Patrick Byrne may seem like an atypical education reformer. He has no children, doesn’t invest or plan to invest in private schools, and he’s much better known for being an investor and starting his career with Warren Buffet. Yet he is the head of First Class Education (an education reform group advocating that 65 percent of school budgets be spent on instructional expenses) and the largest contributor to the campaign for school vouchers in Utah.
His passion stems from two places. First is his understanding of how public education affects the future workforce that businesses, including his, will employ. The second is more philanthropic. Byrne has lived the American Dream, and he believes that every child deserves that same chance. “Utah’s education system is fine for many children, but is failing others. I believe all parents deserve the chance to choose the education that is best for their children, and that will give them the best chance for success in life,” Byrne says.
An investor by trade, Byrne had been the CEO of two companies by the time he started Overstock.com in October 1999. He saw how the Internet could efficiently provide wide access to close-out and excess inventory from manufacturers and traditional retailers and launched Overstock.com without any outside funding. Overstock’s gross sales have grown from $1.8 million in 1999 to more than $800 million in 2006.
Today Overstock has nearly a thousand employees, all in Utah. From that standpoint, Byrne considers himself and his company an “end user” of the product of public education. He hires the graduates of Utah schools to implement his vision and make his company work. He says having a well-educated population is a key factor for all businesses in their ability to operate efficiently and successfully.
“Utah has tremendous societal advantages when it comes to education,” Byrne says. “Families are strong here. Also, Utah invests highly in education.”
Actual performance in Utah schools, however, is around the national average, according to the Nation’s Report Card, published each year by the U.S. Department of Education. In 2007, 26 percent of high school seniors failed the state’s Basic Skills Competency Test. The achievement gap between white and minority students is large and growing.
Byrne, who himself is a former college professor, believes that Utah’s teachers, most of whom are talented, caring, and hard-working, “are trapped in a bureaucracy-laden, union-dominated monopoly that is isolated from market forces. Students are trapped in that same system, where there is no incentive for success and no consequence for failure—at least for the system itself. Children, parents, and then employers are the ones that deal with the consequences of mediocrity. Students graduate without demonstrating basic competency for success in college or the workforce, and then employers in Utah struggle to find qualified employees.”
Byrne’s opinion is supported by the findings of the Employer’s Education Coalition, which then-governor Mike Leavitt convened in 2002 to study Utah’s public education system. Their report said that the system was in “crisis” and was producing graduates that were not prepared for college or a career. Colleges and Universities reported having to spend more and more money on remedial classes to fill in the gaps, and companies reported spending more and more money on training to give new employees basic work skills.
As a leading member of Utah’s business community, Byrne and Overstock face the same challenges. Beyond that, though, is the larger picture and greater concern of the lasting impact on children and society. “Setting aside how unprepared graduates effect businesses’ hiring and efficiency, it’s the graduates that suffer most when they complete school without the skills they need to succeed in life,” he says.
“Those graduates will struggle to find and keep good jobs.” Children from poor families, who are more likely to attend the worst performing schools, will be unlikely to break the cycle of poverty, Byrne believes. Children who grow up poor, and don’t get basic knowledge and skills, will remain poor and pass poverty on to future generations.
“Every child deserves the chance to reach the American Dream,” Byrne said. “Until we change the structure of education in Utah, fewer and fewer children will have that chance.”
Byrne believes that vouchers are a necessary step in improving education. “Schools treat students as revenue generators instead of as customers,” he says. “By providing families with the financial ability to make real choices, we are providing financial incentive to all schools to treat children and parents like customers. When that happens, the quality of their product, education, will go up as schools recruit, attract, and retain students.”
As education improves, Overstock’s future employees will be better prepared to enter the workforce. Those benefits aren’t limited just to Overstock, of course. All Utah businesses will benefit from having a workforce that is better prepared and better educated. Most importantly, according to Byrne, the students will be better prepared to succeed at the next phase of life.”
Byrne points to other voucher programs across the country, including those in Wisconsin, Florida, and Ohio as evidence that vouchers work. “In all of these programs, parents are more satisfied, students do better in school, and graduation rates increase. It’s a question of efficiency and incentives. When families have choice, schools have the incentive to improve their product and the manner in which they deliver it. We need innovation in all schools, whether or not those schools are run by the government.”
Talking with Patrick Byrne it is clear that his beliefs are strongly held. If his ideas are implemented, he believes that all of society will reap the rewards. “When we can improve the quality of education and deliver it more efficiently, everyone will benefit: Most importantly the children who get educated, the companies that employ them, and the society that invests in the education system. Everyone wins, except for the unionized monopoly.”