollar company. Right. Like, let's keep those smaller solutions alive in the places where they make sense. And we can do that. And unlike forms of cap, other forms of capital, our commitment isn't time bound.

Michael Horn

It's super interesting. And Callie, it seems to me like your answer to some of that is, well, we're giving the, for the nonprofits that want to stay as nonprofits, we're giving you an avenue to fruitfully do that. It's not that the for profit structure might be wrong for you, but if you go through the trade offs and you feel like no nonprofit's still where it's at, we're at least creating a vehicle that. Is that the right way to think about like the three of you almost as a menu?

Callie Riley

Yeah, for me, I mean, Michael, I think that's a really good observation and just like kind of stringing us together because we want them to be able to have the right capital to make those decisions and what's right for them ultimately in the long run too. And so we'd love for these nonprofits to stay nonprofit. We think they have incredible value. But if they need to move in a different direction eventually after we, you know, kind of end our very long term, multi year investment, that's up to them. But we want them to be able to make those decisions in the right way.

Michael Horn

And from positions of strength, I guess so

Callie Riley

100% yeah.

Michael Horn

Yeah. So let's talk about what this could start to enable then. And like, so that's the problem space we're living in. We started to allude to some of what this could unlock for these teams. Ashley, why don't you lead us off? Like what, where do you see this could go if we have these different menus on the table for organizations, what could it start to enable that perhaps is not being enabled right now?

Ashley Beckner

Yeah, I don't think we really know yet because the options haven't been there. So I'm excited to see what's possible with these new forms of capital coming to fruition. I think maybe some choices that have been made historically again where companies have either sold to a strategic or the choices that have been made inside nonprofits for how they get to their next step or haven't been made because they haven't had the capital to do it, that if we start to see new access to capital, I don't know that we know what's possible with that kind of shift.

Michael Horn

Matt, let's get you in here. What do you think this could enable? What's your view of it?

Matt Haldeman

Yeah, I think the really unfortunate thing is that, you know, whether it's business or politics or education, the best stuff doesn't always win. Like typically oftentimes it's this question of how much did you fundraise? And that's how we determine who the winners and losers are. Which means that there's all of this awesome under the radar stuff that kind of gets left by the wayside. Like I'll give you an example. I'm talking to a charter management organization and here's what happened. So a school leader noticed an issue in her school and worked with her team to design a solution within those four walls. It works so well that they spread it throughout the entire school network. Now they have this great battle tested idea.

They know it works and the question is how do we really expand it? How do we, how do we really broaden it? And I love what you said about menu. I really like that we did this as a panel. And one of the things, one of the things I live in fear of is that someone is going to hear about what I'm doing and saying that. I'm saying, well, you know, this is better than what Ashley and Callie are doing or better than traditional philanthropy or traditional venture capital. No, it's a menu. You get to decide what's right for you. But at the end of the day, it really is all about mission amplification. Lumos and I haven't really talked a lot about what we're doing publicly, but internally when we talk about what we're doing, we call it Project Echo.

And the idea is that you take something that works, that under the radar solution and it just kind of reverberates out and out now.

Michael Horn

Very cool. All right, Callie, get in there.

Innovative Nonprofit Financing Model

Callie Riley

Yeah. So I think Matt and Ashley have had great answers so far and I guess I'm just going to double down on the idea that like we're really hoping to continue and start this conversation or continue this conversation about what we do around the messy middle right between grants and traditional debt, especially around nonprofit financing. We're starting an HQIM, but we know that these are pervasive issues around any products and service focused organization that are in critical growth stages where they're building earned revenue, they're building new models that will lead them towards sustainability, but they're not there yet. And so the way that we're functioning is similar to an equity investor. We're investing in an organization's long term vision and plan and sustainability versus those specific projects with targeted outcomes. And so we're just excited about this idea that we're a fund that can provide layered, patient, flexible funding options that address current gaps in the capital markets and allow for that long term planning that we were speaking about earlier and to what Ashley was saying too. Ultimately with the fund, the way that our model is, we're willing to share in the risk with our investment organizations. And I think that's really necessary as we're exploring these innovative financing models is knowing that there is risk there.

But it's the exciting kind. Right. Where we're learning a lot along the way with these organizations about what's working, what do they need in order to really reach sustainability and scale of their products and services in their organizations overall.

Michael Horn

Yeah. And it strikes me on the high quality instructional material space that you've chosen in particular, there's been sort of, I don't want to say consensus, but like growing excitement around that space over the last call it five years and maybe a little bit longer, but without probably you all there and some other funders, it's not clear that the organizations would be, would, would be there to match sort of this burgeoning demand that we see for this space. That's sort of my outside perspective.

Callie Riley

Yeah, I mean I've been really lucky to be in a traditional philanthropic organization where HQIM was one of the big portfolios And I spent many years doing that. But we can see that there was something that was needed beyond. And I think there's a really key part here where it's, we ask a lot of times brilliant academic leaders with these wonderful ideas to become brilliant business leaders at the same time they're trying to grow the organizations without the necessary long term capital and other types of technical assistance and capacity building support. And so I'd like to challenge us all too to continue to think, and I think Ashley and Matt are doing this as well. But like, what does it look like when we think about comprehensive support? It's not just the funding. Right. It really is things like coaching, TA, access to other networks that I think the research evaluation work that I mentioned that make all these investments sing ultimately for the organizations we're supporting.

Michael Horn

Yeah. And I'm excited about what you'll learn from that also. Like, where are the limitations in our current understanding and how can we sharpen that as well as we forward? And it strikes me, Matt, like you've started to like answer some of those questions even in the Story Shares, right? Like in terms of like limitations of the existing structure and then like what you learn as you fund that organization, right, to have started to grow a little bit that may have been missing in the traditional landscape. It strikes me from the outside. Let me ask this question, which is as we start to wrap up this conversation, why hasn't this menu existed historically? Like why have we always defaulted into these couple, two, three categories that y' all named at the beginning? Like why isn't the invisible hand working, if you will, and why do you three need to be there to sort of create this? Or are there certain structural barriers that you all feel like you might be fighting against? I don't know who wants to take that first, but I'm really curious to learn on this one.

Ashley Beckner

I'm happy to. Yeah, yeah. I mean, I think there's a longer podcast about whether any part of the education sector really functions with an invisible hand. But setting that piece aside.

Some of it I think is inertia. And, and what we're accustomed to, right there are tools that have been brought into the sector by people who have brought their own experience into that tool from other sectors. And you know, we're coming from the education sector, but we're similarly bringing our experience to the tool that we want to deploy. And I just think in education that there is often a mismatch between long term impact goals and short term investor expectations, like the time horizons just don't match up. And so we're, we're just really emphasizing like thinking about the long term here and, and really thinking about the long game.

Michael Horn

I think that long game is a really important thing because I was reading something else the other day about like divergence, right, in life outcomes and test scores where they don't predict perfectly. And you're like, what's, what's going on there in the divergence? Short term versus long term indicators. We don't have all the things we would like to know. So super exciting. Matt, dive in on, on this. Why isn't it naturally happening?

Private Capital Barriers in Nonprofits

Matt Haldeman

Yeah, so if I think of my specific use case, right. Private capital investment in non profit organizations. If you think about barriers, you got to think about it on both sides. So you know, what is the barrier for non profit organizations that would be open to private capital investment? And then conversely, you know, why are investors who might be interested in investing nonprofits sort of hesitant? So let's talk about the first one. So in the last year I bet I've talked to hundreds of nonprofit leaders and the big issue is that they're worried they can't find investors who are really good stewards of their mission. So imagine a nonprofit founder probably spent decades on a particular mission. That founder doesn't see a penny of any sale or any exit. And so their big question is, you know, are you mission aligned to what we're doing right now? Loomis and I are, we're talking to a non profit organization and we are not the first organization to approach them about an investment.

But the other offers that they received, they just, they didn't have a problem with the valuation, but they did have a problem saying, hey, is this investor going to care as much about the mission as we do? Then on the other side, the reality is, and Ashley, I bet this resonates with you, the space just actually isn't that large. Right. So there are 2 million nonprofits in the U.S., sounds like a huge number. But then you're looking for nonprofits at a certain scale that have a healthy earned revenue percentage and that also are open to this sort of investment. And the space gets pretty narrow pretty quickly. And then the final barrier, which is true to both, is just complexity of the deal. Right.

A conversion from a nonprofit to a public benefit corporation requires substantially more legal and financial oversight in order to really do it properly.

Michael Horn

Yeah, and that's actually what you just said there also the supporting structures you bring to bear to help those nonprofits. I was thinking that with story shares, particularly in light of what Callie, you were saying, like what else can we bring to the table that would help these orgs? But I want your voice in this as well. Why isn't it happening naturally?

Callie Riley

Yeah. So I'm trying to figure out if I start with my agreement with Ashley or my agreement with Matt. So first I'm going to start with my agreement with Ashley, which is just we're in this for the long run, five plus years with the organizations we fund. So patience is key and it requires focusing on the long game. At the end of the day, that's not typically how a lot of grant making cycles work. You know, kind of long typically is like two to three years. Right. And so this is a very different type of situation that we're entering into with these organizations.

Second, it's just really hard work. And what we found when we were developing the fund was that there weren't clear models in the education nonprofit space that combined the various instrument vehicles that we were wanting to use with success based features to utilize. So we built our own. We keyed off of learnings and insights from other smart people in the for profit nonprofit financing space. We identified ways our funding could help mitigate challenges the growth stage nonprofit leaders are typically facing. But that took a long time to build that model and a ton of pressure testing too. To say is this going to work? And then finally deploying these type of stackable investments requires a lot more extensive diligence, especially in the finance side, and frequent ongoing progress monitoring to know how the organizations are progressing against their long term goals. And that's a lot of capacity that's needed.

Philanthropies typically may have capacity on their investments team, but may not actually be structured that way on their program teams. And so introducing something beyond and especially thinking about the kind of the combination of the vehicles is just really complex to do.

Michael Horn

Really interesting. All right, you guys have shed a bunch of light on this. I'm going to throw a curve ball as we just asked this last question, which is actually anything that you want to comment on or make sure we highlight like closing thoughts, sort of choose your own adventure or if in a next conversation so someone wants to take this farther, ask more questions, put more of these vehicles into action. What are, you know, you can tease something that we didn't talk about that you would love to talk about in a future conversation. Take it anywhere you want. Matt, you look least flummoxed by this, so I'm going to ask you to go first and then Callie or Ashley, you can go, you can go back to clean up, if you will.

Matt Haldeman

Sure. So the for profit space is littered with examples of successful pivots, right? Like Microsoft, YouTube, Yelp. These are all very different organizations than the day they were founded. My favorite example is Slack. If you don't know, that company was a video game company that came up with a great internal tool to communicate. The video game failed, but they had this amazing tool and they circulated it and that's now Slack. And here's my question. I can't think of, maybe other

People can, but why aren't there more stories of successful pivots in the nonprofit space? I find that really fascinating and, and a little concerning. Right. And, and that for me is sort of one of my hopes that what, what all three of us are doing, right? A little bit of capital, a little bit of support that allows a nonprofit leader to make a few mistakes, try a couple things, and really hone in on fantastic product market fit.

Michael Horn

That is a good tease. Who wants to go next?

Callie Riley

I'm happy to go next. A little bit more think time. So first of all, I'm just excited to say, like we're on track to finalize our first two investments and so more to come on that. But that's a big deal for us this year. And so while they're not public yet, I just wanted to share a couple of key learnings so far is that not surprisingly, there's a strong appetite for patient and flexible capital in the nonprofit space. And the key is that pre diligence, relationship building, diligence, risk identification, all those things should ultimately all lead to short term and long term metrics that align with the organization's overall long term vision and plan. And we've just learned that the metrics you land on to determine success and will monitor shouldn't feel like a surprise to the organization's leadership.

Boosting Nonprofit Growth and Sustainability

Callie Riley

At the end of the day, it should feel like business and behavioral changes that they also see as good and welcome pushes and driving them towards what we hope are really aspirational goals around demonstrating impact, increasing scale, increasing sustainability. And another thing that I think just came up earlier is that really strongly believe that providing early support to growing and scaling nonprofits, especially in building comprehensive, multi year integrated financial models, is huge. And I'm not sure that's done enough. This is just really important given that most organizations that are nonprofits are primarily relying on grants in the early years. But as earned revenue models, other things come online it gets more complex and it's just a different level of sophistication and planning that needs to happen. So I guess this is my push for any funders that are in our audience around capacity building. This is a really great place to start and a little bit of money can go a long way in setting them up for long term success. And then finally my plug, I guess.

Michael, love to continue this conversation with anybody. It's really great being here with Ashley and Matt and I think we just want to expand the tent of people who are really excited about this kind of work.

Michael Horn

Love it. Ashley, you get to have the final word.

Ashley Beckner

Yeah, great. Three things I'll hit. One, just want to reiterate what came up in this conversation around capacity or capital plus support. So capital alone isn't enough and really we need to bring a lot of support to the table. Two, I don't want people to listen to this and think like, isn't there already a robust set of actors that describe themselves as patient capital? What I would push on as we're talking about the long game is that the patient capital that exists today isn't patient enough for this sector and we need to figure out a way to get even more patient about what's possible while still emphasizing the importance of sustainable impact and then teasing. What I'd love to talk about in the future is just who else is in this messy middle today? I'm sure they're out there, we'd love to talk to them. And how do we bring more people into it because we all have three really exciting models and we're not going to get it done alone. Right.

Like we're going to need a lot more people around this table thinking about what's possible in this messy middle.

Michael Horn

I think that's an excellent couple points to end on. Right. Like having a broader ecosystem that you all can pair up with and braid funding and et cetera. Right. Will help strengthen the sets of options that we're talking about as opposed to one funder doing this thing and or sort of the status quo for a given organization. And the patience piece I think is really important as well because my observation is people love to talk about disruptive innovation. I love it as well. But then like their example is like the Apple iPhone or something like that as opposed to steel which took like 40 years or something like that for disruption to play out.

And I think we should be thinking in like, you know, many decades for education as well. These are not short term structural challenges, these are long term, embedded systems in the fabric of our communities that were there for good reasons at one time. And as they get rethought like that just takes a lot of work and a lot of time and a lot of learnings throughout. So huge thanks. A lot of appetite on my end to continue this conversation. Keep learning and pulling more folks in. But Ashley, Callie, Matt, thank you all for the work you're doing and for all of you tuning in.

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Jorge Elorza, the former mayor of Providence and now CEO of Democrats for Education Reform (DFER), joined me to talk about why it’s imperative in his view to support educational choices for families. Jorge talked about his own struggles as a high school student to becoming a law professor. He explained why he thinks that Democrats have lost their way on education reform, the role of governors and other executives in setting a bold education agenda, and the importance of innovations that empower families and bottoms-up solutions, such as education savings accounts and microschools—as well as how the concept of choice aligns with progressive values. The conversation was fascinating—and frankly the only downside to it was some Internet challenges that occurred during it. Despite those interruptions, I think you’ll enjoy the dialogue. I learned from it—and as always, you can read the transcript for anything that’s hard to hear.

Michael Horn:

Welcome to the Future of Education. I'm Michael Horn. And you're joining the show where we are dedicated to creating a world in which all individuals can build their passions, fulfill their potential, and live lives of purpose, which sadly today remains not the case. But we keep working toward it. And to help us think through that, I'm really excited, actually, for this episode because we have Jorge Alorza, who's the CEO of Democrats for Education Reform. When I got into the world of education, DFER was like it. It was something that we paid a lot of attention to, really excited about. And then Jorge, as you'll hear, wrote a series of pieces, actually, that have caught my attention with the ideas expressed in them and given interviews and so forth to that effect that I thought, hey, something interesting is happening here and important that I want to drill into and understand more. So, Jorge, huge thanks for joining me. Welcome.

Jorge Elorza:

Yeah, it's great to be on here. Thank you for having me.

Jorge’s Journey to the Work

Michael Horn:

Yeah, yeah, you bet. So as I started to allude there, there's a lot of substance that I want to get into. But before we go there, I actually want to start with the personal side of your story and namely your own journey and the path to becoming CEO of Democrats for Education Reform. Because I suspect that the path is not one that know from the outside. People would say, oh, yeah, that tracks. You know, law school professor, mayor of Providence, then CEO of dfer. Talk to us about how you see that journey and how it's made sense from your perspective and in your own personal story.

Jorge Elorza:

Thank you, Michael. So, yeah, if I can, of all places, let me start at the beginning. I'm the son of immigrants, and in my household, from my earliest memories, it was always education, education, education. And, you know, I'd love to say, Michael, that I was that kid that always listened to mom and did the right thing, but I was a bit of a dunce, barely graduated from high school. And, you know, one of the most pivotal moments in my life came my high school graduation. So I barely graduated. I found out I was graduating a week and a half before graduation day. And I'm sitting there, all my friends are celebrating with their families. They're going off to school. I had gotten rejected from everywhere that I applied to. My life was going nowhere. And I had one of those moments where I asked myself, what am I doing? You know, my parents had sacrificed so much. I had let sacrifice blow in vain. And I resolved that I was going to do what I could to turn things around. And it was education that turned my life around. I enrolled at community college. That led me. Then I got a scholarship that it got inner city kids into the state school. That's what got me to college. And then from there, I went to law school, and that set me on this track. So education has always been a core part of, like, who I am and what I believe in. And so I practiced for two years as an attorney, and then I became a law professor. I thought I was going to do that for the rest of my life. I was doing the publishing thing. I had gotten tenure, but there was always an itch to keep one foot in the real world. Right. In the world of doing.

Michael Horn:

Yeah.

Jorge Elorza:

And I was literally minding my business when, you know, the opportunity to run for mayor came up. Folks started approaching me, and at first I was not interested at all, and.

Michael Horn:

But then actually pause there for one second, like, why were they tapping you to run for mayor? Because, like, that doesn't just happen unless you're involved in the community and people see something in you. Right.

Jorge Elorza:

I think a lot of different things. You know, my. My background. I also happen to have a very similar profile to the person who was mayor before me. And so people made a connection. And when I started to see the impact you can have to, you know, move the needle in schools, that's when I got really excited. The interest of. Interested in jumping into the race. And so that's what I did. I jumped into the race. And to be honest with you, I had never been involved in politics, so I wasn't sure or I know what I was jumping into. But sometimes you got to shoot your shot, Trust that you'll figure it out as you go. And that's exactly what I did. I got elected, got reelected, and set out to work on a race, including trying to fix our schools here in Providence.

Michael Horn:

Wow. Wow. And then from there, you finished the time as mayor in 2023, I think it is. And, you know, how does the DFER opportunity come about?

Jorge Elorza:

Yeah. So, you know, I got to tell you that when I first became mayor, I can't say that I came into office waving the ed reform flag, because the truth is, I didn't even know what ed reform was. But, you know, my goal was to fix the traditional public schools where 90% of the kids studied. And over time, you know, I. I came to see just the challenges of reforming these large bureaucratic systems. And over time, I came to believe in and embrace alternatives to the traditional system. So that by the time I left office, I was fully waving the ed reform flag and, you know, calling for the entire district to be charterized here in Providence.

Michael Horn:

Wow.

Jorge Elorza:

And so, and so, you know, I transitioned to the mayor's office. I was term limited. And I remember someone sent me the job posting for DFER that I had never heard of. And I mentioned that to my wife who comes from the ed reform world. And when I told her Democrats for Education Reform, she says, what DFER? And her eyes lit out and she said, you have to look into that. You'll love it. And that started the process. I applied and here I am.

Democrats’ School Choice Imperative

Michael Horn:

Amazing. Amazing. All right, so you get there to, you become CEO. And it feels like to me, the landscape in which DFER was operating at the time you became CEO and it's cloud even felt like very different from say, 15 years earlier when my first book had been published, Disrupting Class. How would you describe the environment in which DFER was operating when you became CEO and sort of its place, if you will, in the ecosystem at that time?

Jorge Elorza:

Yeah, it was a different reality. So DFER was created to, of course, always help policymakers policy wise and politically. And so much of how we operated worked on the assumption that Democrats actually wanted to get something done. But when I came into office, I'm sorry, when I took this position, it had been 10 years since there had been any kind of executive Democratic leadership on education. And so in those intervening 10 years, with the exception of Polis, who, you know, I'm the biggest fan of, with the exception of Governor Polis, there was no executive leadership on education on the left. And so, you know, we had state chapter strategy and approach. And I give a lot of credit to the people who ran those chapters within their state houses. They found places of opportunity. But as everyone who does advocacy will tell you, even under the best of circumstances, it's hard to move good policy. But if the executive is not behind it, it's almost impossible to do meaningful change. And so as an organization, we've taken a step back and, you know, we've been engaging much more with executives. Our theory of change today is that executives are the most important policymakers. They are the ones that set the agenda. They provide the policy guidance, they provide the political cover. And we're working with gubernatorial candidates throughout the country, several sitting governors as well. And what we're trying to do is as much as possible, give them political cover where they need it, but also help them see the opportunities both political and policy wise of embracing a strong reform agenda.

Michael Horn:

Yeah, no, it's a really good point. It's the one I hadn't even thought about in terms of the vacuum that had sort of appeared in the Democrats. But you know, compared to 10 years ago. And Governor Polis is a very good example of someone who is still a stalwart, you know, incredible leader obviously on the issue and to trace back to his own professional background right in the space as well. Of course, in that case, I, I want to jump in then to where you've been leading the organization from a policy and, and sort of what do you put in place standpoint. And you've written a few things that I think have turned some heads and, and, and we'll link to one of them in the transcript in the show notes here. It was a piece on the DFER website titled “It's Time for the Left to Come to the School Choice Table.” And I confess as I read it, there were big sections where I felt like I was reading something that I had written before and like I was like sort of feeling a lot of synergy there. And then there were also some arguments around things that I just didn't know anything about before I read it, frankly, in terms of the history of progressives and some of those things with regards to choice. But I would love you, in your own words, to perhaps share the basic argument behind the piece and the thinking behind school choice and aligning Democrats with it more broadly.

This should not feel as though it's what the bad guys want or something that's foreign to our own principles. We stand for choice in so many other spheres. And the reason why I'm a Democrat is because I've always believed that we look out for the little guy. And I've always believed that if you trust the little guy, if you give families at the agency and the ability to make their own decisions, you know what will happen. We'll make good decisions. And so I think choice very much aligned with our fundamental values.

Jorge Elorza:

Absolutely. And before I jump into the piece, I think it's really important to take a step back and you know, this is my assessment of the world in which we live in today. I believe that we are living to a transitional moment of historic significance. And you know, many leading thinkers are sort of converging around the same point that this is a moment of transition. And Republicans have been a lot faster to react to this moment and perhaps have been flat footed maybe the 15 years though after this last election. This idea that I, you know, it's, you know, the, the logic and the assumption of yesterday, we can't assume that they are going to apply tomorrow is, is real. And so I, I truly do believe that tomorrow is going to look different than today. And while I really appreciate that there are organizations and individuals that are trying to preserve some critical aspects of our existing systems, I also believe that it's important for us to look around the bend and start building what comes next. I think that's really fundamental to everything that we're thinking and that we're working on. And so when it comes to choice, we have always told the party that they're out of step with where their base is on choice. And all of the polling data pulls us up. But like Ben Austin recently said, you don't need polling data. It's like it's so intuitively true, right? Of course it is. And what exists today, that never existed in the past was a political imperative for Democrats to approach education differently. So 10 years ago we had a 26 point advantage on education in terms of voter trust, Democrats over Republicans. Today there are a bunch of different polls on it, but we're underwater. It's not a winning issue for us. And so in this new reality, you know, the truth is that with, with, with voting groups that have drifted away from the party, I'm talking about working class, Black and Brown. This is yet another 80/20 issue that Democrats are on the wrong side of. So I believe that there is a political imperative that exists today around embracing forms of choice that just didn't exist in the past. We never paid a political price for it previously. So with all that said, you know, we're out to make the case that, you know, there's nothing to be scared about with choice. And I think it's really important for Dems, you know, forget what Donald Trump wants [...] Let's come up with our own proactive education agenda. And you know, when I think about choice, we're talking about empowering communities, empowering parents. There's nothing more progressive than that. You know, we're talking about bottom up innovation. This isn't just about the demand side of things where you enhance families purchasing power so they can send their child to a private school. It's also the supply side. We're seeing this in places that have well established ESA programs. These rich ecosystems of bottom-up, community-driven, startup-style innovation in the form of microschools, unbundled learning, you know, start to take hold. That's all exciting and those are all things that appeal to left of center sensibilities. And so this should, this should not feel as though it's what the bad guys want or something that's foreign to our own principles. We stand for choice in so many other spheres. And the reason why I'm a Democrat is because I've always believed that we look out for the little guy. And I've always believed that if you trust the little guy, if you give families at the agency and the ability to make their own decisions, you know what will happen. We'll make good decisions. And so I think choice very much aligned with our fundamental values. And I'm excited about, you know, continuing to make the case and connecting with others who feel the same.

Michael Horn:

Yeah, I mean, that notion of trust, agency, and then the ecosystem you're unleashing on the supply side, that, that all resonates with me. I want to come back to it in a moment. You mentioned the politics side of it, which I think is a really interesting point, and it cuts a number of ways. You talked about the, the changing poll numbers for Democrats. You talk about in the red states where they've passed education savings accounts laws that progressives actually, I think, arguably are taking more advantage of microschools than are the conservatives in, in, in, in many cases. Right. And they're really excited about it. You talk about, frankly, what, what I've felt is that in some ways, if Democrats don't embrace choice the way you've just articulated, it could be akin to the Southern strategy that Republicans had In the Nixon era that turned off black and brown voters for several decades. In some ways, like, it could be that sort of big mistake. I'm curious if you see that similarly, or am I overstating things perhaps there?

Today there are a bunch of different polls on it, but we're underwater. It's not a winning issue for us. And so in this new reality, you know, the truth is that with, with, with voting groups that have drifted away from the party, I'm talking about working class, Black and Brown. This is yet another 80/20 issue that Democrats are on the wrong side of. So I believe that there is a political imperative that exists today around embracing forms of choice that just didn't exist in the past.

Jorge Elorza:

So I do believe that Democrats have begun to pay a political price for being out of step with their own base on education policies. And that's something that we have to take seriously. The working class, while the working class, they relied disproportionately on government providing them options to grade schools. And so I mentioned my own family back, my family background, the time I remember. Education, education, education. If we're talking about these communities, these voters that are drifting away. No, they disproportionately care about education. You know, it's only, it's just smart politics to align, you know, to align our policies with what, with what they want. But it's not just political, it's also policy wise. It's hard to make the case that what we've been doing on education is delivering for families. Yeah, I say it all the time. Providence today, if you can believe this, to name Providence, only 2.4% of high school seniors at traditional public schools can do math at grade level, 2.4%. That's indefensible. Every Democrat should be outraged, yet we just don't see the sense of urgency around it. Providence, frankly, is no outlier. The same situation is repeated in city after state. And we just need a different approach. We need new ideas. We can't be afraid of them, particularly when, you know, in my opinion, there's nothing inherently conservative or Republican about choice. In fact, I think it's deeply progressive.

A Full Vision of Choice

Michael Horn:

Yeah. So let's get then into this where you just took it, which I think is right on the substance. Right. Which is, and you really do embrace a full vision of choice. In the article you listen to yes, charters, but education, savings accounts, microschools. And it seems to me it really fits nicely into an abundance agenda that's gaining some steam on the Democratic side at the moment. But also from an innovation perspective, it just seems to me like we're going to be unleashing forms of schooling and reaching students with all sorts of personalization and supports that we can't even imagine at this point. If we, if we continue to follow this down, how do you see it playing itself out and what, what's, you know, what are you most excited about I guess on that menu, if you will, of lots of choices starting to come down the, down the pipeline.

Jorge Elorza:

Yeah. What I'm most excited about is you know, the factory model of schooling, very top down, literally to standardize, not meant to meet the birth and individual needs of every child. And you know, it was designed to efficiently rank and sort and over the years we've just sort of accepted this year after year to the point that it's become unquestioned tradition. But education doesn't have to look that way. It can look very different. It can indeed be bottom up innovation. We don't have to wait for, you know, a bureaucrat and central plumbing to, to innovate and come up with a new idea. Let's open it up so that people can start new and different schools. So this microschool movement, and you're 100% right that most founders of microschools, they're, they're likely Democrats, they're likely, they're likely progressives. And you know, they're designed from the outset to meet particular needs, diverse needs of that community. So I love this idea of being bottom up also inside the classroom. It doesn't have to be one teacher and X number of kids, every child. We don't have to move them along in age based batches like we do on an assembly line. Let's try new approaches in the same way that, that Ezra Klein and Derek Thompson mentioned in their book, you know, in the later chapters they, they stress a great deal about how the left in general we have under an accelerating progress and the only way that you get good at innovation is by innovating and trying and by, and trying and by iterating. And so we've, you know, we have, we have inherited A very sort of stodgy, very rigid system that of course has stagnated. Has stagnated because that's how it was designed. And I'm just so excited about bringing a dynamism to it of innovation, of iteration and, you know, one that is designed from, not to rank and sort and about instruction, but to customize it and personalize it for every child. I can't think of anything more progressive than that.

Michael Horn:

Yeah, you're singing from my playbook when you talk through all this. And I think the iteration point you bring up is a really good point too, because the suppliers that are coming in today, that's not the end state. Right. They can keep getting better and spiraling up. And if we empower families to choose, they can keep pushing them to get better and better and meet their needs and help them make progress as well. I'm curious, like, so that bottoms up energy contrasts in some ways around what used to be the accountability conversation that was more top down. Right. And so I'm just sort of curious like about how you're thinking about accountability and regulations perhaps for different parts of the ecosystem, you know, ESAs and microschools say versus charters versus districts.

Fitting the Pieces Together

Michael Horn:

Because I, I know you're thinking a lot about outcomes and transparency as well as part of your agenda. It's not all innovation. And so like how does this all fit together in your mind? Or do different parts of the system get different types of outcome based regulations or. No. Or just help me learn about how you're thinking about that puzzle.

Jorge Elorza:

Yeah. So this is definitely a challenging space I think that we're all trying to sort through right now. So I think of it in a bifurcated way. I think of accountability with respect to traditional schools. And with traditional schools, accountability means a lot things. It means testing, means data systems, it means holding to the accountable holding students. It means a lot of different things. But when we mean education, I remind that we've been working with governors and gubernatorial candidates throughout the country. And what we stressed is what we'd like to see is just a sense of urgency, right. This idea that low performing schools have been allowed to exist without any push for meaningful reform for years and in some and some occasions for decades. That is unacceptable. And we think that there is a strong appetite, strong thirst among the electorate for someone to come in and just call a spade a spade and show that that sort of like moral indignancy that this is unacceptable and we have to do better. And you know, a lot flows from that. You hire accordingly. You, you know, put them to come up with solutions accordingly. But it really has to come down we to build that and the top source of where accountability for the traditional schools come from. So when it comes to innovative models, I think accountability and the more we sort of box people to various ideas approaches that and put a map and so I think that a really Republican state, frankly that's all slightly different. They're all, no one can say, you know, we have landed exact. But as we advise Democrats, I think it's really important that we look at this through the innovation lens and ask ourselves accountability is certainly important. Let's look at it and the impact that it will have in either stunting or liberating educators ability to innovate in the classroom. Because I think that the steps that are going to transform our traditional schools it comes through it's accountability. And so let's just be conscious that we don't inadvertently stand in the way of the innovations that will lead to the next educational breakthroughs.

Michael Horn:

Yeah, no, and, and in many ways I think to what your point is like true innovation which I define is only when you actually create value for someone. Like if it's just something new, doesn't create value. I don't count it as innovation. That's just stuff. Right. In many ways that actually introduces accountability because it puts that pressure on the system where know families will vote with their feet. I think if it, if it is or isn't serving them and to your point around trusting them, that's a big piece of it. I guess the last question as we start to wrap up here, I'd love you to. So you, you've laid out like a robust set of ideas around the ecosystem we ought to build. And then in the beginning you talked about the political side of it, the politics of, of empowering executives and helping them buy into it and be champions for this. So maybe connect the, the strands now, right. Like this innovation agenda. The executives and the governors throughout the states. How do you start to empower them to make this their vision, give them the air cover they need to start advancing this and, and hopefully frankly like get some ESA laws and some microschools going in some blue states and make it, you know, not just not toxic but like politically exciting to do it.

Jorge Elorza:

Yeah, yeah. So a lot of different ideas and thoughts there. The first is that, you know, we've been, you know, there's going to be 38 gubernatorial elections in the next 15 months. And so we've been reaching out to gubernatorial candidates, building relationships, getting to know them and what we're noticing is that there's a new generation of Democrats that are lining up to run for governor. And more and more we're seeing that they want to lead on education, literally don't know what to do. This is not enough on them. It's really, there's really a function of our party not prioritizing it or thinking deeply about it over the last 10 years. And so there's a void and as much as possible where we're trying to fill that void, we do the outreach. You got to establish trust, build relationships, all of that human stuff. And as you go, not only provide policy guidance and messaging guidance, but also as much as possible, help them see a world of opportunities that comes out of this. And I think that the real sort of transformational, exciting opportunities don't come at the, you know, this policy or that policy level. They come at the, at the systems level. Can we imagine a different system and how do we shape that system to, to advance our priorities? Last thing that I'll say is I think this is really key. Key. You know, we believe in public education. Public education is a, not a particular set of institutions. I think that too many people on the left confuse the two or confuse means for ends. Public schools are one of the means that will help to create an educated populace. There's just no evidence and no, you know, there's a credible case that can be made that you can only create an educated populace through this mechanism. You know, we should be open. This is an abundance approach, you know, outcomes, orientation to whatever means help us accomplish that, that goal of having an educated public. And more and more we, you know, we want not just governors and executives, but our party to see it that way. That you know, education is a goal that we can all. Public education is a goal that we all should all be behind. But the means and how we accomplish that goal, we should be open to whatever moves the needle for kids.

Michael Horn:

Amen. You have me so excited, I can't tell you. I would love to be helpful as you continue this forward. And I'll end with a quote that you had in your piece which was Americans are looking for something different. And yet our education policy has been dominated by establishment thinking. More money to do more of the same, top down mandates, centralized bureaucracy, and insider political alliances that disregard the interests of families, educators and communities. This has to change. I think those were really good words, Jorge. So appreciate the work that you're doing and the passion that you're bringing to it and, and just I, I hope you'll keep us posted as you continue to do the good work across the country.

Jorge Elorza:

Thank you, Michael. Appreciate you.

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Jessica Gelman, CEO of Kraft Analytics Group (KAGR), and Hillary Casson, CEO of UP Education Network, joined me to discuss their partnership designed to connect middle school students with real-world professional experiences. The conversation explores why early exposure to professional environments is crucial for student growth, details the logistics and structure behind successful school-company collaborations, and highlights the mutual benefits for both students and partner organizations.

Michael Horn

Welcome to the Future of Education. I'm Michael Horn and you are joining the show where we're dedicated to creating a world in which all individuals can build their passions, fulfill their potential and live lives of purpose. And to help us think through that today, I'm delighted we've got two very special guests who do very interesting work in their day jobs and have come together in a very cool partnership that we'll get to talk about. We have Jessica Gelman, she's the CEO of Kraft Analytics Group, and Hillary Casson, who is the CEO of UP Education Network. Hillary, Jessica, great to see you. Thanks so much for being here.

Hillary Casson

Thanks for having us.

Jessica Gelman

Yeah, pumped to be here.

Michael Horn

Yeah, let's, well, let's start with a lightning round just to introduce you both to our audience, the organizations that you both lead. I don't know how many of my listeners will be familiar frankly with UP Education Network or the Kraft Analytics Group. So Hillary, Jessica, why don't you give us a bit about your respective organizations, what you all do so people really can get a sense of the context and a clear idea of the day to day mission of both. Jessica, why don't you jump in first?

KAGR: Data-Driven Sports Engagement

Jessica Gelman

Sure. So, KAGR, we work with sports organizations predominantly on helping them use data and technology to engage and understand their customers better. So at our heart, we're like a data warehouse. So integrating a bunch of different insights about who the customers are and helping with machine learning models and some AI and data integrations. And then we also do a bunch of consulting and some of our clients who the audience might be interested in include everyone from the NFL to the NCAA to NASCAR to, you know, the, I guess here in Massachusetts, the Patriots, obviously. And we spun out of Kraft Sports and Entertainment about nine years ago. So that's kind of the what we do. And it's obviously very data rich and STEM focused.

And I would also just say separately, but connected to this conference or to this discussion. I also co-founded and co chair the MIT Sloan Sports Analytics Conference.

Michael Horn

Very cool. Yeah, very cool. Which people love. Let me ask you this question before I let Hillary get in there. You just said the connection to the Patriots and Robert Kraft, obviously, but how did you get to be CEO of such an interesting organization and such a cool job?

Jessica Gelman

Sure. Well, I've been working with the Kraft family for 23 years. They created a role for me right out of Harvard Business School and I was running many parts of the Patriots business operations and we were using data to again, better engage Patriots and Revolution fans and then, in short, it was very analytically heavy. But I partnered with the Krafts on the creation of KAGR. The original concept was 11 years ago, and then we officially spun out nine years ago. So I think just like from a data perspective, maybe just to share, we touch today over 75 million sports fans across our data warehouses. So, again, the growth of the business and where we started nine years ago to where we are today is something that we're really proud of. And then I'll speak, of course, to the diversity within our leadership team and across the organization and why partnering with Hillary is something that's so important and near and dear to us.

Michael Horn

Well, perfect transition, Hillary. Take it away. Tell us about UP Education Network and your own journey there.

UP Education Network: Revitalizing Struggling Schools

Hillary Casson

Sure. UP Education Network is an organization that manages and runs schools and partnerships in partnership with districts. And we were founded essentially like a restart organization that partnered with districts to propel schools that had been stuck at some of the lowest achievement levels and percentile levels. And we've done that across the state in a number of different regions. And we are different in that we do partner with districts to prove that public school can and must work for every kid. And we're different in that we intentionally really serve communities that have been distanced from resources. Our student need level is a bit higher than your average district, school or charter school. And we commit on behalf of the districts, but even more so on behalf of the families and students, to really propel those schools so that they have an amazing school in their communities that sets kids up for a life of agency and purpose and freedom beyond the time that they're with us.

We started in 2010, and now we have two campuses in Dorchester and serve 1300 kids ages pre K to 8. And our schools, one thing I love about our two schools is that they're walking distance from each other. So we really have a huge impact on this community, in particular. I have, similar to Jess, have been kind of a lifer at up. I started, I moved just because I was so taken by the mission. I moved from Baltimore to help found one of our schools.

Michael Horn

Oh, wow.

Hillary Casson

And, yeah, I didn't know anybody up here, and I was like, I want to work there for that mission and purpose. But I've been here since, that was 11 years ago. And I was an assistant principal, then a principal, and then I was coaching the principals for the network. And now I'm in my second year as CEO.

Michael Horn

And you mentioned the student base is, you know, perhaps lower income, more diverse than a lot of the districts or Charters in the area just give us a sense of who those students are.

Hillary Casson

Sure. The first thing I'll say about our students is that they are just like amazing and so immensely capable and the communities that we work with are so asset rich and phenomenal. But from a demographic purposes, about 93% of our students are coded as high needs, according to state designations, compared to, you know, about a 70% average for charters/public. There's a little bit of variation there, but. And about 40% of our students are language learners, so actively working on building their English proficiency with even higher percentages having a first language other than English. And then most of our students are low income.

Michael Horn

Gotcha. Super helpful, yeah, super helpful I think to give us a sense of who you're serving. So in the last year, as I really understand it, like UP education network in existence for 15 years, but you have started to make a very big push to help students get far more experiences with companies in professional settings out in the real world, so to speak. So perhaps before we get into the specifics and what that looks like, just tell me about the why behind that push. Why did you conclude that this was going to be really important?

Preparing Students for Life

Hillary Casson

Sure, I think it was. First of all, it's been so fun and such a privilege. But in thinking about why do that, I really believe that in my position or in any educator's scope, is you're really required to think about how do I set this human being or this group of human beings up for success long term. I believe that the purpose of school is to prepare folks to have a life of agency and freedom and to choose their own path. And ideally that path allows them to, you know, get a living wage, you know, build a family if they choose to, etc. And so what I know to be true, both from life experience, as a person who grew up in a very rural area that had very limited access to opportunity and sight lines, and then also as an educator that we cannot stop preparing kids just at academics. And don't get me wrong, like academics are absolutely essential. Like if we don't at baseline prepare kids academically, we've failed.

And that is not the only thing that kids need to be successful. And I think you look at any person who has attained success and how I'm going to say that is that they're able to feed their family, make choices, have leisure time, things of that nature. There is more happening for them than just academic success. So just thought a lot about, like, what does it take to break down silos and build those skills that help folks long term. And to me, a lot of that is like providing kids sight lines. And so we were like, wow, we are in Boston. Like, what an amazingly asset rich area. Let's get kids exposure, experiences and all along the way help them feel really good about the process.

So that's kind of like the why at a macro level.

Michael Horn

Perfect. Well, let's get into the what before I bring Jessica in and how they started KAGR started to interface with this. What did you create for students? I know you started to create these partnerships with companies so that they would get that exposure, connection, awareness, sight lines. But what does it look like on the ground over the course of a year? What's that student's experience like?

Hillary Casson

Sure. And I have to shout out my colleague and CEO Mike Bauer, who is like the real powerhouse behind the work and made so much of what I'm going to talk about come to life. But in terms of what it looks like, we have essentially like three phases to our process. But I'll speak to the middle first, and that is the experience with the companies. And I very intentionally choose the word experience because Jess and KAGR and all of our other partner companies really do an experience with our kids. So at KAGR, our kids got a chance to look at fan profiles and think about how could they market to these different fans to get them into the arena more to see more games. And they really like problem solved and worked through it as a group and came up with promotional packages that they could then market to these specific fans. They're not sitting and hearing a panel or listening to a lecture.

Experiential Learning Through Company Partnerships

Hillary Casson

They are doing work that is reminiscent of what actually happens at these different companies. And that is a very intentional thing because not only is it more fun and more engaging, but they build a ton of knowledge about the places and they build so many skills that they may not even know they're building in the moment, such as ability to iterate, collaborate, communicate. But that's really a very intentional thing on our part to make sure that the experiences have those elements as well. And then before they go, they research a bit on, you know, who is KAGR, for example, and like, what is market segmentation. So they're not just like, whoa, I'm struck by these terms that I haven't heard before. We give them a little bit of an access point and then afterward they do a reflection on like, what did I learn? What did I like, what am I taking away from this experience and how that's looked this past year is that each homeroom is partnered with a company and has an in-depth experience like that. As we look to the future we're looking to a bit of increase for seventh grade to have two experiences in our eighth grade. We're hoping this year to have it be a multi touch point so that they're also get with one company so that they're able to really build relationships which we know is so critical for social capital.

So it's been so fun and so awesome but again our amazing partner companies have been critical and then Mike Bauer who's one of our staff people here and bringing that to life

Michael Horn

So it'll start to deepen and so forth. Jessica, let me turn to you and bring you in here because when Hillary up education Mike, they first reach out around this partnership idea. I'm super curious like your thoughts. Like I could imagine you saying sounds great in theory but how are we going to find time to have middle schoolers in the building? That sounds a little disruptive or I know exactly how to build this, let's get going, or maybe it's a little bit of A, a little bit of B. But I'm just sort of curious your reaction and then how it sort of played out.

Jessica Gelman

Well, I mean first I need to give full credit to the KAGR team that really led this initiative starting with Alex Freeband, Lissy Harris and Lauren Paquin. And there was others like Molly Murphy and people who dedicated their time. And I would say that our kind of giving back to the community is really focused on supporting people from historically underrepresented parts of the sports ecosystem. And I'll just like we believe very firmly that comfort with analytics and technology can be a great equalizer in supporting, you know, more, more of a meritocracy. So that's just like a starting point and I think even from like the perspective of me as a female leader of a technology and analytics company in sports, which is obviously multiple things that are, I was going to say.

Michael Horn

You're hitting a unicorn there,

Jessica Gelman

Very male dominated, but I, but I, but I think the, the, the differentiator or thing that has enabled our organization to have such impact and influence across sports is that we are helping people think differently and we are attracting into our organization people who care about this mission that Hillary and Mike are spearheading. And so it was more when you know Mike, this is the connection to Mike. So big kudos to him. He reached out to me. Now Mike was one of the student leads of the Sloan Conference. I think like a decade ago.

Michael Horn

No way.

Jessica Gelman

Yeah.

Michael Horn

Wow.

Jessica Gelman

So he reached out and obviously certainly didn't know all of the different things that we already do within the community. But the, but sometimes like this was not one that we would have known about as an example. And I think our relationship and knowing him honestly, I think it's the 20th anniversary of the Sloan conference this year and I think he may have been in like the fifth or sixth year, so like a long, long, long time ago. So to me, knowing him and his like views on the world and his care and what he's about and then knowing, you know, what our team and what we care about and the representation also that we have at KAGR, which is also different, like we do have a strong, you know, broader representation, I guess I would say. And I think that it's really important for young people to see people who look like them to and to be able to aspire. And then of course, yes, the context of sports and something that maybe they have or haven't experienced. And incrementally like our offices legitimately look at Gillette Stadium. These are things for middle school aged kids.

I just reflecting back to my own time many, many years ago and what things like that might have done. I never had the opportunity to have that experience. But the concept of see it, be it is really powerful. So I couldn't emphasize and want to support the mission of UP more. That said, it was our team that really was passionate about it and made it come to be. And I think the impact and awareness for everything that Hillary is leading is something that we really care about and want to continue to support.

Michael Horn

Well, so I want to dive deeper a little bit on this point because as Hillary and I know each other, something we've talked about is particularly as the use of AI grows and changes of nature of, work is going to become more unpredictable, rapid changing, et cetera. To me, the connection between school and career actually becomes more and more important than it even has been. Giving students real world experiences, connection. Hillary, you mentioned social capital with professionals like incredibly critical. I also think it's important for companies as you think about pipelines and so forth. But what I guess I've observed, Jessica and I love your take on this and then Hillary as well. It does seem to me that there's some friction in there for companies, as in like you have here and now, to deliver on, you know, projects for clients and things of that nature. Taking time out to have a student who might, you know, benefit a decade hence from, you know, is sort of a, it takes you a little bit off the pathway, if you will, in the immediate term.

Obviously it's a good long term mindset, but there is some friction there and I guess I'm just curious how do we have to reduce friction to create more of these partnerships? So it's not, you know, IP claims all the good ones, but more schools can have great partnerships with companies in the area. What does it take on behalf of the school and company to make these things possible? Jessica, why don't you dive in first about it and then Hillary, just jump right on in after.

Jessica Gelman

I mean I think one of the biggest hurdles is transportation and being able to get to the locations. And it was actually one of the biggest things that I thought about, worried about because they're based in Dorchester and we're in Foxborough and so that was something that I asked about immediately and they had a solve on there. They had thought it through already. And so I think once I knew that that big hurdle was crossed, my thinking and expectation is like, okay, they know what they're doing. This isn't going to be, we're going to just have to deliver the solution. There isn't going to be the incremental hand holding or helping them think through what I would call are the tactical operations of doing. And that's really important because as you're saying, time is of the essence. It always is.

One of the things I love about the 20 something generation that again in early 30s that was really spearheading it on our part, the millennials, if you will. This part of engagement is so important to them too personally and recognizing kind of the opportunities that they have had and wanting to affect and create change. So I think it's a combination of for UP education, finding the right type of organization. We're a small organization, you know, we're only 75 people. So undertaking something like this is a big, it's big and it is significant. But knowing that the partner that we're working with recognizes that, I mean honestly appreciation is important but also is going to take out some of the friction as you kind of alluded to on the very operational components. Like we don't want to feel like we need to be overthinking food and you know, all of those different types of elements.

Michael Horn

Sure. Hillary, I'd love your perspective on this about what schools can do to make this an easier yes for companies and maybe so we've just heard about the logistics. The other aspect that strikes me is like meaningful experiences that you alluded to, right, where you're doing work either that's actually helpful for the company or, you know, sort of simulating what one would do. But that can also be its own set of distractions. I could imagine for a company to like sit there creating stuff that middle schoolers are not going to be immediate contributors on all the time. So how do you think about that?

The Role of Education Partners

Hillary Casson

Yeah, it was a bit of trial and error at first, but what we kind of think about and have tried to lean into is the idea that it is our entire job to look ahead to the future and kind of and think about like, what do we need to do today to prepare kids for tomorrow. So, you know, us dedicating a bit of time and resource to this initiative felt really true and core to our mission. So that is kind of a thing that we can bring to companies and say like, hey, we would love to do this with you and we'll try to do as much of the work as we can to make this an easy hopefully yes for you all. And that to Jess's point includes like the logistics. Right. But also includes like, hey, we really know our kids and we really know the types of experiences that will be worthwhile for them and engaging for them. And so we have a team here at UP, spearheaded again by Mike, that helps to design the experiences and takes a real take, really takes the pen on that. We get ideas from the companies for the most part and then we'll create something that will iterate on with the companies.

We basically say like, let us do the lion's share of the work in creating an experience that both matches what the company's bread and butter is. But also we'll meet our kids where they are and hopefully result in an experience that makes everyone feel like this was really meaningful. But if another place or space were to try to scale this, I think you need a person or a team that's going to say, I will ensure that KAGR or whoever you're working with hopefully has a good experience, finds it easy to work with us. I'm responsive, I'm reaching out to them to make sure that, you know, we have everything we need. Everything smooth. And I think that team was really, really necessary for us. And part of the team was leadership at the network and then part of it were school folks. Having those school based champions was helpful as well.

But I have found that that helps decrease friction is like making it light as light as possible.

Michael Horn

Yeah. So last question for you both as we start to wrap up. If that's like the playbook for what schools need to be thinking about what makes a good employer or company for this. Right. Like, what's the other side of the bargain? Hillary, maybe you go first on this, and Jessica, you can wrap it up of like, I imagine not every company would be able to do what KAGR did to take in however many middle school students and give them an incredible experience over the course of the day.

Fostering a Caring Company Culture

Hillary Casson

Yeah, I think, I mean, I think the main crux of it is a culture and some sort of ethos that cares about this. And I think a lot of companies do have that and, and really run the spectrum in terms of types of work that they do. But if your company or organization has people that, like, care about doing good, I think that's a huge check right off, right off the bat. And then beyond that, I think it's folks that are willing to, you know, at any level. We've often found a real sweet spot at like, not the very, very junior people, but like, maybe that middle level that are able to give like a couple meetings and then, you know, work with our team. Hopefully not too cumbersome, but a squad of folks that are able to connect a few times and then the best case scenario is something, and Jess spoke about this, that kids can connect to in some way. I think we'd all be surprised at how much kids can connect to and grasp.

Like, I think some people would be like, oh, our company wouldn't be good for that because we're too XYZ often. I think we can make it. But the obvious and easy yeses are a place like KAGR where kids are like, wow. It has the wow factor when you walk in. I mean, who doesn't want to go to Gillette, right?

Michael Horn

Yeah.

Hillary Casson

Also, they do work that had kids. I'm like, oh, yeah, I've watched sports or I've thought about, like, what type of fan I am. I think that's the optimal partnership type. But I do think there's a. There are more folks that couldn't be a fit than can't be a fit.

Michael Horn

Jessica, I'd love your take on this because I'm hearing your company with 75 people, that touches 75 million. I think you said sports fans, like, that's all. That's a high leverage on individuals there that you're getting out. So, like, to have the capacity to bring in a bunch of middle schoolers and I imagine a longer run. Like, you know, we'd love to see these partnerships with high school students, et cetera, et cetera. Like what's the playbook on the company side to make this work?

Jessica Gelman

Yeah, I mean, listen, we've been doing programs like this. We do get requests from high schools. We do get requests from colleges. We host a program in the fall. So maybe this is like an indication of what organizations are ripe for it. We host an organization called. Or, sorry, an event called Koding with KAGR.

Empowering Women in Tech Community

Jessica Gelman

Coding is with a K, but it's a collaboration of data in the next generation. And we invite. Obviously, Boston and Massachusetts are rich with colleges, so we invite all the local women in analytics, women in tech, down to our offices. 75% of our executive team is women. And we host a series of case studies and Day in the Life with our engineers, our data science, and our consultants. And so my point here is that we are doing active outreach to the community. Middle school is certainly younger, but I think for the audience and the importance of reaching this audience, that's something that we really care about. And it was a unique opportunity for us to be able to kind of embrace and engage with a school that size, age, and desire to come down, because it can be.

Honestly, a lot of the lift is just the back and forth communication of timing and things like that. But I think a predisposition, an organization that has a predisposition for doing things like this, which, of course, we have.

Michael Horn

Very cool. I'm excited to share this conversation to my daughters because I think this is going to inspire them on a couple fronts. But look, I know this is like the beginning of a partnership that could go into a lot of really cool ways. And it sounds like there are plans to deepen the connections for the students and create even more experiences over the course of a year. I'm excited to see where it goes. I hope as it evolves, y' all will come back and tell us about it. And just huge thanks, Jessica and Hilary, for the work that you're doing.

Hillary Casson

Thank you.

Jessica Gelman

Thank you for highlighting this.

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Don Soifer, CEO and co-founder of the National Microschooling Center, joined me to discuss the Center’s latest comprehensive report on the evolution of American microschools. We explored how microschools are growing in size, serving a wider age range, and increasingly enrolling students with diverse needs. We also delved into differences between microschools in states with and without Education Savings Accounts (ESAs), the significance and challenges of accreditation, business models and funding, and the dynamic, adaptable nature of the microschool sector.

Thanks for reading The Future of Education! This post is public so feel free to share it.

Michael Horn

Welcome to the Future of Education. I'm Michael Horn and you are joining the show where we are dedicated to creating a world in which all individuals can build their passions, fulfill their potential, and live lives of purpose. And to help us think through how we get there today, I'm delighted that we have a repeat guest. We don't always have repeat guests on the show, but Don Soifer is someone who I hold in very high regard and so I'm just delighted to welcome him back. As a reminder, he's the CEO and co founder of the National Microschooling Center. He's been in and around the changes in innovation in education, several waves of them, for a few decades at this point.

And Don, I won't go through everything, but it's just, it's really good to see you, man. Thanks for joining.

Don Soifer

Thanks for having me. It's a real pleasure.

Microschools Evolving, Serving Older Students

Michael Horn

Yeah, no, and look, in May, you all released at the center your latest analysis of American microschools. It's a 40-page report, so we will not get into all of it today, but people should visit the National Microschooling Center, check it out, see the findings. But there's a lot in there that I wanted to learn more about personally and shed light on. And so I thought where we would start is this. And it seems from the report that the nature of microschools themselves are evolving. They're getting a bit bigger, it seems particularly, I think when you zoom out of the microschools that are really homeschooling centers, they're starting to serve older students as well, which I think is pretty notable as I think you, the stat was 84% of microschools serve kids age 5 to 11. But now 52% of the universe, if you will, of microschools that you surveyed are serving kids ages 15 to 18, which is a much higher population. And it seems like a big sea change because, you know, for a while you would hear, oh, microschools works great for elementary, middle school, but a lot of kids, you know, they want to go back to traditional high school because they want Friday night lights, college, whatever it is.

And so I would just love your commentary of like, what's changing across these dimensions that's maybe leading to this evolution in the size and the ages of who microschools are serving.

Don Soifer

Great. Well, thanks. So I think first of all, it's important that this is the biggest, deepest, widest research on the sector to date. So we interviewed 800 microschools in all 50 states. So hopefully this is the closest thing to a representative sampling of what's going on out there yet. And I think the other, the other point I think that's worth reiterating is that microschooling is not a new thing that somebody smart invented during the pandemic. Right. What we're doing is updated by a lot of what we now know about pedagogy and the way children learn and all sorts of great additions in this golden age of digital content that we work in.

But microschooling is something that's been going on for a very long time, right. Reporters often ask, and I say, I don't know, maybe the first microschool was maybe the book of judges, but that feels very western centric. And obviously when Slate Blackwoods came across the prairies on trains, one room schoolhouses were taking off. So for sure. So, so what is, what is, what's happening now as we move maybe from left to right on the adoption curve? In some communities, there are definitely places and we're out in the country all the time, and there are definitely some ecosystems that microschooling has gotten more common, more people are aware of it. The people that track things like terms in Google searches will tell you that there are more people in south Florida or some spots like Mississippi or Kansas or the greater Atlanta area where more people are aware of microschooling. We've been doing it for longer.

We see some shifts in who's participating because more people are aware of it. So there definitely is some evolution of the sector that we're seeing. And part of that comes from the fact that the kids we had in microschools, many of them did start during the pandemic, but they're getting older. And microschools, we've seen a trend in homeschooling for year that homeschooling may get a little bit more boring and standardized when kids get to high school because parents don't want to mess up. They want to make sure the kid has the opportunity to play in a NCAA Division 1 sport. And so they're going to sort of collapse, you know, high school is complicated.

It takes more confidence with the subject matter. And we generally see families, maybe, you know, this is the golden age of digital content, but families, when they get to high school might be more inclined to draw all of their content from one particular provider in the name of it being accredited and that somehow helping them with their future options. So high school is more complicated, for sure. But more and more microschools are getting into tackling it, and we're seeing some real evolution over there and it's some really inspiring models and some, some really, you know, they're really learning from each other and it's an evolution of the sector. I think it's a good example of one.

Serving Diverse Student Needs

Michael Horn

Well, so I, let's stay on this because I think the other thing that jumped out to me about these schools and who they are serving is that a lot of the students are former public school students. A lot of them are in the median income bracket, it looked like with nice distributions on the low income and higher income. But a lot are sort of squarely in the middle, at least self reported. It's pretty diverse. And then this, you had 74% of microschools of these 800 that you surveyed report serving children with neurodiversities, 46% with other special needs, 63% of students who came to them two or more grade levels, excuse me, two or more grade levels below their quote unquote age, and 50% who've experienced emotional trauma. So look, you were in the charter school world well before I was. But as you know, charter schools were often accused fairly or unfairly of not serving students with special needs. It seems that this, that charge can't even get lift off here from based on what you're learning anyway,

Don Soifer

Thanks. You touched on some of my very favorite findings. Microschools are more likely to serve kids from slightly below or significantly below the average income in their area than above. More kids come to microschooling from traditional district operated public schools than anywhere else. And coming from homeschooling is a somewhat distant second. So microschooling and we do very well toward the fragile end of the income spectrum. We do very well with families with a child with neurodiversities or other special needs. So microschools are not a school choice play. They're taking off in the blue and the purple states every bit as much as in the red states.

And there are some slight differences you see in trends there. But microschools are not about partitioning privilege. I mean when you read about pandemic pods in the New York media, you know, during the shutdowns, there was a real cause for concern. Are these things any good? Are they equitable? Are they what they are intended to be? Where we're really seeing as this movement takes hold and, and grows, that we're looking for kids that were not thriving in their prior schooling setting and the population in microschools and the very, you know, the, the beautiful diversification of the kinds of models that we're seeing in microschooling really gives every kid an opportunity to thrive. And the examples that you gave are some of my favorites.

Michael Horn

Well, so stand that, because I actually didn't realize that or I didn't pick it up from the report, which is that some of the trends might be different in the blue and purple states compared to the red. And I guess the reason I'd love you to just spin that out a little bit more is the red states tend to be where the education savings accounts have passed for the most part. Right. And we know that very progressive families actually take advantage of those and love them. So it's not really a political issue. But in terms of where the laws are and enabling some public funds to support microschooling, it's more in the red states, it seems to me. So how are the trends different? And I don't even know.

Would be different in terms of who they're enrolling or scope of the schools. What does that look like? That's different.

Challenges in ESA States

Don Soifer

Yeah. So first I should clarify that just because a state has an ESA doesn't mean that microschools are able to participate or that families can choose microschools. The details of policies matter. And a lot of the time those details get decided at the 11th hour as part of a compromise. And let's face it, school choice programs in this country and the broader schools of choice experience are much more traditional and larger. And the programs are really written for those schools because those are the largest stakeholders who are at the table when these conversations are happening. So when we look particularly at microschool trends in ESA states where families can choose microschools to participate, usually one of the hurdles, one of the major hurdles is accreditation. Like in Iowa, which has an ESA program.

But the limit on the available accreditation bodies is such that it's very difficult for, you know, an innovative small learning environment. Maybe something that's particularly innovative, maybe something that's a truly child centered learning model that would deny that they even have a curriculum. It's just too much of a challenge to get that approved for accreditation in Iowa. And there are good people working on that and they're making some progress and that's great. But when you look at the states, Arizona, Florida, Tennessee, to a, to a small and growing degree, what are the trends that are any different? I think that, Arkansas, I think that in a sense, a lot, some of those are going to be predictable. If a microschool or any entity is required to take the state standardized test to participate then that's a factor.

And we see that in ESA states microschools are more likely to have maybe more standardized curricula or the structure of the microschool is going will include more norm or criterion referenced assessments than other states. I will point out though that we have plenty of microschools that we heard from in the ESA states that do not choose to participate in the ESA program for various reasons, but including that the hoops that they felt like they would need to jump through for compliance with the program's requirements were just not something that they wanted to do and that they were able to serve the, you know, the communities that they wanted to serve without being part of the ESA program. So that's part of it too. But we do see trends that a lot of them are quite similar. Right. And we need to also accept that, let's face it, the, the cultural fabric of not every community is the same. And you don't need me to remind you that, you know, the culture of a community in Maricopa county in Arizona is probably different than what we're going to find in Fort Myers beach or the Gulf coast of Florida. Right, because Floridians, right, or Arizonans, just different folks.

And microschools really like nothing meaningful in education as you know, well, happens in a vacuum. And microschooling sectors evolve really in response to two major drivers, the local demand and interest in their community and also the frameworks in which they need to operate in their state. And those I think really explain the major differences we see, you know, along with many similarities in the trends in microschools in ESA states versus other states.

Michael Horn

That's interesting. So let's move to accreditation. That was something that was on my mind to ask. It seems like most of the schools in the sample are not accredited today, but interestingly enough, most of them would be interested in microschool friendly. And that's an important qualifier, microschool friendly accreditation. Why is that? Like, what's the underlying motivation for why they want the accreditation? Is it because they could, you know, get some of those ESA dollars if that's state requirement? And so they see the writing on the wall. It does seem like there's also a trend of more recent ESA states writing in these accreditation requirements or is it something else entirely?

Accreditation: Compliance and Value

Don Soifer

So microschool leaders tell us that they're interested in accreditation for various reasons and some of these are compliance with, you know, again, to be eligible for the ESA program interstate, it might be required. So, that is part of it for sure. But there are other reasons that leaders who, you know, most of the time, we know that microschool leaders are experienced educators in other sectors, most commonly licensed public school educators. So they may see value in an accreditation process that can add value, add to their program that they can learn from in this complicated world where, you know, families have dual custody and you might have one parent that's very interested in your microschool, but they have to sell it to other folks. So something that's convincing, that shows it's a valid third party accreditation is approval. A good housekeeping seal of approval is a value. And in other states we have, you know, regulatory pressure is such that Mississippi is a good example of a state that the Department of Children and Services that oversees child care programs tells you that they will not hassle you if you can show accreditation as an elementary or secondary school. And companies like, frankly, Google for Education is one that will only make their tools available to an accredited microschool, which is something that hopefully the market is going to fix.

But these are all sort of different reasons than just regulatory compliance.

Michael Horn

That's crazy. I didn't know that.

So Google literally, it's like a requirement because they want to give these tools away for free to schools and they're like, so if you're accredited, we know you're a school. Is that like the sort of simple minded idea?

Don Soifer

You know, and I don't think it's, it's a slight deliberately to, to microschooling. They just need to know who it is that they're working with.

Michael Horn

An easy way to just sort of check that box.

Don Soifer

I guess that's right. I mean, in so many places people don't want to get in the business of deciding if an entity is any good or not, so they just make a natural deferral to accreditation because it's sort of been the gatekeeper standard in this country for factory education for a long time.

Michael Horn

Interesting. All right, so I want to talk business model next for what you're learning around microschools. Median tuition, as I understand it from the report, is $6,500 in currently operating microschools. The average of the mean cost is about $8,100. These seem pretty affordable, Don. They're priced around the level of ESAs in many cases also. But I'm just sort of curious as like, is that a coincidence? Is it strategic? It does seem from your survey data though that I'll point out that a lot of folks are actually still paying for these schools out of pocket and not using ESA dollars. So, help us understand pricing and how maybe it is or isn't changing from past instantiations of the survey.

Don Soifer

Yeah, so obviously microschool founders want to have their seats full. And so many microschool founders are highly interested in serving the kids who need it the most. So I really don't know if I could name a single microschool that charges full freight of tuition to every single family that they serve. Most microschools are still on mostly a tuition based model. And again, we're starting to see some innovation. I mean our own microschool was a public private partnership where we got taxpayer dollars from a city's appropriation, you know, and operated in a library and rec centers that have government funding that can bring new resources into a microschool. And sometimes YMCAs and boys and girls clubs and community nonprofits will be partners in the microschool so that there are resources that are available that can help the founder not have to rely exclusively on families tuition because they don't want to be in the business of, you know, partitioning out privilege. They want to give these opportunities as broadly as, as they can.

But on the other hand, you know, microschools, I would say are in terms of the productivity of the sectors, the way that they are measured. Public education in this country has a relatively low rate of productivity, you know, which includes both how much you spend and how much you achieve by your own metrics where microschools tend to spend a lot less. You're right. The median cost to educate one child in a microschool is $6,500. And you know, there's so much that goes into that. Right. If you have more kids in your microschool in May than you did in September, the number of kids goes into the denominator. And it's hard to necessarily always track, but we always encourage microschools to keep track of that particular number.

Some microschools will not require everybody to be on a full time schedule. That some microschools, especially if you're serving families that follow the homeschool requirements in your state. And again, most of those, many of those families are not going to be traditional homeschool families. They're going to come from much more traditional learning settings like public, you know, district operated schools. But if you can give families those flexibilities that can, you know, then your tuition can be prorated. And we've seen, you know, a kid coming two days a week and the parent get renting an apartment closer to the microschool and what they save on gas lets them afford a third day a week in the microschool. That's not atypical for what's happening. So again it's a response to what's in the community, what's available in the community, what the resources are and you know, and being scrappy on both sides of the financial ledger so that this can be a good viable product that meets families needs but that's also affordable to the families is one of the ways we're seeing the sector evolve.

Sustainability Concerns

Michael Horn

I think for sure it's interesting and it's some, it touches on something I've long been concerned about as you know, which is the sustainability of these models. Like you know, will microschool be there in five, 10 years? And, and to be clear, some folks have, you know, have told me that for that to really happen we actually need to get certain schools up to maybe 50, 55 kids for it to really be sustainable. And it, and on that though, it seems like you have, you know, interesting data around founders taking salaries, that a quarter are not actually taking salaries but the average even counting for that is around $50,000. I'm curious though, and I don't know if you've done this analysis but if like you take out the centers serving homeschoolers from the data set, like you exclude that, does that change what you see at all? And, and the reason I ask like if I'm a center serving homeschoolers for some of them, my bias, and you could tell me I'm wrong, but is like sustainability over more than five years is actually not the goal like it, you know, they just maybe wanted to do it for a few years, maybe their own kids, personal mission, whatever and then they're going to like keep on moving. But maybe there's other schools that feel, you know, microschools that feel more like we're trying to create something sustainable here for the longer run. And my guess is that the founder's behavior might look different there in terms of salary - do I take it? Dollar amount, maybe number of kids they even serve and stuff like that. Do you see any difference along those lines?

Don Soifer

Yeah, I mean it's such a panoramic scope of things that come into play here. For sure you're right. More than a quarter of microschool founders don't take a tuition. It's very common in microschooling. More than between a third and a half of microschoolers, microschool leaders have kids of their own in their microschool and that's part of it too. If you look at microschooling as literally take moving schooling out of, you know, the, out of an industry that teaches in buildings that are on average 50 years old in this country and cost $50 million and what, what a, you know, as you, you know, you sort of mentioned, I was a charter school authorizer in some of the most high performing cities in the country. And there's something that you see in that sector I always refer to as the charter school half life phenomenon, where seven years in, if your founding families have moved on and if your founding leader has moved on, is that entity really the same quality as it was when it first started? In microschooling, we give a stump talk that says dynamism is the new sustainability, that if you're running a microschool and you do it for five years and your kids have moved on and are older now, and you've served kids and given them great options for five years, and microschool leaders are quite responsible in the way that if they were to close or move or start a new microschool or maybe they'll, you know, whatever it is that they do, get on with their, with their lives, then they're going to, you know, work with other microschools in their area to ensure that those kids have a trajectory that they can continue. But I think that we're seeing a model that dynamism and the opening and closing and maybe a microschool leader goes on to start a new microschool.

That's high school ages, their own kids get older or whatever reason, they get on with their lives. I think the human capital of this movement is coming from a more dynamic place than it is in the factory school model that evolved in the 1950s, where it's just a different kind of sustainability as a sector than we see in traditional public schooling.

Michael Horn

Gotcha. Okay, well, so then, last question as we wrap up here because, and again, folks should check out the report. There's a lot in there. And staying on this funding question, because a lot of schools in the report said that their biggest pain point is funding. And I guess I'm just curious, like, as you think about the biggest barrier or, or challenge for supply, the supply side of this, of, of this world, is it like funding to start up the school? Is it funding for ongoing operations? Like, what do they mean when they say the biggest pain point is funding? And how should we be thinking about solving that?

Don Soifer

Yeah, so it is both capital and operating revenue, and about a third of the microschools that we talked to in the study are pre launch microschools. So if you look at the sizes that we're talking about, I think on average we find it takes between 17 and $25,000 in startup costs to launch an independent microschool of about the average size that we see. So who can do that? Right. People can borrow it from family and friends, which is a self selecting group. We see experienced educators liquidating portions of the 401k and pay themselves back in year three. But we've seen some really interesting programs. I think what Building Hope and Stand Together are just standing up as a revolving loan fund specifically for microschools. I think that's going to really help if we can see that proliferate. Different versions of partnerships and seeing employers or community nonprofits getting involved because you know, occupancy costs, facilities are the single biggest ticket item in your microschool.

Sector Growth Factors

Don Soifer

So as we as, as these, you know, as, as interest grows, as the sector gets more momentum, I think we're going to see new vehicles take place that can sort of help with that. And once we solve the access to startup capital or solve it to some degree, as, you know, as school choice programs proliferate, that's a thing that helps too. Philanthropy is broadly starting to get more comfortable with microschooling and the better, you know, and this is the golden age of digital content. And some of the really cool AI models are quite pricey right now. Maybe one of the very best is a program operated by a fantastic set of microschools in the Austin area that can cost $10,000 a kid, which is out of the price range for most of the microschools in our sector. But I think the market will take care of that. So I think we are seeing a sector that is growing in response to a lot of different factors and the more growth we see in the sector, I think that a lot of these things are going to find solutions that are on their own or handed to them by an evolving marketplace.

Michael Horn

Well, you've given us a really cool snapshot, Don, of a dynamic market, as you said, dynamic sector characterized by dynamism. And you're part of that. So just huge. Thanks for joining us. And for all of you tuning in, check out the National Microschooling Center. Keep an eye out for the analysis reports that they're doing. If you're interested in getting involved in the sector, they've got great resources to help founders, to help operators, really not just like navigate the early innings, but navigate it all through the life cycle of a microschool.

So, Don, keep up the great work. Really, really appreciate you and thank you for joining me.

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Macke Raymond, the program director of Stanford’s Hoover Institution’s Program on U.S. K–12 Research and former director of CREDO, joined me to discuss the need for a new “operating system” in American public education. We spent time diving into the recommendations from the Hoover Institution’s recent report, “Ours to Solve Once and for All,” which calls for reimagining the roles of federal, state, and local actors to foster a more adaptive, innovative, and student-centered education system. According to Raymond, given the massive changes at the federal level since President Trump took office, now is the perfect time for this rethinking. According to the report, it’s vital we prioritize incentivizing educational mastery, minimizing rigid mandates, cultivating a dynamic, responsive education workforce, and offering safe learning environments, all of which should start from the grassroots up. Have a listen and let me know what you think in the comments.

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Michael Horn

Welcome to the Future of Education. I'm Michael Horn. And you're joining the show where we are dedicated to creating a world in which all individuals can build their passions, fulfill their potential, and live lives of purpose. And to help us think this through, today, I think we have a repeat guest, if I'm not mistaken, Macke Raymond. She's the program director for Hoover Institution's education work. She was the director of CREDO for many years at Stanford University, the Center for Research on Education Outcomes. And with the Hoover Institute Institution's Education Futures Council, together they put out this terrific report, “Ours to Solve Once and For All, Securing the Outcomes Our Students Need. “That's probably more introduction, Macke, than you need because you've done so much in the world of education.

But first, good to see you. Thanks for joining me.

Macke Raymond

Oh, it's wonderful to be here, Michael. Thanks for inviting me.

Accelerating Change in Education Systems

Michael Horn

Yeah. No. So you wrote this really provocative note to me that sort of. I had written this piece for my substack and Forbes about how disruption of schooling might finally be possible in the world of education savings accounts, because for the first time, families might feel like they're losing out if they aren't exercising their choice in sort of the savings accounts that come with it. So there's this sense of value that's been overlaid with certain states moving in this direction. And then you wrote me and said, well, not only that, but we've been arguing, right, for this new operating system, really, the foundational principles of how education operates in this country, and seen states as sort of the lever against that. But this I'll let you describe in a second. But these changes at the federal level maybe have actually accelerated the timeline over which the recommendations and the thought we had put into that report have become even more relevant quicker than we thought that they would.

So maybe you should lay out the premise because I probably just did a poor job and sort of give us the context for what the report was arguing for in terms of a quote, unquote, new operating system and why the current moment, in the current context perhaps is conducive to that.

Macke Raymond

Well, first, you did a beautiful job setting this up, so thank you. The clarity of your introduction is really helpful for all of this. So we've known for a long time that the current way that K12 public education operates in the United States isn't getting the job done for lots and lots of students. And we would also argue the entire system itself continues to not produce graduates and product that is actually internationally competitive. So we've known that for a long time. We also know that a lot of what we've tried to do to improve education has not worked. And based on some earlier work at the Hoover Institution, we dug into what was behind that. And one of the important conclusions there was that we have created a system that is phenomenally capable of resisting change.

It is intransigent in really, really important ways. And so this brought us to the question of what would it take to actually have a public education system—federal, state and local—that really was capable of adapting, was capable of innovating, was capable of disrupting where it was necessary in order to make sure that students were getting the kinds of academic and non academic preparation that would set them up for success. All, all the things that we want for our kids. How could we think about the system as itself as a lever for doing that? And so the Education Futures Council was brought together to sort of ponder that question. And the conclusion that the Futures Council members came to was that the way in which decisions were made and executed in K12 from the federal and state and local levels were actually a big, big deterrent to effective operation and effective impact on student learning. And that led to then, okay, what would be a better approach to thinking about what we call the operating system? So we're not calling for a different curriculum, we're not calling for a different staffing model. We're not talking about a longer school year or a different school model. We're really talking about how do the institutions themselves work on their own and work together.

And the Futures Council report, “Ours to Solve Once and For All,” posits that there is a possibility of reorganizing what happens at the state and federal level and at the local level in order to create a much better environment for creating conditions for positive learning for students. So that's the purpose of the report. We in a million years would never have expected what we've seen in the last six months. Our initial thinking after the publication of the report, which happened last October, before the election, we thought we were talking about a three to five year timeline of very carefully building a coalition of both advocates and policy leaders to basically try to enable some of these kinds of changes that the report called for. And then the inauguration happened. And within a very short period of time, it became clear that the field of play at the federal level is open for the kinds of disruption that might be possible in order to advance this more productive conversation about the institutional arrangements. You could think of that as a new federalism that we're advocating for. And the conditions have softened at the federal level to the point where this could actually be a constructive conversation.

Michael Horn

I want to dig into a bunch of those parts. Maybe first for the audience, let's lay out, like, as you all see it, what would be the pillars or commitments, I think is the way the report phrases it, of the new operating system. And what would the different actors, local, state, federal, what would be their responsibilities, if you will, in such a system? And maybe once we have that understanding, then I have so many questions for you. So let's start there.

Macke Raymond

We have a limited amount of time, Michael.

Michael Horn

Yeah, yeah, it's true, it's true. So we'll do our best. Yeah.

Macke Raymond

All right. So every single enterprise, whether it's private business, whether it's a social service agency, whatever, they have to have a few operating essentials in order to function. And we call for those as operating essentials for the new operating system. They involve being very clear about what the outcomes are that you want to achieve. And so the report is calling for a broader definition of student success and new measures in order to reflect whether or not we're making progress on those. Second part of that is a regular system of measuring how students are doing. Certainly coming out of the pandemic, we collectively as a nation, care a whole lot more about what students know and can do than we did before. A bad way to get that gift, but I think we can leverage that and move that forward.

And then after a measurement system, we have to be candid about the fact that there's a broad range of performance in the system in schools that we have to acknowledge. If we're committed to making sure that every single child gets the preparation for a life of opportunity, then we have to have accountability. It doesn't have to look exactly the way that it has for the last 25 years, but accountability definitely has to be part of the system. And finally, it sounds like a no-brainer, but we really have to create and assure that there are safe learning environments that are conducive to both instruction and learning. And that's not a trivial thing. So the current debate about cell phones in classrooms, the whole problem of school security, whether it's digital or physical, plays into that. We have to make a commitment that schools are environments in whatever way they actually roll forward.

Decentralized Education Policy Reform

Macke Raymond

They are environments that are safe and conducive to learning. So those are the operating pieces. The commitments are that we need to change the way in which we do business. And over very many years, like 40 now, 45 years, what's happened is that we have created a very strong top down directive process for setting education policy. And it doesn't make sense to us that that should be the case. We have huge variation across the country in terms of what local conditions look like and what learning environments look like across the country. And so having somebody who is from a very remote perspective choosing typically a one size fits all solution and then wondering why it doesn't work across all the settings that it's tried to be adopted to, and then blaming people on implementation infidelity doesn't make sense to us. So we're looking for a different approach to building capacity so that there can be a regular culture of adaptation and innovation towards student learning.

So not local people reinventing the education process, but that they are capable of understanding what new tools are available and putting those to good use. And if that's the place that we want local folks to be comfortable and proficient, then the rest of the system has to modify to make that happen. And so that suggests a different role where we're actually saying the learning environment is the top of the pyramid, not the bottom. So we're not top down, we're supporting up. And that means that the role of local agencies and state agencies and the federal agencies have to understand what they are good at and what they can provide. That would be a constructive contribution to this new approach. And that speaks to being a whole lot clearer about what does work and what doesn't in particular environments. Capturing that information, making that information available to local actors in a way that's really constructive and useful and practical.

It means that we want to know at a more continuous level how schools are doing and create incentives so that schools are facing conditions that align adult interests in getting better themselves with the improved outcomes that we want. And clearly this talks about a different attitude on the part of adults from the top to the bottom, that these are all now opportunities for really thinking differently about the professionalism of the work and how we cultivate and support that over the lifespan of individuals as educators and as other actors in the system.

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Rethinking Education for Advanced Manufacturing

Michael Horn

So let me try to make it like, present an example that feels very different from what we've had and help us fit this into the framework or not, I guess so at one level, let's say I'm in a particular region, advanced manufacturing is a big employment outcome that has different competencies and skills and knowledge base, Right, that are, that are important for students. And we could pick our flavor of Advanced manufacturing. But just stay with high level for a moment at the local level. I think what you're saying is like we would say these are the student outcomes that we want to see and we'd have a professional teaching force that reflects what it looks like to educate students to be able to do those things. And if I hear you right, the role of the state and even federal would be less like dictating did you hit a certain test that everyone has to hit? And more helping us have tools to measure, perhaps have tools to understand which jobs are in demand maybe and what and like research basis of therefore these are the skills taxonomy,

Someone might want to learn, you know, in demand fields or we see a shift in supply demand. Therefore your outcomes might want to change. And so it's more informed into that. Tell me like, start to edit that, where is that right and wrong?

Macke Raymond

So I think you're on the right track there, Michael. We think that there are really strong outcomes that we need to be unapologetic about, but I think we need to be a lot looser on means on the pathways to get there. And let's face it, even in today's landscape, there are schools, there are districts that are already doing well. There's no reason for us to start trying to shape their behavior. They know what they're doing and we should not have a heavy hand on that. We should say you're able to demonstrate that you're having strong learning outcomes. We should back off where the emphasis and the attention is necessary, and I think better placed is on helping those communities where the learning outcomes are not as strong as we would want them to be and that they want them to be and help them understand what the right combination of success elements could be for them.

Again, we're not expecting people to go and innovate on their own. We're not expecting people to on Sunday night build new curricula for their classes for the week. We think that there is enough good stuff out there from successful districts, from successful teachers, from the research that shows us what works. We just don't harness that in a way that makes it easy for folks on the ground in local communities, in local districts, coaching local school teams. We don't make it easy for them to say we need to do something different. Here are five things that we know work in communities like yours. Maybe you want to take a look at those. Like it's sort of like a most favored nation kind of approach here at the local level.

But the state and federal opportunity here is to build the capacity to bring those exemplars of success and set the cultural expectation that if you're not meeting the same ratchets in communities like yours are able to hit, then you've got work to do and let's get on it.

Collaboration in Education Support Systems

Michael Horn

So it's almost like the, it's not a good joke, but the thing that I often say, right is like you don't have doctors building vaccines in medicine, right? Like that's crazy. You have, you have a separate set of companies that are doing that then supplying the doctors, et cetera. And essentially what I think I hear you saying is like, yeah, look, there's textbook companies and assessment companies, but actually there's a lot more that goes into teaching and learning that federal and state can be using its resources, whether that's consultative, advisory, connecting or maybe even building alongside, like to help support efforts on the ground. And that might be your school district, it might be your micro school, it might be your charter school. Forget about the form. Its point is on the ground getting support from other players that are able to see across geography or patterns or things of that nature. Is that getting even closer then?

Macke Raymond

Yeah, Michael, I think you're really zeroing in on this. I mean, we know that there are tremendous forces of change happening across the country and we're not putting the right emphasis on preparing local districts for the kinds of changes, local schools for the kinds of change that they're going to face. And so in addition to moving away from a top down regulatory mandate approach, we also have, I think, much more value in the system that we can harvest that states, for example, could be operating the development of some of these knowledge bases. I mean, one of the things that I've talked about for years is something that I call the institutional commons, where states have the data to identify what the best 4th grade math teacher is in the state. Why don't they set up some kind of an incentive system so that that teacher is open to sharing their full set of resources and that that's packaged in a really easy way for some other 4th grade math teacher to go get. Why don't we harvest: here are great ways to set up community based learning opportunities. And here are 12 different models that have been successful around the country so other people can learn on what are the right processes.

But also here are some models that we could just flat out adopt?

Michael Horn

Right and just take rather than reinvent the wheel. Or we might say, gee, it needs modification because our population has these sets of resources or these, you know, future aspirations are different here for whatever reason or something like that.

Macke Raymond

That's right. That's not to say that there aren't a lot of new learning horizons that as a system we need. We know that there's a huge R and D function at the federal level for building new measures and metrics for assessing this broader set of outcomes that we want. It doesn't make sense to have 50 states doing that work themselves in parallel. It's a huge fixed cost to do that. So that's an obvious place where the scale and the scope of a federal initiative would make sense. But there are places at the state level that do make sense, like being able to say this works well here is something that states ought to be really interested in getting behind and I think with a little bit of encouragement and support in the way in which we establish the new federalism, that's going to be a very fruitful path forward for state agencies.

Michael Horn

Yeah, that's really interesting. And I imagine it could link in with workforce development agencies at the state level that's seeing data trends of hiring is actually increasing here therefore right in a local district's not going to necessarily have the time or capacity to absorb that themselves.

Macke Raymond

Yeah. I'd put one other thing on the table there and that is that we have across the country a number of really wonderful examples of almost every single piece of this new system that we're talking about. We don't need to start from scratch to create the conditions. We have positive examples of a relaxed regulatory environment. The charter school world shows us what that looks like. We have great opportunity to redefine what the outcomes are we want from kids from the portrait of the graduates and these new workforce development models that span high school and post secondary. So it's not like we have to go all the way back to zero. What we have to do is we have to be smart and coherent and intentional about setting the system in a direction that allows for these kinds of changes to occur in the system so it better serves students and families and communities.

Ed Reform: Accountability and Growth Trends

Michael Horn

A couple things that spurs for me and I'll try to take them in sequence, but I guess the first one is, and you can correct me if this is wrong because you are way more expert in measurement and tracking student learning than I will ever be. But the sort of the narrative I think of ed reform over the last, let's call it eight years maybe has been like, okay, student achievement grew during no Child Left behind era. There was a lot of friction in that accountability model. But we saw growth 2011, 2012, somewhere around there. It starts to taper and actually fall off even before the pandemic is the consensus around accountability weekends. But what I think the story doesn't tell is that actually a lot of that growth was also driven in the late 80s and then through the 90s, before the federal government sort of solidified some of this stuff through state action. And so I would love you to just reflect on like, sort of people who say, whoa, wait a second, if we decentralize too much, isn't that going to be that sort of led to some of the Common Core conversations, as I recall.

And I think I hear you saying that might not be the only way to look at it. And so I'd love you to just to sort of help us navigate that conversation around what's centralized versus decentralized.

Macke Raymond

We have relied on states for the most part, to define what the outcomes are that we want and the learning standards. And I think that that is an appropriate exercise at the state level. If you look at the learning standards across the states, and it's an ugly project to undertake, so I wouldn't recommend anybody who's sane to do that. The learning standards are pretty consistent. What you might argue is that we have piled on more and more learning standards that are making the whole thing chaotic. I would point to Indiana, where they went through a very unsexy process of being very, very intentional about reviewing what are the critical standards that we absolutely have to have. And what came out the other end was a series of very, very deliberate learning standards that were scaffolded beautifully from early to late public education that lent themselves to a much broader set of engagement with other learning experiences and tying into some of the workforce development stuff that's very top of mind in Indiana right now. We know that can happen, and we think that that's a right place for it to happen is at the state level.

Having said that, I think there's always a role at the federal level to advocate for and to protect student groups that we know from state level data are not getting a fair shake. I think there is a complete justification for protecting vulnerable populations with federal standards and an expectation then that we would measure and pay attention to that and potentially intervene with additional pressure if that has to happen from the feds. If in fact some student groups are not getting the same kind of shake. I mean, that was the origin of the civil rights activities to begin with. We have vulnerable populations of special ed. I would also say we're in an era now where students are differentially vulnerable in terms of their status as legitimate students that come from a variety of origins. But I can see that this would be an area of ongoing concern. So yes, I do think that there is a sort of a bottom line protection of individual students and their right to an education that has to be federal.

It's part of our sort of constitutional commitment and our democratic fabric that we believe everybody has opportunity and should be prepared equivalently. So I like all of that. I do think that there are lots and lots of cross state opportunities that exist. There are models for schools that are coming up both through the traditional district realm and through the charter school realm and charter management organizations that set the tone for potentially national models of schools and potentially national networks of schools that we don't think about today, but we ought to be open to because they can set such a high bar for student results that they ought to have some kind of a recognition that says these are exceptional schools. Exceptional schools ought to have additional privileges within states, their exceptional schools ought to have additional privileges and additional autonomies. But also these emerging national networks and constellations of schools, if they're stellar, then we should be able to allow local schools to affiliate with these networks and not stand in the way of that. And that doesn't mean you'd give up local control.

It's just that they have a membership option that says quality could come from outside the local area, it could come from a national federation of schools, and we should encourage that if it's really high quality.

Michael Horn

And so in terms of the federal role right now, it seems like I hear you saying, on the one hand, I'm just thinking about some of the tensions here. Like it seems like on the one hand they've said we want states to lead, so that's an opportunity. And maybe frankly, it's an opportunity for experimentation because we don't know exactly how this new operating system should look. But two, I also see like a bit of a potential retreat. I know it could be a reset, but it also could be a retreat on some of the research functions that the federal government's traditionally done. And so I'm curious, like how you're thinking about what's opportunity, what's vacuum, what's threat, what's, you know, how do we drive this forward in line with this vision right now?

Decentralizing Decisions

Macke Raymond

Well, so a sort of a rule of thumb that I have been using in my own thinking and in the conversations that I've been having is that decisions should be handed down to the lowest possible level where you have high quality and scope at the same time. And so with, with all the good intentions of lots of the federal programs that grew up over the years. There were a lot of things that were happening that didn't have to have a federal footprint on them, that actually could have been handled effectively at the state level. And so that part of the reset, I think, has some positive upside to it. The things that I think have to stay at the federal level are clearly the national assessments of what students know, because that's the truth, that's the light of truth across all these state systems. And we can't give that up. The second thing is I do think that there are a new set of federal priorities for research and development and I want to stay away from the R and D umbrella because that constitutes a different set of things. There's a role for federal involvement in R and D.

But here I'm really specifically thinking of undertaking specific programs of research on new measures, on new assessments, on emerging practices in light of AI and all of these tectonic changes. There are things that the federal agency has line of sight on that also scale best at the federal level. And so I do have a sort of a wish list under my blotter on my desk about what that might look like. But I also think then that continuing the attention on vulnerable populations and using this moment to instead of be mandate focused and regulatory focused, use this moment to cultivate a kind of capacity building at the state level, is a phenomenal moment that I really hope we don't miss. And I really am anxious to see that that becomes part of the ongoing commitment to public education that we have as a nation and that it has a strong presence at a national federal level.

Michael Horn

As we start to wrap up here, let's stay on that vulnerable student population piece because one of the things, as you know, I'm super intrigued by these education savings account states, it shifts accountability in my mind to the parents, frankly, themselves, but a real concern, and I grant it is like in a world where we are thinking more deeply about high quality instructional materials, coherent sets of background knowledge right across discipline to turn people into really good readers and things of that nature, if someone's experience specifically from a low income background becomes more fragmented, maybe they lose some of that connective tissue. How would the federal role be to really be using its scale to sort of spotlight that, find trends that you might not be aware of and help local actors, I mean, even down to an individual student. Or is that overreach? Or is it more like identifying trends and building capacity? Like how does that all shake out? So we maybe use the benefits of choice, but don't lose some of the negatives that can come from incoherence.

Charter Schools: Challenges and Incentives

Macke Raymond

Frankly, this is a moment that actually happened in the charter school world. As networks of charter organizations formed into charter management organizations and communities had larger shares of their students enrolled in both charter schools and charter management organization schools. We faced some of that, that there was an incentive on the part of new entrants to really zero in on what their sweet spot was and be careful about what the protecting the brand became important. I'm not saying that charter schools shed students because I don't think that happened. Our data never showed that that was the case. But there was always the incentive that there were students that were going to be very difficult to serve and that the expectation and the incentives were set up to keep those in the public sector, in the district public schools. I worry that as we proliferate the number of choice paths that we have, that we're seeing, we have the potential for seeing something similar and that if we have different standards of performance across all of these models, that we are in fact inadvertently going to be creating tiering of outcomes. And it's not clear to me that putting parents as the final arbiters of quality is going to be as successful and productive as many of the choice advocates think, unless we can tie that to very clear understanding of what the outcomes are that students have to have in order to be successful and real transparency about how these individual models are delivering on that.

So I see accountability evolving to stratified accountability. That's very clear about what the channel is that students are pursuing for their education.

Michael Horn

And so just staying with that for a moment, I'm just trying to think how practically that looks. In some sense it's like an asset based view of the world of like maybe, maybe a local community concludes this branch of mathematics is not important. We don't think for our future, fine. But it's going to be reflected in that you're not showing mastery of that. And then someone might flag that and say, hey, just want to make sure you're aware you're not preparing your students for fields that take advantage of this branch of mathematics. And maybe that's an intentional choice, but. But we want to make sure it's transparent.

Empowering Parental Choice in Education

Macke Raymond

Certainly transparent, but where there are lots of choice vehicles, you could imagine that a district would say, you know, collectively we don't really need physics, let's just say. But it turns out that somebody really wants physics for themselves or for their child, then the ESA piece can kick in there and say, no, no, no. You know what? I'm going to customize this with an ESA because I really want physics for my child. The problem is a lot of parents don't know what they really want for their child in that level of specificity. And I think that's a state function to make sure that parents are actively informed and can easily exercise their wishes for their kids and transact in a larger choice environment in a way that's productive for their kids.

Michael Horn

So in some ways that's what like Amy Guidera was doing in Virginia, I think around reading of making it super clear to parents, hey, just want to be clear. This is where your kid is at from a reading level perspective. This is the curriculum. We think that. I can't remember how far she went, but I think it went fairly detailed into this may be why the gaps are there. So that parents built a level of information that they wouldn't have otherwise had and they didn't have to go seek it. I think that's the other important part of it, if I remember.

Macke Raymond

Yeah, you're right about that. A related example, Michael, is that underperforming schools and districts in Louisiana were given a menu of high quality instructional curricula and material that they could choose from. Right. They still had the power of choice, but they couldn't stay in a position of inferior production. And so I see that as part of the sort of new accountability work that I think is a natural part of the new federalism, helping states develop that kind of capacity, that kind of information, and making sure that that connection to students and their future is a solid one for everyone involved.

Michael Horn

Really helpful. Okay, final thoughts. Things that we ought to keep an eye on as this ball continues to move. I'd love your thinking along that.

Embracing Change in Education

Macke Raymond

Well, I'm gonna end with throwing you a rose. That it's probably a very old rose at this point because it goes all the way back to disrupting class. That the models of disruption that you called for before were so in the context of the system that existed at that time and the environment were so radical. But guess what? The world has grown into your scenario. And so I just want to say I think this is an era of phenomenal change. And the question is whether we let the change happen at us and to us or whether we grab onto it and make that change work for us. And so want to thank you for all the years of talking about the fact that this is a natural process and that we should get there. And now that we're here, really hope that we can work together across both political spectrum and across geographic boundaries to really create the system that best serves our kids with that kind of approach.

Michael Horn

Well, the best thinking being done in that system is from the work that you've done. So huge thank you for coming here and talking about it, but for putting out the report. For those that don't know, if you just Google Hoover Institution and Ours to Solve Once and For All, you will get that PDF report. But there's also a really cool on The Education Future Council.com site where you can get the report as well. There's also a video around it, an AI generated podcast. There's a lot of resources that we have just scratched the surface of, so check all of those out for sure. What else should they follow?

Macke Raymond

Well, I think the best thing they can do is just follow along, paying attention to what the public debate is and be ready to jump in because their voice is going to be extremely important.

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