The business of educating
Last November, when Hartford, Conn., announced that its school board had hired a publicly-owned company to assist in managing its education system, the city became the focus of nationwide scrutiny characterized simultaneously by derision and praise. Hartford was not the first municipality to contract for private education management – among others, Baltimore; Dade County, Fla.; Dayton, Ohio; Minneapolis and Washington, D.C., have adopted limited privatization – but it was one of the first in the country to involve “outsiders” in the oversight of an entire school district.
The resulting debate marked public-private partnerships in education as a disturbing trend – a quick-fix attempt by a desperate public and opportunistic CEOs to somehow reverse low test scores and high dropout rates that plague urban schools. In districts where partnerships are in place, however, officials counter that school boards remain in control of the schools, while managing partners serve primarily as consultants, assisting the boards in implementing changes necessary for better teacher training, greater parental involvement and, ultimately, improved student performance.
PROFITS AND PROTEST
Thirty-two schools in Hartford serve 25,000 students in pre-kindergarten through high school grades. “Hartford has the typical urban situation,” says Kathy Evans, a member of the city’s school board. “Test scores are low, and the budget seems to always be shrinking.
“We’ve had superintendents come and go, and things weren’t changing,” she explains. “When we decided not to renew our past superintendent’s contract, we started talking about other ways to run a school system.” In addition to hiring a new superintendent, the board began to look at partnership models in other districts.
Its attention turned to Baltimore, There, since 1992, Minneapolis-based Education Alternatives Inc. (EAI) has managed several of the city’s schools. Together with KPMG Peat Marwick, Johnson Controls and Computer Curriculum Corp., EAI has formed an alliance that offers students in Baltimore and other cities a program based on “enhanced instruction, classroom technology, professional development for teachers, parental and community involvement, and safe, well-maintained schools.”
Hartford board members, together with parents, students, local businessmen and city council members, traveled to Baltimore to look at the public-private system. Upon their return, the board talked with representatives of EAI, issued requests for proposals and last fall elected to hire EAI as a management partner for Hartford’s schools.
The five-year contract calls for EAI to invest $20 million – most of which has been earmarked for building improvements and technology – in the schools. Evans says that a lesser portion of the investment will go toward improvements in administration, teacher training and grant development.
The school board’s budget is fixed, and EAI will be paid only if the company produces savings within that budget. “If there’s any savings, [EAI] will take out their expenses, and profit will be split 50-50 between EAI and the school system,” says Evans. “Two-thirds of the school board’s portion returns to the city council.”
Evans says EAI has moved quickly on equipment improvements. “Each one of our schools has a new copier and a new fax machine,” she says. “We will be getting computer labs in 10 schools by January, which will bring us to one computer for every 10 children. But the bottom line is academic achievement.”
Hartford’s critics have seized upon the fact that benchmarks for specific improvement in areas such as academics, teacher training and parental involvement are not in place. “During this transition time, we have to develop benchmarks,” says Evans. “We’ll do that as a board, and the superintendent will help us evaluate achievements. A local foundation is choosing and funding a third-party firm to evaluate EAI at the end of the first year.”
Although Hartford’s school board is being praised in some circles for its efforts to improve the effectiveness of its schools, it is being criticized vehemently in others for its choice of partners. Many onlookers have argued that the publicly-owned EAI has its own bottom line, that profit rather than student achievement is its overriding motive.
In an editorial printed in the Hartford Courant, National Education Association (NEA) President Keith Geiger says the EAI contract “fails to link profits to educational performance. Instead, EAI’s profit margin will be determined by how deeply [EAI] can slash Hartford’s $8,450 in per-pupil spending. . . . This is crazy. It creates powerful incentives to `economize’ by increasing class sizes, cutting back drastically on special education and eliminating `non-essential’ teachers of art, music and other specialized subjects.”
In addition to NEA’s protest, the American Federation of Teachers (AFT) issued a scathing review of EAI’s performance in Baltimore, accusing the company of replacing certified teachers and paraprofessionals with less-costly “interns,” “dismantling” special education programs and reneging on its agreement to redirect savings on non-instructional services back into the classroom. Student performance has also come into question with allegations that EAI exaggerated Baltimore test scores, claiming a rise in math and reading last year when in fact math scores rose and reading fell slightly.
EAI declined to be interviewed for this article, but Evans is familiar with the criticisms and has had to respond to them in her own community. “A lot of the [initial] concerns came from the teachers’ and principals’ unions,” she says. “They said, `Why are we bringing in outside people?’ But very few principals and teachers live in Hartford, so that didn’t last.
“Then came the profit margin. `How can they make a profit off the children?’ Over 83 percent of our budget is salaries; everybody makes a profit off the system, [including] textbook and pencil dealers. But this has stuck around in the form of the shareholder argument [that EAI will cut necessary personnel and services in order to boost profits].”
Evans is unimpressed, noting that Hartford’s school board, like Baltimore’s, makes all final decisions. “It’s not EAI imposing things on our staff,” she says. “EAI can’t cut anything; only the board of education A can make cuts.”
The board also controls the contract. “It can be canceled for any reason, any time, and we give them 90 days notice,” says Evans. “If we cancel, we don’t owe them anything.”
So what does EAI stand to gain from the venture? “They’re at risk for $20 million minimum,” notes Evans. “We know there’s a lot of waste in what we do, so I don’t think anyone doubts that they will find efficiencies in what we do and be able to save money. Whether they’ll be able to squeeze money out of that is another question. They may get nothing, and that’s a real possibility.”
Ultimately, she says, it may not be necessary to recoup the $20 million. “All they have to do is make us look good to increase business,” she says. “I don’t think they have to make a dime. I think we are a showcase for them.”
The Minneapolis Model
A year before Hartford, Minneapolis made a similar decision to hire private management for the city’s 80 schools and 45,000 students, but there were a couple of key differences: First, Public Strategies Group (PSG), a St. Paul-based consulting firm headed by Minneapolis native and former state finance commissioner Peter Hutchinson, was actually hired as the district’s superintendent, and, second, the firm agreed to accept payment only when specific items in the board’s strategic plan were completed.
School Board Member Ann Kaari explains that, like Hartford, Minneapolis has had a high turnover rate among superintendents. The board suspended its superintendent in 1993, leading to his resignation, and began searching for a “nontraditional” candidate to replace him.
PSG was hired by the board in Spring 1993 to “come in on a consulting basis and help us straighten out our financial difficulties,” says Kaari. Hutchinson “balanced the budget, presented us with a complete budget and reorganized the finance department.”
As the board prepared to hire a superintendent, televised interviews of all candidates, including PSG, were conducted by the school board and a committee of 25 community members. The board leaned toward PSG because most of the other candidates “came from traditional situations,” says Kaari. But it was the firm’s willingness to work on a pay-for-performance basis that sealed the board’s decision.
By December 1993, the board had obtained a waiver for a state-required superintendent’s license and hired PSG to manage its schools. As the firm’s president, Hutchinson is recognized as acting superintendent.
PSG’s initial contract was set for six months, from January through June 1994, during which time the firm conducted surveys and gathered test and curriculum data to develop a base for strategic planning. “There were 43 or 44 items in the contract, all of which had a monetary value assigned to them,” says Kaari. “Not all were completed. Out of $200,000 something, $160,000 something was paid.”
Kaari points out that PSG is not costing the school district additional money. “We didn’t fill administrative positions, so this money was put into a pot from which we pay Public Strategies,” she says.
By Fall 1994, the school board had finalized a three-year renewal contract calling for PSG to meet three primary goals:
1. Increase the achievement of all students, eliminating the gap in achievement between students of color and other students, and between female and male students;
2. Increase the trust and involvement of all community stakeholders; and
3. Improve leadership and accountability throughout the district.
As part of each goal, the board listed specific objectives based on its baseline data, then outlined related assignments and their conditions of completion. As in the first contract, each item was assigned a monetary value.
“At first, it was a crap shoot to assign values to contract items,” says Kaari. “We just kind of did it. The second time around, it was a much more thoughtful process. There were fewer items, and we had to focus much more intently to decide where we needed to put our energy and our money.”
Steve Struthers, a PSG associate, says there are two parts to the payment portion of the contract. “We are paid $5,000 per month for superintendency duties,” he explains. “A much bigger portion – $410,000 per year – is all performance-based.”
For example, under Goal 1, PSG has to “maintain or increase the level of [student achievement] based on average age growth over the last three years,” says Struthers. “If test scores go up, but the gap increases between white students and students of color, we don’t get paid.”
The school board decides whether tasks have been completed satisfactorily, says Kaari. Struthers notes that PSG failed to receive full payment last fall, when state laws increased screening requirements for bus drivers and the usual contractor was unable to meet staffing requirements. “Ensuring the availability of buses is a basic superintendency duty,” he says. “We were docked half of our pay that month.”
Quarterly reports, including results of ongoing student, parent and teacher surveys, assist the board in monitoring progress. Kaari cites many changes that are beginning to fall into place.
“In teacher development and curriculum, teams of teachers from the same disciplinary areas are reviewing the curriculum to develop a core,” she says. “We hope to have [the resulting curriculum] in place by Fall 1995.”
Although test scores still provide a standard measure of student achievement, Kaari says the board is interested in finding alternative assessment methods such as “developing reading tests for young children that might involve actual [Oral] reading and answering questions.”
Community is part of the board’s plans as well. “We are asking business representatives and major educational institutions how well prepared our students are,” says Kaari. “And we have developed a 30-person district leadership team, including teachers, community members, union reps and administrators, to meet once a month to talk about obstacles, identify issues that impede our progress and discover what we can do to break down barriers.”
Unlike many other districts with private management, Minneapolis is receiving support from both local and national educators’ unions. Part of the reason, says Struthers, is that PSG has taken on the role of navigator rather than driver in the partnership.
“We are not the ones that will make change happen,” he says. “We want to be in a position to challenge school sites and then support them, encourage them and give them models to use.”
In curriculum development, explains Struthers, “we don’t know nearly as much as three-quarters of the people in the district. But we can set up communication between leaders in the school district. We can poke and prod them to determine whether the curriculum will serve the needs of our customers. Is it serving the students, or is it serving the needs of curriculum experts!”
`An Awful Lot of Fear’
Despite progress reported by the school board and PSG, the partnership has not gone uncriticized. When the board announced its selection of PSG as one of the finalists for superintendent, it was sued by the Minneapolis Urban League, which charged that other nontraditional candidates were not recruited. The court ruled in favor of the board, allowing it to proceed in its selection, and the Urban League has since announced its support of “the new administration.”
Remaining skepticism focuses primarily on the notion of privatization, says Kaari. Early on “people had in their minds `privatization,’ not realizing that there were only three people in Public Strategies. [There are now nine.] It’s still difficult to explain the concept to people who are not looking to change,” she says.
Many of the board members who support the PSG contract are up for reelection this year. It is conceivable that a new board would rescind the contract (it can be broken by either party with 30 days notice), in which case Minneapolis would “go back to a traditional system,” says Kaari.
For now, however, Minneapolis, Hartford and other school districts continue to spark debate. “Asking a private organization to come in and run a public school scores some and pleases others,” says Michael Casserly, executive director of the Washington, D.C.-based Council of the Great City Schools. “It is a development, without doubt, that warrants some vigilance, some encouragement but little wholesale opposition.”
NEA’s Geiger, calling the Minneapolis-PSG model promising, nonetheless urges the public to rethink privatization. “If administrators in a given school system are flunking, then hold them accountable,” he says. “Don’t superimpose a new layer of (private) management.
“If there are legitimate savings to be squeezed out of school budgets, then squeeze away,” he adds. “But those savings should be reinvested in the schools, not siphoned off by private contractors.”
Kaari and Evans agree that, historically, the turnover of school boards and administrators has made it almost impossible to enforce individual accountability. “The average tenure of an urban superintendent is two-and-a-half years, says Kaari. In Minneapolis, she says, “everyone was reinventing the wheel. PSG was proposing that we need to focus attention on school sites rather than what’s going on at the top. They’re trying to institutionalize change so that it doesn’t matter if school boards and superintendents turn over.”
“As a board, you have a very limited time to make things happen,” says Evans. “As critical as people want to be about [these partnerships] or education in general, education is just not working for our students. Instead of wringing our hinds and saying, “We can’t change that,’ we took steps to try to make a change.
“There’s an awful lot of fear here,” she says. “Once people calm down – once the fear level reduces – they’ll see this is not some big, awful experiment. One of the big fears is that this will work, and, if it does, what will that say about how we do business? What if it really works and we all have to change?”