Chile’s Failed Free Market Education System Faces Overhaul

Chile has one of the oldest large scale universal school voucher programs in the world. It was established under the Pinochet dictatorship during the 1980s as part of a policy to create a free market in education through decentralization and privatization of the education system.

The system of school vouchers created a school system organized under three main types of schools: public-municipal, private-voucher and private-paid (independent) schools. Families and students were provided with vouchers to study attend either public-municipal schools or private-voucher schools that could be religious or non-religious and non-profit or for-profit.

In theory, public schools are free and open to all types of students. They are mandated to accept all students who apply. However, public schools in better-off areas tend to enrol students from better-off backgrounds and exclude low-income students by setting admission criteria or by transferring students to other schools if they are retained in a grade. Private schools are permitted to use parental interviews to select students.

Chile had a tradition of public financial support of private education, mainly of Catholic schools, before the implementation of the voucher system in the 1980s. A significant feature of the Pinochet changes was that each student received the same government funding to attend a public or private-voucher school.

Private-voucher schools and public high schools can charge a monthly tuition fee limited to 1.6 times the voucher payment. Over half of private-voucher schools charge fees and there has been a significant increase in the number charging fees since 1990. About 80 per cent of students in private-voucher schools pay fees. Many of these schools are for-profit schools. About 25 per cent of students in public high schools pay fees.

In 2008, the voucher law was amended to allow for the higher costs of educating disadvantaged students. An extra per-student payment of 50 per cent of the base voucher payment was introduced for students classified as disadvantaged and for schools with a high concentration of disadvantaged students.

The voucher system has resulted in a large shift in enrolments from public-municipal to private-voucher schools. Between 1990 and 2012, enrolments of public-municipal schools dramatically decreased from 59 to 39 per cent. In comparison, private-voucher schools expanded from 33 to 53 per cent of total enrolments. The number of private-voucher schools has more than doubled while more than 200 public schools have closed.

The voucher system has promoted a high degree of social segregation between schools. Chile’s education system is a form of education apartheid. In 2012, 43 per cent of Chile’s students were in socially disadvantaged schools and 34 per cent were in socially advantaged schools. The proportion in socially disadvantaged schools is the highest of all 64 countries participating in PISA except for Luxembourg and Macao. The proportion in socially advantaged schools is the highest of all countries except Luxembourg, Montenegro and Qatar.

Only 23 per cent of students are in socially-integrated schools compared with an average of 47 per cent across OECD countries. This is the lowest percentage of all OECD countries and is one of the lowest of all the countries participating in PISA – only Luxembourg, Macao and Qatar had lower proportions in 2012.

This extreme social segregation between schools is reflective of social segregation at all levels of Chilean society, with vast income inequality within the major cities and between regions. Chile has the highest Gini coefficient (a measure of income inequality) in the OECD and amongst the highest in the world.

Chile’s average reading, mathematics and science results are in the bottom quarter of the countries who participated in PISA in 2012. Fifty-two per cent of students were below the international proficiency benchmark in mathematics. Only Mexico had a higher proportion below the benchmark.

Yet, Chile is not a poor country by world standards – it is after all a member of the world’s club of rich countries, the OECD. Many countries with a much lower income per head do better than Chile in PISA.

For the past several years, students have waged a campaign of protests and strikes about education inequality and seeking free education from elementary school through to university. The students have kept up the protests under the new government of President Michelle Bachelet. Tens of thousands of students demonstrated in Chile’s major cities in May in support of free public education.

The President announced a major overhaul of Chile’s education system in May and has sent a new education bill to the country’s Congress. The President said that the bill is designed to give Chileans a quality, free and comprehensive education. The changes include ending public funding of private for-profit schools, making all primary and secondary education free, and prohibiting selective admission processes in schools receiving government subsidies.

However, student protests continue because they say the President’s plan does not go far enough. They want a ban on all for-profit schools and universities. They also say that the phase out period for the ending of the co-payment system is too long. In order to reach a comprehensive education bill, students and teachers demanded to be part of the drafting process. The Education Minister has presented a new bill to the Congress to grant citizens and student organizations a voice in education reform.

The President has proposed to fund the changes by increasing the basic corporate tax rate from 20 to 25 per cent and an additional 15 per cent will apply as income is earned, rather than when distributed as at present. These changes were opposed by major business interests and overseas investors, but last week a negotiated compromise was passed by the Senate and will go back to the lower house for approval.

The education bill is still before the Congress and opposition to it is building from private school interests, that is, Chile’s rich families.

Trevor Cobbold

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