It’s All About Money and Power: an exclusive interview with Peter R. Denton

Published March 1, 2002

Energy = MC2

Just as Einstein had a formula for transforming solid matter into energy, New Jersey engineer-businessman Peter R. Denton has a formula for transforming America’s public schools into education powerhouses: 

Parental School Choice = E3

Empowering parents with school choice, Denton says, reforms public education to produce Excellent Education for Everyone.

E3 also is the name of the organization that Denton, his wife Audrey, and Newark city councilman Cory Booker co-founded three years ago as a coalition of Garden State citizens sharing similar views on school choice despite differing religions, ethnic groups, and political allegiances. E3 has grown rapidly to become one of the largest grassroots school choice organizations in the country, with a budget of over $2 million and a paid staff of 15 to 20 people.

Peter Denton is chairman of Denton Vacuum, a Moorestown-based high-tech firm started by his father in 1964 to serve the precision optics industry. After graduating from MIT in 1967 with a B.S. in electrical engineering and earning an MBA from Harvard Business School in 1969, he worked as a management consultant with Peat, Marwick & Livingston before taking a job to manage the finances of Donley Manufacturing, a Boston-area jewelry manufacturer.

He joined the family business in 1976 and was named president in 1982. Denton expanded the firm from 35 employees in 1976 to over 100 in 1990, with the Denton Companies now generating annual revenues of more than $20 million.

But in 1999, at the age of 53, Denton turned his successful businesses over to his managers, resigned as president, and turned his attention to reforming public education in New Jersey. Although a product of public schools himself, he had become disillusioned with them as his two children attended supposedly good suburban public schools that he came to regard as expensive, bureaucratic, and unresponsive to parents and students.

Denton’s sister also provided him with further insight into public education issues through her involvement in the charter school movement in the District of Columbia. Finally, as a businessman recruiting new employees for his firm, he had found that a very large number of applicants from inner-city communities were just not literate enough to meet the requirements even of simple entry-level jobs.

Denton spoke recently with School Reform News Managing Editor George Clowes.  

Clowes: What was your motivation for getting involved in school reform?

Denton: In the mid-1990s, things were going very well in business terms and I realized I could spend another 10 years making more money or I could give something back. I decided to work on fixing the public education system in New Jersey, which is a $16 billion industry. I had no comprehension of the magnitude of the task I was undertaking.

My motivation for working on fixing the system is because it is the right thing to do. We cannot have a functioning democracy with a permanent underclass that is racially segregated both geographically and economically. It is a civil rights issue and an issue of fundamental fairness.

There’s no question that, on the business side, we are impacted by the education system, but I get very concerned when people say, “Well, you only care about this because you can’t get good employees for your business.” In my view, that’s an insulting, racist, and ignorant statement.

People who run businesses are citizens of this country. We want this country to grow and survive and be a fair place for everybody to live in. If the country does better, then obviously our business environment will be better, but we get no direct business benefit.  

Clowes: How did you settle on parental school choice as the reform mechanism?

Denton: That’s a key question. When I started to do this, I decided to get educated about education and I started going to conferences. I found there were two vastly different types of conferences.

One type was the professional educators who talked about the reform du jour. They would talk about a different textbook, or different hours per day, or different teacher certifications. But there was no interest in making any substantive changes and no interest in establishing measures of accountability. The focus was on the process and increasing the cost of the process. That meant more jobs, more money, and more contracts. To me, that is simply re-arranging the deck chairs on the Titanic.

Now, many of us have grown up with the public education system. It never occurs to us there could be a different way until we step back and ask, “What works organizationally in our society, and what doesn’t work?” We know bureaucracies don’t work. We know monopolies stifle innovation and are very expensive. In this particular case, we’ve got a monopoly that is also a bureaucracy–the worst of all possible worlds. The public school system is a monopolistic bureaucracy.

The other type of conference had relatively few professional educators or had people that had given up on the professional education field. There would be ex-teachers and ex-superintendents who had realized good people in a monopolistic bureaucracy could not do good things. They said, “We have to look at different power relationships and different organizational structures to get education done. We have to create competition to breed efficiency and innovation.”

If you look at K-12 education in New Jersey, approximately 20 percent of the schoolchildren are disadvantaged and live primarily in urban districts. Parents there have no educational options. Their children are told to go to their local neighborhood school. Those schools have no competition. They do not function.They are the worst.

The other 80 percent of the schoolchildren tend to be middle class and they live primarily in suburban and rural districts. Parents there have enough money to send their children to private schools or they can move to a district with better public schools. Because the parents have the option of moving away, those school systems have competition. They function reasonably well.

Now, you could decide, as many professional educators do, that the problems of urban schools have nothing to do with the school system and that the socioeconomic characteristics of the parents are to blame. I utterly and totally disagree with that, which I view as a racist slander. There are many, many examples of children from disadvantaged environments being educated very effectively by both public and private schools. It’s a matter of having an organization that believes those children can be educated.

Getting back to your question: why school choice? School choice is simply a transference of power over the money for a child’s education from the school monopoly to the parent. It empowers poor parents to get control over the public dollars allocated for their child’s education in the same way that suburban parents have that power. School choice spreads fairness to all of our parents.

In our view, school reform–particularly in urban districts–has very little to do with children and education and everything to do with power and money. It’s purely a question of who has money and power, and who doesn’t. Disadvantaged parents do not have money and power, and therefore they have no control over their child’s education. They cannot force competitive improvements in urban public schools the way that suburban parents can.

What parental school choice is all about is transferring control over the educational spending from the bureaucracy to the parents. We think that’s a necessary pre-condition to all of the other reforms necessary in the school systems. You cannot implement the kinds of reforms people want unless the parents get control over what goes on in the school building by having the power to take their children and the money somewhere else.

Once parents have that power, the schools will be motivated to make substantive, real reforms. And, because the parents are always there, those reforms will stay in place over the generations.  

Clowes: I understand urban districts in New Jersey have relatively high per-pupil expenditures. How did that come about?

Denton: Our state Supreme Court has ruled the urban districts must be funded to the same extent as the suburban districts. That ruling was implemented by supplementing urban district funding with state dollars. As a result, a very large proportion of urban funding now comes from the state.

Since the local school boards no longer have to answer to local taxpayers for funding, there’s been no effective check on urban spending, which now is substantially in excess of suburban funding. Our statewide average is $12,000 per child, but in our urban districts, it’s $15,000 per child or even higher.

Even with that spending, since the late 1970s, when the funding imbalances were corrected, there has been a continual downward trend in all performance measures for urban school districts. Graduation rates, attendance rates, college acceptance rates–any statistical measure you want to use about New Jersey urban schools–have gone down in the last 25 years, while spending has gone from substantially below suburban spending to substantially above.

New Jersey’s lesson for the rest of the country is that dollars alone are not the solution. Spending more dollars with no change in control will lead to continued educational failure and bankrupt taxpayers.  

Clowes: You want to bring school choice to parents in urban districts. What’s in it for suburban families?

Denton: This is a basic issue of civil rights. The people who are most damaged by this school system are people of color, trapped in urban school systems. One of the comments that’s been made by African-Americans is that the battle a generation ago was to go to the lunch counter. The battle today is to be able to read the menu. This is an issue of civil rights and basic fairness that everybody should be on board with.

Also, in New Jersey, it’s the suburban taxpayers who are paying for the urban schools. For example, the Newark school system is about 90 percent state-funded. Suburban citizens should demand performance from those schools. It’s their money. It should be spent efficiently. It should result in children being educated and becoming functioning members of society. Instead, right now, urban high schools are prep schools for prisons.

Clowes: There’s considerable interest in helping disadvantaged urban children through privately funded scholarships and tax credit programs. Did you consider that route?

Denton: School reform is all about empowering poor parents; they have to control the dollars. Although the tax credit programs in Arizona and Pennsylvania have been somewhat limited to date in the total amount of money involved, I would expect them to grow to the point where they could fund choices for 5 or 10 percent of children in urban districts. I view them as school choice programs because they involve reallocating tax dollars away from the bureaucracy to the parent.

The problem is, it’s not enough. We spend $400 billion a year on K-12 education, or an average of $8,000 per child for about 50 million children. Private scholarships tend to range between $1,000 and $2,000. That is not enough money for any private operator to create new schools that would be competitive with the public system.

But creating $8,000 scholarships for 10 million disadvantaged children would cost $80 billion annually. There just is not enough private charity available to provide funding of that magnitude. It has to come from reallocating control over the tax dollars currently going to public education. That’s why my wife and I decided not to start a school and not to do private scholarship programs.

We’re utterly impressed and supportive of all the people that have decided to do that, and we hope more people do it and continue to do it, but, at the end of the day, if you want to fix urban education, and education for disadvantaged parents, you’ve got to change who controls the public dollars.

Clowes: Do you have any suggestions for legislators who are considering education reforms?

Denton: First, legislators must listen to their constituents in the urban districts, where support for vouchers is very high. Second, they need to understand what parental school choice is all about. School choice is primarily an urban school reform for disadvantaged parents. It’s also not the enemy of public schools, but their savior.

Our whole message at E3 is that parental school choice is the reform mechanism for public schools. We don’t have much interest in the competitive schools themselves because our entire focus is: What do you have to do to make the public schools better?

Opponents of school choice and academicians waste an inordinate amount of time trying to answer the question, “Do students that have vouchers or students that go to charter schools get better test scores than their peers in the public schools?” It is the wrong question. One hundred percent of the children in the voucher schools and the charter schools are there voluntarily. Every one of them can go back to the public schools any time they want. Asking, “How they are doing?” is irrelevant. It is the wrong question.

For example, in Milwaukee, 80 percent of the children still are in schools operated by the Milwaukee public school system. The right question is, “Are those children doing better because of parental school choice?” The answer is: absolutely. Their test scores have shown a dramatic and steady increase since 1997, when the voucher program became significant in scope.

The Milwaukee public schools also have made organizational changes to ensure that the money and resources are put in the classroom, that good teachers are in front of the students, that administrative costs are reduced, and that the school buildings are safe–everything to encourage parents to keep their children in the Milwaukee public schools. Because parents have a choice of walking out the door if they’re not happy.

The key lesson from Milwaukee is this: If you implement parental school choice, public schools get better.

Clowes: So the most important feature of competitive schools is not that they’re good but simply that they’re there to prompt the public schools to improve?

Denton: Exactly. Their role in this effort is to force the public schools to be good.

Many people argue only the good students will exercise choice, leaving the public schools with the less able students. In fact, the demographics of the students who leave are about the same as the demographics of the students who stay. The reason for that is very simple. If the child is having a good experience in the public school, the parent is not going to change schools. It’s the students who are not having a good experience who are going to leave.

However, “creaming” does take place in urban public school systems as a result of the system’s own reform efforts. The first thing that’s done is to set up a magnet school or advanced classes in certain schools, or to give scholarships to the best and the brightest and take them out of the system altogether.

Creaming is a big problem in urban education, but it is a problem with the public schools, not with parental school choice. What goes on is educational triage; they pay attention to 10 or 20 percent of the children and write off the other 80 percent.