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A Local Battle Highlights the National Debate Over EMOs

by Julie LightSpecial to CorpWatch
July 8th, 1998

SAN FRANCISCO -- Parents, teachers, students and community leaders turned out for a marathon School Board meeting here at the end of June, in a scene that is becoming emblematic of battles around school reform in the 1990's. Dozens of frustrated African American and Latino parents pleaded with the school board to allow the controversial Edison Project, a for-profit company which currently runs 23 public schools around the country, to manage San Francisco's coincidentally named Thomas Edison Elementary School. An equal number of parents, teachers, community activists and union leaders, many of them also people of color, accused the school board of abandoning students to the free market.

"They're just giving up. They're putting up their hands and saying 'forget it,'" complained Belinda Belinger, 15, a student at San Francisco's Thurgood Marshall High School. " A business may not even know how to run a school," charged the high school junior. Many parents, some of whom were flown by the company to visit another Edison Project school in Chula Vista, near San Diego, disagreed. " Even though it's a corporation, it's here to help the students," one father told the school board, adding that he had not been enticed by the promise of a computer or a plane trip.

Parents supporting the business venture portrayed those union teachers opposed to it as self-interested obstacles to change. Union leaders told the board that allowing the Edison Project to manage the school would be the first step toward privatizing the school system-one their membership would remember the next time they go to the polls to elect the school board. After hours of debate, the Board voted 5 to 2 to approve the school's charter petition, clearing the way for a deal with the Edison Project. School Superintendent, Bill Rojas, who is a non-voting member of the board, has worked hard behind the scenes to push the deal through. But the ability of the for-profit to turn around one of San Francisco's most neglected schools, even with venture capital, remains to be seen.

Wall Street has dubbed the some half dozen private companies managing public schools, "Educational Maintenance Organizations" (EMOs). Some administrators stress the resources they bring to the schools. In fact, GAP founder Donald Fisher has promised $2.6 million in start up costs, including computers and teacher training, if the school signs with the Edison Project. In all, Fisher, a top Republican Party funder, offered a total of $25 million San Francisco Bay Area schools that sign with Edison. Critics charge that the philanthropic gesture could represent a conflict of interest because his son, John Fisher, owns a 4 percent share in Edison, a privately held company.

Some teachers and parents fear that just as HMOs have made the financial bottom line the standard in healthcare, EMOs will be more accountable to investors than students. San Francisco School board member Jill Wynns, one of two Edison opponents on the board, worries about accountability. "My concern is the impact on democratic governance of education," she told CorpWatch. "The voters elected me to have input into policy decisions," she added. Edison project supporters on the board did not return CorpWatch's phone calls.

Originally, Edison Project founder Chris Whittle envisioned owning a chain of profit making private schools across the country. When he failed to raise the venture capital necessary, Whittle set his sights on running a handful of public schools, many of them with troubled histories. By this fall, the Edison Project will boast 48 schools. Whittle says he needs 100 to begin to turn a profit and pay dividends to his investors. Whittle himself remains the company's major shareholder. Others include Phillips Electronics and J.P. Morgan Capital Corporation.

The Edison Project's pitch to investors emphasizes the bottom line, not the quality of its product. Whittle told venture capitalists to compare the Edison project to Home Depot, McDonald's or Wal-Mart. Those companies, while not considered high-end by consumers, have become leaders in retail and lucrative investments. "We hope you'll think of us in that group," Whittle is quoted by Education Week as having said at the first "education industry" investor conference sponsored by Lehman Brothers brokerage firm in 1996.

Whittle's controversial reputation grows out of his last project, Channel One, a 12 minute current events television broadcast beamed into homerooms in 40 percent of the country's secondary schools every day. Critics charge that Channel One delivers a captive audience to advertisers. To enhance Edison's academic credentials Whittle hired former Yale University President Benno Schmidt as CEO. John Chubb, the Edison Project's Executive Vice President, is a senior fellow at the conservative Brookings Institution and a leading intellectual advocate of privatized education.

The Edison Project spent four years developing its curriculum, which involves a longer school day and academic calendar. The company promises to donate a computer for home use to every family in its schools. Edison also returns music, art, physical education and foreign language instruction that have been cut from many school districts, to the standard curriculum. However, school board member Jill Wynns described Edison's approach as a chain of "cookie cutter schools" that do not adapt their program to specific circumstances at each individual school.

The Edison Project's promotional materials do not mention special education, and some educators fear that special needs kids get short shrift at Edison Schools. Boston's Renaissance Charter school, one of the first four Edison schools opened in 1995, came under fire for possible non-compliance with state and federal guidelines on students with disabilities. The school's disciplinary policies were equally controversial. They involved suspending kindergartners, teachers wrapping their arms around children in "therapeutic restraints," and an in-school detention room. Last year the U.S. Department of Education's Office for Civil Rights ruled that Boston Renaissance had violated the rights of a special education student who was regularly disciplined by the school. The child in question was only five years old and had been suspended 20 times.

According to Alex Molnar, Director of the Center for the Analysis of Commercialism in Education at the University of Wisconsin-Milwaukee, the academic track record of the Edison schools is not exemplary. "They've got some schools that are performing well, some that are performing less well," he told CorpWatch. 'The Edison schools are ordinary. They are in no sense of the world a kind of role model for the reform of public education."

However, San Francisco Edison Elementary principal, Barbara Karvelis says she is attracted to the Edison Project curriculum and administrative structure. "It's an opportunity to try something and see if it can make a difference," she said. It is not hard to understand why parents and teachers Edison Elementary are willing to give just about anything a try. Karvelis is the fourth principal the school has had in the last two years, and the eighth or ninth in the last decade. Three years ago, in a drastic step the district "restructured" the school, firing all staff and administrators and starting from scratch. According to Karvelis, not a single fifth grader was reading at grade level when she took over last October. Despite its location in an affluent neighborhood, Edison Elementary draws most of its pupils from two low-income African American and Latino communities. One teacher described it as a "remainder" school where kids who do not get into the district's more desirable schools end up.

Berta Hernandez, whose son will enter first grade at Edison Elementary in the fall, says that she was "harassed and mistreated" for asking some tough questions about the Edison Project's track record. "When per pupil spending is down, it's easy to sell out to corporate do gooders," she told the school board. Lindsay Hershenhorn, an outspoken first grade teacher accused the school principal and school superintendent of railroading through the deal and stifling dissent. She said in the eleventh hour effort to gather petition signatures for the school charter there had never been a full staff, parent or community meeting. She worried that "when the bottom line is profit, not the children, that doesn't lead to responsible decision making."

The Edison Project has been described as masterful at public relations. It emphasizes innovative curriculum to parents and educators, the financial bottom line to venture capitalists and resources to officials in strapped school districts. Whether the project can deliver to schoolchildren in a troubled school like Edison Elementary is an open question. Education Alternatives Inc, a rival EMO, had its contracts cancelled by the dissatisfied Baltimore and Hartford school districts. So far, the Edison Project has survived largely on venture capital and Whittle's own millions. "Many people believe that there is a lot of money to be made in the education sector. (But) if there were money to be made, somebody would have done it before now," notes educator Alex Molnar.

Edison Project Director of Western Development Kathy Hamel says the company is "on track" in its timetable to repay its initial investors. Hamel describes California as a "fiscally challenged state" because per pupil spending, about $5,000, is well below the national average. (For example, the Edison Project gets about $7,500 per student at the Boston Renaissance School.) The Edison Project relies on philanthropists, like the Gap's Donald Fisher, to make investing in Bay Area schools feasible. Hamel says the Project will need a "critical mass" of schools to become profitable. She would not say what would happen to undercapitalized schools, like Edison Elementary, if the company fails to reach that economy of scale before venture capitalists demand a return on their investment.

When the Thomas Edison Elementary School opens this fall, the San Francisco Unified School district's most neglected school will have two an a half million dollars that a conservative philanthropist would never have donated if the school had not privatized. The Edison Project has not explained how it will offer a better education for years to come in a school district where per pupil spending is below the national average, once such philanthropy has dried up. Many parents, teachers and students wonder if the school board is not selling schoolchildren to the highest bidder. "If all the schools got the funding they were supposed to and every school got an equal chance they wouldn't have to go to this level," said Jamie Motley, a junior at Raoul Wallenberg High School.