University of Southern California Dissertations and Theses

Special education outsourcing: district privatization of therapeutic day schools for students with severe emotional disabilities

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Special education outsourcing: district privatization of therapeutic day schools for students with severe emotional disabilities

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Content Running head: SPECIAL EDUCATION DAY SCHOOL OUTSOURCING 1

Special Education Outsourcing: District Privatization of Therapeutic Day Schools for Students
with Severe Emotional Disabilities

by

Ryan C. Eisenberg

A Dissertation Presented to the
FACULTY OF THE USC ROSSIER SCHOOL OF EDUCATION
UNIVERSITY OF SOUTHERN CALIFORNIA
In Partial Fulfillment of the
Requirements for the Degree
DOCTOR OF EDUCATION

Dissertation Chair – Dr. Guilbert Hentschke
Committee Members – Dr. Katharine Strunk and Dr. Patricia Burch

May 2014

Copyright 2014 Ryan C. Eisenberg
SPECIAL EDUCATION DAY SCHOOL OUTSOURCING 2

Dedication
This dissertation is dedicated to all of the students and families I have worked with
throughout the years. There is nothing I enjoy more than sharing my love for life and learning.
It is my hope that you have learned as much from me as I have from all of you.

SPECIAL EDUCATION DAY SCHOOL OUTSOURCING 3

Acknowledgements
There are several people I would like to acknowledge and thank for their contribution to
helping me within my journey through this degree and dissertation.
First I would like to thank my committee chair person, Dr. Guilbert Hentschke. Your
humor, structured yet flexible method, valuable feedback, and great insight helped not only in
completing this dissertation, but also expanding how I viewed my study and the concepts I
encountered. I’d also like to thank my committee members, Dr. Strunk and Dr. Burch for their
time and feedback, helping make this a more complete and clear picture for deeper
understanding.
Next, I would like to thank all of the “smart people” (Assisi, 2011). I could not have
been paired with a better cohort. You all made Tuesday nights a valuable learning experience, as
well as, something I looked forward to and enjoyed on a personal level. Whether is was in-depth
debate, humor, the creation of Crewisms, or anything in between, you made my USC experience
a valuable one well beyond what I expected. I look forward to continued social events and the
ability to push our education system with the great minds I met within my group, thank you.
A special thank you to Kapolei High School, COMPASS, and the Hillsides Education
Center. You all have shaped my professional experiences, offered me opportunity, and pushed
me to pursue further opportunity. It is with the experiences and understanding from these
schools that I arrived at writing this dissertation. I truly value the co-workers, students, and
families I have encountered within my career and how that has helped shape me as an educator.
Finally, I would like to thank my family and friends. Without you I would not be here. I
appreciate your understanding and sacrifice, which have allowed me to take this journey in the
pursuit of stronger education for all students. Thank you and I love you.
SPECIAL EDUCATION DAY SCHOOL OUTSOURCING 4

TABLE OF CONTENTS

Dedication 2
Acknowledgements 3
Abstract 6

CHAPTER 1: INTRODUCTION
Background 7
Conceptual Framework 11
Statement of the Problem 12
Purpose 14
Research Questions 15
Limitations, Assumptions, Design Controls 15
Definition of Key Terms 19
Summary 22

CHAPTER 2: REVIEW OF RELATED LITERATURE
Introduction 24
Mental Health in and Beyond Schools 26
Transaction Cost Economics 36
Summary 46

CHAPTER 3: RESEARCH DESIGN AND METHODOLOGY
Introduction 49
Problem and Purpose Overview 50
Research Questions 50
Population and Sample 51
Instrumentation 58
Data Collection 62
Data Analysis 64
Table 3.1, Methods 70
Summary 70

CHAPTER 4: ANALYSIS OF THE DATA
Introduction 73
Report of Findings Question 1 75
Report of Findings Question 2 90
Report of Findings Question 3 106
Summary 113

CHAPTER 5: CONCLUSIONS AND IMPLICATIONS
Summary of Study 114
Conclusions 115
Implications 122
Future Research 123

SPECIAL EDUCATION DAY SCHOOL OUTSOURCING 5

REFERENCES 126

APPENDICES
Appendix A: District Interview 133
Appendix B: School Interview 136
Appendix C: Parent Focus Group Interview 138
Appendix D: District Survey 141
Appendix E: Parent Survey 143
Appendix F: Interview Recruitment Letter 145
Appendix G: Survey Recruitment Letter 146

SPECIAL EDUCATION DAY SCHOOL OUTSOURCING 6

Abstract
This study applies transaction cost economics theory (TCE) to understanding the efficiency in
organizational decisions to outsource programming. The purpose of this study was to examine
the factors associated with the decision a school district makes to outsource students with
emotional disabilities to private therapeutic day schools. I examined the contractual relationship
between the districts within a Special Education Local Plan Area (SELPA) and private, nonprofit
therapeutic day schools to determine the factors within the decision to outsource, as well as
influences on those factors as related to efficiency in decisions dealing with students identified as
emotionally disturbed (ED), through the lens of TCE. This qualitative study interviewed and
surveyed district administrators, day-school personnel, and parents or guardians to collect data
relevant to district decisions. Data collected was crossed and compared across collection
techniques and stakeholder groups to determine trends and connections, building an
understanding of the efficiency within district decisions. The study’s findings demonstrate that
decisions to outsource whole school models for students with mental health needs are currently
inefficient, and are influenced by opportunism, family means, and access to advocacy. The
findings add to the discussion of current school failure patterns for students with mental health
needs, and showed that current decision-making practices potentially add to the amount of failure
experience by students identified as ED.
SPECIAL EDUCATION DAY SCHOOL OUTSOURCING 7

Chapter 1: Overview of the Study
American public schools are essential in the development of academic and social skills
for children, enabling our students to become citizens within their communities (Hochschild &
Scovronick, 2004). Schools are designed to develop people through academic and social skills in
order to create citizenship that promotes the common good. Several factors, including policy,
school finance, socio-economics, disability, assumptions, bias, prejudice, and embedded school
traditions, impact the ability of all students to achieve success within the public schools.
Students with severe emotional disabilities (ED) as defined under the Individuals with
Disabilities Education Act (IDEA) are a group whose ability to achieve success in and beyond
school are at the greatest risk.
Students identified with ED are at a greater risk of school failure, suspension, and
expulsion than same-age peers across grade levels (Lane, Carter, Pierson, & Glaeser, 2006;
Wagner, Kutash, Duchnowski, Epstein, & Sumi, 2005; Davis & Stoep, 1997). These students
have higher rates of anxiety and depression in schools, and are rated by teachers as having less
developed social skills than peers. Students with ED are more likely to fail coursework, display
maladaptive behaviors, and drop out of school (Cullinan & Sabornie, 2004; Davis & Stoep,
1997). These risk factors contribute to poor post-secondary and life outcomes for students with
emotional disturbances (Lane et al., 2006; Wagner et al., 2005; Davis & Stoep, 1997), impacting
their ability to become productive and contributing citizens. Gaining information on this
population is of critical importance for identifying appropriate resources and designing
interventions to target an area of urgent need (Mark & Buck, 2006).
Tragic events involving widespread violence within our communities, such as the
shootings at Sandy Hook Elementary; Aurora, Colorado; Virginia Tech; and Columbine High
SPECIAL EDUCATION DAY SCHOOL OUTSOURCING 8

School, have begun to bring attention to addressing mental health needs within our schools and
communities (Cherikas, 2012; Healy, 2012; Schleisner, 2012; Soloman, 2012). Beyond these
violent events that bring attention to mental health within the media, individuals with mental
health needs have a generally poorer life outcome than peers (Rumberger, 2010; Belfield &
Levin, 2007; Lane et al., 2006; Wagner et al., 2005). Accessing mental health support is more
difficult and has more barriers than any other disability area or health-related service (Bringewatt
& Gershoff, 2010; Warfield & Gully, 2006; Wagner, et al., 2005). We know students identified
with emotional disturbance are more likely to be suspended or expelled, and to transition in and
out of several schools (Lane, et al., 2006; Wagner, et al., 2005). These factors increase risk for
failure within classes and for dropping out (Belfield & Levin, 2007; Lane et al., 2006). Research
shows that students who do not complete high school are more likely to be unemployed or
removed from employment, have poorer physical health, and are more likely to engage in
criminal activity than those who do (Belfield & Levin, 2007; Rumberger, 2010). Students
identified with ED are also more likely to spend time in hospitalizations and incarcerations (Lane
et al., 2006; Wagner et al., 2005; U.S. Department of Health and Human Services, 1999), which
draws on local and federal economies, and this should be considered when weighing the costs
and benefits of decisions around mental health services for students.
Students with emotional disabilities are at great risk within our schools and communities
(Rumberger, 2010; Belfield & Levin, 2007; Lane et al., 2006; Wagner et al., 2005). Still, there is
a considerable gap between the identification of the need for mental health support and the onset
of actual services—greater than in other disability areas (Wagner, et al., 2005). In the current
system, there are extreme barriers to accessing mental health care for children with mental health
needs (Bringewatt & Gershoff, 2010; Warfield & Gully, 2006). Parents of students with ED rate
SPECIAL EDUCATION DAY SCHOOL OUTSOURCING 9

obtaining services as being harder and more time consuming than parents of students with other
disabilities (Wagner et al., 2005). These parents are less satisfied with the schools of their
children, the teachers they have, and the services they receive. Litigation such as due process is
highest among students with ED when compared to other disability areas (Wagner et al., 2005).
Special education students cost more per pupil for education than their general education
peers (California Department of Education, 2012; Harr et al., 2006). Students identified as ED
can be a relatively expensive group when compared to peers. This expense is associated with the
need for lower staff-to-student ratios and supplemental services, including aides, behavior
supports, and counseling, and with the high rate of placement in contracted private schools for
students identified as ED (Heflin & Bullock, 2010). The poor school performance of students
with ED, their difficulty in post-secondary life (Lane et al., 2006; Wagner et al., 2005; Davis &
Stoep, 1997), and the rising costs (Harr et al., 2006) of educating these students, put pressure on
school districts to find a cost-effective system to increase student success.
A recent statewide change, the elimination of Assembly Bill 3632 (AB 3632), which
funded school-based mental health services through the Department of Mental Health, has
shifted responsibility for mental health support of students to the schools (The California
Alliance of Child and Family Services, 2012). This shift has created debate over to what extent
mental health support should be included in, or the responsibility of, schools. Students with ED
are the student group with the greatest need for support in mental health, and that support is
essential to their development within our schools to ensure higher-quality life outcomes (Heflin
& Bullock, 2010).
Making decisions in the interest of students identified with ED is complex. High expense
(Harr et al., 2006), assumptions and media attention (Cherikas, 2012; Healy, 2012; Schleisner,
SPECIAL EDUCATION DAY SCHOOL OUTSOURCING 10

2012; Soloman, 2012), lack of awareness or preparation (Walter, Gouze, & Lim, 2006), and the
need for quality, targeted specialized interventions (Heflin & Bullock, 2010; Adelman, 2000) are
all considerations when deciding how to support these students. Students identified as ED
benefit from services that address their academic, behavioral, social, and mental health needs
(Heflin & Bullock, 2010). School districts must consider student development and outcomes
when deciding on how to best address the needs of the most at-risk students within our schools
(Flaherty, Weist, & Warner, 1996).
My case study will investigate the complex decisions a SELPA and school district must
make when deciding on the treatment and education of students identified as ED or having
significant mental health needs. Decisions about appropriate schooling for students with mental
health needs are expensive and multifaceted, dealing with finances, local and federal policy,
unions, quality of life, parental concerns, community needs, political factors, and perceptions of
mental health. This case study will investigate the relationships among the districts within a
SELPA and two day schools they contract with, to begin the understanding of efficiency and
effectiveness within decisions to outsource schooling and services for students identified as ED
or with significant mental health needs.
The use of therapeutic day schools, both public and private, is consistent with
requirements of the Individuals with Disabilities Act (IDEA) of 2004, as these schools are
necessary to assure varied levels of restrictiveness in meeting students’ various needs (Gagnon &
Leone, 2006). IDEA strengthened the obligation of schools to provide appropriate educational
services to students identified as ED (Flaherty, Weist, & Warner, 1996). A school district or
SELPA’s decision to outsource therapeutic day schools for a school district is dual-faceted.
Districts must first find and select providers to establish contracts. Establishing contracts enables
SPECIAL EDUCATION DAY SCHOOL OUTSOURCING 11

the districts and SELPA to have resources and options when attempting to make individual
decisions about services and placement for students identified as ED. SELPAs assist in
negotiations of contracts on the first level of selecting vendors, and supervise the allotment of
monies across districts. The actual decision to use internally developed or outsourced models is
individual, based on individual student needs. This decision is frequent and can vary depending
on the student and circumstances. Within this level of decision making, parents and educational
rights holders become a third stakeholder group.
Conceptual Framework
Schools must decide how to meet the specific and specialized needs of students with
significant mental health and social-emotional needs (Heflin & Bullock, 2010). This requires
SELPAs and school districts to evaluate options in delivery of services. Options can be
developed internally or outsourced externally from the school district, or could include a
combination of both internal and external options. Mental health services can also be school- or
site-based, or of an off-site service model (Adelman, 2000). The lens of transaction cost
economics (TCE) (Williamson, 1973, 1985, 1999; North, 1990), considers factors associated
with organizational decisions. This study utilized TCE to analyze the complex decisions related
to outsourcing services for students identified as ED.
TCE is a framework that evaluates organizational decisions (Williamson, 2008, 1999;
North 1990). TCE allows organizations to make a well-informed decision when considering the
development of a service or system internally or when considering outsourcing to attain an
efficient desired outcome (Williamson, 2008). Transaction factors and the different tradeoffs
involved in the decision of outsourcing a whole school model for students with mental health
needs will be analyzed.
SPECIAL EDUCATION DAY SCHOOL OUTSOURCING 12

The decision about how to educate our students with ED is complex. TCE gives us a lens
to evaluate particular choices that SELPAs and districts must make in order to determine cost
efficiency (Williamson, 2008). With any decision a school district makes, there are costs
associated, including human uncertainty, unclear or grey areas within agreements, and third-party
influences (Macher & Richman, 2008). TCE allows us to examine these complex exchanges
through an economic lens (Tadelis & Williamson, 2012), to determine the efficiency of decisions
and agreements. Decreasing the transaction costs associated with a decision is essential in
determining the cost efficiency of a decision (Williamson, 1999; Brown, 1992; North, 1990).
Transaction costs arise because economic actors have only imperfect information to guide their
behavior and because the information they possess is asymmetric (Lamoreaux, Raff, & Tomin,
2002). My study will investigate the factors associated with decisions relating to students with
mental health needs, how those factors are influenced, and the efficiency of decisions based on
those factors and values. It will investigate the decisions, factors, and influences by exploring
the perceptions of districts (firms), day schools (vendors), and families (other actors and
consumers) within the TCE framework.
Statement of the Problem
The shortage of professionals in the mental health sector within schools necessitates
creative partnerships to meet the needs of children identified with ED or significant mental
health needs (Walter, Gouze, & Lim, 2006; Evans, 1999). A combination of poor and failing
school performance of students identified with ED (Cullinan & Sabornie, 2004; Davis & Stoep,
1997) and recent changes in statewide policy, which have shifted the responsibility of mental
health support towards school districts (California Alliance of Child and Family Services, 2012),
enhances the complexity of the decisions associated with this group of students. Schools have a
SPECIAL EDUCATION DAY SCHOOL OUTSOURCING 13

responsibility to support students in special education so they receive benefit from their
instruction and schooling (Flaherty, Weist, & Warner, 1996). Students identified as ED gain
from mental health support in order to benefit from their schooling. This is a costly expense
(California Department of Education, 2012; Harr et al., 2007) and a low-quality area within our
schools (Rumberger, 2010; Belfield & Levin, 2007; Wagner, et al., 2005). Further investigation
to find cost-efficient and effective systems is needed.
Students with severe emotional disabilities require a high level of support for their
educational and mental health needs (Heflin & Bullock, 2010; Adelman, 2000; Adelman &
Taylor, 1999, 1998). This group of students is currently a costly expense in comparison to peer
groups (California Department of Education, 2012; Harr et al., 2006), and a failing group of
students within our schools (Cullinan & Sabornie, 2004; Davis & Stoep, 1997), exacerbating the
need to find cost-efficient solutions. Students identified with mental health needs often display
acting-out behaviors and poor decision making, which impacts the learning and growth of
students around them (Walter, Gouze, & Lim, 2006). The group effect on all students in the
learning environment should be considered when investigating the public and private good of
appropriate school placement and services.
The complexity of students identified as ED calls for specialized professionals and
interventions in order to improve outcomes (Heflin & Bullock, 2010; Mark & Buck, 2006).
Instruction in working with children with mental health disorders is something lacking from
most teacher programs (Walter, Gouze, & Lim, 2006). Teachers in public schools identify
behavior disruptions in the classroom as their largest difficulty within the class and their main
mental health concern. Teachers report not feeling confident to address behavioral issues and
mental health concerns, and they acknowledge their understanding of mental health issues is
SPECIAL EDUCATION DAY SCHOOL OUTSOURCING 14

limited. Within schools there is a shortage of professionals who are aware of and competent to
address students with mental health needs (Walter, Gouze, & Lim, 2006).
These factors leave local SELPAs and school districts with a difficult decision to make
regarding the education of students with emotional disabilities and mental health needs. Schools
must decide how to address the needs of these failing students in an efficient and effective
manner, minimizing costs associated with the decision they make. The decision includes, but is
not limited to, potential development of internal programming and services, or outsourcing of
schooling and services for this group of students.
Purpose
The purpose of this case study is to examine the transaction factors associated with the
decision a SELPA or district makes regarding the schooling of students with emotional
disabilities or mental health needs. The study examined the contractual relationship between the
districts within a SELPA and two private, nonprofit therapeutic day schools to determine the
factors, and influences on those factors relating to efficiency in decisions about students
identified as ED or having mental health needs, through the lens of TCE. Efficiency will be
generally defined in this case study as the minimization of transaction costs to the greatest extent
possible for the three stakeholder groups involved in the decision-making process (Williamson,
1999; Brown, 1992; North, 1990).
A SELPA’s decision whether to outsource or develop systems internally is dual-layered.
Initial decisions focus around potential providers. SELPAs and school districts must determine
providers to contract with. This decision is based on factors weighed by the school board,
district leaders, and the provider. Contracts at this level do not guarantee outsourcing of services,
but instead provide options and availability. Once vendors have been selected and contracts
SPECIAL EDUCATION DAY SCHOOL OUTSOURCING 15

negotiated, the actual decision to outsource to selected providers is done on an individual student
level, weighing different factors associated with that student, the district, the provider, and the
Individualized Education Program (IEP) team. Potential for internal options may result in the
frequency of transactions at the second level, allowing for appropriate scale (Tutorials Point,
2012). This study investigated both layers of the process, with specific interest in the factors
associated with decisions about services and schooling for individual students and how they
relate to efficiency.
Research Questions
(1) What factors or values do different stakeholders consider when deciding to outsource
a student?
(2) How do they weigh these factors or values when making decisions?
(3) What combination of factors appears to favor outsourcing of whole school systems for
students with mental health needs by these organizations?
(4) Does the decision to outsource affect different stakeholders’ perceptions of quality of
services?
Limitations, Assumptions, and Design Controls
Limitations
A case study such as this contains limitations due to the nature of the investigation. Emic
and etic dynamics (Merriam, 2009) influenced the sharing of information. Emic and etic
dynamics refers to insider and outsider information. Approaching public school districts as an
outsider had potential influence on how information would be presented, and it was necessary to
consider how to generate meaningful and complete information. My study gathered information
from several sources, so it was important to understand the perspectives of different stakeholders
SPECIAL EDUCATION DAY SCHOOL OUTSOURCING 16

and how their viewpoints related to global decisions regarding outsourcing schooling for students
identified as ED. Given the complexity, financial cost, and sensitive nature of decisions related
to students requiring mental health support within schools, vendors potentially were guarded in
their presentation to someone outside their inner group. The question design aimed to create
comfort and find root information; to work through any insider and outsider conditions. The use
of anonymous surveys also addressed this potential limitation.
The scope of the study was another limitation. This is an investigation of one local
SELPA and the three school districts within that SELPA. Although this group of districts
provides a diverse population in regards to socio-economics, race, religion, and other factors, it is
only one SELPA and two contractual relationships, so the results may not generalize to other
settings.
Assumptions
Several different assumptions affect this case study. In order to determine cost efficiency,
I used the lens of TCE. This enabled my study to evaluate costs and benefits associated to
decisions made. Stakeholder groups hold different perceptions and have different values, or
value related costs and benefits differently. Each stakeholder in the decision considers different
tradeoffs and makes different professional judgments in attempting to make or influence a
decision. Despite these considerations, it is assumed that the efficiency determined in this study
takes into account different perspectives to find a balanced solution.
Students with mental health needs and identified as ED are often viewed very differently
by different people. These perspectives influence decisions made pertaining to these students,
and values among individuals differ greatly. In addition, students identified as ED often act out
and have higher rates of suspension and expulsion (Lane et al., 2006; Wagner et al., 2005; Davis
SPECIAL EDUCATION DAY SCHOOL OUTSOURCING 17

& Stoep, 1997). These acting-out behaviors or expulsions can lead to juvenile incarceration,
which removes responsibility of payment and services from the school district, a factor that may
influence decisions a district makes. The appropriateness of having mental health supports and
services within our schools is a highly debated topic. The influence of people’s individual views
of mental health within the schools should be considered within the information collected. If an
individual values mental health as a component of schooling, it will enhance the value associated
with solutions for mental health needs. An individual who believes mental health is not the
concern of a school district devalues options and decisions for mental health needs. This was
considered when finding balance within the information collected in my study. In order to
address these assumptions, mental health is being considered the responsibility of schools, and
these students are the responsibility of the school districts they are within.
Different professionals and stakeholders came to this study with different perspectives
and knowledge bases. Each had information important to the study, but potentially lacked
insight to other perspectives. This includes variation in the awareness of administrators
interviewed, or the differences between parent perspective and professional perspective. School-
based personnel carry a different value system than district-based personnel, which could
influence the information they share, or what is valued.
Schools utilize instructional practices to teach curriculum and develop students for career
and college-ready outcomes (Hochschild & Scovronick, 2004). When determining appropriate
services for students with significant mental health needs, several factors must be considered.
(Tutorials Point, 2012; Heflin & Bullock, 2010). Expense, specialization, individual student
need, appropriateness of services and school design, district policy, union regulations, political
factors, and the scale of a district or SELPA all influence decisions being made (Tutorials Point,
SPECIAL EDUCATION DAY SCHOOL OUTSOURCING 18

2012). Students identified with severe emotional disabilities have complex mental health needs,
and are a population of students within our schools that is currently failing and underachieving
(Cullinan & Sabornie, 2004; Davis & Stoep, 1997). These students benefit from specialized
services (Heflin & Bullock, 2010) and districts must determine the appropriateness of internally
developed or outsourced models of schooling to meet the needs of this challenging group of
students.
School districts’ outsourcing to therapeutic day schools who specialize in working with
students with complex mental health needs appears to provide benefits to the individual student
(private good), the school district, students within the districts as a whole, as well as the
collective good of the community (public good), helping all students access their education to the
maximum extent possible. This type of outsourcing appears to be an efficient system, which
benefits the individual, district, community, and future outcomes for the students involved.
Design Controls
In order to control for the limitations, to account for human assumptions and bias, and to
produce accurate and appropriate results that provide valuable information, I put several design
controls into place. These controls also account for the anonymity of specific respondents’
responses. To address these issues, I collected data and information across a variety of means. I
gathered information for rich description using semi-structured interviews, semi-structured focus
groups, online anonymous surveys, and record review. Respondents represented different
stakeholder groups and included district and SELPA administration, district personnel,
therapeutic day school personnel, and families. Gathering information from various sources and
through various means ensured more accurate and compelling data (Maxwell, 2013; Merriam,
2009). In addition to relying on various sources of information, in order to gain valuable insider
SPECIAL EDUCATION DAY SCHOOL OUTSOURCING 19

information, I utilized probing questions and follow-up interviews and emails. In chapter three, I
describe the collection tools and respondents in more detail.
Further design controls were also put into place. The selection of the SELPA for this
study represents three districts with varying degrees of socio-economic and racial diversity. This
allowed for different viewpoints and backgrounds to be represented within one study. This
diversity provided information from different perspectives, allowing for a clearer understanding
of a school district’s decision to outsource services.
Key Terms
The following terms were used within this case study. These terms provide a basis for
understanding the economic lens of the study, special education terminology, state and federal
policy, and general research information.
Academic Benefit: Special education law term referring to a student making academic and
individual goal gains within his or her educational setting
Assembly Bill 3632 or AB3632: (1984) Bill that provided funding to the Department of Mental
Health for school-based mental health services, including Residential Care, WRAP around
services, outpatient care, and medication monitoring. This bill was a line-item veto and had its
funding stopped on July 1, 2011. Responsibility for services was shifted to school districts,
along with some of the funding.
Asset Specificity: Describes the condition where the identity of the parties matters for the
continuity of a relationship. This can take many forms including brand, physical, human, and
site (Williamson, 2012; Tadelis & Williamson, 2012).
Asymmetry: The phenomenon whereby people know more about their own attributes and
actions than they know about those of others with whom they interact (Williamson, 2008).
SPECIAL EDUCATION DAY SCHOOL OUTSOURCING 20

Cost Efficiency: The value associated with the total costs and benefits received by the contractor
(SELPA and districts) in order to make a decision. The goal in cost efficiency is to get the
transaction costs associated with a decision as close to zero as possible (North, 1990).
Cross-Sectoral Alliances: Public sector agencies enriching their capacity with resources from
other economic sectors. This includes public sector and private sector partnerships, or
contracting services from private sector agencies (Wohlstetter, Malloy, Hentschke, & Smith,
2004).
Emic: Insiders point of view. Refers to being a member of a given community and having
access to the rituals and cultures of that community (Merriam, 2009).
Etic: Outsiders point of view. Refers to being an outsider to a given community and not having
access or insight to certain cultures and rituals (Merriam, 2009).
Individual with Disabilities Education Act (IDEA): Reauthorization of PL 94–142, Special
education law, protecting the rights of students with disabilities and guaranteeing education to
students within special education.
Least Restrictive Environment (LRE): IDEA terminology referring to the attempt to educate
students with disabilities as close as possible to their general education peers while still ensuring
they receive academic benefit
Mental Health: A person’s psychological wellbeing. In this case study, this encompasses
factors such as whether a person has experienced trauma, has a neurological diagnosis, and/or
needs support in their thoughts processes.
Opportunism: Individual gain through informational advantage or lack of honesty within
transactions (Williams, 1973).
Opportunity Costs: The cost of a transaction when compared to the next-best alternative.
SPECIAL EDUCATION DAY SCHOOL OUTSOURCING 21

PL 94–142: Education for all Handicapped Children Act (1975): Original special education
law
Risk Absorption: The theory whereby higher the cost of information, and the farther into the
future uncertainty will be resolved, the greater the tendency to diversify rather than specialize
(Brown, 1992)
Special Education Local Plan Area (SELPA): A collection of school districts, where funding
and support networks are channeled and dispersed.
Severe Emotional Disability (ED): IDEA category of disability. Emotional disturbance means
a condition exhibiting one or more of the following characteristics over a long period of time and
to a marked degree that adversely affects a child’s educational performance:
(A) An inability to learn that cannot be explained by intellectual, sensory, or health
factors
(B) An inability to build or maintain satisfactory interpersonal relationships with peers
and teachers
(C) Inappropriate types of behavior or feelings under normal circumstances
(D) A general, pervasive mood of unhappiness or depression
(E) A tendency to develop physical symptoms or fears associated with personal or school
problems (U.S. Department of Education, 2013)
Therapeutic day schools: Specialized school settings focused around supporting students with
mental health and behavioral needs. These schools can be public or private (Gagnon & Leone,
2006; Spencer, Shelton, & Frank, 1997).
Transaction Costs: What is given up in order to make the exchange. A loss that would have not
otherwise occurred without the exchange (Williamson 1999; North, 1990).
SPECIAL EDUCATION DAY SCHOOL OUTSOURCING 22

Summary
Students identified with emotional disabilities are at the highest risk of failing within our
schools and have poor life outcomes (Lane et al., 2006; Wagner et al., 2005; Cullinan &
Sabornie, 2004; Davis & Stoep, 1997). Current economic times have placed even greater
pressure on the school system to create cost-efficient systems to enhance the school experience
for students identified as ED. This case study investigates SELPA and school district decisions
associated with students identified as ED or with significant mental health needs, through a lens
of TCE. It examines the transaction factors, and the influences on those factors, within the
decision to outsource whole school models of schooling for students identified as ED in order to
gain understanding of cost-efficient decisions.
Chapter one provides insight into the background of the case study. This includes the
definition of the problem, the conceptual framework in which the problem was investigated, and
an introduction to the purpose and research questions that the study explores. This chapter
discusses limitations and assumptions, and explains how the study considers and deals with these
issues.
Chapter two explores the literature related to this current problem. It begins with an
exploration of mental health within the schools. This includes research related to students
identified as ED or as having mental health needs, professional readiness to work with students
with mental health needs, current services offered within the school system, and the ability of
individuals to access those services. The review of the literature moves from the discussion of
the status of mental health within the schools to an economic framework. TCE is explored in
regards to its intended purposes within this study, including how TCE has been utilized to
SPECIAL EDUCATION DAY SCHOOL OUTSOURCING 23

evaluate decisions within schools and organizations. This section includes research related to
transaction factors, opportunism, uncertainty, and efficiency.
Chapter three provides a roadmap to the methodology behind this study. It includes a
description of the study, a description of the firm and vendor within the study, and why those
participants were selected. It reviews the purpose and research questions and describes the data
collection tools and instruments that were used to accomplish the goals of the study. Finally
chapter three discusses data analysis and how the information collected was reviewed in order to
answer the research questions posed.
Chapter four presents the data collected in the study. It is organized by presenting the
data within each research question explored. Each question in broken into subunits based on
trends within the data. The data is analyzed within the discussion. Some connection and
framing to current research, as well as interpretation is completed in the presentation of data.
The study concludes in chapter five. The final chapter connects the data presented in
chapter four with the research presented in chapter two. Conclusions and implications are
drawn, which leads to a discussion on future research.

SPECIAL EDUCATION DAY SCHOOL OUTSOURCING 24

Chapter 2: Literature Review
Students identified with ED are more expensive to educate than peers (California
Department of Education, 2012; Harr et al., 2007), and are a low-achieving group of students in
our schools (Cullinan & Sabornie, 2004; Davis and Stoep, 1997). Students with ED are at risk
within our schools and communities, having greater incidence of failure, suspension, expulsion,
dropping out, and negative life outcomes than their peers (Rumberger, 2010; Belfield & Levin,
2007; Lane et al., 2006; Wagner et al., 2005). Recent changes in California policy with the
elimination of AB 3632 have shifted responsibility for mental health support of students to the
schools (California Alliance of Child and Family Services, 2012). Understanding the decisions
associated with students identified as ED or with mental health needs is of great importance
(Mark & Buck, 2006).
This study investigated the contractual relationship between three school districts within
a SELPA and two nonprofit special education therapeutic day schools. In this chapter I first
investigate what is known about mental health and mental health services within the schools. I
explore the characteristics of students with ED and mental health needs, professionals within the
schools, current school services, and access to services. Next, I discuss TCE and its implications
for efficient decision making within schools.
The first section in the review of the literature explores emotional disturbance and mental
health within our public schools. This section starts by examining the characteristics of students
with emotional disturbance and mental health needs. Understanding the common traits of
students identified as ED is important in the investigation of efficiency within service options for
these students (Mark & Buck, 2006). Next an examination of educators’ common perceptions of
students with mental health needs helps shape the context of current schooling practices and
SPECIAL EDUCATION DAY SCHOOL OUTSOURCING 25

environments. Then I move to a look at current school practices and services. This includes both
internally developed systems and contracted private systems of services. This section concludes
with a look at access to services and barriers to access.
The second major section of the literature review addresses TCE. This section looks at
four major themes within TCE that relate to this study and decisions associated with internally
developed or outsourced programming. Common transaction factors are explored along with
their implications for decision making. Next, opportunism is defined and discussed in relation to
both the firm and vendor. Opportunism relates to informational advantage or dishonesty within a
transaction, which holds influence over contracting decisions. Both the firm and vendor have
potential implications of opportunism relating to this contract. The literature on uncertainty and
its influence on decisions and abilities to make quality decisions is reviewed. Finally, efficiency
and the research on efficiency in school-based decisions is discussed. These four areas influence
decisions organization make, and should be considered when exploring efficiency in a decision
(Williamson, 1985, 1999).
Mental Health Needs in and Beyond Our Schools
In order to create understanding of the complexity and multilayered dimensions to school
district decisions around appropriate education and development for students identified as ED or
with significant mental health needs, it is important to first look at the characteristics of the
students who are at the foci of these decisions. Research is clear about the current status of these
students within our schools; including the devastating outcomes they face (Rumberger, 2010;
Belfield & Levin, 2007; Lane et al., 2006; Wagner et al., 2005; Cullinan & Sabornie, 2004;
Davis & Stoep, 1997).

SPECIAL EDUCATION DAY SCHOOL OUTSOURCING 26

Characteristics of Students Identified Emotionally Disturbed
Students with severe emotional disabilities are failing within our schools (Lane et al.,
2006; Mark & Buck, 2006; Wagner et al., 2005; Cullinan & Sabornie, 2004; Davis & Stoep,
1997). Davis and Stoep (1997) provided a comprehensive look at the characteristics of students
with ED. Their research also highlights similarities represented in other studies (Lane et al.,
2006; Mark & Buck, 2006; Wagner, et al., 2005; Cullinan & Sabornie, 2004) regarding poor
school performance and poor post-secondary outcomes for these students. This collection of
research also represents how the statistics for students with emotional disturbance are not
changing over time. Davis and Stoep conducted their research in 1997, and similar findings are
found across more recent studies (Lane et al., 2006; Mark & Buck, 2006; Wagner et al., 2005;
Cullinan & Sabornie, 2004). Mark and Buck (2006) state that conducting studies and learning
more about this population is critical for targeting appropriate resources to an area of obvious
and great need.
Students identified with ED are some of the poorest-achieving students within the public
schools (Rumberger, 2010; Belfield & Levin, 2007; Lane et al., 2006; Wagner et al., 2005; Davis
& Stoep, 1997). Students with ED fail at a higher rate, having more absences, and drop out more
frequently than their peers (Cullinan & Sabornie, 2004; Davis & Stoep, 1997). These students
are generally significantly below grade level or are low-achieving in their academic skills (Lane
et al., 2006; Wagner et al., 2005). This low achievement may be associated with several factors.
A high rate of suspensions and expulsions — greater than for same-age peers (Lane et al., 2006;
Wagner et al., 2005; Cullinan & Sabornie, 2004) — creates a decrease in instructional time for
students with emotional disabilities. Cullinan and Sabornie (2004) discuss how ED students
have a higher level of inappropriate behaviors in classrooms, which can disrupt instruction or
SPECIAL EDUCATION DAY SCHOOL OUTSOURCING 27

impact instructional time. ED students generally have fewer friends than same-age peers
(Cullinan & Sabornie, 2004). This speaks to poor academic and social development, placing
them at risk of being less prepared for post-secondary life. Understanding the factors associated
with the poor school experience of students with ED is important in guiding our understanding of
the decisions that must be made in their interests (Mark & Buck, 2006).
One of the most troubling characteristics of students with emotional disabilities is their
disappointing outcomes when transitioning to life after high school (Lane et al., 2006). These
students experience higher dropout rates when compared to peers (Lane et al., 2006; Kaufman,
Alt, & Chapman, 2001), and higher levels of unemployment and underemployment when
compared to peers (Bullis & Cheney, 1999; Davis & Stoep, 1997). ED students are also at
increased risk for incarceration and hospitalization (Rumberger, 2010; Belfield & Levin, 2007;
Lane et al., 2006; Wagner et al., 2005; U.S. Department of Health and Human Services, 1999).
In addition, students identified as ED have lower rates of participation in civic and community
activities, including voting (Armstrong, Dedrick, & Greenbaum, 2003). These increased poor
life outcomes and lack of civil engagement reflect a group of students currently not developing
into productive and contributing members of our communities and society.
A concerning school statistic is that students identified as ED have a dropout rate above
50% and only 42% graduate with a diploma (Cullinan & Sabornie, 2004). Research tells us that
students who do not complete high school are at more risk than peers who do complete high
school with a diploma (Rumberger, 2010; Belfield & Levin, 2007). Dropouts are more likely to
struggle to gain and maintain employment, they have poorer health, and they are more likely to
engage in criminal activity (Rumberger, 2010; Belfield & Levin, 2007). Individuals with mental
health needs or having significant trauma histories are more at risk for alcohol and substance
SPECIAL EDUCATION DAY SCHOOL OUTSOURCING 28

abuse, and have more difficulty in the accessing of services than those with other disabilities or
health needs (U.S. Department of Health and Human Services, 2002; 2003). High levels of
incarcerations and hospitalizations, poor health, and escalated levels of unemployment when
compared to peers are all issues that affect federal and state health care costs, individual tax
rates, and social service monies within the economy (Rumberger, 2010; Belfield & Levin, 2007;
Wagner et al., 2005; U.S. Department of Health and Human Services, 1999). Poorer health rates
and increased criminal activities also affect communities directly, increasing concerns around
safety.
The research on students with emotional disturbance demonstrating high levels of failure
within the public schools and facing devastating life outcomes is concerning for our schools and
communities (Rumberger, 2010; Belfield & Levin, 2007; Lane et al., 2006; Wagner et al., 2005;
Cullinan & Sabornie, 2004; Davis & Stoep, 1997). Students identified as ED were rated as
having immature moral reasoning, and poorer, less developed social problem solving skills
(Davis & Stoep, 1997). Students with ED rated themselves as having fewer friends than same-
age peers. They were also more likely to experience multiple separations from their family.
These separations included deaths, divorce, institutionalization, incarceration, and out-of-home
placements. Davis and Stoep’s (1997) survey found a near 50% graduation rate, which is similar
to earlier discussed dropout rates. It was discovered that students identified as ED have the
lowest grade point average among disability groups, and are most at risk to fail coursework.
Students with ED had an increased risk of, and greater prevalence of, homelessness, criminal
activity, and drug use than same-age peers (Davis & Stoep, 1997). Davis & Stoep concluded that
ED students were undereducated and underemployed, and had limited social supports.

SPECIAL EDUCATION DAY SCHOOL OUTSOURCING 29

Teacher Preparation and Attitudes
Given the troubling statics on school performance and outcomes for students with ED
(Lane et al., 2006; Mark & Buck, 2006; Wagner et al., 2005; Cullinan & Sabornie, 2004; Davis
& Stoep, 1997), it is apparent that they are a challenging group of students to educate. Low
achievement and academic skills, and an increased likelihood of disruptive and maladaptive
behaviors (Lane et al., 2006; Mark & Buck, 2006; Wagner et al., 2005; Cullinan & Sabornie,
2004; Davis & Stoep, 1997) create the need for well-prepared teachers (Mark & Buck, 2006)
with a base of knowledge in supporting mental health needs and social development.
The reality for many public schools is that there is a lack of knowledge and expertise in
working with students with mental health needs. A study of urban school teachers finds that the
majority of teachers feel their knowledge of mental health issues is limited, and feel unconfident
in dealing with students with mental health problems (Walter, Gouze, & Lim, 2006). Over 50%
of teachers list behavior problems as their greatest difficulty in the classroom. When verbal
disrespect was included in the definition of behavior problems, the number of teachers reporting
difficulty grew to 66%. Disruptive behavior prevents the teacher from maintaining safety, order,
and a productive environment (Walter, Gouze, & Lim, 2006). Behavior can constitute a major
barrier to instructional time and learning for a substantial portion of the students in the surveyed
community, and it affects all students in the classroom, not just those displaying the behavior.
The lack of expertise suggests that teacher preparation programs do not equip the majority of
public school education teachers with the tools needed to appropriately support students with
mental health needs.
SPECIAL EDUCATION DAY SCHOOL OUTSOURCING 30

Lack of appropriate and specialized instruction to meet the needs of ED students may
have the most detrimental long-term implications (Heflin & Bullock, 2010). A study
investigating teacher beliefs and attitudes to the inclusion of ED students in the general education
setting revealed some common themes. Teachers believed they had insufficient support and
training to work with students in special education, especially those identified as ED (Heflin &
Bullock, 2010). Surveys found that teachers felt unable to meet the needs of ED students and
had more difficulty with behavior management, affecting their whole classroom. These teacher
attitudes potentially affected students’ perceptions of school as well, as the researchers found that
ED students experienced feelings of rejection and were perceived as ostracized (Heflin &
Bullock, 2010).
An important aspect of deciding whether to outsource a service or to develop internal
programming is the level of expertise and specialization (Tutorials Point, 2012). If teachers
within the public setting do not have the level of expertise needed to work with students with
significant mental health needs, the needs of every student will be impacted due to lost
instructional time as a result of increased attention on behavior management (Walter, Gouze, &
Lim, 2006). The majority of students with mental health needs fail to receive appropriate
treatment whether through the schools or other sources (Flaherty, Weist, & Warner, 1996).
Having school-based support, whether in-district or within the schools, increases awareness and
access for students with significant mental health needs (Bringewatt & Gershoff, 2010; Stephan,
Weist, Kataoka, Adelsheim, & Mills, 2007; Flaherty, Weist, & Warner, 1996).
Mental Health Services in Schools
Changing times in California and the United States, with the focus on responsibility
shifting to our schools to address the mental health needs of our nation’s children, provide a
SPECIAL EDUCATION DAY SCHOOL OUTSOURCING 31

unique opportunity to investigate the current state of services within our school system. The
issue of addressing the needs of students with mental health and psychosocial problems is not a
new topic in literature (Adelman & Taylor, 1998; Flaherty, Weist, & Warner, 1996). Schools
have designed and attempted to use several programs aimed at addressing different problems —
such as dropouts, delinquency, and attendance — as well as more mental health–focused
programs designed to work with students with abuse histories, emotional regulation difficulties,
and tendencies towards violence (Adelman & Taylor, 1998). Different types of services, schools,
and programs are designed to meet the needs of this complex population. Understanding current
options, both internally developed and outsourced, will help frame the decision to outsource
whole school models that my study investigates.
Resources within a public school are often scarce (Adelman & Taylor, 1999; 1998).
When it comes to mental health, most schools only offer the bare essentials and tend to
marginalize efforts to address mental health and social-emotional needs of students (Adelman &
Taylor, 1998). A well-developed system might include case coordination, ongoing consultation,
program development, advocacy, and quality assurance built into the delivery of the system
(Adelman & Taylor, 1999; 1998). A survey of 482 districts showed on average one school
psychologist for every 2,500 students, and one counselor for every 1,000 students (Adelman &
Taylor, 1998). Mental health specialty personnel, such as school psychologists, carried
extremely large and unmanageable caseloads, demonstrating that mental health was a low
priority and not a prominent part of the school’s organization (Adelman, 2000; Adelman &
Taylor, 1999,1998).
Both public and private therapeutic day and residential treatment schools are types of
programming accessed for students identified as ED. A descriptive analysis of elementary day
SPECIAL EDUCATION DAY SCHOOL OUTSOURCING 32

and residential schools for children with ED outlines common characteristics across settings and
states (Gagnon & Leone, 2006). The study examines three areas of the schools: (a) principals,
(b) teachers, and (c) students, to give a foundation for future research and insight. This study
used total years’ experience, as represented by Darling-Hammond (2000), as an indicator of
quality, as it correlates to student achievement.
Principals in residential and day schools are highly qualified for their positions to lead the
school and to work with students with ED (Gagnon & Leone, 2006). The majority of principals
in day and residential schools hold a minimum of a master’s degree as well as appropriate
certifications or credentials. Principals had an average of 10 years’ experience in private
settings, compared to principals in public schools who had nine years’ experience. Principals of
day and residential schools have the education and certification that supports their qualifications
to assist such a complex group of students within their school settings (Gagnon & Leone, 2006).
For teachers, the results were similar, but less overwhelming. Approximately two thirds of
teachers had been teaching five or more years, and about half had been at their current school for
at least five years (Gagnon & Leone, 2006). Teachers with greater experience are more effective
than teachers new to the field (Darling-Hammond, 2000). Specifically, teachers with fewer than
two years’ experience are less effective than more senior teachers (Rivkin, Hanushek, & Kain,
2000). Almost all teachers in this survey and study held certification, and one third of teachers
held more than one certification (Gagnon & Leone, 2006). A limitation was that there was no
clarification of how many of those teachers may be emergency certified, and there was no
breakdown of types of certifications, or whether they were appropriate to the population of
students. All teachers held at least a bachelor’s degree, and most held master’s degrees (Gagnon
& Leone, 2006). The majority of professional staff in therapeutic residential and day school
SPECIAL EDUCATION DAY SCHOOL OUTSOURCING 33

settings are qualified to work with the population of students they serve (Gagnon & Leone,
2006). Principals tend to be more qualified than their teacher staff, but both groups present rich
experience and appropriate credentials.
At the time of this study, there was a trend of ED-identified students increasingly going to
day and residential schools, demonstrated by a 13% increase from 1992 to 2002 (Gagnon &
Leone, 2006). During this same period, there was a movement towards inclusion, which had an
opposite effect on other groups represented in special education, according to Gagnon and
Leone. Currently, the trend is reversed within California, with a decrease of students identified
as ED attending out-of-district or outsourced schools from 2007 to 2012 (Ed-Data, 2012). This
study notes that enrollment was relatively short term within these programs, averaging from one
to three years (Gagnon & Leone, 2006). The majority of students move on to less restrictive
settings, which could represent successful programming. A shortcoming of this study was not
accounting for students who returned to these settings after attempting a less restrictive setting
and failing, or for students who went to more restrictive settings. Developing an understanding
of successful programming through successful transitions and maintenance within less restrictive
settings is important in determining the efficiency of selected programming for students
identified as ED.
In determining efficiency and effectiveness at a school district level, expense is one factor
considered. Both public and private, or internally developed and outsourced, therapeutic day
schools have an expense associated with utilization of the program. A study conducted by
Spencer, Shelton, and Frank (1997) investigates the differences in characteristics between public
models, private nonprofit models, and private for-profit models of residential and day schools.
Their findings suggest that private non-profit models of schooling are more cost efficient in
SPECIAL EDUCATION DAY SCHOOL OUTSOURCING 34

terms of a school district’s true financial expense when compared to internally developed public
school models or outsourcing to a private for-profit models (Spencer, Shelton, & Frank 1997).
They note that when looking at purely day-school settings, public schools have a slightly lower
financial expense, but it is not a significant difference in financial costs between the different
facilities. The research in this study was related to actual financial expense, and did not consider
other potential costs and benefits within the lens TCE and cost efficiency as defined in this study.
Spencer, Shelton, and Frank (1997) did mention that the majority of students stepped down from
private nonprofit settings to less restrictive public models, which may be considered a benefit if
the students are successful in these less restrictive settings.
True financial cost is only one factor to be considered when determining efficiency and
weighing the costs, benefits, and trade-offs involved in a decision a district must make (Tutorials
Point, 2012). Understanding that pure cost savings are not achieved by keeping a student in
district (Spencer, Shelton, & Frank, 1997) when compared to outsourcing enables organizations
to consider other factors in greater depth, with less financial trade-off. If a school district knows
that it is spending similar amounts of money whether outsourcing or developing a model
internally, it can look at areas of expertise and quality. In addition, it can consider outputs from
the programs and how students succeed once exiting a program.
Barriers to Accessing Services
I have reviewed the poor school experiences students with ED currently experience (Lane
et al., 2006; Mark & Buck, 2006; Wagner et al., 2005; Cullinan & Sabornie, 2004; Davis &
Stoep, 1997). According to research, teachers feel ill prepared to meet the needs of this complex
and at-risk group (Walter, Gouze, & Lim, 2006). Research also shows that accessing support and
services for students identified as ED or with severe mental health needs is complex and difficult
SPECIAL EDUCATION DAY SCHOOL OUTSOURCING 35

(Bringewatt & Gershoff, 2010; Wagner et al., 2005). Parents of ED students work harder to
obtain services for their children than parents in other disability areas (Wagner et al., 2005).
These parents are also less satisfied with their children’s school, teachers, and special education
services. Wagner et al. (2005) found a considerable gap between the identification of the
disability or problem and the onset of services. Parents of students identified as ED also had
more mediations and due process hearings contesting services and placements than any other
special education disability.
Accessing mental health services for a child is a fragmented and complex process
whether school-based or outpatient (Bringewatt & Gershoff, 2010). Schools represent the most
common access point for mental health care for children (Stephan et al., 2007), accounting for
about 80% of children who receive mental health support (Williams, Horvath, Wei, Van, &
Jonson, 2007). School-based services increase availability and access for students and families
(Bringewatt & Gershoff, 2010). Even with this increased access through schools, several
barriers exist for students and families in acquiring appropriate mental health care. Barriers
include a lack of information about available services and when to seek care, a shortage of
providers, fear of stigma and distrust with the system, and financial and logistical obstacles
(Bringewatt & Gershoff, 2010). Research has shown that approximately 70% of school districts
reported that competing funding priorities were a moderate-to-major impediment to the delivery
of mental health services within schools in their districts (Bringewatt & Gershoff, 2010; Foster,
Rollefson, Doksum, Noonan, Robinson, & Teich, 2005).
The literature shows that students identified as ED are failing in and beyond our schools
at higher rates than their peers (Lane et al., 2006; Mark & Buck, 2006; Wagner et al., 2005;
Cullinan & Sabornie, 2004; Davis & Stoep, 1997). Teachers and professionals within the public
SPECIAL EDUCATION DAY SCHOOL OUTSOURCING 36

school setting feel unprepared to meet the demands of students identified as ED (Heflin &
Bullock, 2010; Walter, Gouze, & Lim, 2006). Inappropriate or lacking specialized instruction
for students identified as ED may have the most detrimental long-term implications (Heflin &
Bullock, 2010). Public schools utilize an array of service options for students with ED, including
both public and private models of schooling and services (Adelman, 2000; Adelman & Taylor,
1999, 1998). The literature shows that public and private models of schooling cost school
districts similar amounts of money (Spencer, Shelton, & Frank, 1997). Students and families
with mental health needs have difficulty accessing services (Bringewatt & Gershoff, 2010;
Wagner et al., 2005). School mental health options and services increase availability and access
for students and families (Bringewatt & Gershoff, 2010), which assist in increasing positive
outcomes. The poor outcomes, array of options currently used by schools, as well as the similar
financial expense between those school options demonstrates the need for exploration of current
decisions being made for students identified as ED to determine their efficiency.
Transaction Cost Economics
The decision to outsource students with mental health needs is a complex transaction
with transaction factors that need to be considered. The literature has outlined school and life
outcomes for students identified as ED, current professional attitudes towards students with ED,
some service options within schools currently, and barriers for students and families to accessing
services. This next section discusses the literature on transaction cost economics (TCE) and how
it relates to this case study.
The basic unit within TCE is the transaction or exchange (Williamson, 1985, 1999).
Every transaction has costs associated with it. Transaction costs within a decision to outsource
will be investigated in this study. Achieving cost efficiency means finding maximum benefit
SPECIAL EDUCATION DAY SCHOOL OUTSOURCING 37

within a decision while minimizing the costs associated with that decision (Williamson 1999;
Brown, 1992; North, 1990). Themes within TCE, including transaction factors, opportunism,
uncertainty, and efficiency will be explored in relation to this study. TCE is the lens that this
study will utilize to determine cost efficiency in investigating the trade-offs within a school
district’s decision to outsource.
Transaction Factors within Special Education Decisions
The contract is the basic unit of TCE, and it sets out the rules that govern the exchange
(Williamson 1999, 1985). Within any contract are transaction factors, including costs and
benefits. Transaction costs are what are given up in order to make the exchange (Williamson
1999; North, 1990). The goal of any decision is to minimize the costs for at least one of the
parties involved in the exchange, if not both parties. Cost effectiveness is when the benefits
outweigh the costs, while efficiency is the attempt to optimize the exchange (Williamson, 1999).
A school district’s decision to outsource whole school models for students with emotional
disabilities potentially has several competing factors associated with it, making it a complex
decision, in which it is difficult to determine overall efficiency.
School districts face decisions about whether to develop systems internally or to
outsource systems. The complexity of students with mental health needs, along with the high
cost of educating students within special education (California Department of Education, 2012;
Harr et al., 2007), and the apparent need for whole school models dedicated to students with
mental health needs (Gagnon & Leone, 2006) makes finding efficient contracting decisions
important for a SELPA or school district.
One factor that should be considered in helping to make an informed contracting decision
is scale of operation (Tutorials Point, 2012). For example, the Green Unified School District
SPECIAL EDUCATION DAY SCHOOL OUTSOURCING 38

(GUSD) averaged between 40 and 44 students placed in private school settings from 2008 to
2011 (Ed-Data, 2012). These students range in disabilities and grade levels. This could limit the
possibility of having a great enough volume of students with mental health needs at a given
grade level to support a self-sufficient classroom or school internally. If you expand this out to
the SELPA, including the other two districts, the total student population potentially becomes
between 100 and 120 students. This scale could support an internal system, depending on other
potential factors, such as disability, area of need, grade level, age, and level of current care.
Financial cost is another factor to consider when deciding whether to develop or
outsource a service (Tutorials Point, 2012). Funding for school-based mental health comes from
a variety of sources, including IDEA, the Safer Schools/Healthy Students Initiative, state special
education funds, and local funds (Foster et al., 2005). School districts state that competing
funding priorities impact decisions on the delivery of mental health services in schools
(Bringewatt & Gershoff, 2010; Foster et al., 2005). Spencer, Shelton, and Frank (1997) found
that there was not a significant difference in the cost of public and private day schools. The same
study showed it to be more cost effective, from a purely fiscal lens, when residential and day
programs were integrated in a private nonprofit model when compared to a public setting. The
authors note that one of the potential reasons for the cost difference is the case mix or severity of
illness of children being served. They go on to note that the nonprofit programs tend to be
smaller on average, treat a higher proportion of younger children, and have less excess capacity
than public or for-profit schools (Spencer, Shelton, & Frank, 1997).
As discussed earlier, students identified as ED or having mental health needs are a
complex group of students who are failing in our schools (Lane et al., 2006; Wagner et al., 2005).
One motivation for outsourcing or contracting a provider for a service is because it provides a
SPECIAL EDUCATION DAY SCHOOL OUTSOURCING 39

significantly different, high-quality option to other existing schools (Hentschke, Oschman, &
Snell, 2002). Students identified as ED need a high level of expertise in order to be successful
within school. Integrating mental health support into a standards-based curriculum model has
been a challenge for our schools, as demonstrated by the poor outcomes for ED students
discussed earlier. School districts routinely contract for educational services for students with
Specific Learning Disabilities (SLD) and ED (Hentschke, Oschman, & Snell, 2002). When
school districts add contracting of whole school models and services, it adds to the array of
options a district can offer its students. These whole school models often contract with multiple
districts (Hentschke, Oschman, & Snell, 2002).
Services requiring a high level of knowledge and specialty in specific areas are growing
rapidly (Davies & Hentschke, 2002). School Boards and Local Education Area (LEA) systems
look to outsource things they believe to be too complex. Research is showing a growing number
of special education services being outsourced, especially in regard to students with emotional
disabilities (Davies & Hentschke, 2002). The public schools have not traditionally worked with,
nor do they have the expertise in, mental health or meeting mental health needs (Walter, Gouze,
& Lim, 2006).
Opportunism in Special Education Interactions
A school district’s decision to outsource has two components. The first is selecting
vendors with which the firm wants to develop a relationship. Within this layer, contracts are
developed and preliminary partnerships are formed, yet money is not exchanged. Once a
partnership is established, the second transaction is possible. This second layer is the individual
decision to place a student with the vendor. Opportunism describes a situation whereby a vendor
makes individual gains through a lack of honesty within transactions (Williams, 1973). There
SPECIAL EDUCATION DAY SCHOOL OUTSOURCING 40

are two ways in which an organization can display opportunism. The first has to do with
withholding information or potentially providing false information in order to gain an upper hand
in negotiations. The second has to do with winning bids, and the fact that winning a bid puts the
contracted at an advantage in the future (Williams, 1973). If a vendor is able to turn a school
district student referral into an actual student, this increases the contact with the district, and
potentially increases the number of referrals sent by the district. By turning a referral into a
student and successfully working with that student and family, the vendor creates positive
relations with the school district, resulting in additional referrals. An increase in referrals
potentially leads to an increase in market share of students from a district. This increase also
suggests renewal within the first layer of contracting in subsequent school years.
Opportunism, as discussed in Williams (1973) can also be represented in the pursuit of
other contracts. The creation of other contracts between the firm and vendor increases the
opportunity to continue current partnerships. These other contracts can act as a way to have an
edge over competition or to represent a level of expertise. Multiple contracts are currently held
between the firm and vendor that this study investigates. It will analyze the concept of
opportunism and its effects on the decision to outsource, within the investigation of transaction
costs associated with that decision.
A further form of opportunism is using informational advantage in order to make
personal gains (Williamson, 1973). School districts hold an information advantage over parents
and families regarding special education rights knowledge (Greene, 2007). Greene argues that
the IEP meeting is a negotiation between schools and families to provide services for students.
Within this negotiation school districts are at a significant informational advantage, which is
often taken advantage of in order to save in other areas and create fiscal efficiency within the
SPECIAL EDUCATION DAY SCHOOL OUTSOURCING 41

school or district. The argument states that federal and state policy incentivizes identifying
students for special education to receive funding, but discourages appropriate interventions for
students with disabilities because of high costs associated to more intensive services and no
additional funding for those higher care services. Informational advantages, or lack of parent
awareness, and poor accountability of special education funding uses contribute to potential
inappropriate services because of the currently designed funding system (Greene, 2007).
Uncertainty in Special Education Interactions
Williams (1973) goes on to discuss transaction factors and uncertainty. This is how an
organization’s hierarchy will be favored over opportunism, meaning a district may choose
internal models seen as less costly over contracting a service out, due to tuition. This is likely
seen in the recent budget constraints and school district trends of sending fewer students to
outplacement (Ed-Data, 2012).
Uncertainty can influence decisions (Williamson, 1973, 1985; Brown, 1992). This is
represented within the literature on TCE. Imperfect information can lead to uncertainty and
influence decisions made (Lamoreaux, Raffi, & Tomin, 2002; Brown, 1992). Brown (1992)
discusses the implications of imperfect information and uncertainty in determining public or
private models of schooling. This article, although limited in its scope of school differences,
presents arguments within the decision for a district to buy or make a service.
Brown (1992) states two reasons that lead to districts choosing private school options.
The first reason is that the private school offers some kind of service or specialty the public
option is unable to support. The article limits these potential options to religious studies, which
given the current market for schools, is a narrow scope; however, the argument presented is
valid. Research on strategic partnerships (Osborne & Gaebler, 1992) or cross-sectoral alliances
SPECIAL EDUCATION DAY SCHOOL OUTSOURCING 42

(Wohlstetter, Malloy, Hentschke, & Smith, 2004) offer similar concepts of meeting needs
otherwise not met by the public sector through partnerships or alliances. The research reviewed
in this study shows students with mental health needs are failing within our public schools (Lane
et al., 2006; Wagner et al., 2005; Cullinan & Sabornie, 2004; Davis & Stoep, 1997), which could
demonstrate a need the public schools are currently not meeting.
The second reason is due to efficiency failures within current models of schooling
(Brown, 1992). The article again limits itself by stating that public and private options for
schooling have the same design, so efficiency failures would be similar in each setting. That
statement or assumption presumes a great deal of information and in itself may be inaccurate.
Williamson (1999) argues that public bureaucracies are not all the same and should be
distinguished. Brown (1992) generalizes his findings to all public and private models, even
though only exploring public and religious oriented private school models. Within this case
study, the efficiency of outsourcing whole school models for students identified as ED will be
examined. The research discussed in this literature review has shown that ED students are
failing in our schools (Lane, et al., 2006; Wagner, et al., 2005; Cullinan & Sabornie, 2004; Davis
& Stoep, 1997). This failure within the public school setting could demonstrate an efficiency
failure within our public option, and demonstrates the need to investigate efficiency within
current decisions being made by school districts.
Efficiency in Special Education Interactions
The level of efficiency within a given decision is defined by the ability to minimize the
costs associated to that decision (Williamson, 1973, 1985, 1999). Different researchers have
argued what constitutes cost efficiency within a decision. North (1990) argues that efficiency
can be judged by examining how closely an actual political market can achieve zero transaction
SPECIAL EDUCATION DAY SCHOOL OUTSOURCING 43

costs. Within this model, it is noted that political markets are inherently imperfect, making it
difficult to determine efficiency. The article makes the case that public and private models, or
the decision of buy versus make, cannot be compared or judge within a political frame, because
it is like comparing apples and oranges (North, 1990).
A counter argument to North’s (1990) assertion that public and private models are
different things, which cannot be compared, is presented in the work of Williamson (1999). Here
Williamson states that efficiency needs to be assessed with respect to a common transaction.
TCE assumes that economic actors have the capacity to look ahead, recognize potential hazards,
and factors these into organizational decisions (Williamson, 1999). This idea of a common
transaction is relevant to the decision a school district must make in determining whether to
outsource whole school models. A true cost when looking at transaction costs is an expenditure
that would not have been made otherwise (Greene, 2007). In evaluating decisions a school
district must make, considering all factors involved in decisions made, and potential factors in
decisions that could be made is important in gaining an understanding of true costs and benefits
involved. TCE lends itself to evaluate these decisions, the differences between the public and
private options, giving value to the different factors and costs involved, based on Williamson’s
(1999) claims that actors within this decision can look ahead and recognize potential hazards.
An argument has been made that public options, or government run schools, is a more
efficient system than private based schools (Brown, 1992). The utilization of private schools
could be seen as an infrequent transaction, general evaluated on a year to year basis according to
Brown. With infrequent transactions brings high risk. According to Brown, developing internal
systems would create a cost in production efficiency, but would decrease overall transaction
costs. The article argues that monitoring of private outsourced schools would also be difficult
SPECIAL EDUCATION DAY SCHOOL OUTSOURCING 44

and create a high cost. Finally they state that the ability to switch providers would be difficult
and come with a high cost.
In addition to these efficiency concerns, Brown (1992) notes that public and private
models of schooling are often similar or the same, which limits the private schools ability to
specialize or develop a niche. This argument is both support and contrasted by Chubb and Moe
(1991), where they state the importance of schools in finding a niche in order to meet a need. If
schools are too similar, the market will have difficulty maintaining itself, but if they are able to
develop a niche, a market can be create and a need fulfilled.
Risk absorption is a factor that influences why many schools, public or private, are
perceived as the same in model and design (Brown, 1992). Efficient schools develop programs
to accommodate the demands of their students. Efficient schools will offer what the student
demands, yet uncertainty plays an important role in shaping the uniformity across schools that
we see in the real world (Brown, 1992). These concepts of efficiency and uncertainty appear at
odds with one another within the context of schooling models and may be represented in the
decision associated to this case study. Internal factors or constraints that result in uncertainty
may influence a public’s options to meet client needs, influencing decisions to outsource
services.
Alternative perspectives offer evidence that partnerships and development of markets can
enhance public sector industry. Public sector agencies often lack capacity to provide effective
and efficient services on their own (Wohlstetter, et al., 2004). Alliances, known as cross-sectoral
alliances, can supplement and enhance public service delivery. Cross-sectoral alliances are
strategic partnerships, or arrangements between two different sectors, such as public and non-
profit, designed to search for solutions, creating more efficient systems (Wohlstetter, et al.,
SPECIAL EDUCATION DAY SCHOOL OUTSOURCING 45

2004). This article argues that despite transaction costs within the agreements, the cross-sectoral
alliances serve to enhance the capacity of organizations by providing access to a number of
presumably otherwise unavailable assets.
Another argument presented in the article deals with dealing with scarce and tight
resources, creating uncertainty. During periods of uncertainty and scarce resource, alliances can
serve as effective coping strategies to forestall, predict, or absorb uncertainty, and achieve a
reliable resource flow and exchange, creating a more efficient system, which could lead to access
to resources, and ability for innovation (Wohlstetter, et al., 2004; Oliver, 1990). Although
dealing mainly with charter school partnerships, this research demonstrates the benefits to
developing mutually beneficial partnerships to enhance services and create efficiency within
school systems.
Powell (2003) introduces an alternative to markets and hierarchies called networks.
Networks are based on complementary strengths, rely on relationships, and allow for multiple
partners. The decision to outsource students involves multiple stakeholder groups, all with
potential influence over the contractual agreement. When drawbacks may exist within other
economic options, such as internal development, or acquisition of an established program, equity
arrangements or certain forms of networks may act as a beneficial option (Powell, 2003). Firms
pursue agreements in order to gain access to new technologies to benefit from economies of
scale, to tap into resources outside their current knowledge base, and to share risk. This concept
of mutually beneficially, relationally based partnerships and alliances could exist within the
partnership between districts, day school, and parents, in order to decrease uncertainty,
emphasize individual strengths, and increase efficiency.

SPECIAL EDUCATION DAY SCHOOL OUTSOURCING 46

Summary
The research reviewed in this chapter is clear about the current negative outcomes for
students with emotional disabilities or mental health needs in our schools. Students identified as
ED are a high cost (California Department of Education, 2012; Harr et al., 2007) failing group of
students within the public school system (Lane, et al., 2006; Wagner, et al., 2005; Cullinan &
Sabornie, 2004; Davis & Stoep, 1997). Students identified as ED have disappointing life
outcomes, including increased hospitalizations and incarcerations when compared to peers
(Lane, et al., 2006; U.S. Department of Health and Human Services, 1999). Many public schools
lack of knowledge and expertise in working with students with mental health needs, and teachers
feel their knowledge of mental health issues is limited, leaving them to feel unconfident in
dealing with students with mental health problems (Walter, Gouze, & Lim, 2006). Resources are
scarce within our schools, and generally schools offer only the bare essentials or marginalize
mental health supports and services (Adelman, 2000; Adelman & Taylor, 1999; 1998).
Transaction cost economics (TCE) lends itself as a lens to explore this different factors,
assess the values and combinations of factors within complex decisions, and determine efficiency
within decisions being made by school districts for students identified as ED (Williamson, 1999;
2008). TCE is a way of evaluating decisions based on different factors and costs involved within
the exchange (Williamson, 1999, North, 1990). The research on TCE was reviewed in this study
to outline key concepts within TCE that are present in this study, and through its applied use in
similar decisions by organizations, and their implications to this study. Factors such as financial
cost, availability of resources, scope of operations, and level of expertise, among others, were
discussed and related to the topic. Concepts such as opportunism, uncertainty, and efficiency
SPECIAL EDUCATION DAY SCHOOL OUTSOURCING 47

were explored in more detail in how they influence decisions and relationships between firms
and vendors.
The research showed different outcomes on efficiency based on different factors involved
within individual cases. This lends itself to Williamson (1999) assertion that efficiency needs to
be assessed with respect to a common transaction. Research on efficiency within decisions to
outsource whole school models for students identified as ED or with significant mental health
needs is lacking. Determining efficiency within these decisions is essential for improving the
decisions being made for one of our school’s lowest achieving groups of students in a time where
school budgets are in great constraint.
The use of day schools is consistent with requirements of the Individuals with Disabilities
Act (IDEA) of 2004 as these schools are necessary to assure varied levels of restrictiveness in
meeting students’ various needs (Gagnon & Leone, 2006). Therapeutic day schools can be
internally developed (public) or outsourced (private) (Spencer, Shelton, & Frank, 1997). School
districts are faced with a decision on which benefits individual students or the district more
efficiently. TCE is best utilized when looking with respect to a common transaction
(Williamson, 1999). If a school district knows that they are spending similar amounts of money
whether outsourcing or developing a model internally (Spencer, Shelton, & Frank, 1997), they
can look at areas of expertise and quality. In addition, they can consider outputs from the
programs and how students succeed once exiting a program. Investigating this complex decision
and partnerships will begin to develop an understanding of the efficiency within the decision to
outsource for three school districts. Understanding the efficiency of decisions associated to
students with mental health needs will contribute to the knowledge base of the integration of
SPECIAL EDUCATION DAY SCHOOL OUTSOURCING 48

mental health services in schools, as well as TCE and its usefulness in understanding
organizational decision making.

SPECIAL EDUCATION DAY SCHOOL OUTSOURCING 49

Chapter 3: Methodology
This study seeks to understand the factors that influence outsourcing decisions for mental
health based special education services by school districts. It takes the form of a qualitative case
study involving several school districts and a special education service provider. My study
focused largely on services for one category of special education student, students identified
emotionally disturbed (ED). Specifically, this case study is an investigation of the contractual
relationship between the School Districts of the Hillside Special Education Local Plan Area
(SELPA) and two non-profit, non-public special education day schools, the Howard Education
Center (HEC), and 6Yards.
The Hillside SELPA consists of three school districts, Green Unified (GUSD), Blue
Unified (BUSD), and La Cardinal Unified (LCUSD) (Foothill SELPA, 2013). These districts
currently contract HEC for specialized day school services for students in special education
identified with severe emotional disabilities (ED) or multiple disabilities and social difficulties.
The use of day schools is consistent with requirements of the Individuals with Disabilities Act
(IDEA) of 2004 as these schools are necessary to assure varied levels of restrictiveness in
meeting students’ various needs (Gagnon & Leone, 2006).
This qualitative case study attempts to build understanding for how organizations make
decisions to outsource specialized mental health services for students identified as ED (Merriam,
2009). Focus was given to how people interpret the tradeoffs within decisions related to students
with mental health needs using transaction cost economics (TCE). Qualitative research helps
understand the process that leads to these current outcomes (Maxwell, 2013). The conceptual
framework of TCE allows for analysis of the cost efficiency of decisions being made
(Williamson, 1973; 1985; 1999, North, 1990). Understanding the efficiency of decisions
SPECIAL EDUCATION DAY SCHOOL OUTSOURCING 50

associated with students with mental health needs contributes to the knowledge base of the
integration of mental health services in schools, as well as TCE and its usefulness in
understanding organizational decision making.
Problem and Purpose Overview
The research reviewed in this study has demonstrated that students identified as ED or
having significant mental health needs are a high expense, low achieving, and at risk population
of students within our schools (Lane, et al., 2006; Epstein, & Sumi, 2005; Wagner, et al., 2005;
Cullinan & Sabornie, 2004; Davis & Stoep, 1997). Gaining information on this population is of
critical importance for targeting appropriate resources and interventions to an area showing great
need (Mark & Buck, 2006). Special education attempts to support students so they receive
academic benefit from their instruction (U.S. Department of Education, 2013). Currently there is
a shortage of professionals with knowledge in mental health within schools; requiring creative
partnerships to meet the needs of children identified as ED or having significant mental health
needs (Walter, Gouze, & Lim, 2006).
The purpose of this case study is to examine the factors associated with the decision a
SELPA or district makes about services and schooling for students with emotional disabilities or
mental health needs. Using TCE, it will examine the contractual relationship between a SELPA
and private day school to determine the factors, benefits, and costs related to cost efficiency in
decisions associated with students with ED and mental health needs.
Research Questions
This case study investigates the contractual relationship between school districts and a
nonprofit day school. In order to gain understanding of the decision to outsource, and to explore
the cost efficiency of this decision, it will investigate the following research questions.
SPECIAL EDUCATION DAY SCHOOL OUTSOURCING 51

(1) What factors or values do different stakeholders consider when deciding to outsource
a student?
(2) How are these factors or values weighed in making decisions?
(3) What combination of factors appears to favor outsourcing of whole school systems for
students with mental health needs by these organizations?
(4) Does the decision to outsource affect different stakeholders’ perception of the quality
of the services?
Population and Sample
Research Sites and their Subjects
Hillside SELPA — Firm
The Hillside SELPA consists of three school districts, the Green Unified School District
(GUSD), the Blue Unified School District (BUSD), and La Cardinal Unified School District
(LCUSD) (Foothill SELPA, 2013). These three districts represent urban and suburban schools,
as well as a cross-section of diversity, including socio-economic and racial diversity (California
Department of Education, 2013; Foothill SELPA, 2013). This diversity within the SELPA and
districts being investigated provides a sample rich with complexities, and allows for a detailed
picture on the decision to outsource.
The Hillside SELPA currently offers two internal options for students with severe
emotional disabilities, one at the middle school level, and one at the high school level. An
elementary option had existed, but was closed for the 2012–13 school year due to insufficient
enrollment (Foothill SELPA, 2013; GUSD representative, personal communication, October
2012). These schools, Magnolia Park and Green South, are located on the campuses of other
public schools serving general education students. The schools are considered separate schools
SPECIAL EDUCATION DAY SCHOOL OUTSOURCING 52

from the schools whose campuses they share. This enables these schools to develop specialized
programming for their students, but being bound to campus-wide rules limits some
specialization.
The Hillside SELPA has a separate contract with Howard Education Center (HEC) for
mental health support and services within their shared public day school programs. This is a
separate contract, which serves all three districts within the SELPA, providing mental health staff
to district school sites. This contract is billed to the districts as a service provided through the
school, and is noted in this dissertation due to its implications of partnership building between
the school district and a non-public school.
GUSD currently serves 2,439 students in special education (California Department of
Education, 2012). Of the total special education population, 82 students are diagnosed with
emotional disabilities (ED) as their primary disability area, 812 with specific learning disabilities
(SLD), 433 with autism, 286 with other health impairment (OHI), which accounts for the
majority of disability types served at HEC (HEC, 2013; HEC Director, personal communication,
October 2012). GUSD has approximately 1.8% of its total special education population placed
in non-public residential and/or day school settings, based on information collected from
Education Data (ed-data.com). During the 2008–09 school year, 44 students in total were placed
in contracted non-public settings; 41 students in 2009–10; and 44 students in 2010–11 (Ed-Data,
2012).
BUSD currently serves 1,783 students in special education (California Department of
Education, 2012). Of the total special education population, 104 students are diagnosed with
emotional disabilities (ED) as their primary disability area, 132 with specific learning disabilities
(SLD), 52 with autism, 65 with other health impairment (OHI). BUSD has approximately 1.8%
SPECIAL EDUCATION DAY SCHOOL OUTSOURCING 53

of its total special education population placed in non-public residential and/or day school
settings, based on information collected from ed-data.com. During the 2008–09 school year, 43
students in total were placed in contracted non-public settings; 45 students in 2009–10; and 32
students in 2010–11 (Ed-Data, 2012).
LCUSD currently serves 386 students in special education (California Department of
Education, 2012). Of the total special education population, 18 students are diagnosed with
emotional disabilities (ED) as their primary disability area, 132 with specific learning disabilities
(SLD), 52 with autism, 65 with other health impairment (OHI). LCUSD has approximately
4.1% of its total special education population placed in non-public residential and/or day school
settings, based on information collected from ed-data.com. During the 2008–09 school year, 22
students in total were placed in contracted non-public settings; 20 students in 2009–10; and 16
students in 2010–11 (Ed-Data, 2012).
District Personnel Sampling of Subjects
In order to understand the relationship between the firms (districts of the Hillside SELPA)
and the vendor (HEC), an appropriate sample from the relevant population must be utilized to
gather data. To answer the four research questions posed, this study will utilize purposeful
sampling (Maxwell, 2013; Merriam, 2009). The sample selected has relevant insight into the
research questions posed, and offers essential components of district-based decisions (Maxwell,
2013). The study will utilize district administrative staff, including district special education
directors and program specialists, within each district of the Hillside SELPA, for sampling.
District special education directors and program specialists are key contributors in decisions
associated with student identified as ED, within special education, and with mental health needs.
District directors oversee and manage district-based decisions and work directly with the
SPECIAL EDUCATION DAY SCHOOL OUTSOURCING 54

superintendent and board of directors to determine decisions that they feel best support the
district mission. Program specialists chair individual student IEP meetings and are directly
involved in individual student decisions. They interact directly with day school personnel and
monitor day school effectiveness. Input from these key district personnel is essential to
understanding district-based decisions in the decision to outsource, selection of vendors, and the
factors associated with individual students. The study may utilize snowball sampling (Merriam,
2009) if other relevant district administrators are identified through the data collection process
where meaningful information may be collected.
The Hillside SELPA director is also included within the sample. The director has been
selected purposefully due to her insight into decisions to outsource or internally develop services
for students within special education (Maxwell, 2013). One role of the director of the SELPA is
to manage and oversee district-based decisions, allocating money to individual districts. This
makes the director of a SELPA an essential part in establishing contracts, determining and
negotiating rates with providers, and managing district-based decisions.
Howard Education Center and 6Yards — Vendors
HEC is a non-public, nonprofit, special education school in California for students with
Individual Education Plans (IEP) that has been operating for 30 years (HEC, 2013). The school
works with students diagnosed with emotional disabilities and students with social and
behavioral difficulties in addition to a specific learning disability, health impairment, mild
intellectual disabilities, or autism. HEC serves up to 90 students in eight classrooms, with a
teacher-to-student ratio of 1:12 (HEC, 2013). Classrooms have a minimum of two additional
support staff, keeping overall classroom ratios around 1:4 for staff to students. Staffing is also
SPECIAL EDUCATION DAY SCHOOL OUTSOURCING 55

made up of administration, clinicians, case managers, and paraprofessionals, with an overall ratio
of about 1:3, comparing overall staffing to maximum student capacity (HEC, 2013).
HEC serves grades 1 through 12 within two programs, elementary and high school (HEC,
2013). Classrooms have a maximum capacity of 12 total students. Students receive additional
support, based on their IEP services, which can include transportation, individual counseling,
family counseling, and speech and language services. HEC supports dual enrollment
programming and transition, which includes students splitting academic days between the day
school setting and public school setting (HEC, 2013).
6Yards is a non-public, nonprofit, special education school in California for students with
Individual Education Plans (IEP) that has been operating for 32 years (5Acres.com, 2013). The
school works with students diagnosed with emotional disabilities and students with social and
behavioral difficulties, in addition to a specific learning disability, health impairment, mild
intellectual disabilities, or autism. 6Yards serves approximately 80 students in eight classrooms,
with a teacher-to-student ratio of 1:10 (5Acres, 2013). Classrooms have a minimum of one
additional support staff, keeping overall classroom ratios around 1:5 for staff to students.
Staffing is also made up of administration, clinicians, case managers, a speech therapist, an
occupational therapist, and paraprofessionals, with an overall ratio of about 1:3, comparing
overall staffing to maximum student capacity (5Acres.com, 2013).
6Yards serves grades 1 through 10 within two programs, elementary and high school
(5Acres, 2013). Classrooms have a maximum capacity of 10 students in total. Students receive
additional support, based on their IEP services, which can include transportation, individual
counseling, family counseling, and speech and language services. 6Yards supports dual
SPECIAL EDUCATION DAY SCHOOL OUTSOURCING 56

enrollment programming and transition, which includes students splitting academic days
between the day school setting and public school setting (5Acres, 2013).
Vendor Personnel Sampling of Subjects
To gain a complete and rich understanding of the factors associated with outsourcing
whole school models, it is important to develop an understanding from a vendor contracting with
the school districts. This study uses purposeful sampling when selecting vendor staff (Maxwell,
2013; Merriam, 2009). The positions of interest within this sample are the administrative
positions that develop and negotiate contracts with the school districts or SELPAs (directors) and
the administrator who sits on the IEP teams. The second administrative position varies in title,
including Academic Dean, Assistant Director, and/or the Director of the school.
The director is in charge of all contracting with school districts. The director negotiates
terms of the contracts on an annual basis and works directly with SELPA and district
administrators to come to terms on contracting, to enable potential individual student agreements
(HEC Director, personal communication, October 2012). This is an essential component to the
first level of outsourcing within this arrangement. The director also deals directly with
programming concerns that districts may have, and has the most contact with district directors,
which relates to key contractual relationships. Information from the director of HEC and 6Yards
is relevant for the research questions being pursued.
The IEP is an important part of the decision to outsource a student with mental health
needs. Administrative staff sits on the IEP team and is part of the discussion on team decisions.
The director, assistant director, or academic dean can chair individual student IEP meetings as a
representative for the day school. HEC currently uses both the academic dean and assistant
director for this role. 6Yards currently uses its assistant director for this role. These
SPECIAL EDUCATION DAY SCHOOL OUTSOURCING 57

administrative staff work closely with district program specialists and are key members
associated with individual student decisions (5Acres, 2013; HEC, 2013). Administrators are
often included in discussions of student progress and decisions on student needs, including
location of services.
Consumers for sampling
The firm (the districts of the Hillside SELPA) and vendors (HEC and 6Yards) are only
part of the decision-making process in outsourcing school or services for students with mental
health needs. Parents or guardians are essential members on student IEP teams and influence
decisions districts make for students (U.S. Department of Education, 2013). The data collection
includes parents and guardians, as they are members of the IEP team and contribute to decisions
involving school services. The study utilizes convenience and unique sampling techniques
(Merriam, 2009) to form a sampling of parents. Parents whose students are already or have been
associated with private day school settings are part of the sample. Having experienced the
process of having a child outsourced to a therapeutic day school enables parents and guardians to
provide insight into how they were included in the decision-making process. Parents selected for
the sample have children who have attended either 6Yards or HEC at some point during their
school careers. Sampling for focus groups is conveniently selected (Merriam, 2009), with focus
groups occurring on parent meeting nights to enable easier access and availability. The
instrumentation section describes focus groups in more detail. Parents are informed of the
purpose of the study and their consent is accessed before their participation. Parent sampling for
surveys encompasses a larger selection of parents, and surveys are anonymous and conducted
online. Information gathered from parents is of interest due to their influence on the factors in a
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decision to outsource, and due to their perception of quality, directly relating to research
questions one, two, and four.
Instrumentation
To answer the research questions, this study utilized a mix of data collection methods.
Individual semi-structured interviews, semi-structured focus groups, online surveys, and a
review of relevant records were methods used to collect necessary information to draw parallels
and gain understanding of the contractual relationship, as well as developing an understanding of
efficiency in the decision to outsource whole school models.
The study utilized samples, semi-structured interviews and focus groups to collect data
from the firm, vendor, and consumer (Merriam, 2009). Interview and focus group protocols can
be found in appendices A, B, and C. The research questions relate to decisions that involve
several factors and conditions. Given the complexity of the decisions being made, as well as the
two levels within the decision – selection of vendors and individual student decisions –
observations were not considered a practical means of data collection. Interviewing is a
necessary component to gather information when observation cannot be utilized (Merriam,
2009). Interviews defend against mistaken expectations (Weiss, 1994) and allow for
understanding of how people interpret the world around them (Merriam, 2009). Semi-structured
interviewing allows for flexibility in gathering information (Merriam, 2009). Semi-structured
interviewing gives a structure and format to the interviews, but allows for flexibility, enabling
discussions and information to be free flowing, which enables understanding of stakeholder
perspectives and values when discussing the factors associated with district decisions.
The focus of the semi-structured interview in appendix A was school district special
education directors and the SELPA director, which helped gain a clear understanding of the
SPECIAL EDUCATION DAY SCHOOL OUTSOURCING 59

process and considerations relating to outsourcing students. The interview protocol for SELPA
and district directors (appendix A) related to all four research questions. This is represented in
categories one through three in the protocol, demonstrated by questioning around perceptions of
mental health, vendor choice, individual decisions, and outside influences. This questioning
helped determine factors associated with the different levels of outsourcing choice, values within
the factors, combinations of factors, and perceptions of quality. Snowball sampling (Merriam,
2009) was considered if other relevant district personnel were identified as having meaningful
information regarding the research questions in addition to the information that was being
collected. After meeting with the district directors, no additional information was required, as
the individuals interviewed produced similar trends, categories, and data. Appendix B is the
semi-structured interview for vendor-based administrative staff. This interview was designed to
collect information on research questions one through three. The interviewed was designed to be
implemented individually. Due to time constraints, 6Yards requested that the Director and
Assistant Director be interviewed as a group.
Appendix C is the semi-structured focus group for the consumers, or parents and
guardians. Parents and guardians within this sample have all experienced being outsourced to a
day school setting through district-based decisions. These parents’ experience of having had
their children outsourced gives the selected sample knowledge on the given topic and creates
important data for the study (Merriam, 2009). The intent for the focus group was to select a
group of approximately six parents in order to gain insight from a larger sample, and to allow for
perspectives to be shared and built upon. Scheduling difficulty and parent availability impacted
my ability to have a group of six parents at one time. The alternative was to have three smaller
parent groups instead of one larger group. Three groups (of two, two, and four) were
SPECIAL EDUCATION DAY SCHOOL OUTSOURCING 60

interviewed to collect relevant information, data and perspectives. Parents and guardians shared
experiences and discussed the similarities and differences around their experiences, providing
rich and meaningful data related to research questions one, two, and four.
The interview and focus group protocols (appendices A–C) went through several stages
of development. Upon initial creation, protocols were reviewed by colleagues. Their feedback
contributed to refining questions and adjusting wording in order to gain useful information and
create dialogue. Next, I piloted the protocols. Piloting enabled me to determine if my questions
gained the information intended to be gathered (Maxwell, 2013). I piloted the protocols with
individuals of similar standing as in the sample. I piloted Appendix A with school district
representatives. These district representatives were from districts other than the districts within
the Hillside SELPA, and they volunteered to participate in the piloting. I adjusted the protocol
after each pilot. I piloted Appendix B with a day school representative, who provided feedback in
addition to participating in the pilot exercise. Special education teachers and a group of parents
reviewed the focus group protocol in appendix C; and then it was adjusted to allow for increased
discussion. The protocols presented in the appendices represent data collection instruments
capable of collecting useful and rich information regarding the four research questions.
The next set of instruments that were used to gather information from the sample
populations were surveys. The study utilized two sets of surveys (appendices D and E). Surveys
allowed for flexibility in dealing with different types of data (Sapsford, 2006). They allowed for
information to be collected from a greater number of respondents. The information surveys
provide come directly from people and can provide descriptions of feelings and perceptions, as
well as values (Fink, 2013). Having surveys as part of this study enables information to be
collected from a wider sample, and the information collected was compared and contrasted to
SPECIAL EDUCATION DAY SCHOOL OUTSOURCING 61

other data collection tools. Surveys were anonymous and were conducted online. Anonymous
surveys increase the likelihood of accurate and true feelings and information being collected
(Fink, 2013). Online surveys may both enhance and limit individuals’ ability to participate,
based on availability of the internet and computers. Appendix D is the online survey protocol for
district special education administration and program specialists. I compared and contrasted
these results to interview information, helping to build a more developed understanding of
district decisions. I used the survey protocol in Appendix D to address research questions one
through four. Appendix E is the protocol for the parent and guardian survey. It was designed to
answer research questions one, two, and four, and to provide validity to information collected in
the semi-structured focus group protocol in appendix C.
I designed the surveys to collect meaningful and valid information for the research
questions. I piloted the surveys presented in appendices D and E with similar or like sample
populations. Results from the piloting enabled question changes in order to gather more relevant
and useful information. I piloted the survey in appendix D with five district professionals. I
piloted the survey in appendix E with three parents and three teachers. The use of teachers was
to gain meaningful feedback without utilization of potential sample population within the study.
I made additional enhancements to survey protocols based on information and trends identified
during the interviewing stage of data collection. I conducted interviews prior to the release of
surveys, and used information collected from the interviews to adjust survey questions.
Finally I collected data by reviewing records. Records included information from the
California Department of Education, from district and school contracts, and from Education Data
(ed-data.com). The record review showed outsourcing trends over the course of years, which I
compared to information collected from district personnel and day schools. I also reviewed
SPECIAL EDUCATION DAY SCHOOL OUTSOURCING 62

SELPA and district policy or missions, to gather information on district values and how decisions
related to stated values and policy. Additional documents from the vendor, including copies of
contractual agreements with the school districts and records of numbers of students referred and
enrolled within the school from the districts were also reviewed. This review of records was
important in establishing internal validity within the study, demonstrating whether the findings
matched reality (Merriam, 2009). In the data analysis section of this chapter, I discuss the
connection between the record review and other data collection techniques further. The review
of records is relevant for research questions one and two, with potential implications to research
question four, depending on statistical trends within outsourcing or use of vendors.
Data Collection
This study took several steps and actions in order to maximize potential responses, to
enable rich full data to be collected. First, I piloted the developed protocols in order to enhance,
alter, and streamline information, enabling the best possible data to be collected from the sample.
I developed surveys online in order to create confidentiality. I also modified and updated
surveys based on information collected from interviewing. The combination of in-person
interviewing and anonymous online surveys balances emic and etic (Merriam, 2009) limiting
factors and provided rich complete data. Although similar in focus, format, and style, the
questions for each survey and interview were tailored for the targeted sample group and to
answer specific research questions.
To establish consent for this study, I sent personal letters explaining the study, its purpose,
and intended use. I followed the letters with individual meetings with district special education
directors from each district, answering questions they had about the study and gaining initial
consent. During the onset of the data collection, I sent follow-up email letters to district special
SPECIAL EDUCATION DAY SCHOOL OUTSOURCING 63

education directors. In addition, I sent letters through email to other district administrators,
vendor representatives, and consumer representatives, restating the purpose of the study, and
making a statement of data-collection instruments. Finally, during actual collection, I gained
final consent through verbal acknowledgment at the start of the interview, or through clicking
access to the online survey. Individuals were interviewed and surveyed in the study, but the
focus was not human subjects. Institutional review board (IRB) exempt approval was gained
though the University of Southern California (USC) for this study (citation). SELPA, district,
and vendor names will be presented using pseudonyms, protecting identities, perspectives, and
contractual relationships.
To gain understanding of the four research questions, I collected and analyzed the factors
associated with decisions made about student services through a variety of means, including
interviews, surveys, focus groups, and the review of relevant records. These factors differed by
stakeholder groups. The values different stakeholders associate with the decision to outsource or
develop internally was of particular interest. Creating understanding of the perspectives
associated with these decisions, and how they interact among different stakeholders was
important in order to gain understanding to the decisions being made.
In addition to exploring the factors and values associated with the decision to outsource,
it was important to investigate the number of students who are outsourced, helping to establish
trends, total usage of outsourcing between districts, and scale of outsourcing. Total numbers,
along with demographic breakdowns, particularly of disability type, are of importance to
understanding the relationship between the school districts and vendor. I analyzed trends for
districts or between diversity demographic, which provided insight into district values or factors
associated with outsourcing of whole school models. The information collected helped develop
SPECIAL EDUCATION DAY SCHOOL OUTSOURCING 64

an understanding of the perception of quality and its influence on ongoing partnerships or
contracts, or of the influence consumers or parents have over the decisions. Stakeholders’
definitions of quality influence levels of satisfaction, and influence both levels of outsourcing, as
well as determining vendors, and individual student decisions. Perceptions of quality may also
influence how firms value factors associated with decisions outsource, and relates to contractual
relationships, including institutional loyalty (Williamson, 1973; 1985).
I conducted interviews (appendices A and B) in person, one-on-one, and audio-recorded
using an application on an iPad called V oice Recorder. After completion of the interview, I wrote
reflection notes, or a memo (Merriam, 2009), with key reflections from the interview within 24
hours. I transcribed recorded interviews using a service called Rev.com. Focus groups
(appendix C) were completed in the same manner, but with a goal of a group of four or more
parents and guardians. Due to scheduling conflicts, one group of four was split into two groups
of two. The third parent focus group consisted of five parents.
Respondents completed surveys (appendices D and E) online using Qualtrics. Data was
collected online and a variety of question formats were used, including open-ended, scales,
closed, and multiple choice (Fink, 2013). I sorted question responses by research questions and
to enable analysis.
Data Analysis
This is a qualitative research study investigating the cost efficiency in decisions by school
districts to outsource students with mental health needs to private therapeutic day schools
through an investigation of the contractual relationship between a firm and vendor. My study
utilizes semi-structured interviews, online surveys, semi-structured focus groups, and relevant
record reviews to gain rich, full data in order to understand this relationship and cost efficiency
SPECIAL EDUCATION DAY SCHOOL OUTSOURCING 65

within decisions made about students with mental health needs. The study utilized a variety of
methods, data sources and instruments, and the information collected was crossed and compared
to other sources of information, which enabled the portrayal of a fuller, deeper understanding of
the complex decisions a district makes in outsourcing students. The system of using multiple
data sources and collection techniques, and comparing the results for more valid results is
triangulation (Maxwell, 2013; Merriam, 2009). The use of multiple sources and collection
techniques allowed for trends to emerge and influences to be examined (Merriam, 2009).
Competing factors from different stakeholders were investigated in terms of how they influence
decisions being made, and how potential blends of factors and competing factors result in
decisions to outsource within this contractual relationship.
The semi-structured interviews and focus groups (appendices A–C) were conducted in
person and audio-recorded. Upon completion of the interview I wrote a memo or reflection
(Merriam, 2009) within 24 hours to accurately reflect on the collected information. Recorded
interviews were transcribed using a transcription service called Rev.com. I listened to interviews
multiple times, and I read and reread transcripts. I used open coding (Merriam, 2009) after
reading transcripts and listening to recorded interviews. Open codes were grouped as trends
emerged, and axial coding was utilized (Merriam, 2009). Axial coding allowed for reflection and
interpretation of meaning, growing from descriptive coding. Once codes emerged, I developed a
series of categories to group the codes (Merriam, 2009). Categories are conceptual elements that
span a group of individual examples or codes. I refined categories over time, and as I completed
more interview analysis. As categories developed, I made connections between categories.
These connections are demonstrated through visually developed maps (Merriam, 2009). The
linking of categories enabled trends in factors, values to factors, and disconfirming evidence to
SPECIAL EDUCATION DAY SCHOOL OUTSOURCING 66

be identified more clearly. As trends emerged and saturation (Merriam, 2009) of information
was discovered, I linked categories and codes back to research questions and synthesized.
I collected survey data online using Qualtrics.com. Initial sorting was completed through
the online tool, Qualtrics. I sought a response rate of five or more people (appendix D) and six
to ten people (appendix E) for accurate and relevant data. The school district survey yielded five
respondents, and the parent survey had eight respondents. Parents also sent letters and emails
with additional information after completing either the survey or focus group, which was added
to the record review. Closed-ended responses were grouped by question number and linked to
research question to establish trends. Open-ended, multiple-choice, and short-answer questions
were coded using opening coding (Merriam, 2009). I grouped emerging trends in codes into
categories and identified trends and connections between categories. Codes and categories were
refined throughout the process.
Interview, focus group, and survey codes and categories were brought together and
crossed to look for connecting and disconfirming information (Merriam, 2009). I compared
patterns and trends between protocols to identify valid information for results. I completed
further refinement of categories by research question across protocols to identify results of
research questions. I completed reflections or memos on individual protocol refinement findings
and cross-protocol refinement findings to synthesize information.
I reviewed relevant records for this study. Records considered were district and SELPA
memos, firm and vendor contracts, and data from online sources, such as Education Data and the
California Department of Education. Used documents included district and SELPA statements
towards special education and least restrictive environment, parent letters that were submitted, a
firm and vendor contract, and data from online sources. Contracts and memos were coded and
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placed in categories. Codes and categories were crossed and compared to information collected
from other study protocol analysis. Data collected from online tools was analyzed for trends and
patterns and compared to data collected and categorized within other protocols.
The following is a description by individual research questions of the analysis that was used:
Research Question One
What factors or values are considered when deciding to outsource a student by different
stakeholders?
To answer research question one, I utilized all sample populations and data collection
tools and methods (appendices A–E). I coded collected information from interviews and focus
groups using open coding (Merriam, 2009). As trends in codes developed, I utilized axial
coding. I placed codes in categories, in which conceptual elements were identified (Merriam,
2009). I refined and crossed codes and categories, which lead to determining linkage between
categories, including trends and patterns. I gave particular interest to factors or values identified
by different stakeholder groups, and how they intersected within analysis. Connections between
categories among different stakeholder groups was of interest, which enabled the identification
of themes, and vast differences between the groups and the factors that were valued.
Survey information (appendices D and E) for research question one covered two areas,
frequency counts on closed-ended and multiple-choice questions with pre-identified factors, and
open coding for short-answer and open-ended responses. The counts and codes were compared
and crossed to determine factors and values that are relevant to different stakeholder groups,
including those that are shared between groups. I sought trends and disconfirming evidence in
the review of relevant records. I completed open coding of district memos and contractual
agreements (Merriam, 2009). I included additional review of letters submitted by parents in the
SPECIAL EDUCATION DAY SCHOOL OUTSOURCING 68

review of records. I placed codes were placed in categories and refined categories and compared
them to other protocol information.
Research Question Two
How are these factors or values weighed in making decisions?
Research question two is a growth of research question one. Coding and categorization
was the same as stated in the above question one section. Interest for this research question
occurred in the similarities and differences between identified factors and values placed within
individual identified factors among stakeholder groups. Interviews and surveys generated a great
deal of information regarding this question. Record review established value systems for school
district personnel that were crossed with information gathered and analyzed from interviews and
surveys. The connection between identified categories and how different groups value the
connections provided great insight to this research question.
Research Question Three
What combination of factors appears to favor outsourcing of whole school systems for students
with mental health needs by these organizations?
Research question three relates most closely to the school district personnel sample
population. During data collection and analysis, information collected from other groups did
influence this question, including information around legal involvement and use of an advocate.
This will be discussed more in chapter four. Information from protocols from the district sample
was of particular interest, although information from vendor population and parent samples were
also considered to gain perspective on how other stakeholder groups view firm decision making,
and influence decision making. I chose to consider the vendor information since contractual
negotiations occur between the firm and vendor that could include discussions on desired outputs
SPECIAL EDUCATION DAY SCHOOL OUTSOURCING 69

and services, relating to firm values. Parent information was chosen for this research question
after completion of data collection because of the potential influence on district decisions and the
correlation of information when compared to district information.
I continued to use the identified analysis process for this research question. I used results
from questions one and two to begin to identify results for this research question. I designed
interview questions (appendix A, category 2) to create discussions on individual cases for
outsourcing and what circumstances generated outsourced students. I utilized open coding of
interviews and surveys to identify trends and develop categories. I crossed categories within
protocols and across protocols and record review to establish more global trends and patterns
within the decision to outsource. I developed a clear picture of the combination of factors and
values that result in outsourcing. I also investigated trends within and across different districts
within the SELPA. Some similarities and differences emerged within or between the districts,
therefore I sought factors contributing to those similarities or differences within the data
collected.
Research Question Four
Does the decision to outsource affect perception of quality of services to different stakeholders?
Research question four discusses perception of quality. All stakeholder groups were
considered. I utilized interviews, surveys, and record reviews. Interviews (appendix A, category
1; appendix B, category 1; appendix C, categories 3 & 4) sought to find how different
stakeholders perceive the quality of this contract, services within outsourcing, the school
experience, and the vendor. I examined issues of quality around renewal of contracting or
selecting vendors, as well as parent perceptions of internal and external models of schooling. I
utilized open coding to establish themes (Merriam, 2009). Axial coding into development of
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categories followed. I established connections between different categories, within protocols and
across protocols. I discussed and examined similarities and differences between stakeholder
groups.
Table: 3.1: Methods for Research Questions
Q:1
Factors or
values
considered
when
outsourcing a
student?
Q:2
How are factors
or values
weighed in
making
decisions?
Q:3
Combination of
factors favoring
outsourcing of
whole school
systems?
Q:4
Perception of
quality of
services to
different
stakeholders?

Interview,
appendix A
X X X X
Interview,
appendix B
X X X X
Focus Group,
appendix C
X X X X
Survey,
appendix D
X X X X
Survey,
appendix E
X X X
Record Review

X X X

Summary
This study seeks to understand the factors that influence decisions to develop internally
or outsource mental health–based special education services by school districts. It takes the form
of a qualitative case study involving several school districts and a special education service
provider. Specifically, this case study is an investigation of the contractual relationship between
the School Districts of the Hillside Special Education Local Plan Area (SELPA) and the
nonprofit, non-public special education therapeutic day school, the Howard Education Center
(HEC).
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This qualitative case study attempts to build an understanding of how people make sense
of the decisions to outsource specialized mental health services for students identified as ED
(Merriam, 2009). Focus is given to how people interpret the tradeoffs within decisions related to
students with mental health needs using transaction cost economics. The purpose of this case
study is to examine the factors associated with the decision a SELPA or district makes for
students with emotional disabilities or mental health needs. Transaction cost economics will be
used as the lens to understand these decisions and cost efficiency within these decisions
(Williamson, 1985; 1999; North 1990).
To develop an understanding of the relationship between the firm and vendor, the study
investigates four research questions through a variety of methods, instruments, and data
collection techniques. These questions explore the factors associated with decisions to
outsource, the value given to the factors considered in outsourcing, an investigation into the
combination of factors or competing factors within decisions for students identified as ED, and
perceived quality, and how that combination of factors influences decisions and contractual
agreements. Semi-structured interviews, focus groups, surveys, and record review are the tools
used to collect information.
The study analyzes, examines, compares, and contrasts the information collected to build
a deep rich understanding of the relationship and decisions. It uses interviews, focus groups,
surveys, and review of relevant records will to collect information. It uses data collection
techniques across stakeholder groups, including accessing information from the school districts
(firm), day school (vendor), and consumers (families). It codes the information collected, places
it in categories, refines, and compares it within and across protocols and stakeholders, and
synthesizes it to answer the four research questions. This study will contribute to the literature
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on efficient organization decisions for students with mental health needs, as well as transaction
cost economics and its usability in evaluating organizational decisions. My study will develop
an understanding of the efficiency in the contractual relationship between the school districts
within the Hillside SELPA and a specialized non-public, nonprofit day school for students with
mental health needs.

SPECIAL EDUCATION DAY SCHOOL OUTSOURCING 73

Chapter 4: Analysis of Data
The following chapter presents data collected as part of this qualitative study on school
district special education outsourcing. In this study, I investigate the relationship between school
districts (firm) and therapeutic non-public day schools (vendors). I explore the decision a district
makes in deciding to contract with day schools, along with the individual decision to contract
with another school to provide schooling for the district’s student through stakeholder interviews,
surveys, and reviewing records and documents.
This chapter presents data that was collected and analyzed as part of this qualitative study
on school district outsourcing of students with emotional disabilities to non-public school
models. The study collected data from three stakeholder groups, including school districts,
vendors, and parents or guardians. Common and contradicting themes and values emerge from
the different stakeholder groups. Data is presented by research question, with attention given to
individual stakeholder group perspectives initially, and then to the combination and comparison
of stakeholder groups.
Organization of Data Analysis
This chapter includes a presentation of the results of the research described in the
previous chapter, as well as answering three research questions. The study was initially designed
to address four research questions. Through data collection and analysis, these research
questions have been refined. This refinement was done to minimize repetition in presentation,
and to more clearly demonstrate the interaction of factors in making decisions to outsource.
Research question 2 was altered from “How are these factors or values weighed in making
decisions?” to “What influences how these factors or values are weighed in making decisions?”
Research question 3, “What combination of factors appears to favor outsourcing of whole school
SPECIAL EDUCATION DAY SCHOOL OUTSOURCING 74

systems for students with mental health needs by these organizations?”, was eliminated. This
was done because the analysis showed that it was not so much the combination of factors, as how
certain things influenced the factors involved in the decision process. The combination of factors
and direct influences to factors will also be discussed in the analysis later in this chapter.
Research questions one and four remained consistent, and the fourth research question will now
be addressed as research question three.
The following research questions guide the discussion in this chapter:
(1) What factors or values are considered when deciding to outsource a student by
different stakeholders?
(2) What influences how these factors or values are weighed in making decisions?
(3) Does the decision to outsource affect perception of quality of services by different
stakeholders?
This qualitative study utilized two primary data collection techniques. Interviews or
focus groups and surveys served as the primary vehicles for collecting information. They were
tailored to represent the given stakeholder group being utilized. Record reviews were also
conducted. Record reviews included district memos, data collected from websites, including the
California Department of Education and Ed-Data, demonstrating outsourcing trends, and
documents submitted by parents for informational purposes.
Respondents
To answer these research questions, I drew a sample of respondents consisting of three
key stakeholder groups who have influence over student educational decisions. The stakeholder
groups were school districts (firm), day schools (vendor), and parents/guardians (who hold
educational decision-making rights). School district personnel included district special education
SPECIAL EDUCATION DAY SCHOOL OUTSOURCING 75

directors, the Special Education Local Planning Area (SELPA) director, school psychologists,
and school specialists across three districts in one SELPA. I selected two day schools to
represent the vendor, and collected data with the assistance of the directors and assistant
directors. Parents and guardians from the two day schools provided additional information
through focus groups and surveys. These stakeholder groups participate in the decision to
outsource students at varying levels of the process. All have influence within the decision-
making process.
Reporting of the Findings
Findings related to research question 1: What factors or values are considered when
deciding to outsource a student by different stakeholder groups?
Vendor Selection
Schools districts have to decide to which vendor they will contract school services. In
considering this decision, my study identified several factors and themes. Both school district
and day school representatives identified factors such as proximity, expertise or specialty area,
oversight and control, and trust or relationships. These areas influenced a district’s desire to
utilize a particular vendor and the frequency with which a vendor was utilized when placing
individual students in outsourced settings.
Proximity and Location: Proximity was a recurring theme and area of importance when
considering vendors. The concept of proximity came up in many different fashions. Time on the
bus, accessibility to home neighborhood, direct district oversight, access to local district, and
transportation costs are all examples of proximity issues that were discussed during data
collection. One school district official stated, “You don’t want your student to sit on the bus for
an hour,” and went on to say, “If a similar program is close by and we can work on dual
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enrollment, why would I want to send a child that far away? It is a loss of instructional time, it is
additional time out of the student’s day that he is not being productive, and he’s sitting on the bus
without instruction or structure.” This representative touched on key points directly related to
time, distance, and ability to work collaboratively with the sending district (dual enrollment).
When discussing the high costs of transportation involved in selecting a school for
outsourcing, another district representative said, “Transportation is the biggest factor, you know
we would love to have someone at school x right next door to the high school because we don’t
have to pay for transportation.” The district representative said that transportation costs alone
mirror the cost of vendor tuition, depending on distance from the district. Distance was rated as
high importance by all respondents on the district survey.
A third district representative stated that when you consider tuition costs combined with
services and transportation, “you could probably hire a teacher and other support staff and create
a class for a child that you maybe didn’t have before.” They went on to say, “We do care very
much about proximity because I think parents care about that. I think it is horrific to have kids
on the bus for more than an hour.” This added to the information presented by districts regarding
the different aspects of proximity of vendor to the home district.
Day school representatives echoed this idea of proximity. Day school respondents stated
that working with districts that are closer enables them to offer services such as dual enrollment,
which they felt increased district relationships and the ability to successfully transition students
back into the general education setting. One representative stated, “It depends on geographical
location. We offer dual enrollment, where they start a couple of hours in more preferred classes.
Our teachers will work sometimes with the public school teachers or sometimes just with the
students and their homework for help and support.” Day school representatives also stated that if
SPECIAL EDUCATION DAY SCHOOL OUTSOURCING 77

a district is closer in proximity to their campus, they can supply transportation at a lower cost
than a separate provider.
School Quality and Expertise: Finding quality schools with appropriate skills and
expertise to match district needs was an important factor when determining schools with which
to potentially contract. Quality here includes philosophical approach, areas of expertise,
instructional quality, and overall professionalism. School districts and day schools reported
similar information within this area. Districts rated quality instruction and quality behavioral and
therapeutic support as key factors in schools they desire to contract with and utilize for their
students. One school district director stated that they want to know that a day school understands
the educational model and works towards serving kids in the least restrictive environment. They
went on to say that a quality program does not look to keep kids forever, but instead looks to
help the students return to the district. Several district representatives stated that they look at the
quality of the instruction during their visits and emphasized the importance of engagement
within the classrooms.
Day schools talked about quality through a comparison of advertising and creating an
open door model. One day school representative commented, “We used to advertise, but we had
no indication that any of our referrals were a result of our advertisement. We found that word of
mouth, and keeping districts happy with hard work with our students and families, was far more
effective.” This representative went on to say those districts appreciate their willingness to work
with very challenging kids. This person said, “They know if they send us a kid that they can’t
place anywhere else, we’ll take the student and give it a real shot.” Another representative
commented that their strength was not marketing, so they do not attempt to market, but instead
encourage districts to see first-hand what happens on a daily basis within their school. This
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school mirrored the other school’s response, and discussed word of mouth and reputation as
being its best attributes in demonstrating its quality and attracting potential districts. The
representative added the importance of collecting data to show the district what work they are
doing with their students and to demonstrate how the student is growing within their school.
Oversight and Control: Another factor districts considered when establishing contracts
or making a determination of internally based or outsourced services is oversight. Oversight has
direct correlations to proximity (discussed above) and vendor trust (which will be discussed
later), as well as some of the quality issues discussed above. A common theme and source of
frustration for district officials was lack of control over outsourced schools and the difficulty of
having appropriate oversight.
During an interview, while discussing internal and external school models, one district
representative stated that “control” is lost when a student is placed in a non-public day school
setting. She went on to say that with internal programs, “I have more quality control, and it is
also serving students in a less restrictive environment.” This representative compared district
programs with regionalized programs (shared schools between districts), and outsourced day
schools, and explained that with each layer the district loses a bit of control and oversight, which
results in the school not being run in the manner they would prefer, or which impacts their ability
to make decisions directly related to the student.
Other directors shared similar insights. One director stated, “I can’t tell a non-public
school how to do their jobs, but I can in my own program.” The director went on to explain that
depending on the location, oversight can be very difficult, describing relationships with out-of-
state placed students. Another district representative stated that they look for a specific
behavioral component and a particular instructional methodology. This representative stressed
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the importance of being certain a school is not just holding a student, but instead working
towards a goal.
Representatives from the day schools interviewed approached this concept in a different
fashion. They discussed “including the district” in decisions, student updates, and student
progress. They went on to discuss keeping open doors and allowing for district observation of
classrooms and campuses as a way of promoting their school and the work that is completed.
They also referred to working for the districts and helping work toward district goals for the
students. One day school director commented, “They have my cell phone number,” when
discussing accessibility. This representative commented that districts need you to be accessible,
but more importantly, to be able to help them through whatever problem or issue is currently
happening.
Trust, Relationships, and Partnerships: Accessibility and partnerships are also key
components in the next factor, trust and relationships. Districts stated that they wanted to know a
day school was a partner with them and that they looked to successful partnerships in the past in
selecting vendors. They looked for a vendor to be ethical, honest, and an active partner with
them in working with their students. Day schools discussed building relationships through a
variety of means in order to foster partnerships, working towards shared goals, creating
accessibility for the district, and building capacity within their schools.
Districts talked actively about trust with day school vendors. One representative
discussed the importance of partnerships, and wanting to build relationships with vendors that
were ethically based. They discussed day schools being non-compliant on residency fraud as a
sign that they are not interested in being a partnership. They stated, “If they’re not being ethical
and honest about things like that, then they’re really not your partner.” Another district
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representative discussed IEP meetings, and being aware of opinions and statements prior to
meetings. They stated that they wanted to be supported, or at least to understand ahead of time
why they might not be supported, so that there were no surprises during the meeting. They
discussed an example in which, prior to the meeting, a day school supported their
recommendations, but during the meeting stated they did not support the district
recommendations. One director commented on finding schools they feel are great partners and
utilizing those relationships. The director said, “There are others [day schools] that are great
partners, and right away when you make that placement there are discussions about a plan to
bring the student back; what goals, and what benchmarks do we need to see before we start
having an IEP to talk about returning?”
Day schools also placed an emphasis on building trust, establishing relationships, and
building partnerships. One day school representative stated that, “It is absolutely about
relationships. [One district director] was in one district and had four or five students with us.
She left and returned with a different district; now we’re getting students from that district. She
said, ‘It’s because I know you guys, I trust you guys.’” This person went on to say, “The bottom
line is, a good relationship with a district means referrals.” When discussing how to develop and
foster the relationship, this individual stated several things, including accessibility to classrooms,
the campus, keeping the district informed, and helping the district with difficult situations,
students, and families. They stated, “Accessibility is the thing we bring. Not just accessibility,
because even when we get them on the phone, it’s helpful. We give them some avenue, some
options, and some recommendations, and I think that goes a long way.”
Another representative mirrored those thoughts, stating, “I think it’s accessibility, paired
with the ability to help and actually solve the problem and talk them through and calm them
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down.” Day school representatives mentioned districts having their cell phone numbers and the
importance of answering calls or responding within the day. One joked that they’ve even
answered calls while on vacation. Another day school representative discussed the importance of
reputation. This representative stated that having success with very challenging students and
families, and assisting the districts through that process, builds reputation, which can build trust.
They stated that small things like being flexible around IEP schedules and showing data to
support school claims helps build trust as well.
Both schools and all representatives interviewed discussed being a buffer between
families and districts, helping re-establish communication as a means of building trust. They
also stated that accessibility for the districts to teachers and classrooms helps create transparency
and trust within the program. Asked what plays into developing trust, one representative
summarized the above discussion: “Strong relationships with district administration more than
anything. When they are on campus, they see what’s happening in the school. They have
positive relationships in the IEP meetings. They don’t feel that we separate them or attack them
in IEP meetings. We are upfront with them before IEP meetings about what our goals and plans
are for certain kids. Then we are constantly having dialogue with them about how the kid is
going or what the process is or is not. “
Individual Student Decisions:
The other considerations when making decisions to outsource services are the factors
related to individual student cases. Some factors overlap with the initial firm and vendor
relationship and some are more unique to individual students. When discussing this layer of the
decision-making process, the different stakeholder groups identified several factors. Some were
distinct to a group, while others were shared across groups. Factors unique to this layer of
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contracting included financial costs, safety, student history, district pride, relational dynamics
with parents and families, and advocacy.
Financial Obligations and Costs: Financial costs were considered a factor within the
individual student decision. According to day school and district representatives, costs between
school sites (day schools) are relatively consistent. The financial costs involved in outsourcing
include the tuition costs to the school, supplemental services received, and potential
transportation costs, which were discussed earlier with proximity considerations. Financial
considerations also mirror referral trends over the years, as seen on ed-data.com (2013), and as
reported by districts, in relation to state budgetary trends over the same years. In times of budget
downsizing, referrals dropped, while in more recent years, with budgets building back to prior
years’ levels, referrals to outsourced schools have increased.
District representatives did not initially engage in financial cost as a factor. They related
this factor to the annual budget and making sure they were effectively utilizing their resources to
meet their students’ needs. As time passed in the interview, each district representative stated the
importance of monetary costs, and one even said, “It all goes back to money.” One district
representative discussed the consideration of student age and how it relates to the financial
discussion. This person stated that a district has to consider that once a student is outsourced,
there is a chance they will never return to the district, so it is not just this year, but all the years of
schooling that must be considered. This individual speculated that, in theory, sending a younger
student to more specialized services may ultimately benefit the student more, however, given the
potential of more years of financial obligation, the district often waits as long as it can before
outsourcing. Another representative stated that sometimes, “We’re just trying to hold on as long
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as we can, and he’s got good days and bad days, but we know ahead of time at some point he’s
going to need more services.”
All district representatives discussed litigation cases and the effects these have on
financial decisions. They stated that it is important to consider the cost of litigation, which could
influence the decision, because it may be a cost saving to outsource the student. District
representatives said they often have to do a “cost-benefit analysis” if litigation is pending, which
impacts and influences their decisions. These considerations and decisions also impact future
individual student cases and the district’s ability to make student-based decisions, as it commits
budgeted money to one student, which could influence the decision regarding another student
according to representatives. This will be discussed further in research question two.
Day school representatives acknowledged financial factors and discussed their
perceptions and experiences with districts. One representative stated that when they adjust their
rates they receive backlash from districts and threats to no longer contract with the school. They
went on to say that their rates have remained frozen for a number of years, which impacts their
ability to maintain their budget and operate their programming. They questioned, “Can we risk
it?” when considering rate changes and the potential impact on student referrals or loss of
students in enrollment. Another representative discussed how districts openly made an effort to
start their own programs at one point in order to save money, but more recently realized the
difficulty of that decision and are again seeking their support. Day school representatives also
commented on how SELPAs dictate annual rates with little or no input from the day schools and
will encourage districts not to contract with or utilize schools that do not comply with the
dictated rates.
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Parents also discussed financial factors. One parent talked about how any parent wants
the best for their child and how in a perfect world that would be possible, but acknowledged
budget constraints and the need for limits in order to make things work for the greater good.
Another parent also noted that districts have large responsibilities and difficult financial
decisions to make, but expressed the belief that districts pick fights over small costs, which
results in their having to pay larger sums later. Their example highlighted a fight over 10
minutes of a supplemental service, which eventually broke down the IEP meeting and lead to
mediations, resulting in the student being outsourced to a day school. Other parents agreed with
this parent, saying districts will often fight over the small stuff, which over time breaks down
trust and results in parents fighting for larger, more expensive services and placements. This
parent group collectively stated that if the districts just “eased up” on the smaller things, perhaps
the larger fights would not occur.
Safety and Student History: Safety and student history was another factor when
considering the decision to outsource a student to a day school. The research showed several
common characteristics in students who have significant mental health needs or who are
classified as emotionally disturbed (Lane et al., 2006; Mark & Buck, 2006; Wagner et al., 2005;
Cullinan & Sabornie, 2004; Davis & Stoep, 1997). Some of these characteristics included
heightened failure rates in school, increased suspensions, increased expulsions, parents rating
school satisfaction lower than peer groups, and students achieving below peers in school
(Rumberger, 2010; Belfield & Levin, 2007; Lane et al., 2006; Wagner et al., 2005; Davis &
Stoep, 1997). All stakeholder groups discussed these factors. Day schools discussed the typical
history of a student who is referred to their school. Parents shared personal stories of their
students and student experiences in the public schools, and the districts discussed what
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behavioral and safety concerns they generally look for when considering a candidate for a non-
public day school, and linked these back to school success or access to curriculum and benefit.
Districts discussed and rated safety as a primary factor when considering alternative
school placement or outsourcing students. Safety was described as the school’s and district’s
ability to keep the individual student, other students, and the school campus safe. District
representatives rated the importance of school safety higher than the importance of community
safety, but acknowledged community safety should also be considered, especially in extreme
circumstances. One representative discussed the differences between public school campuses
and day schools, saying that size, training, and staff-to-student ratios all play a role when
thinking about a student with significant safety concerns, such as sexually acting out, or
consistent assaultive behaviors towards staff members. They will ask, “Can we keep this child
safe and keep others safe?” They referred to one student who was in an internal program for
students with mental health needs but was assaulting staff members numerous times daily. They
said this student was unsafe to others, not receiving instruction, and impacting the instruction of
others.
Another district representative mirrored these comments, stating that public schools have
a different capacity to handle major disruptions and safety concerns (personal communication,
2013). They stated that they had a student who was throwing chairs, hitting others, and being
assaultive, and their school’s ability to work with the student through these behaviors as they
were occurring was limited due to the size of the school, other students, and lack of resources or
time, creating safety concerns. This representative also talked about “manpower,” referring to
staffing ratios. They said that public schools don’t always have the staffing ratios to
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appropriately support students with severe acting-out behaviors, which impacts the individual
student’s learning and the learning of others.
Some of the representatives discussed the potential to hurt others, both in school and in
the community. They agreed that if a district feels as though a student may hurt themselves or
others, including their parents, then the district needs to consider more services. One district
representative stated that this is a “hotly debated” topic, especially when considering safety
issues in the community, as schools should focus on educational progress and other agencies
should support in safety and mental health, yet due to the severity of some behaviors and some
potential harmful behaviors, districts have no choice but to consider them as factors.
One district representative discussed the awareness of safety issues on a public school
campus. This representative referred to a recent suicide by a student on one of their high school
campuses and the direct impact on schools within the district, hospitalizing students and
requesting outsourced services for students demonstrating safety concerns. Events related to
student safety could impact a school’s overall awareness, and those events may impact students’
mental health (personal communication, 2013). They acknowledged that it is hard to determine
whether this effect is due to heightened awareness, the impact of the post-traumatic stress, or a
combination of factors. Another district discussed the same issue around suicide and awareness.
A representative stated, “We’ve had a recent increase in suicides and suicide attempts in our
district and SELPA.” They went on to say that there is increased awareness, and dedicated
SELPA meetings discussing how to address and best support students struggling with mental
health due to this recent increase. The representative did acknowledge that this does not
automatically mean an increase in students going to non-public day schools, and could result in a
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variety of solutions and supports, but has directly impacted the awareness of mental health and
safety in schools.
Day school representatives discussed the issue of safety by describing a typical profile of
a student who is referred to their school. Day schools stated that students who are sent to their
schools tend to have significant acting-out behaviors, can be assaultive, may have traumatic
histories or experienced intense traumas within their lives, generally have a clinical diagnosis,
struggle with their social interactions, have difficulty with frustration tolerance, and have a
history of significant school failure, including repeated class failures, suspensions, and
expulsions (personal communication, 2013). They stated that many of their students have been
enrolled and removed from several public schools and school settings before entering into their
own day school. Representatives from day schools went on to say that many of their students
have truancy issues and a poor self-image, that they struggle with consistency in class, and have
difficulty building and maintaining relationships. The discussions focused around a pattern of
school failure and how the combinations of behaviors influenced both the physical and emotional
safety of not only the student, but others in their environment and families.
Day school representatives acknowledged that focus and campus differences enable their
own schools to address certain issues more readily. An example of this is a general rule that
students cannot be expelled or suspended from the day schools they attend for their behaviors,
but instead have to work through the behaviors at the school site, an approach that is very
difficult for public schools to take on a consistent basis, as discussed earlier in this section.
Parents talked candidly about their own children’s experiences in school, including
repeated suspensions, safety in school, safety in the home, emotional safety, and the effects on
parental and school district relationships, which will be discussed in more detail in research
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question 3. A repeated theme among parents was their child being sent home for acting out and
disruptive behaviors. Parents echoed that public schools were not equipped to handle their
children, as was demonstrated by their sending kids home on a daily basis, but said that during
meetings, public schools often claimed they could support and work with their students. Parents
also discussed how the repeated suspensions and expulsions affected their students’ perceptions
of school and impacted them emotionally.
One parent group joked that the process from public school to a non-public school is a
“journey,” and even a “nightmarish journey,” when discussing their children’s history in school
and ultimately of being outsourced. One parent gave the example of her son. This parent
described how her child was diagnosed with bi-polar disorder, anxiety disorder, and psychosis at
the age of four and a half. In this case, problems presented themselves throughout his
development and he had significant difficulty within a specialized daycare and preschool
settings. This parent approached the district prior to kindergarten to be proactive about
establishing services. The district responded by saying, “We wait for the child to have a
problem.” She described the large number of problems the school subsequently had with her
son, the repeated suspensions in kindergarten and first grades, and how the process took about
three years before her son was placed in a non-public setting. She said she was “lucky” that she
worked independently from home; otherwise she would have lost her job due to the amount of
time her son had to spend out of school.
Repeated suspensions were something a lot of parents discussed. One mother who
moved from out of state to California explained how her son had been in a specialized school out
of state, but when she came to California, her district told her they had to try the public school
first. She said he was in the first grade and the behavioral referrals started his first day in school
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and were occurring on a daily basis. “The principal became a babysitter, and the teacher was
scared of him,” she commented. Eventually, he assaulted his teacher and was suspended for 365
days. She said, “He just floundered for a couple of months,” and “I spent the next two months
on the phone trying to find out what my options were.” During his time out of school he was in
and out of the psychiatric hospital, eventually spending four months hospitalized (personal
communication, 2013). The parent finished by saying that it almost took a year and the
assistance from professionals at her son’s final hospitalization, but eventually he was placed in a
day school.
The idea of suspension came up in every group. Parents stated, “They would send him
home,” or say they’d get calls from the school saying, “Come and get him.” Parent groups
echoed that their children were suspended as young as four and five years old, and that their own
jobs were lost or put in jeopardy because of the repeated time out of school. Parents also voiced
that schools often made them feel as though it was “their fault” or “something they are doing
wrong,” but that the schools were not fast to offer support or solutions. One parent commented
that, “You don’t know what you don’t know,” when discussing helping her son get to a more
specialized school. This is a topic (opportunism) that will be covered in research question two
on how it relates to accessing services.
Some parents also discussed how schools chose to deal with their students. One parent
described how she went to the public school before kindergarten to share her child’s history.
“She’s adopted, prenatally exposed to drugs, was kicked out of a few preschools, was kicked out
of summer camps, rarely slept and had poor sleeping routines, and it was clear something was
wrong.” She explained that this student was diagnosed with ADHD and bipolar disorder, and
that she presented this information to the district. The district started this student in the public
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setting and she tore the classroom apart within the first week. The student was then moved to a
special education classroom. In this room she continued to act out, so the school began letting
this student “color” to prevent incidents. Eventually they “hospitalized her to teach her a
lesson.” This parent discussed how upset she was about how the district approached her student,
even after she had brought all the information ahead of time. After the hospitalization, the school
expelled her student. Once expelled, it was not too much longer before her student was placed in
a day school.
Parents also discussed the effects of repeated school failure and suspension and removals
on their students. Parents stated, “It destroys their self-confidence,” and several commented that
their children began to dislike and even hate school. Parents questioned, “Why does my child
have to fail?” when discussing accessing appropriate services. Another said, “My child had to be
kicked out of school to get the services they needed.” Parents consistently stated how the years
of fighting and failing really destroyed their children’s and their own perceptions of school and
public schools.
Findings related to research question 2: What influences how these factors or values are
weighed in making decisions?
Several factors are considered when making decisions related to students identified with
an emotional disability (ED). Each individual case is viewed differently, with certain factors
influencing how the criteria are weighed within the decision-making process. Three key
influences affected how different factors were valued within the decision-making process,
influencing the efficiency of the decision, the timeliness of the decision, and the ultimate
decision to outsource services. These factors included opportunism, level of trust, and family
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means and access. Each of these influences overlapped one another on some level and also acted
alone.
Opportunism or information advantage had direct impact on the efficiency and timeliness
of student-based decisions to outsource and access services. Opportunism influenced how key
factors were considered in the decision-making process. Trust was a theme across stakeholder
groups. Trust influences decisions at several levels, including vendor selection, stakeholder
group influence in decision making, and parental decisions when dealing with districts. Family
means and access to resources enabled more ready access to information, which impacted how
factors were considered and the attention districts gave to key factors. These three key
influences, trust, opportunism, and family means or access all interact with one another,
influencing direct decisions related to students and outsourcing students.
Opportunism
The literature review in chapter 2 discusses informational advantage or opportunism
(Williamson, 1973; Greene, 2007) and its relation to decision making. Greene (2007) asserts that
school districts hold an information advantage over parents and families regarding special
education rights knowledge, and use that to their advantage. Opportunism influences decisions
related to student school placement. Opportunism directly impacts several layers of the decision-
making process, including direct knowledge of options, as well as team trust and relationships.
These instances of opportunism came up across stakeholder groups and had real or perceived
influence over decisions. Opportunism is a factor related to placement decisions; it influences
the weight given to different factors, and has direct influence over the combination of factors
associated with the decision. In addition, opportunism affected the amount of time taken or
efficiency in a student’s being outsourced to non-public day school settings. The greater the
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district’s informational advantage, the more likely the placement decisions reflected the district’s
values and preferences, as opposed to the parents’ preferences.
Day schools are not initially involved within individual decisions between school districts
and parents to outsource a student, but they did offer insight and experiences related to
informational advantage during that stage of the process. A day school respondent stated that,
“You don’t know what you don’t know,” when discussing why some students access services
more readily than others. This person discussed how parents do not always know what their
options are; therefore they do not know what to ask for when looking for support and services for
their child in school. Another representative discussed phone calls they receive from parents
looking for information. This representative stated that parents find the school online and call
discussing their situation at their current school and ask if their student would be allowed to
attend the day school. Often these parents have little information and reported feeling helpless
watching their child fail and be suspended from school on a regular basis. This representative
stated that they spend time explaining the process to parents, how to ask for an IEP, and what
jargon to use in meetings. The representative went on to say that on occasion the parents call
back thanking them, saying it helped them access more support for their child.
Parents echoed the feeling of being disadvantaged. One parent stated, “You don’t know
what you don’t know, and so you don’t even know what you could even ask for,” which mirrored
the same comment as a non-public school director on this same topic. This parent went on to say
that initially they trusted the school district as experts, stating, “Well, I guess they’re the experts,
and they’re going to take care of everything.” This parent discussed how frustrating it can be to
watch their child fail, thinking the school district is acting in their student’s best interest, and to
later find out they did not have all the information and more could have been done (personal
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communication, 2013). Another parent commented that districts manage information. They
said, “That’s because they manage the information. You, as a parent, you go in. You don’t know
anything, and they open the curtain just a little smidge, smidge, smidge at a time. Over the years
you heard, oh well, ok, if you’re asking for that…. You just happen to think of a random question
and it happens to be one of your legal rights that you don’t know.”
Another parent commented that the jargon is difficult to comprehend during IEP
meetings. “The jargon takes like several years to get down. The jargon, that’s overwhelming.”
This parent went on to describe feeling lucky that they were “smart enough” to learn quickly and
learn the jargon, stating that other parents are not so lucky. Several other parents shared in this
feeling, making statements about the “language” and saying that it took time to understand what
was happening during IEP meetings, and that they even felt overwhelmed by the discussions,
jargon, and language used at IEP meetings.
Parents consistently stated that it was difficult to understand what their rights were, and
what kind of options, services, and schools were available, making it difficult to even know what
questions to ask. “There’s no guide on how to do this,” shared one parent when discussing
whether they felt like a partner in decision making. They went on to say, “You’re kind of on your
own. At one point I hired an advocate to help me out with the process.” Parents also
consistently stated that schools rarely offered information on these services and supports unless
first prompted by the parents. One parent said, “You’re never really told what you’re actually
entitled to and you’re always going to … their goal is to get … it seems the minimum.” That
parent went on to say, “It’s just hard to understand what your rights are and what you’re entitled
to.” Parents also discussed accessing advocates, attorneys, gaining independent assessments and
opinions, and researching options as a way of leveling the playing field and closing the gap on
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the informational advantages districts hold, but acknowledged that this only occurred after
broken trust, continued failures for their child, and personal frustration over time.
School districts dealt with this concept of informational advantage in a different way.
School districts clearly reported feeling as though they wanted a trustful relationship and team
approach with parents, but that they were the professionals, and therefore should drive the
discussion. One school district respondent stated, “I’ve said to teams over and over, you are
professionals, you are educators. You are going to say what the child needs.” This respondent
went on to say that the district is comprised of professionals and should not compromise what it
feels is in the interest of the student. Even though there is truth to the statement that the district
staff are professionals, given the perceptions of the parents, along with other factors that are not
student-based, this apparent disconnect breaks down efficiency in making school district
decisions, which could influence other factors, such as legal involvement and broken trust
(discussed later in this chapter).
One district representative from a higher socio-economic area reported that her parents
were “well informed” and were more likely to be knowledgeable about available services and
placements (personal communication, 2013). This person stated that these knowledgeable
parents were more likely to receive these services and placements than parents from the low
socio-economic urban district where the representative had previously worked. The
representative went on to say these “knowledgeable parents” were often the “leaders” of the
team, and sometimes the district needed to slow down and really look to see if the student
actually needed what the parents were asking for and receiving.
Another trend that emerged from district data collection was the influence of advocates
and litigation in the decision-making process. Districts rated “use of advocates” and “litigation”
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as key factors in deciding to outsource a student. They also discussed the influence of advocates
on the decision-making process, stating that the use of an advocate would increase the chances of
increased services or use of non-public schools. This could be related to informational
advantage. This is also an influence when considering cost efficiency, as discussed earlier, and a
result of family means and access that will be discussed later.
Trust
Trust has implications across stakeholder groups and influences different aspects of the
decision-making process, including vendor selection, the value of vendor opinion and influence,
and parental relationships. Trust involves building a trusting relationship and the breaking down
of trust within a relationship, as both influenced the actions of stakeholder group members, and
values placed on stakeholder opinions. Parental relations with the district directly impacted
parental decision making and access to information and support.
District and Vendor Trust: Trust was a recurring theme for the districts and was
emphasized as a factor of critical importance when selecting which vendors to ultimately work
with and how often to contract for individual students. In the perception of how to build and
develop trust, there were some similarities between districts (firm) and day schools (vendors) and
some vast differences. Ultimately how trust was developed over time influenced how districts
chose to utilize vendors when individual decisions to outsource were presented.
Districts stated that often the initial contract is developed with little choice. This is
because they might have inherited a vendor, students might already have been placed with a
vendor, or there might have been an urgent need to select a vendor when an individual student
decision arose. Districts stated that the decision to outsource individual students to a particular
vendor is something more closely monitored and vendor trust influences the number of students
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a district places with a particular vendor. Districts and day school representatives discussed the
importance of trust and relationship development as a key factor in developing a partnership that
allows for an increase in individual students being placed with a particular vendor. This sense of
trust directly impacts the frequency of utilization of particular vendors or day schools.
Districts were clear and consistent in stating that they look for day schools that will be
partners with the district. One district representative stated that they wanted to know that a non-
public school (NPS) supports them when contracting. This person referred to the day school’s
willingness to engage in discussions about bringing the student back to a district program or not
“surprising” the district in IEP meetings. The representative stated that if a NPS were a partner,
they would work with the district, helping to bring the student to a less restrictive environment.
A school district director discussed the importance of a strong relationship with the day
schools they choose to utilize. This person stated the overall importance of trusting that the staff
at the NPS “understands the educational model versus a clinical model,” when choosing who to
contract as a vendor (personal communication, 2013). The director stated that the district looks
for a record of success in serving the population of the student being referred out of district. The
director finished by stating they want to ensure that the school is not interested in “keeping the
student forever,” referring to a school’s ability to bring students back into district-based
programs.
A representative from another district addressed this topic by discussing how, “you just
know” when referring students to some schools that they are never coming back to district. This
individual discussed how some schools hold kids forever, or “warehouse” kids. The
representative stated that these schools are generally avoided and that they are not partners with
the district.
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An urban school district director discussed the importance of ethical and honest vendors.
The director stated, “If they’re not being ethical and honest about things, then they’re not really
your partner,” when referring to residency fraud. The director stated the importance of knowing
a vendor will be honest and up-front with the district, treating it as a partner in working with the
student. This director discussed how ultimately the district is responsible for the student, so if
the school is being unethical or making decisions that are not in the interests of the district, it
creates problems for the district.
The data demonstrated that school district representatives look to develop trust with
vendors through a history of success, quality services, partnerships in helping bring students
back into the district, and by finding schools that make ethically based decisions and keep
districts as members of the team (personal communication, 2013). Day school representatives
mirrored some of these values, but discussed trust development with districts in a different
fashion. The non-public day school representatives looked at trust as relationship development
and the ability to be transparent and good communicators (personal communication, 2013). This
directly related to an earlier-discussed district concern about outsourcing, oversight, and control.
Day schools discussed how creating an environment of accessibility and support was essential to
maintaining relationships and trust with a district (personal communication, 2013).
Communication, transparency, and accessibility were key contributors to how day
schools perceived district trust development. As discussed earlier, day school representatives
commented on the importance of both being accessible and having information when accessed as
important to meeting the needs of districts. NPS representatives referred to districts having their
personal cell phone numbers, answering calls on vacation, and immediate or prompt follow-up
on needs in order to build partnerships. This immediate access and support enabled day schools
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to help alleviate stress and difficulties for districts, also helping form partnerships (personal
communication, 2013).
Like district representatives, day school representatives also discussed the importance of
communication and IEP meeting support when developing a trusting relationship. “There is an
unspoken rule in the IEP meeting — no surprises,” one day school representative commented
when discussing how to build a partnership. Other representatives discussed how difficult
conversations or disagreements should be discussed prior to the meeting so that the parties
involved know what is going to be introduced at the meeting. One representative stated, “They
don’t want to feel that we separate them or attack them in an IEP meeting.” This individual
stated that it is important to preview information with a district prior to a meeting, and to keep an
ongoing dialogue with a district to avoid surprises.
One director of a day school discussed the importance of having trust in a relationship
with the district. They stated that once trust is established, districts will seek out information and
advice when making student-based decisions. The director went on to state that if districts feel a
school is working in their interests and in the interests of helping a student find a less restrictive
environment, the district is more likely to take the advice of the day school or act on the
recommendations of the day school.
Another director stated, “The bottom line is a good relationship with the district means
more referrals. Referrals means teacher-filled classes, and teacher-filled classes mean we stay
open. That’s really the bottom line.” This individual gave an example of how relationships
influence referral patterns, discussing how when special education directors change districts,
referral trends can change with them. The director stated that they had a handful of student
placements from one area, and when the director left, the referrals fell in that area. The same
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director took a position in another district, and within their first year, referrals and placements
from the district went from one student to five or six students. This representative briefly
mentioned similar patterns with other district directors as well, and gave an example of this
school’s investment in relationship development in particular districts over the past few years
and how that has resulted in an increase in referrals from each of those districts.
Parent and District Relationships and Trust: District and parent trust had several
implications for parental decisions regarding student decisions. Broken trust was a key influence
in parental decision making and accessing of information. Trust or lack of trust was also a key
influence in parental advocacy for student services. Districts acknowledged that they felt parents
had limited trust with the district, but the same district representatives had a difficult time
conceptualizing parental perceptions or why parents had limited trust.
In discussing school district relationships, the majority of parents from the focus groups,
9 of 10, discussed the difficulties in working with school districts, and how the process of getting
their child’s needs met was a “journey” or even “nightmarish journey.” One parent did state that
her relationship with the school district was and always has been strong, reporting that she felt
the district had her son’s best interests in mind. This parent stated that her son was placed in a
specialized setting when he first entered school and that the district has consistently engaged
with her in problem solving and meeting her child’s needs. The other nine parents shared stories
of feeling at a disadvantage, being discouraged, not being heard, and having to watch their
children fail before services were enacted (personal communications, 2013). These parents
discussed how these events influenced decisions to advocate and fight for their children and to
seek litigation, and created situations where parents began studying to better respond to school
district representatives whom they did not trust. Parents did acknowledge that once their
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children went to a NPS day school their relationship with the district improved (personal
communication, 2013). Districts mirrored that feeling.
When asked if they felt like partners with a school district, one parent responded, “Not in
the beginning, not in the beginning. It was all new. There’s no guide on how to do this. You’re
kind of on your own.” Another parent jumped in, stating, “They don’t ever tell you that you can
get an advocate, because they don’t want you to have an advocate,” and went on to say that,
“They don’t want you to have someone strong on your side because it’s a little bit of we’re
(school district) going to do this and we’re going to do that.” This parent reported not feeling like
part of the team.
Parents also reported feeling as though they had been taken advantage of, or promises
had not been fulfilled. One parent referred to IEP meetings, where they would meet to discuss
how her child was failing and agree upon some interventions, but there was no follow-through.
This parent stated that when they met again the school would make excuses as to why things
were not implemented. “They said, ‘But the T was not crossed or the I was not dotted.’ It is so
frustrating,” referring to how a district would try to avoid the discussion about why something
was not provided. This parent reported how much this angered her and how, over time, it
chipped away at her trust in the district. The parent stated: “Soon I was calling meetings every
three months. I would come in every time with a manifesto, shaking.”
Some parents discussed how they lost trust because of how they were treated by school
districts. Parents discussed phone calls received from public schools placing blame on them for
their children’s behavior. Some parents described how they approached school districts giving
them information on their child, explaining their child’s significant needs, and how the public
school initially took that information and stated: “No problem, we can handle this.” Once
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problems began, those same schools would call and place blame on parents or would be angry
with parents. Parents expressed frustration and embarrassment over this type of treatment.
“I felt like I had to be a gladiator,” a parent said when discussing her advocacy. Her son
was being sent home every day; he was being transferred to different schools a few times a year;
and she felt as though they did not know what to do. This parent described fighting for help for
her son and being frustrated at the district’s not offering additional support, and instead being
critical of her parenting style and continually sending her son home. This affected this parent’s
ability to work, which also influenced where the family could live and placed additional stress
within the home. A larger discussion began within that focus group regarding school district
treatment of parents, and how the effect of creating additional stress at home led to a dynamic of
fighting with the district instead of one of partnership.
One parent described how she was treated at an early evaluation meeting and her
perception that the district had a “black and white” view of her child and the world. This parent
shared a story about how a psychologist presented her son in a negative light in a matter of fact
way. The parent mentioned how young this professional was and how they had little
consideration of her grieving as they presented on her son, and how insulting the person was to
her parenting style and why her son was the way he was. “I left in tears,” stated the parent, and
she shared how this meeting, even though it was years ago, still creates anxiety for her when
facing IEP meetings with the school district.
Both parents and school districts engaged in discussions on least restrictive environment
and an emerging trend correlated LRE perspective to the development of trust or broken trust.
Districts referred to LRE as their “mandate” and described how they must exhaust options before
trying the next option. Parents reported that they saw LRE as the need to watch their children
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fail before being able to access appropriate services. Parents also stated that they felt this
“system of failure” further enhanced their children’s difficulties in school, ultimately affecting
students’ perspectives of school. Day schools also offered an opinion on LRE, stating that LRE
should ensure growth for a student, but does not translate into the best available services.
“It’s unfortunate that a kid has to fail before they get an IEP, even though it’s clearly
visible there is an issue,” said one parent. They went on to say, “That kind of destroys their self-
confidence. I mean, here she knew in kindergarten she was different. She knew in first grade
she was different. She knew in second grade she was different and there was a problem, and yet
she had to get kicked out of school in order to get the help that she needed. I think that is
unfortunate and she remembers all the things that happened in the second grade.” This parent
group began to discuss the effects of failure and repeated failure to access services on their kids.
They stated that they felt it was “damaging” to their kids and influenced their children not liking
school or not wanting to attend school. Other parent groups shared similar stories and similar
accounts of the effect of repeated failures on their children.
One parent recalled a district representative telling her, “Well, we wait for the person to
have a problem.” That parent discussed her disgust with that statement. She stated that she
approached the school due to her child’s intense and extreme behaviors, and that she was worried
about her child’s safety and the safety of the other children. Parents engaged in a discussion on
why a district needs to wait for failure and why it cannot just look at the information and make a
recommendation that is supportive to the student.
School districts discussed LRE by definition and as a process. “The goal is to have the
student in district,” said one representative. “Our mandate is LRE. We are required to serve kids
in our schools and we get, for lack of a better word, dinged from the California Department of
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Education (CDE) on our compliance data if we have too many kids placed in that restrictive of
an environment,” commented another district director when discussing placement and litigation
by parents. This director went on to discuss LRE as a philosophy and an approach, not just a
location. The director stated that the district felt it was important to keep kids in their
neighborhoods, to create a welcoming environment in their schools, and to be able to serve their
own students when possible (personal communication, 2013).
One district director admitted to holding kids in district due to knowing the likely result
of sending a student out of district. This director stated that once a student is sent out of district,
it is rare that they come back. “We know that, but we’re just trying to hold on as long as we can
and he’s got good days and bad days but we know ahead of time at some point he’s going to need
more services,” stated the director. This director went on to discuss aspects of pride and
philosophy, echoing the views of the director in the previous paragraph. The director stated that
they feel like they should be able to support their students and push their schools to be able to
accommodate and meet the needs of their own students. “You want to feel you can meet your
students’ needs. You try everything you can. You try to make yourself better so you don’t have
to send them out,” commented this director. Keeping them in district is considered best by this
director, as an in-district school is less restrictive, in the child’s neighborhood, and offers a more
local social group (personal communication, 2013).
One day school representative referred to a court case involving a LRE decision, saying
that a student does not need to be excelling. The representative stated that districts need to
“provide a Buick, not a Cadillac,” for a student. This description and court case reference
somewhat provides a middle ground to what districts and parents are saying, giving the view that
the student should be moving forward (not failing), but does not need to be excelling or making
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significant progress. This interpretation of LRE also suggests that a student’s needs do not need
to be met, as long as the student is making some educational progress.
Litigation and Advocacy: Poor family experiences and differing perspectives on LRE
appeared to lead to broken trust and frustration between parents and districts. This broken trust
and poor relations often lead to the accessing of advocates and the pursuing of attorney
assistance or even litigation. Litigation and advocacy support was rated as a major contributing
factor in district decisions of determining student school placement and services by school
districts on the survey. Litigation influenced how other factors were determined or weighed.
One district director spoke frankly about litigation and the effects of litigation. “Well,
this is a litigious environment, so sometimes what pushes the district to acquiesce into a certain
area that the parents want is the threat of litigation. You’re basically weighing what it is going to
cost for placement versus the cost to litigate. Even if the district wins litigation, do you want to
have a parent who is that unhappy and potentially will litigate the next year?” This director went
on to say, “Sometimes we do make decisions based on legal matters.” They discussed the
difficulty of making decisions when so many things are factored in and how legal movement can
influence or enhance one particular case compared to another (personal communication, 2013).
Parents discussed the use of advocates and attorneys in trying to get support for their
children. Parents overwhelmingly hired advocates in order to help create movement and support.
Parents acknowledged mixed feelings towards advocates, stating that they felt it helped get
services, but that it was expensive and often advocates acted as glorified editors (personal
communication, 2013). Parental use of advocates and attorneys will be discussed in further
detail in the family means and access section.
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The development of trust greatly impacts the actions of stakeholders when making
decisions for students with mental health needs. When relationships are stronger, IEP meetings
are considered more efficient by all stakeholder groups (personal communication, 2013). When
trust is broken or stressed, the likelihood of involvement of advocates or attorneys increases,
which skews the decision-making process and affects the value given to factors related to the
individual student. Trust and stakeholder perspectives on relationships will be discussed further
in research question three.
Family Means and Access
Family means also influenced individual decisions. Family means is the general ability
of a family to access resources. These resources include advocates, lawyers or attorneys, general
support, and information. Families with means appeared more likely to obtain advocates or
pursue litigation, and more often are able to argue for outsourced placement, according to
districts, parents, and day school representatives. Each individual stakeholder group referred to
family means or the family’s ability to access resources as influential to the decision-making
process. Parents and day schools particularly highlighted families with means access these
resources more successfully, and more efficiently access outsourced services for their students.
Family means influenced not only these particular individual decisions but also subsequent
decisions, due to district means and considerations on the total numbers of students outsourced,
creating a trickle-down effect.
The district director from the upper class community, the highest socio-economic
community within this study, described the parents of that district as the leaders in the IEP team
(personal communication, 2013), which was a contrast from the other two districts in the SELPA.
This director commented that parents within the district were both active members and highly
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informed about options and services for their children (personal communication, 2013). This
director said that often the parents have done their research, got their child accepted at a school,
and begun making plans before even talking with the district. Sometimes, this director
commented, they needed to “take a step back,” and make sure this was really what the child
wanted and not just the district giving into parent requests.
The other two districts within the SELPA had a different experience with family means.
They did not directly comment on family means, but did acknowledge that when attorneys were
involved, or with well-informed parents, the district was more likely to discuss outsourced
services to a NPS setting (personal communication, 2013). Although this is not directly
equivalent to family means, the ability to access resources such as attorneys, to pursue litigation,
or hire advocates, which involves financial obligations that increase likelihood of student
placement, according to interviews and survey data collected, a correlation can be made.
One group of parents described feeling lucky that they had the means and ability to
access resources such as advocates and attorneys (personal communication, 2013). This group
expressed sympathy for parents who cannot access support, feeling as though their children
likely struggle for longer periods of time, or never access the support and services they require.
Findings related to research question 3: Does the decision to outsource affect perception of
quality of services by different stakeholders?
Perceptions of quality were discussed on many levels during data collection. Parents
spoke of attitudes and perceptions towards day schools, public school settings, and district
administrators. They discussed past experiences, how perceptions have changed over time, and
what they felt was appropriate for their student. Districts discussed control and oversight, and its
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influence over services and what students need. They also discussed parental relationships and
the need for respite after a difficult outsourcing decision has been determined.
Firm and Vendor
Transparency and partnership between the firm and vendor (district and day school) were
key attributes that came through when considering quality. As discussed in prior research
questions, districts identified quality schools as having good instruction, sound behavioral
support, and consistent implementation of student IEPs (personal communication, 2013).
Through interviews, districts qualified these views by identifying the need for oversight, and for
being informed on what was occurring within the school setting.
Day school representatives discussed the importance of accessibility within their schools
(personal communication, 2013). This included keeping open doors and consistent
communication, being available to support districts when problems or needs arose, and making
sure to not surprise districts with unknown information or approaches. This concept of
availability matches with the district’s desire for oversight, which creates transparency and
partnership, fitting both the firm’s and the vendor’s definitions of quality.
Parental Perspective
Both surveys and focus groups provided information regarding parent’s perspectives and
changes in perspective over time. Generally speaking, parents were happy with current non-
public school (NPS) settings and had experienced poor public school experience. Parents also
generally stated relationships and partnerships with public schools had improved since their child
attended a NPS. In the discussion of parental perspective, attributes parents look for in schools,
current feelings towards both public and NPS settings, and comparisons of public and NPS
settings will be discussed.
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School Attributes: When asked what characteristics are important in a school for their
children, parents offered a variety of answers. Parents responded by identifying school size,
compassion, level of understanding and expertise, communication, and the ability to support
their needs (personal communication, 2013). Parents also expressed interest in schools that did
not use punishment and could “think outside of the box,” which were key characteristics in
meeting their needs. Additionally, parents answered on the survey and spoke in focus groups of
the importance of staff, student, and family relationship building and clear communication
(personal communication, 2013). They identified this as a significant part of developing trust
and building partnership in meeting their child’s needs.
Differences in Settings: When asked about key differences between public and NPS
settings, parents offered both logistical and emotional responses. “Heart,” offered one parent,
near to tears, in reference to the NPS setting her son currently attended. “School x has more
heart,” she repeated, and the other parents in the group agreed. She went on to say, “It’s the
understanding thing. There’s no understanding of children like ours in public school. There just
isn’t. Then unfortunately there’s so many people who have children like ours that don’t know
how to get services.” Parents in each focus group echoed this sentiment, discussing the level of
understanding, compassion, patience, and dedication that their current NPS setting offered.
Parents did acknowledge some poor NPS experiences prior to attending their current school.
Parents also offered more practical differences in quality between NPS and public school
settings. Things like campus size, enrollment, class size, staff training and expertise, and general
program structure were discussed. Parents acknowledged that differences in physical space
could impact programming and the total amount of students in a public school setting impacted
the level of care and attention their child could receive (personal communication, 2013). The
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ability to be flexible and meet individual needs was also discussed within the context of class
size and total enrollments within school settings. Generally speaking, parents felt that the NPS
settings offered a higher quality, more specialized school experience compared to public school
for emotional and personalization reasons, as well as for individualization and the ability to offer
a highly responsive and tailored approached to working with their children.
According to information collected from the parent survey, parents rated the NPS setting
as having stronger therapeutic supports compared to public schools. Parents rated NPS staff as
being more knowledgeable and understanding of their children on surveys. Communication
from day schools was also rated stronger than that from public schools, which correlates with a
statement from a day school representative who discussed scale and the ability to create
accessibility within smaller environments. Parents acknowledged in focus groups and follow-up
emails after completion of focus groups and surveys that instructional rigor in the NPS setting is
something that concerns them at times, but that they have seen more educational growth in their
children since attending a NPS (personal communication, 2013). Parents also expressed
difficulty in making direct comparisons between NPS and public schools, acknowledging that
some public schools were better than others, and that NPS settings also differed greatly between
one and another, so when rating, a general opinion on the settings as a whole was considered.
Two parents had little to no experience of public schools and chose not to answer the sections
related to quality differences.
General Attitudes: The survey information collected generated the basis of the profile
on typical school attitudes and perspectives. Further clarifying points and parent discussions
through focus groups also provided information relevant to this research question. Of parents
surveyed, two parents had students who had attended only one school in the past three years; five
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parents had students who had attended two to three schools in the past three years; and one
parent had a student who attended four to five schools (personal communications, parent survey,
2013). Two parents had little to no experience with public schools and their children had been in
the same NPS setting for more than five years: They did not answer survey questions related to
public schools, but did discuss attributes and general attitudes towards desired schools for their
children.
When asked if they would want their child to return to a public school, six of eight
parents stated no. Eight of eight parents stated they felt the NPS was working in the best
interests of their student and had appropriate goals for their child (personal communications,
parent survey, 2013). When asked if they felt the public schools understood their child and
supported them appropriately, only one of eight parents responded yes. This is reflected in more
detail in research question two, looking at student and parent experiences with the public
schools. Seven of eight parents felt that a NPS setting was the current appropriate setting for
their child, with one parent feeling their child needed a less restrictive placement. Six of eight
parents stated their comfort level at IEP meetings has increased since attending a NPS setting.
Of the two parents who marked no, their comfort has not increased, one noted that they had just
received placement, therefore could not fully state at this point. Five of seven parents
acknowledged that their relationship with the district had improved, with one parent electing not
to answer due to the new placement at the NPS. One of the parents who marked no noted that
their relationship had always been a quality relationship with the district (personal
communication, 2013).

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Trust Reconstruction and Perspective
Osborne and Gaebler, 1992, assert that the public sector can benefit from nonprofit
support, which supplements and enhances the public sector. All stakeholder groups
acknowledged an improvement in the relationship between the school district and parent once a
placement to a NPS was implemented. This improved trust lead to improved IEP meetings and
perceived partnerships between stakeholder groups (personal communication, 2013). The three
stakeholder groups offered insight on why these relationships improved and the effects of these
improved relationships.
District directors spent time discussing the rebuilding of trust with families of students
who are placed in NPS settings. A director of a high socio-economic district stated, “When you
have students that go, after we’ve been through this whole process of fighting to keep them here,
and the attorneys and this whole big mess, you want at least a year or two to recover where the
parents don’t hate you anymore, and then maybe you can start discussing bringing the student
back to district.” When asked how much effort goes into repairing the relationship, this director
joked, “They are fine after the placement, they are the ones who buy me Christmas gifts.” The
director went on to say the school placement gives the parent “peace of mind,” and that life can
go back to normal. Before the placement the parent is called daily, the student is generally
having major behavior issues in school, and has been failing a lot; now, with the placement, NPS
schools call less frequently and work through the behaviors (personal communication, 2013).
One parent focus group introduced the concept of “public school deprogramming”
(personal communication, 2013). The parents described and discussed how once the placement
was made, they continued to live on eggshells, worried about daily phone calls, and waited for
their child to continue to fail. Once accustomed to the change, they valued the school experience
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in the NPS setting, which helped to relieve tension and stress in their home. Other focus groups
echoed these concepts and extended them as parents reported that they were able to go back to
work, that they began to see their children come home from school happier, and that schools
treated them, as parents, with more value (personal communication, 2013). The parents in focus
groups also described liking having one district representative consistently attending IEP
meetings. The parents reported how this district representative “got to know” their child and
appeared to have their child’s best interest at heart (personal communication, 2013). This shared
perspective differed drastically from the parent’s perspective on district involvement prior to
NPS placement.
Day school representatives discussed how the fight was generally over by time the
outsourced placement was made. They discussed how parents could go back to life as normal,
had access to support, and were not judged within the school setting (personal communication,
2013). They discussed how stress levels decrease, and how they work to help rebuild
partnerships with districts and parents. Day school representatives also discussed the notion that
parents had discussed of “public school deprogramming.” One director commented that during
school tours, parents worried that their child would never be able to sit like the other children,
and expressed the general fear that they would have the same experiences at the NPS as in the
public setting (personal communication, 2013). This director said it can take a couple of months,
but parents begin to see that there are less calls home, that the staff understand the student’s
challenges, and that they are working in the best interests of the children, allowing the parents to
worry less during the school day.
One day school director put the shift in parent perspective in the context of the scale of
operations. In larger settings, such as the public school, the student and family are one of many,
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making it difficult to meet the significant needs of the children who ultimately attend NPS
settings, creating stress and frustration on both sides. “The marginalization of their need is what
happens in the public school. If they’re in a general education setting, it’s just such a bigger
setting; the principal has 600 other kids they’re worried about, and they’re going to try and help
you and your child out. The reality is that there are 99 other kids out there that need some help
too. They can’t provide the level of support to the kids and families that we do; it is what we
specialize in.” He discussed the differences in scale, and how that plays into providing the
necessary supports, and lends itself to either building or breaking down trust. He explained that
the public schools do care about their students, but it is difficult to provide the level of support
needed for these families.
Summary
Students who are outsourced to non-public, nonprofit therapeutic day schools by school
districts share several key characteristics, with stakeholder groups considering several factors in
making that decision. Influences on those characteristics and factors emerged as the more
critical aspect in making decisions related to students with mental health needs. Opportunism,
access to resources, and trust or partnerships emerged as influences over school district decisions
associated with outsourcing whole school services. Once a student was outsourced, the data
collected demonstrated that reconstruction of trust occurs, and that the public sector benefits
from nonprofit support. Chapter five draws conclusions and identifies implications based on the
findings reported in this chapter.

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Chapter 5: Conclusions and Implications
Chapter five begins with a brief summary of the completed study, which investigated
district privatization of therapeutic day schools for students with severe emotional disabilities
(ED). Next, the chapter draws conclusions from the data presented in chapter four as they relate
to the literature review in chapter two. I will move into a discussion of the implications of these
connections, looking at the dynamics of the relationships between the different stakeholder
groups and how that influences decisions made regarding students considered ED. Finally, I will
present a discussion of future research.
Summary of the Study
Students considered ED, or students with mental health needs, are failing within our
schools (Lane et al., 2006; Wagner et al., 2005; Cullinan & Sabornie, 2004; Davis & Stoep,
1997) and are more likely to have poor life outcomes (Lane et al., 2006; U.S. Department of
Health and Human Services, 1999). School districts are faced with a decision on how best to
serve these students with significant psychological needs. The purpose of this study was to
investigate district privatization of therapeutic day schools for students considered ED through
the lens of transaction cost economics. By exploring the key stakeholder groups within the
decision, the study investigated factors related to outsourcing decisions, the key influences on
those factors, and stakeholder group perceptions of quality, as well as changes in perceptions
over time, to determine efficiency within school district decisions for students with mental health
needs. In order to accomplish this purpose, the study explored the following research questions:
(1) What factors or values are considered when deciding to outsource a student by
different stakeholders?
(2) What influences how these factors or values are weighed in making decisions?
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(3) Does the decision to outsource affect perception of quality of services by different
stakeholders?
In the literature review, I explore the research on students with mental health needs
within our schools. This research demonstrates an increased risk of failure (Lane et al., 2006;
Wagner et al., 2005; Cullinan & Sabornie, 2004; Davis & Stoep, 1997) and poor life outcomes
(Lane et al., 2006; U.S. Department of Health and Human Services, 1999) for students identified
as ED when compared to both non-disabled and disabled peers. These outcomes mirrored the
information collected from stakeholder groups within the data-collection phase of the study as
well. Next, the study explored transaction cost economics (TCE). Key aspects of TCE which
the data presented in chapter four demonstrated included: opportunism (Williamson 1973,
Greene, 2007); cross-sectoral alliances or strategic partnerships (Wohlstetter et al., 2004;
Osborne & Gaebler, 1992); efficiency (Brown, 1992); competing priorities (Bringewatt &
Gershoff, 2010; Foster et al., 2005) and uncertainty (Williamson, 1973; 1999).
Conclusions
The research reviewed in chapter two and the data presented in chapter four regarding the
school histories of students identified as ED were consistent, reinforcing the idea of poor and
failing school histories (Lane, et al., 2006; Wagner, et al., 2005; Cullinan & Sabornie, 2004;
Davis & Stoep, 1997; personal communication, 2013). The data presented in chapter four added
to the conversation about school history by demonstrating that school district decisions can
influence and even add to the amount of failure students identified as ED experience within the
school system. Federal and state policy incentivizes identification of students for special
education to receive funding, but discourages appropriate interventions for students due to high
costs, informational advantages, and poor accountability for special education funding uses
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(Greene, 2007). The complexity of the students as well as the complexity within the decision
regarding services for students identified as ED creates great uncertainty (Williamson, 1973;
1999) and inefficiency within individual decisions for students.
Several themes presented in the literature review emerged within the findings presented
in chapter four. Transaction cost economics served as an appropriate lens to investigate the
decisions to outsource whole school services for students with mental health needs, due to the
nature of competing factors within and across stakeholder groups, creating a difficult decision.
Opportunism, uncertainty, cross-sectoral alliances or partnerships, efficiency, and cost
effectiveness were themes associated with this study.
Opportunism
Opportunism emerged as a major influence and theme in school district–based decisions
for students with mental health needs. Greene, 2007, asserts that districts hold an informational
advantage over parents in special education. This research goes on to say that districts make use
of this informational advantage during meetings and negotiations in order to create fiscal
efficiency within the district. The findings in this study are consistent with this research on
opportunism and were presented across stakeholder groups.
Opportunism acted as a key influence in the decision-making process. This appeared in
direct and indirect ways within the findings. Parents and vendors acknowledged informational
gaps and difficulties in accessing all of the information, which puts them at an informational
disadvantage. More indirectly, families who accessed information or who accessed support
through advocates and litigation had an increase in access to services as presented by all
stakeholder groups. The access to litigation also influenced financial decisions school districts
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must make, therefore it was not solely a response to informational advantage, but instead
presented an influence over a couple of factors.
Another aspect of opportunism can be represented in the pursuit of contracts
(Williamson, 1973). This was seen through the analysis of vendor and firm interactions. There
was a lot of discussion of trust and relationship development. Through a developed relationship,
both the firm and vendor acknowledged an increase in student referrals and student placements.
By creating other contracts between the firm and vendor, the opportunity to continue current
partnerships was increased, consistent with the research of Williamson. Vendors also
acknowledged providing information to parents who are seeking advice to access more
appropriate services. Although it was not questioned further, vendors providing this information
could result in an increase in the market, which potentially leads to more referrals and can be
seen as another form of opportunism.
Uncertainty
Uncertainty was present at several levels within the decision-making process. Different
aspects of uncertainty were also present, including imperfect information (Lamoreaux, Raffi, &
Tomin, 2002; Brown, 1992), the favoring of organizational hierarchy (Williamson, 1973; 1999),
risk absorption, and efficiency failures (Brown, 1992). Uncertainty influenced district decisions
for students with mental health needs. This was represented in the desire to develop internally
controlled programs, and the preference to utilize limited, trusted partnerships with increased
transactions. One way to decrease the uncertainty was demonstrated by the establishment of
partnerships.
District representatives discussed concepts of control and oversight as the basis for a
desire to create internal systems to work with students with mental health needs. This stated
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desire for control over internal models by district representatives demonstrates the favoring of
organizational hierarchy over opportunism, or the unknown, with a vendor (Williamson, 1973,
1999). Other factors — such as scale, utilization of staff, expertise within the district, and other
district needs at the time — influence a district’s ability to develop internal models (personal
communication, 2013). Research shows that competing funding priorities impact decisions on
the delivery of mental health services by schools (Bringewatt & Gershoff, 2010; Foster et al.,
2005). Complicating and competing factors influence school district decisions and were present
within this study. Uncertainty exists in decisions to outsource to external programs, but also
within the district in making internal decisions.
Partnerships: The high level of uncertainty internally within a district creates the ability
to form mutually beneficial relationships. Powell (2003) discussed networks as an alternate form
of economic organization to the more traditional models of markets and hierarchies. Networks
allow for multiple partners, are relationally based, and attempt to offer mutual benefits, creating
an economic organization more closely associated with this case study’s contractual relationship.
Cross-sectoral alliances (Wohlstetter et al., 2004) or strategic partnerships (Osborne & Gaebler,
1992) are public and private partnerships that benefit one another. Districts acknowledged a
desire to develop internally based programs for increased control and oversight, which would
limit uncertainty (personal communicating, 2013). Imperfect information, lack of expertise,
competing factors, scale of district, and other district obligations impacted the district’s ability to
establish such programming in an efficient and effective manner. Because of this, districts
sought “trusted” relationships with vendors. Utilization of these trusted relationships with
vendors decreased uncertainty for the school districts.
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Brown (1992) asserts that infrequent transactions bring high risk and uncertainty. The
research goes on to say that private, outsourced models of schooling can be difficult to monitor
(Brown, 1992). These concerns about oversight were present in district discussions. Yet
research on cross-sectoral alliances says use of private vendors can enhance public service
delivery (Wohlstetter et al., 2004). The findings in this study support the work on cross-sectoral
alliances. In order to reduce uncertainty within the transaction to outsource whole school
models, several things occurred. Districts looked to increase transactions to a lower number of
vendors. All stakeholder groups desired an increase in transparency and communication, which
can contribute to increased oversight. The change in state funding and responsibility for mental
health services also occurred, which created a greater influence of uncertainty on government
oversight of services, and contributed to an increase in partnerships.
In July 2012, California Assembly Bill 3632 was removed from the state budget. This
change in legislation shifted mental health responsibility for students in school from the
Department of Mental Health to the local school districts. This change created uncertainty as
reported by both the firm and vendor. During periods of uncertainty and scarce resources,
alliances can serve as effective coping mechanisms to absorb uncertainty (Wohlstetter et al.,
2004; Oliver 1990). In addition, alliances can achieve a reliable resource flow and exchange,
creating a more efficient system, leading to access to resources and ability to innovate
(Wohlstetter et al., 2004; Oliver 1990). During this time of change within California, trends in
student placements in outsourced therapeutic day schools began to reverse (Ed-Data, 2013).
Referral trends increased from 2012. District comments about establishing trusted relationships
with vendors who they felt had a knowledge-base in mental health underscored this shift.
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Vendors also acknowledged seeking out districts to share expertise in order to establish
relationships, assist through the change, and increase referrals (personal communication, 2013).
Effective partnerships appear to decrease uncertainty within this relationship between
school districts and non-public therapeutic day schools. Effective partnerships are those
identified as being “trusting” by both the firm and vendor. Trust was established through
communication, the limiting of surprises, transparency, and quality service implementation.
Partnerships also enhanced parent’s perspective on districts. Research has shown that parents
work harder to obtain services for ED students than parents of other disability areas and the
parents of student identified as ED are also less satisfied with their children’s schools, teachers,
and special education services (Wagner et al., 2005). The information presented in chapter four
shows similar results to those presented by Wagner et al. However, in contrast, with the addition
of a non-public school placement, parent perspectives improved over time and parent satisfaction
was rated higher for both the day school and the school district. These results, demonstrating a
change in parental perspective and attitude, demonstrate another aspect of effective partnerships.
Cost Effectiveness and Efficiency
Within TCE, the goal of any decision is to minimize the costs for at least one of the
parties involved in the exchange, if not both parties. Cost effectiveness is when the benefits
outweigh the costs, while efficiency is the attempt to optimize the exchange (Williamson, 1999).
One of the difficulties within the decision to outsource whole school models for students
identified as ED is the involvement of three stakeholder groups instead of the common two
within a contractual decision. A common transaction consists of a firm and vendor. Within this
transaction to outsource whole school models, there is a firm (school district), vendor (day
school), and a third party (parents/guardians), who have influence over the establishment of
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contracting and the transaction. Each stakeholder group has its own competing priorities with
internal and external influences, in addition to the competing factors within the actual decision.
This makes for a very complex decision, which can be generally viewed as inefficient due to the
great variation in each individual exchange or student case.
The level of efficiency is defined by the ability to minimize the costs associated with the
decision (Williamson, 1973; 1985; 1999). Given the three stakeholder groups, decreasing costs
for all groups becomes increasingly difficult, and through exploration of these decisions, it can
be argued that each stakeholder group perceives its costs as more important and works towards
minimization of its own costs. Districts may utilize informational advantage to create greater
fiscal efficiency within their internal system, but at the cost of parents being unable to access
appropriate services. In turn, parents may utilize litigation to close the information gap, putting
financial strain on the district and influencing decisions. These competing factors and influences
greatly influence the overall efficiency of decisions related to students with mental health needs.
As discussed earlier in this chapter, utilization of trusted effective partnerships can be
viewed as an effective way to minimize costs. Brown, 1992, argues that efficient schools
develop programming to accommodate the demands of their students. Public schools have a
desire to do this, however uncertainty can be high and competing factors could influence their
ability to create desired programming. Brown goes on to argue that utilization of private schools
is inefficient due to the infrequency of the transaction and its high uncertainty. Districts
demonstrated an attempt to correct for this cost by increased transactions with a limited number
of vendors. There is difficulty within this attempt to minimize uncertainty through increased use
of fewer vendors, as districts do not have control of school availability when an individual
decision to outsource a student is made.
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This study has shown that utilization of partnerships between public and private groups
did decrease uncertainty and increase efficiency. It should be noted that this study has a limited
scope, only investigating three districts and two vendors. All stakeholder groups did
acknowledge variation in non-public day school quality, which would influence the overall
efficiency of the decision. Given that districts do not have complete control over the vendors
they utilize, uncertainty increases, placing increased stress on the decision and potentially
influencing decisions. Parents also have influence over the decision of school placement, which
also increases uncertainty and decreases efficiency, making it even more difficult to determine
the use of trusted and effective partnerships as defined by my study.
Implications
Inappropriate or deficient specialized instruction for students identified as ED may have
the most detrimental long-term implications for students with mental health needs (Heflin &
Bullock, 2010). The overall inefficiency in decisions made for students identified as ED can be
interpreted as a lack of specialized services or a gap in specialized services for these students,
which can be viewed as a cost across stakeholder groups. Competing factors and influences such
as opportunism result in a greater inefficiency in decisions for students with a clear need of
support, as supported by current research (Lane et al., 2006; Wagner et al., 2005; Cullinan &
Sabornie, 2004; Davis & Stoep, 1997).
Special education looks to individualize education for students with disabilities, helping
meet their needs and creating learning. LRE was designed as an anti-discriminatory clause to
protect students. It is designed to keep students as close to the general education population as
possible so that students continue to be independent but still receive benefit from their
instruction. This study demonstrated different perspectives on LRE, with districts calling it their
SPECIAL EDUCATION DAY SCHOOL OUTSOURCING 123

mandate, and parents feeling as though it ensured failure for their students. Perceptions of LRE
had direct implications to how different stakeholder groups valued different factors associated to
the decision to outsource. LRE also appeared to decrease the ability to individualize or
specialize for students who needed specialization, including removal of individualized services if
a student began showing success. Although designed with good intentions, LRE can be seen as
working in opposition to the original individualization intent of this law, as portrayed within this
study. The future research section will discuss this further.
The findings of this study support the work completed on cross-sectoral alliances and
strategic partnerships. In some cases for students with significant mental health needs, when
public and private partnerships were accessed, costs were minimized and stakeholder perceptions
of quality increased. Although limited in scope, the potential for these partnerships was present.
Investigating ways to increase partnerships through a variety of services may mutually benefit all
stakeholder groups and potentially decrease student referrals to non-public settings. Given the
need for the expertise within the outsourced school models, expanding partnerships to be
included in internal models may enhance a district’s ability to provide services internally.
Future Research
Given the high level of uncertainty and the relative inefficiency of decisions presented in
my study, future research should focus on narrowing the gap in what is unknown, or on
examining individual factors and influences as they pertain to the decision to outsource whole
school models for students with mental health needs. Research on special education funding
influences, LRE implications, and effective schooling practices for students identified as ED
would benefit the educational community.
SPECIAL EDUCATION DAY SCHOOL OUTSOURCING 124

Financial obligations and budgetary constraints were significant considerations for school
district representatives when making a decision to outsource, which had potential influence on
other factors involved. Special education funding design creates an incentive for identification,
but a disincentive for application of services (Greene, 2007). This design creates an
accountability system which monitors student identification and not quality of services. This
limited oversight of implementation of services also influences district-based decisions, putting
student needs and district budgetary constraints at odds with one another. Research has shown
that school districts state that competing funding priorities impact decisions around the delivery
of mental health services in schools (Bringewatt & Gershoff, 2010; Foster et al., 2005), which
was confirmed by the information collected by my study from school district officials who
acknowledged how money and budget influenced their decisions. Investigation of how funding
formulas could influence district decisions and students’ success rates could benefit students with
mental health needs within our schools.
Perceptions of LRE influenced decisions and perceptions of quality across stakeholder
groups. As described above in the Implications section, LRE is intended to protect students in
special education from discrimination, however, it may be impacting the appropriateness of
services received by those students. Districts discussed a mandate to follow LRE and reported
that it is their obligation to try less restrictive environments prior to more restrictive ones
(personal communication, 2013). As discussed earlier, competing priorities, budgetary
constraints and influences, and informational advantages held by the school districts impact the
credibility of their statements and use of LRE. Parents expressed anger towards a system
designed to have their students fail before accessing appropriate services, and at times, fail
several times before accessing services (personal communication, 2013). Research should be
SPECIAL EDUCATION DAY SCHOOL OUTSOURCING 125

conducted on the use of LRE and how it impacts student development. LRE should also be
investigated in terms of how it impacts a district’s ability to individualize or specialize education
for students in special education as well.
Finally, further investigation into effective school practices for students identified as ED
should be conducted. Prior research and my study confirm that students identified as ED have
negative school experiences with high rates of failure. Inappropriate or lacking specialized
instruction for students identified as ED may have the most detrimental long-term implications
for students with mental health needs (Heflin & Bullock, 2010). Increasing success and
reduction of the tragic outcomes of students identified as ED should be a driving factor when
deciding on appropriate services and placements. Stakeholder groups acknowledged
inconsistency within quality across outsourced providers, which influenced how this factor was
considered. This is a pressing need within our schools to identify effective practices, whether
internally developed or through effective partnerships that will benefit our communities and
students identified as ED.
SPECIAL EDUCATION DAY SCHOOL OUTSOURCING 126

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Appendix A
Special Education Outsourcing Study
Interview Protocol: District Administrators
Interviewer:______________________ Date:____________________
Interviewee: _____________________ District:__________________
Job Title:________________________ Phone: ___________________
Start Time:____________ End Time: __________ Email: _______________
Introduction:
[Introduce yourself and your affiliation]. This is a study for a dissertation. The purpose is
to investigate the cost efficiency of “buy” vs. “make” models of schooling for students with
mental health needs. This study looks at the contractual relationship between school districts and
private non-public schools for students with special education needs.
During this conversation, we are hoping to learn more about [insert district] and your
experiences with day schools, outsourcing, and decisions related to students with mental health
needs. Specifically, I’d like to speak with you about how your organization approaches the
decision to outsource, and what factors influence decisions. The study’s ultimate goal is cost
efficiency in decisions made for students with mental health needs.
I would like to tape record this interview in order to have an accurate record of our
conversation. Would that be okay? The interview should take approximately 60 minutes. Do
you have any questions before we begin?
Category 1: Picking vendors
1. About how many day schools does your district currently contract with?
2. Are there variations within the day schools, for example different specialties?
SPECIAL EDUCATION DAY SCHOOL OUTSOURCING 134

a. Do you utilize multiple day schools with the same specialty?
3. What are some of the things you consider when deciding on a day school/vendor to
contract with?
4. Are there things that draw you to different day schools that make you want to contract
and continue contracting? Such as?
5. What are some of the characteristics or qualities you want to avoid contracting with?
6. Are there day schools you contract with but have not sent students to?
7. Are there day schools you use more often than others?
a. What are some of the reasons you utilize one day school more than another?
8. Is the Board of Directors involved in selecting day schools?
a. What role does the Board of Ed play?
9. Are unions involved in the decision to outsource?
a. Directly or indirectly
b. Do district polices make internally developed programs more or less efficient in
your opinion and why?
10. How does district policy impact the decision to outsource or develop internally?
Sub Cat 1: Specific to this contract
11. What are some of the benefits to working with different vendors?
a. Specific vendors
12. What are some of the costs or tradeoffs?
13. Why do contracts get renewed year to year?
14. Have there been any changes in working with this vendor over the past couple of years?
Category 2: Individual Decisions to outsource
1. Explain the process in referring a student to a contracted day school.
SPECIAL EDUCATION DAY SCHOOL OUTSOURCING 135

2. What are some of the factors considered within the IEP meeting/team?
3. What are some of the factors considered outside of the IEP meeting/team?
4. What are some of the tradeoffs to sending a student out of district?
5. Do you currently have a similar internal model?
a. What are the benefits?
b. What are some of the hurdles?
c. Why do students still get contracted out with internal models?
d. Is there a cost difference internally vs. externally?
6. Talk to me about some of the pros and cons to using outsourced models of schooling for
students with mental health needs
a. Cost differences
b. Graduation rates
c. Success of students
d. Quality
Category 3: Integration of mental health in schools
1. What role does mental health have in schools?
2. Students with emotional disturbance have mental health needs. How does this impact
their schooling?

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Appendix B
Special Education Outsourcing Study
Interview Protocol: School Based/Vendor Administration
Interviewer:______________________ Date:____________________
Interviewee: _____________________ School:__________________
Job Title:________________________ Phone: ___________________
Start Time:____________ End Time: __________ Email: _______________
Introduction:
[Introduce yourself and your affiliation]. This is a study for a dissertation. The purpose is
to investigate the cost efficiency of “buy” vs. “make” models of schooling for students with
mental health needs. This study looks at the contractual relationship between school districts and
private non-public schools for students with special education needs.
During this conversation, we are hoping to learn more about [insert district] and your
experiences with day schools, outsourcing, and decisions related to students with mental health
needs. Specifically, I’d like to speak with you about how your organization approaches the
decision to outsource, and what factors influence decisions. The study’s ultimate goal is cost
efficiency in decisions made for students with mental health needs.
I would like to tape record this interview in order to have an accurate record of our
conversation. Would that be okay? The interview should take approximately 60 minutes. Do
you have any questions before we begin?
Category 1: Districts
1. About how many different school districts do you currently contract with?
2. How do you establish a contract with a district?
SPECIAL EDUCATION DAY SCHOOL OUTSOURCING 137

a. Do you advertise?
b. Can you describe things that you do to attract potential districts?
Category 2: Contract Perceptions
1. In your belief, what are key components to maintaining and continuing district
contracting from year to year?
2. What factors contribute to increased or decreased referrals from a district?
3. Describe the professional relationship with the Foothill SELPA districts?
a. In your opinion, does this differ from other districts/SELPAs?
4. What are some of the benefits to working with the districts in the Foothill SELPA?
a. For the school
b. For the students/families
5. What are some of the costs or tradeoffs?
6. What are challenging aspects to the relationship?
7. With districts such as the ones in the Foothill SELPA, what do you relate increases or
decreases in enrollment and referrals to?

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Appendix C
Focus Group Protocol
Good evening everyone. [Introduce yourself and your affiliation]. I want to thank
everyone for coming in; this discussion is for a study for a dissertation. The purpose of this
study is to investigate the cost efficiency of “buy” vs. “make” models of schooling for students
with mental health needs. This study looks at the contractual relationship between school
districts and private non-public schools for students with special education needs. Specifically,
this focus group will investigate parent and family experiences with school districts, public and
private school settings, and issues around quality within schools and districts.
During this conversation, we are hoping to learn more about the student and family
experience, including your experiences with day schools, public schools, and decisions related to
students with mental health needs within the IEP. Specifically, I’d like to speak with you about
your perceptions of quality within different settings, your experiences within IEP meetings, and
your journey towards a NPS day school. The study’s ultimate goal is cost efficiency in decisions
made for students with mental health needs.
I will ask general questions and will open them up for group discussion. I would like to
tape record this focus group in order to have an accurate record of our conversation. Would that
be okay? The interview should take approximately 30 to 60 minutes. Do you have any
questions before we begin?
Category One: Public Schools/Student History
1. Walk me through your experience with your children (students) within public
schools.
2. Do you feel you want your children back in public schools? Why/why not?
SPECIAL EDUCATION DAY SCHOOL OUTSOURCING 139

3. Explain how your children got to an NPS setting.
a. Was it through your advocacy?
b. Did the district propose?
c. Was it with their agreement or disagreement, and why?
d. How were Non-Public Schools explained to you?
Category Two: The IEP experience
1. Explain how you feel or don’t feel part of the IEP team and decision-making
process
2. What is your perception on your role or influence within the IEP meeting?
3. Do you feel like you had a say in the decision to send your child to a non-public
school?
a. If so, how much influence do you feel you had?
b. What were key factors in your decision to agree or disagree with the
decision?
Category Three: Private/NPS schools
1. What separates an NPS from a public school in your opinion?
2. What are some of the strengths of NPS schools you’ve worked with?
3. What are things you feel they need to improve upon?
4. How did you learn about NPS schools?
5. Has the experience with an NPS school been as anticipated, and why/why not?
Category Four: Issues of quality
1. What makes a school a good school?
2. What makes a school appropriate for your child?
SPECIAL EDUCATION DAY SCHOOL OUTSOURCING 140

3. Are there characteristics you look for in a school?
4. How are NPS schools and public schools different?
5. What are some aspects of each that you like or dislike?

SPECIAL EDUCATION DAY SCHOOL OUTSOURCING 141

Appendix D
Survey Protocol—School District
Thank you for your participation in this survey for my dissertation process. The purpose
of this study is to investigate the cost efficiency of “buy” vs. “make” models of schooling for
students with mental health needs. This study looks at the contractual relationship between
school districts and private nonpublic schools for students with special education needs.
Specifically, this focus group will investigate parent and family experiences with school districts,
public and private school settings, and issues around quality within schools and districts.
This survey is collecting information in regards to the relationship between a school
district and private day school settings. It looks to investigate key factors in the decision to
outsource whole school models of schools for students with mental health needs. It will also
look at perceptions of qualities and choice of vendors. This survey is anonymous and only basic
demographic information will be collected.
Demographics:
1. Role
Section 1: Open Response
2. When selecting NPS schools to contract with, what are characteristics you consider?
3. What are some advantages (benefits) and disadvantages (costs) to contracting with NPS
schools?
4. When a decision is made to send a student to a NPS, what considerations are made?
5. What role does the Board of Directors play in the decision to contract vendors (NPS) or
send students to NPS settings?
Section 2: Rating Scales
6. Please rate the following in terms of importance when selecting schools to contract with
(1–low importance, 5–high importance):
a. Distance
b. Transportation
SPECIAL EDUCATION DAY SCHOOL OUTSOURCING 142

c. Financial cost/tuition
d. Quality of academic instruction
e. Quality of therapeutic services
f. Quality of behavioral services
g. Quality of supplemental services (Speech, OT, etc.)
h. Availability of supplemental services
i. Reputation
j. Campus and facilities
k. Specialization to disability areas
l. Level of expertise
m. Relationships with personnel
n. Success with prior students
o. Quality of paperwork
p. Development of partnerships
q. Other--______ (list)
r. Other--______ (list)
7. Please rate the following when considering individual student placement (1–low
importance, 5–high importance):
a. Match to student disability or presenting concerns
b. Distance
c. Tuition
d. Quality of services
e. Parent request
f. Personality match with family/school personnel
g. Communication with vendor (NPS)
h. Trust in partnership
i. Other--_____ (list)
j. Other--_____ (list)
8. Please rate the level of influence the following individuals/positions have on the decision
to place or maintain a student in an NPS setting:
a. Special Education Director
b. Program specialist
c. Family/parent/guardian
d. Educational advocate
e. Student
f. NPS staff
g. Board of Directors
h. School administrators from sending public school
i. Other: _______
j. Other: _______
SPECIAL EDUCATION DAY SCHOOL OUTSOURCING 143

Appendix E
Survey Protocol—Parents and Guardians
Thank you for your participation in this survey for my dissertation process. The purpose
of this study is to investigate the cost efficiency of “buy” vs. “make” models of schooling for
students with mental health needs. This study looks at the contractual relationship between
school districts and private nonpublic schools for students with special education needs.
Specifically, this focus group will investigate parent and family experiences with school districts,
public and private school settings, and issues around quality within schools and districts.
This survey is collecting information in regards to the relationship between a school
district and private day school settings. It looks to investigate key factors in the decision to
outsource whole school models for students with mental health needs. It will also look at
perceptions of qualities and choice of vendors. This survey is anonymous and only basic
demographic information will be collected.
1. Relationship to student
a. Biological parent
b. Adoptive parent
c. Foster parent
d. Assigned educational rights holder
e. Legal guardian
f. Other
2. How many schools has your son/daughter attended in the past three years?
a. 1
b. 2–3
c. 4–5
d. >5
3. Please rate the following in regards to quality and satisfaction (1–low, 5–high):
a. District communication
b. Public school communication
c. Day school/HEC communication
d. District representative
e. Teaching staff at day school
SPECIAL EDUCATION DAY SCHOOL OUTSOURCING 144

f. Therapeutic staff at day school
g. Administrative staff at day school
h. IEP meetings and paperwork
i. Availability of day school personnel
j. Availability of district personnel
k. Academic growth of my student since in NPS
l. Behavioral growth of my student since in NPS
m. Social growth of my student since in NPS
4. Explain your role within IEP meetings. Do you feel you have influence over decisions
and your students’ needs are being addressed?
5. Please answer yes or no to the following:
a. I was part of the decision to send my child to a NPS
b. I want my child to return to public school
c. I feel the NPS is working towards appropriate goals for my child
d. I feel the NPS is appropriate for my child
e. My voice is heard in IEP meetings
f. If I have a concern it is heard by the school
g. If I have a concern it is heard by the district
h. My relationship with the school district has improved since my student attended
an NPS
6. Briefly explain your experience with your child’s school career. How did your child end
up at an NPS school and how involved in the process were you? Has your child’s school
experience improved since entering an NPS school?
7. What are important characteristics for a school for your child?
8. What are the main differences between your child’s current school and former public
schools?

SPECIAL EDUCATION DAY SCHOOL OUTSOURCING 145

Appendix F
Interview Recruitment Letter
Dear [Name],
My name is Ryan C. Eisenberg, and I am a doctoral candidate in the Rossier School of Education
at University of Southern California. I am conducting a research study as part of my dissertation,
which examines school district decisions to outsource whole school models for students with
mental health needs through a lens of transaction cost economics. You are cordially invited to
participate in the study. If you agree, we will arrange for an interview. The interview will be
conducted in person around your schedule and is anticipated to take about 70 minutes to
complete. Interviews will be audio recorded.

Participation in this study is completely voluntary. Your identity as a participant will remain
confidential at all times during and after the study. Pseudonyms will be used to represent the
SELPA, districts, and day schools within this study.

If you have questions or would like to participate, please contact me at Reisenbe@usc.edu.
Thank you for your participation,

Ryan C. Eisenberg
May 2014, Doctoral Candidate—Rossier School of Education
University of Southern California

SPECIAL EDUCATION DAY SCHOOL OUTSOURCING 146

Appendix G
Survey Recruitment Letter
Dear [Name],
My name is Ryan C. Eisenberg, and I am a doctoral candidate in the Rossier School of Education
at University of Southern California. I am conducting a research study as part of my dissertation,
which examines school district decisions to outsource whole school models for students with
mental health needs through a lens of transaction cost economics. You are cordially invited to
participate in the study. If you agree, you are invited to complete an online survey that contains
multiple choice and short answer questions. The online survey is anticipated to take no more
than 15 minutes to complete.

Participation in this study is completely voluntary. Your identity as a participant will remain
confidential at all times during and after the study.

If you have questions or would like to participate, please contact me at Reisenbe@usc.edu.
Thank you for your participation,

Ryan C. Eisenberg
May 2014, Doctoral Candidate—Rossier School of Education
University of Southern California

Abstract (if available)

Abstract This study applies transaction cost economics theory (TCE) to understanding the efficiency in organizational decisions to outsource programming. The purpose of this study was to examine the factors associated with the decision a school district makes to outsource students with emotional disabilities to private therapeutic day schools. I examined the contractual relationship between the districts within a Special Education Local Plan Area (SELPA) and private, nonprofit therapeutic day schools to determine the factors within the decision to outsource, as well as influences on those factors as related to efficiency in decisions dealing with students identified as emotionally disturbed (ED), through the lens of TCE. This qualitative study interviewed and surveyed district administrators, day‐school personnel, and parents or guardians to collect data relevant to district decisions. Data collected was crossed and compared across collection techniques and stakeholder groups to determine trends and connections, building an understanding of the efficiency within district decisions. The study’s findings demonstrate that decisions to outsource whole school models for students with mental health needs are currently inefficient, and are influenced by opportunism, family means, and access to advocacy. The findings add to the discussion of current school failure patterns for students with mental health needs, and showed that current decision‐making practices potentially add to the amount of failure experience by students identified as ED.

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Asset Metadata

Creator Eisenberg, Ryan C. (author)

Core Title Special education outsourcing: district privatization of therapeutic day schools for students with severe emotional disabilities

School Rossier School of Education

Degree Doctor of Education

Degree Program Education (Leadership)

Publication Date 04/28/2014

Defense Date 03/05/2014

Publisher University of Southern California (original), University of Southern California. Libraries (digital)

Tag cost efficiency,cross‐sector alliances,cross‐sectoral alliances,day school,district privatization,Economics,Ed,emotional disability,emotional disturbance,least restrictive environment,LRE,Mental Health,non‐profit,OAI-PMH Harvest,opportunism,opportunity cost,organizational decisions,outsource,outsourcing,risk absorption,SED,SELPA,severe emotional disability,Special Education,special education outsourcing,TCE,therapeutic day schools,Transaction Cost Economics,uncertainty

Format application/pdf (imt)

Language English

Contributor Electronically uploaded by the author (provenance)

Advisor Hentschke, Guilbert C. (committee chair), Burch, Patricia E. (committee member), Strunk, Katharine (committee member)

Creator Email reisenbe@usc.edu,ryan.eizy@gmail.com

Permanent Link (DOI) https://doi.org/10.25549/usctheses-c3-385907

Unique identifier UC11296047

Identifier etd-EisenbergR-2423.pdf (filename),usctheses-c3-385907 (legacy record id)

Legacy Identifier etd-EisenbergR-2423.pdf

Dmrecord 385907

Document Type Dissertation

Format application/pdf (imt)

Rights Eisenberg, Ryan C.

Type texts

Source University of Southern California (contributing entity), University of Southern California Dissertations and Theses (collection)

Access Conditions The author retains rights to his/her dissertation, thesis or other graduate work according to U.S. copyright law. Electronic access is being provided by the USC Libraries in agreement with the a...

Repository Name University of Southern California Digital Library

Repository Location USC Digital Library, University of Southern California, University Park Campus MC 2810, 3434 South Grand Avenue, 2nd Floor, Los Angeles, California 90089-2810, USA