With the short-term financial outlook for public schools being so bleak, I wonder how these circumstances will affect the way schools educate students. Will these economic conditions change our public schools in a fundamental way? Will America’s schools be forced to embrace the types of disruptive innovation required to keep them economically viable?

With these questions in mind, Michael Horn’s recent blog, Colleges Going Under, caught my attention. As a result of today’ economic crisis, many college administrators are finding their institutions badly undercapitalized.

Are public schools facing a similar fate due to rapidly decreasing revenues?

Evidently, many independent colleges are facing dire economic circumstances as a result of changing economic conditions conditions that will probably reshape the higher education landscape. According to a recent report by the National Association of Independent Colleges, too many institutions of higher learning are undercapitalized. Much like the current housing bubble, American colleges are facing a potential market collapse of catastrophic proportions. The reality of shrinking funding sources threatens their very solvency.

Horn’s analysis is interesting:

When we cite disruptions in the higher education space—such as teaching universities, community colleges, and online universities—a big question is do they have the room to continue to move up-market given the aid in donations and federal dollars established universities tend to receive? It’s a good question. Federal loans and grants, for example, allow families and students to avoid making quality-cost tradeoff decisions they would make ordinarily in a normal marketplace. This has the effect of propping up high-cost higher education institutions that otherwise might lose market share—and stifling lower-cost options.

Over the past few decades, the cost of higher education has spiraled out of control. As noted by Horn, much of the capitalization during this time came from federal dollars and donations which are shrinking rapidly. In the face of today’s economic crisis, can these institutions continue to remain economically viable based on the current education model, or will some sort of disruptive innovation take place that will transform the way post-secondary students are educated?

According to Horn,

This example suggests, however, that disruptive players can ultimately overcome this market distortion. Interestingly, just as we suspect that budget crunches in the years ahead will accelerate the adoption of online learning in high schools, so too will these same pressures likely exert a similar effect in the higher education market.

It seems just as many colleges are facing difficult choices due to the rapidly changing economic circumstances, many public schools find themselves facing similar challenges. As the current recession forces states to teeter on the brink of economic collapse, their governments are making deep budget cuts that will significantly impact the way these schools educate students in the future.

Facing these challenges, will public school leaders embrace the sorts of disruptive innovation that will enable them overcome these challenges? Will these economic circumstances force educators at every level to embrace the disruptive innovation associated with Web 2.0 technology?

I’m not so sure. When it comes to implementing this sort of technology in a meaningful way, it seems public school administrators face too many hurdles. With strong unions, insufficiently trained staff, and a general lack of technology know-how, I find it hard to imagine the traditional public school community embracing the type of innovation required to make a significant difference in terms of student learning and organizational efficiency.

Perhaps the effects of disruptive types of innovation will impact schools at a sort of grass roots level. As educational technology becomes cheaper, more effective, and more easily accessible to both students and their parents, schools will be forced to embrace it or become irrelevant.

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