Philanthropy Roundtable Presentation by Tom Luce, CEO, NMSI

“From Lighting Pilots to Fueling a System: How Donors Can Scale Excellence in STEM Education”

 May 15, 2008

Chicago, Illinois

It is always a great pleasure to speak at the Philanthropy Roundtable because I feel very, very strongly that philanthropy -- particularly entrepreneurship philanthropy -- is what is going to be making the most difference in this country.   I believe we are at a very unique crossroads in our country and I want to talk to you about that today.

I’m going to deviate a little bit from the presentation to set the stage for what we have done and why the National Math and Science Initiative was formed in the first place.  I have been involved in education reform since 1983, which was the year that the “Our Nation at Risk” report came out and warned that our education system was failing to meet the challenges of a more urban, diversified nation.  When “Nation at Risk” came out, we proudly boasted that notwithstanding the fact that our nation was at risk, we still led the world in high school graduation rankings – today, we are 16^th in the world in high school graduation rank.  In 1983, we proudly boasted that we were number one in college graduation rank -- that’s no longer true.  We are, depending on how you look at it, probably 10^th in the world in college graduation rank.  Keep in mind, this is when we started recognizing national risk. Having worked since then on the issue of education, I hope I have learned a few things.  Let me share with you one of the major lessons I have learned, which I think applies to the reason why the National Math and Science Initiative was formed.  I hope it will cause you to think about your efforts.

Now when I started working on the problems in Texas public schools and I would be talking to business audiences, I would say, “Let’s look at the Texas public school system, just K-12, as if it were a business. Its annual revenues are $4.5 billon. It serves 4.2 million customers, or children, which is a pretty good size business. It employs 325,000 employees.  And by the way, when you talk about management, it has 1,000 school districts, which is just one layer of management, and it has 6,500 unit managers or school principals.  And you need to change that system.”  Well, that’s like changing AT&T 25 years ago, if you look at public schools as a business.

Now when you move that comparison to the national level, you have to understand again the numbers. K-12 public schools today educate 55 million school children in the United States. Private schools educate 7.7 million, so that’s 55 million versus 7. 7 million. That means for at least my children’s generation and my grandchildren generation, a huge preponderance of the American population is going to be educated in public school.  I am totally in support of charter schools, totally in support of vouchers.  However, at the same time, we also whatever leverage we have to change the public schools -- or else the numbers, the economic numbers in this country will not work. The growth engines in the American economy since 1983 have been California, Florida, and Texas. Demographics show that if we don’t do a better good of educating our Latino population, in 20 years the average income in Texas will decline $6,500, the average income of every Texan will decline $6,500. Today we are in fact living off of the accomplishments of the previous generation that was the most educated generation the world.

 If you look at our economic history, we have always benefitted from the education factor.  That’s why we competed and won the highest wage jobs.  If we don’t improve the education system for all of our citizens, then we are going to be competing for lower skilled jobs. The Federal Reserve Vice Chairman, just a year ago, said at least a third of the jobs in this country are capable of being outsourced.  Just last week, I heard Norm Augustine, who chaired the “Rising above the Gathering Storm” report, speak.  He said unfortunately, industry has the answer to our skilled labor shortage and that is to outsource.   If we have a third of our jobs that are at risk of being outsourced because we cannot provide the skilled workers here, then we have to become world leaders again in innovation and lead the world in skilled labor. Otherwise, you cannot pay enough taxes to support all the people who have not been sufficiently educated to hold a job in the information age.

This is something we must come to grips with as a country and a culture.  The public may understand the need for math and science education, but often they will say something like, “It doesn’t apply to my job,” because in their minds, we will still stay the same in this society.  Margaret Spellings has a wonderful way of putting it.  She said, “You know, when I go to a soccer match or a reception in Washington there is always somebody who will say that they can’t balance their check book.  Now nobody would brag to me that they can’t read.”  But we still have a population that still says to itself, “I wasn’t very good at math and science,” or says, “Johnny doesn’t need to be good and math and science, he is good with his hands.”  Well, guess what, times have changed. When I got out of high school you could be a high school dropout and if you had a strong back, you could get a job that would pay a living wage and support a family.  If you drop out today, no way, no way.

There was an interesting article in The New York Times two weeks ago, pointing out that the number of $20-an-hour wage jobs has declined dramatically in this country. That is what we used to call blue-collar jobs. There are no blue-collar jobs like that anymore.   Some 80% of the jobs being created today are what I call gray-collar jobs -- not exactly white collar executive positions, but requiring more education than blue-collar jobs.  More learning is required in the Information Age.  That means math and science is the new literacy of the Information Age.

What we have to do is convince the public that math and science is not only about innovation, but it also is about having a skilled workforce that can keep those jobs here after the innovative discoveries have been made.  Our drug companies today are outsourcing to India the follow-up on the basic research they have done.  That is a significant change and it is what I see happening across the world. That’s why I tend to say that we need a Paul Revere moment in this country, we need to understand that our standard of living and our way of life are threatened by the new age in which we live and our inability to educate every child to the standard of the new world economy. You’ve heard about the flat earth -- it’s true. You know it’s here and it has significance for everybody.

When I was in Washington, I met Commerce Secretary Carlos Gutierrez, a wonderful executive who used to be CEO of Kellogg. I asked him about the competitiveness issue and he said, “It’s simple: We won. We won the Cold War and we created and trained 3.4 billion new competitors in capitalism. That’s the completion that we face today. You can talk all day long about free trade, fair trade, no trade, lots of trade; the bottom line is that skills are going to matter. That’s what’s going to matter in the information age, it’s intellectual skills.  And there is nothing you can do to prevent innovative technology from being the number one economic engine in the country.

That brings me back to the National Math and Science Initiative.  One of the biggest problems I see facing our country is the challenge in math and science. One of the greatest learning experiences for me prior to working with NMSI was working with a nonprofit called “Just for Kids” on education reform.  We collected academic data in 40 states. We analyzed that data by grade, subject and student demographics, so that we could show on three bar charts, how schools were doing.  Number one is how your school did in grade three reading on passing and mastery.  Number two is how the schools in your state with a demographic just like yours did. And then number three shows how the top ten schools in the state did. That enabled us to have a real conversation at schools, because that kind of data can get over the first line of defense, which is, our kids are different. Every school’s first line of defense is: Our kids are different. They are white, rich and spoiled.  Or they are all poor.  Or they are all orange.  Or they are all pink. Or they are all black. That is the first line of defense.  That study enabled us to show in 40 states there were outstanding public schools in every grade in every subject in every demographic.

So in my mind, we have proven every child can learn, so what’s the problem? The problem is lack of public will and an institutional structure that works against scaling successful programs. Every business in this country benchmarks itself against other people. They learn from other people and they adapt and change what they are doing. That doesn’t happen very often in our country in education.  Unfortunately we in the private sector perpetuate that problem, because we start pilot program after pilot after pilot program.  I’ll have to say that we’ve lighted at least a million pilots in this country, but we haven’t lighted the central heating system.  Programs that help 1,000 kids are wonderful and I mean that sincerely, but remember we have 55 million that we have to impact, so I look at the National Math and Science Initiative in business terms.   I have been fortunate -- in my legal career, I represented Ross Perot for 30 years, so I’ve watched an entrepreneur build a business. Then I watched when Michael Dell started out at 25 years old and soon had $100 million in revenue.   What these successful entrepreneurs know how to do is scale up what they are doing.  In business terms, that’s what NMSI is going to do, take proven programs to a national scale.

Entrepreneurs are going to start new programs whether it is going to be “Lead the Way,” I think, was the name of one I heard about this morning, or “Reasoning Mind,” whatever.  If they have data and if they have the results and they are replicable, then the next step is to take them to scale so more students will benefit.  That’s what we set out to do.  We took two existing programs that produced dramatic results and we said, "We have to take these to national scale." We started with a RFP process. It was very detailed and specified that those requesting grants would have to replicate every essential element of this program. We had 28 states apply for grants to replicate our Advanced Placement Training and Incentive program.  On the university front, we had 52 universities apply to replicate our UTeach program to improve long- term the training of our math and science teachers.  We started with strong capital foundation of $140 million, thanks to a generous donation from ExxonMobil and additional help from the Bill & Melinda Gates Foundation and the Michael & Susan Dell Foundations.  But even that won’t take everything to the nation scale, so we are now trying to attract other financial partners.  We are also challenging the federal government, saying you ought to match what we are doing dollar for dollar. We are saying to the state and local communities, you match us dollar for dollar.  By combining resources, we have more leverage to make a difference. Our goal is to replicate these two programs in 50 states and in 50 universities.  We are already in 14 states.

Our goal eventually is to take other successful programs and follow this exact process of replication, because you cannot address the math and science crisis in this country unless we start taking successful programs to national scale. That’s the bottom line. It is a daunting task.  It is a scary task. But there is no other way to accomplish what we all in this room understand is needed and what the public is increasingly recognizing.  It is the only way for our country to grow economically and to maintain our competitive leadership in the world. And again, this doesn’t just apply to the top 5%, the top 1% of students -- this has to apply to 55 million kids. They have to reach a higher standard than they are reaching today, and the only way to do that is on a national scale.  Thank you very much.