State not being fair in schools takeover


STATE EDUCATORS are cheating on the controversial test of whether they can improve academic scores in three low-performing Baltimore City schools by taking them over and contracting them in September to Edison Schools Inc., a national for-profit company.

As reported in Education Week, the contract "appears to be a national first in state education policy." That casts Maryland in a highly visible role in the nationwide debate over privatization of public schools.

With the national spotlight on, the Maryland State Department of Education is anxious for Edison to succeed. But an excess zeal for success has led state educators to rig the performance contract in favor of Edison.

First, Edison is being given substantially more money to spend on student instruction than comparable city schools. This violates the letter and spirit of the state takeover regulation that is intended to show whether an outside contractor can raise student performance, assuming the same amount of money per student for school-based instruction is allocated.

Edison will be paid $7,462 per student even though the three schools to be taken over received about $2,400 less per student this year from the city school system.

Second, and even worse, the state is paying the extra money to Edison, at least $3 million, out of city, not state funds. In other words, Edison's excessive contract price is being paid at the expense of other poor city students, who will have even fewer resources.

The state promises it will make future revenue adjustments that mitigate the siphoning off of city school funds. But these allowances are uncertain and small compared to the overall losses that city children will suffer.

Education budgets are notoriously arcane, but a fairly simple principle is at the core of the disagreement between the city and state over how to calculate the per-pupil expenditure payable to Edison. The city says that Edison is entitled to only what is being spent on direct instruction in the schools. The state argues that Edison should get that amount plus what is being spent outside the school in indirect overhead costs.

There are compelling reasons why the city is right and the state is wrong. The state's method of calculation clearly violates the state regulation governing takeovers. The regulation adheres closely to the city's view that any private contractor like Edison should receive no more than what the schools have been receiving for school-based instruction.

The State Department of Education concedes that it has not followed the technical mandate of the regulation. Rather, it claims to have improvised a fair formula based on a series of unilateral assumptions. But the state's ad hoc assumptions are disputed by the city because they create such a huge disparity in per-pupil spending between Edison and city schools.

Apart from technicalities, Edison's claim for non-school overhead is unjustified. Edison, which calls itself the "country's leading private manager of public schools," already has 108 schools in 21 states across the country and so incurs little additional overhead under the contract. Moreover, the city school system will be providing many centralized services to Edison at no extra charge.

Equally important, the Baltimore public schools can't save on system-wide overhead as a result of the contract because Edison is taking over less than 2 percent (three of 183) city schools. According to the national Council of the Great City Schools, city expenditures for non-school-based instruction are relatively efficient. Therefore, the bottom line is that overhead should be disregarded if the playing field is to be kept level.

Without a level playing field -- that is, without equal spending -- little will be learned or proven about whether Edison can do better than the public schools under comparable conditions. The takeover test will not be a fair test.

Privatization watchers say that this is "EAI all over again," referring to the hidden extra payments that wrecked the credibility of the city's pioneering and failed privatization contract in 1992 with Education Alternatives Inc.

The Edison schools will be similar to charter schools that have extensive autonomy. Yet, Edison will be paid well over $2,400 more per pupil than the city's other charter schools (called "New Schools") are allocated.

There are other signs that Edison is getting undue advantages. For one, the Edison schools have been leapfrogged to the top of the city list for electrical service for technology.

Also, Edison has raided the city schools to hire two of the very best principals. The disparity in funding is a key factor, since at least one of the principals will be paid about $20,000 more than her previous city salary.

Although the contract is one-sided, city officials -- because of pressure from the state -- have publicly gone along. But others should cry foul.

The state Board of Education and the General Assembly should conduct inquiries and an independent monitor of the contract should be appointed. Further, the contract should be reviewed by the court that is overseeing parts of the city-state partnership agreement enacted by the General Assembly in 1997.

Only such public scrutiny will restore the integrity of an important experiment in school reform.

Kalman R. Hettleman is a former member of the city school board and an education consultant.

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