Studies comparing the public and private sector find that the private sector generally tends to use resources--be they financial, human, or temporal--more efficiently. Researcher Louis De Alessi, Ph.D., compared the operations of the public and private sectors for various industries and found that the private sector was generally more efficient than publicly operated organizations.10 Says De Alessi, compared to the public sector, private-sector organizations tend to minimize the costs of providing a given service or product, are more likely to respond to consumer preferences, are quicker to adopt cost-saving innovations, spend less on facilities construction, and are more likely to compensate employees based on their individual performance.

In addition, private-sector compensation tends to be based on market-rates. Since the cost of labor is often lower in the private sector, overall efficiency is enhanced by using the private sector, particularly for labor-intensive organizations, such as education. A parallel comparison is the cost of teachers in public and private K-12 schools. The Department of Education reports that average-base salaries for private-school teachers are 37 percent lower than that of teachers in the public sector11

The Illinois-based Ombudsman Educational Services provides a good example of these kinds of private-sector efficiencies. Providing education programs under contract with the public schools, Ombudsman serves, on any given day, roughly 2,000 at-risk students in seven states.

Administrators at Ombudsman are few, with just one administrator for every 400 students. By comparison, the Chicago Public Schools, one of the districts with whom Ombudsman contracts, has nearly four times the proportion of administrators, employing one administrator for every 124 students.12

Operating as it does in the private sector, Ombudsman has greater latitude when it comes to scheduling, curriculum, and instruction. Ombudsman focuses exclusively on core subjects such as math, English, and social studies, providing students with an intensive course of study. Doing so keeps costs to a minimum. Its locations are modest too--most Ombudsman classrooms are located in store fronts or business parks.

Students attend the Ombudsman program for four hours a day, working at computers independently and at their own pace. Some students graduate from Ombudsman with a high school diploma; other students use the program to catch up on their studies before making the transition back to a regular public high school.

Teacher-staffing costs are also lower at Ombudsman. Compensation for Ombudsman teachers, as for teachers in private schools, is based on market rates, which tend to be lower than in the public sector. All Ombudsman teachers are licensed by the state in which they teach.

Instead of paying more for instructors, school buildings, and administration, Ombudsman puts its focus on teaching. Student-teacher ratios in an Ombudsman classroom are no more than ten to one. With between eight and ten students per teacher, Ombudsman is able to give greater individualized attention to students.

The bottom line? Such efficiencies are passed along to the customer. The cost to the public schools of enrolling a student in an Ombudsman program for a year (between $3,000 to $4,000) is about half the cost of most district-operated programs for at-risk youth. Moreover, Ombudsman boasts a retention rate of 85 percent among this difficult-to-educate population.