In a bid to halt Baltimore's pioneering "Tesseract" experiment in school privatization, the teachers' union has challenged the legality of a city contract with a Minneapolis company to operate nine public schools.
In its suit, the union contends that Baltimore's contract with Education Alternatives Inc. (EAI), now in its second year, violates charter requirements that the city maintain control of public schools.
The lawsuit, filed this week in city Circuit Court, also claims that the five-year privatization venture discriminates against thousands of students because "Tesseract" schools receive more city money per pupil than do most other public schools in the city.
The suit also seeks to abort pending agreements that would give EAI control of financial management, security, maintenance and other nonteaching functions at two of the city's new "enterprise schools," part of a separate experiment in school-based management.
Irene Dandridge, president of the 8,500-member Baltimore Teachers Union (BTU), said yesterday that EAI's Tesseract contract provides "absolutely no public accountability for schools."
"The charter intended that public officials, not private companies, run our public schools," she said at a news conference announcing the lawsuit.
"The city's fathers appear inclined to engage in social experimentation -- in a process which has no prior track record and no specific sanction by law under the charter," she said.
Superintendent Walter G. Amprey called the suit a "groundless union ploy to throw cold water" on the privatization effort.
"We're being fought by the self-interest of the union, but we have to keep moving forward in the interest of educating children," said the superintendent, who is now in his third year at the helm of Baltimore's public schools.
Dr. Amprey said the experiment has succeeded in eliminating bureaucratic red tape, cutting administrative costs and channeling more money to improving schools.
Mayor Kurt L. Schmoke said in a statement that he had not seen the lawsuit and would withhold comment until he had reviewed it.
The action by the union, which had been an early supporter of Tesseract, drew sharp criticism yesterday from EAI's chairman and from a councilman who supports the privatization effort.
City Councilman Wilbur E. "Bill" Cunningham, D-3rd, a member of the board at City College, one of the two "enterprise schools" where EAI is seeking to manage nonteaching functions, said: "I think the BTU could find a better use of their funds. I am totally supportive of the move to school-based management. And that means nothing unless you give responsibility to the schools and give them the tools to manage their programs. We've got a school system that needs as much innovation as possible."
John T. Golle, EAI's chairman and chief executive officer, called the lawsuit "a malicious attempt to undermine our efforts." Attorneys for both his company and the city had scrutinized the Tesseract contract for four months and found no legal problems, Mr. Golle said.
"We are perplexed at this juncture as to what it violates," he said. "Everyone knows the [Tesseract] schools are working."
News of the lawsuit sent the price of EAI's common stock plummeting in trading yesterday. The stock dropped 10 percent in an hour, closing at $31.50 bid, off $3.375 on the day.
One analyst predicted that the suit may slow the company's efforts to market its program to other school districts.
"This will cause some uncertainty. No one is sure how serious the suit is, but if it drags out for a long time, it could hurt the company's efforts in other states," said Pam Lund, of John G. Kinnard & Co. in Minneapolis. "It's wait and see."
The decline on the stock market marked the second time in recent days that EAI's stock had dropped substantially based on negative news out of Baltimore.
Two weeks ago, the stock declined after a cable TV broadcast carried a report of negative comments about the company made by city Comptroller Jacqueline F. McLean. But the stock rebounded quickly when traders realized that Ms. McLean had opposed the original contract, signed in summer 1992.
The suit names as defendants Mr. Schmoke, the City Council, Dr. Amprey and the school board.
Sharon C. Wilson, the parent of a ninth-grader at Walbrook High, is a co-plaintiff with the teachers' union.
She said that she is concerned that her child's school is being shortchanged because of what she called funding inequities resulting from the privatization.
Walbrook received about $3,700 per pupil last school year, compared with $5,549 per pupil -- the citywide average -- at the nine Tesseract schools. School officials point out that actual per-pupil spending varies widely.
School system officials have asserted that the union has misrepresented the amount of money Tesseract schools receive.
Had the city school system continued running the nine Tesseract schools last school year, costs of operation would have totaled $20.6 million, based on the previous year's spending level, the contract says. EAI received $26.7 million during the first school year.
Of the additional $6.1 million, $3.4 million was to immediately revert to the city for costs unrelated to direct operation of schools, and $2.7 million was earmarked for instructional interns, computers and technology and staff development, according to the contract.
Nat Harrington, school system spokesman, said the lawsuit took school officials by surprise. "We knew [the union] had some philosophical differences with it but we had no idea of this level of dissatisfaction," he said.
The school system disputed the contention that EAI's role violates the charter because EAI answers to the school board and superintendent, who retain ultimate control.
"Tesseract," a term from a children's science fiction book, became the nation's most extensive school-privatization experiment when it started last fall.
EAI promises personalized instruction for students, two instructors in every classroom, and a wealth of computers and other high-tech equipment.