Privately run city schools cost more to improve

Three Baltimore elementary schools run by the for-profit Edison company are making progress, but it's costing more to run them than other city schools that have seen bigger jumps in test scores, according to a new Abell Foundation report.

The state brought in Edison Schools Inc. with fanfare in 2000 to run the three schools, which were failing so badly that the state had taken control of them. The company brought with it a new curriculum and method for organizing schools.

Among the findings of the report, scheduled for release this week: Edison, the nation's largest for-profit school management company, retains the equivalent of $1,425 for each child it serves at Furman L. Templeton, Gilmor and Montebello elementary schools.

And its administrative costs per pupil are nearly twice those of the city school system.

The state deducts the amount of money it gives to Edison from the money it allocates to the city school system. Last school year, Edison received $20.1 million.

State Superintendent Nancy S. Grasmick, who contracted with Edison to run the schools through 2007, vigorously disputed the report's findings. She said the company has turned around the schools for the same amount that other public schools in the city receive.

"I don't care whether it's a for-profit company," she said. "They're doing the job for children."

Robert C. Embry Jr., president of the Abell Foundation, said the purpose of the report is to spark a discussion about the efficiency of contracting with private companies to run public schools.

Edison and several other companies have capitalized on the charter school movement to secure contracts around the country.

While the report does not take a position on Edison's role in Baltimore, Embry was critical of for-profit school management firms in a guest column that appeared on The Sun's Op-Ed page in March.

He voiced concerns about the "potential for cheating" on state tests.

"Particularly troubling," he wrote, "is when a for-profit firm such as Edison Schools, Inc., which operates three public schools in Baltimore, is compensated in part based on its test scores - information that is solely under Edison's control with no external monitoring."

Embry, a former chairman of the state and city school boards, said in an interview yesterday that there are three "givens" with Edison running the three city schools:

One, "the schools have done better." Two, "comparably bad schools have done even better." Three, "Edison's only in it to make money. ... It has to cover its overhead and it has to make a profit."

"The question is," Embry continued, "is it reasonable? Maybe it is. Maybe it isn't. But ... it's not something that's ever been publicly discussed."

The report is based on a study conducted for Abell by William S. Ratchford II, former director of the state Department of Fiscal Services, who has worked as an analyst for the city and advised the school system last year during a fiscal crisis.

Laura Eshbaugh, executive vice president of Edison Schools Inc., declined to comment on specific figures in the report. She said in a statement: "Edison is proud of the educational progress made by students in all three schools over the course of our engagement and pleased by the increased involvement of parents and the community in these schools."

$20 million
Edison received $20.1 million, or $9,370 per pupil, to operate the three schools last school year. Of that, $3.2 million, or $1,425 per pupil, was "retained revenue," which means profits or money not directly spent on running the schools.

An additional $2.4 million, or $1,059 per pupil, paid for corporate administration, the report says. The city school system budgets $647 per pupil for central office administration.

The three Edison schools have an official total enrollment of 2,276, but for purposes of the Abell report pre-kindergartners who attend for half a day were counted as half-students.

Money redirected
"The financially pressed Baltimore City Public School System has had to make painful decisions in the last two years - laying off staff, trimming programs and increasing class sizes," the report says.

"At the same time, the State has redirected more than $10 million in public funding earmarked for City schools to fund retained revenue and overhead at Edison Schools."

This school year, Edison is receiving $10,242 per pupil.

Other findings of the report:

  • While the state pays the cost of retirement for Maryland's public school teachers, the Baltimore school system must pay retirement costs for Edison teachers.

  • The amount that went to retained revenue, administration and taxes grew from $4.8 million in the 2003-2004 school year to $5.6 million in the 2004-2005 school year.

  • Last school year, Edison received an average of nearly $8,000 more for each special education pupil than other city schools - $19,481, compared with $11,585. The state provides extra money for Edison to subcontract with the Kennedy Krieger Institute to serve the 82 most severely disabled pupils.

    Grasmick said nine Maryland school systems, including Baltimore, have contracts with Kennedy Krieger to serve severely disabled students. Otherwise, she said, the state would need to spend far more sending those children to private schools.

    Grasmick pointed to a 2001 review of the Edison contract by the state Department of Legislative Services that found that Edison schools "could be receiving less funding than the average city elementary school." That review says elementary schools receive, on average, more funding per pupil than middle and high schools, yet the Edison contract is based on average city spending on all students.

    Improved scores
    The report points to three city schools - Bay Brook, William Paca and Dr. Martin Luther King Jr. - that outscored the Edison schools this year. Those schools, along with the three Edison schools, all had pass rates in the single digits on the state's standardized tests in 1999, the year before Edison got its contract.

    The state uses a different test now. But this year's pass rate in third-grade reading was about 80 percent at Dr. Martin Luther King Jr., Bay Brook and William Paca. It was 53 percent at Templeton, 64 percent at Gilmor and 69 percent at Montebello.

    Grasmick questioned whether the other schools started out in such dire straits. She said Templeton and Gilmor were "at a disaster level" before Edison took over, and Montebello was only slightly better.

    "We certainly allowed the city to provide a lot of intervention to these schools before this decision was made," Grasmick said. "They did not improve."

    School system spokeswoman Edie House said schools chief executive officer Bonnie S. Copeland would not comment on the report because she had not yet read it.
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