Education Secretary Rod Paige told the nation's largest teachers' union Saturday that public school teachers are competing for business with private schools, charter schools, home schools and others.

"Public schools are no longer the only show in town," he said. "This is a challenge that all of us must confront."

In remarks prepared for delivery to the National Education Association's annual meeting in Los Angeles, Paige said unsolved problems plaguing public schools have given rise to increasingly tough competition from private, parochial and charter schools, as well as from families who educate their children at home, leaving schools with fewer tax dollars.

A text of his remarks was released in Washington.

"It is tempting to pretend that public schools are exempt from the law of supply and demand," said Paige, the former superintendent of the Houston Independent School District. "This pretension will destroy the system."

He cited the charter school system in Washington, D.C., which now enrolls about 10 percent of public school students.

Paige said schools could improve by looking at why students flee the public schools.

"Embracing competition means not fearing it, but finding opportunities to use it to create the change to our system that has eluded us for so long," he said.

Charter schools, which are run by for-profit companies, nonprofit groups, teachers' groups or others, generally work with few restrictions and often use nonunion teachers.

Congress recently approved education legislation that closely follows President Bush's schools blueprint, but does not include his plan to give students in struggling schools a government voucher to attend private or parochial schools. The legislation, which congressional negotiators must finalize before sending it to Bush, instead gives students the option of using federal funds to pay for tutoring or transportation to another public school. It also increases funding for charter schools.

Teachers' unions and many Democrats fought against the voucher provisions, saying the allowances would drain money from struggling public schools.

Paige also joked that many would be surprised to see a Republican secretary of education addressing the teachers' union, which has more than 2 million members and endorsed Al Gore in the 2000 presidential election.

"Fear not," Paige said. "I come to praise you, not to bury you."

The NEA meeting, which began last week, runs through July 7.