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\author{Joseph Barillari\footnote{I extend my thanks to Curtis Saxton
for giving me the idea, and to Steve Frakt for his editorial
suggestions. The content of this paper follows Professor Scovronick's
outline. N.B.: In this document, some punctuation in quotations was
moved outside of quotation marks to accomodate parenthetical
citation. The title of this paper is drawn from a phrase oft-used in
competitive debate. }}

\date{January 15, 2002 (Dean's Date)}

\title{Let the Market Solve: \\ The potential to revive urban
education \\ through for-profit management}

\begin{document}
\maketitle

\begin{doublespacing}

\section{Enterprise-run schools: the major issues}

\subsection{Introduction}

In a rush to bring the efficiency-boosting power of the free market to
the nation's K-12 education systems, profit-making schools are
springing forth nationwide. Media magnate Chris Whittle's Edison
Project is the industry flagship,\footnote{Lips,
Carrie.```Edupreneurs': A survey of for-profit education.'' Policy
Analysis, No. 386. November 20, 2001. Washington, D.C.: Cato
Institute. p. 20-23} with several smaller companies trailing in its
wake, among them Advantage Education (now Mosaica
Advantage)\footnote{``Mosaica Education to acquire struggling
Advantage Schools'' Boston Business Journal, July 3, 2001. [web; last
accessed 9 Jan 2002]
http://boston.bcentral.com/boston/stories/2001/07/02/daily11.html},
and National Heritage Academies\footnote{Lips profiles them.}. The
market is rough: Education Alternatives, Inc., once the industry's
poster child,\footnote{Richards, Craig, Rima Shore, and Max
Sawicky. \emph{Risky Business: Private Management of Public Schools.}
Washington, D.C.: Economic Policy Institute, 1996 p.57} lost face in
the fiascoes of Baltimore and Hartford\footnote{See Hill, Paul
T. ``Contracting in Public Education.'' in \emph{New Schools for a New
Century: The Redesign of Urban Education}. Ravitch and Viteritti,
eds. New Haven: Yale University Press, 1997, also in the GAO report}
and went bankrupt in 2000,\footnote{Walsh, Mark. ``In Pa., District
Tries 3-Way Contest To Fix Schools'' \emph{Education Week}. April 4,
2001 [web: verified 12 Jan 2002]
http://www.edweek.org/ew/ewstory.cfm?slug=29chester.h20} but the
potential rewards are alluring: a slice of the K-12 education
industry's \$360 billion\footnote{Lips cites Moe, Bailey, and Lau on
this figure.} annual spending.

The interactions of commerce and public education are not new; Lips
notes that the education supply industry is completely
commercial. Proprietary trade schools have haunted television
advertisements and the back pages of \emph{Popular Mechanics} since
time immemorial. But the education of children has remained almost
entirely nonprofit and government-funded (Lips 3, using Moe, Bailey,
and Lau's data).

Independent for-profits are analogous to traditional private schools
and raise no new policy issues. Controversy erupts, however, when
private industry is engaged to control, to one degree or another, a
school financed by the public treasury. This engagement is the subject
of this paper, which discusses the policy issues it raises, considers
relevant academic literature, examines an operating for-profit charter
school and evaluates its performance, then closes with some policy
recommendations.

\subsection{The Nature of the Relationship}

Relationships between public education and the private sector vary in
scope.\footnote{Hill discusses some of these categories.} They range
from limited jobs, such the hiring of corporations to act as
consultants or administrators (as in Minneapolis\footnote{``Private
Management of Public Schools'' United States General Accounting
Office, GAO/HEHS-96-3, April 1996. [web: verified 20 Jan 2002]
http://purl.access.gpo.gov/GPO/LPS11533 p.22}), to employing
businesses to run charter schools (such as the Boston Renaissance
Charter School, discussed later), to contracting for the operation of
some of a district's public schools, as with EAI in Baltimore (GAO 4),
to the comprehensive use of business in contracting to run an entire
school system, as with EAI in Hartford (GAO 4).

\subsection{Policy Issues}

\textbf{\emph{Potential conflicts-of-interest.}} Contracting with
private enterprise raises many of the same issues that charter school
plans, voucher plans, and choice plans in general raise. As this paper
neglects those issues to which \emph{any} choice program would give
rise (a general discussion of choice is beyond the scope of this
paper), consideration is limited to five primary areas of
concern. Three are discussed by (among others) Myron Lieberman, a
for-profit education advocate and, incidentally, a critic of the
``costly, destructive emphasis on formal education and
credentials.''\footnote{Lieberman, Myron. \emph{Beyond Public
Education}. New York: Praeger, 1986. p. 222} They are the (1)
potential for harmful cost-cutting directed at raising profits, (2)
the potential for fraudulent advertising and falsified results to be
used as lures (Lieberman 224), and (3) the difficulty of making a
profit in education (Lieberman 227)\footnote{Houston makes references
to why this difficulty may exist.} To these I add (4) the unique
problems raised by special education\footnote{Zollers and Ramanathan
have detailed articles on this subject.}, and (5) the (in)viability of
major contracts in education, as evidenced by the large-scale EAI
disasters.\footnote{Hill summarizes EAI's problems and some reasons
for why they occurred. The GAO report also covers those EAI
operations.}

\textbf{\emph{(1) Excessive cost-cutting.}} Carol Ascher observed that
for-profit schools ``serve two masters'': the school politicians and
shareholders. Given this split sovereignty, what happens when
``instruction in subjects that may not obviously advance test scores''
is under budgetary review?\footnote{Ascher, Carol, Norm Fruchter, and
Robert Berne. \emph{Hard Lessons: Public Schools and
Privatization}. New York: Twentieth Century Fund Press, 1996. p.8}
That question arises in all schools when politicians and boards of
trustees must appear fiscally responsible before their donors and the
public. For-profits, however, have another reason to be frugal: they
can pocket what they do not spend. Chief among the potential evils
unique to, or considerably magnified by for-profit schools is the
concern that schools may cut expenses by hiring incompetent staff and
purchasing cheap materials (Lieberman 224), eliminating expensive
arts, slashing activities budgets, and the like, all to increase its
take. As an example, the American Federation of Teachers has made such
an accusation about for-profit provider Edison
Schools\footnote{Nelson, Howard ``Student Achievement in Edison
Schools: Mixed Results in an Ongoing Experiment: IV. Cutting Corners''
American Federation of Teachers. [web: confirmed 10 Jan 2002]
http://www.aft.org/research/edisonproject/Corners.htm}, which
vehemently denies doing so.

In response to AFT's charges, Edison Executive VP\footnote{Title drawn
from [web: accessed 15 Jan 2002]
http://www.edisonproject.com/overview/ov04.html]} John Chubb pointed
to his company's extensive offerings: ``If Edison wanted to cut
corners,'' he wrote, ``why would we offer in our schools twice as much
fine arts as most public schools, a superb character and ethics
curriculum, Spanish language instruction for every child starting in
kindergarten, a longer school day and year, and a technology program
that equips every teacher and family with a
computer?''\footnote{Chubb, John and Chris Cerf. ``Response to the AFT
Report on Student Achievement in Edison Schools.'' [web: verified 12
Jan 2002]
http://www.aft.org/research/edisonproject/EDRESPND/Edresp2.htm
Alternatively, in PDF [web: 11 Jan 02]
http://www.aft.org/research/edisonproject/response.pdf}

While Edison's offerings are impressive, other for-profits' may not be
quite so extensive: in the \emph{Nation}, Peter Schrag quotes a
``respected academic authority on privatization'' as calling Edison's
program ``far and away the best.''  ``The rest,'' Schrag quotes, ``do
it on the cheap.''\footnote{Schrag, Peter. ``Edison's Red Ink
Schoolhouse.''  \emph{Nation}, 25 June 2001, Vol. 272 Issue 25}
%Ultimately, it is both parents and politicos who must ensure that
%for-profit schools deliver education as-advertised.

\textbf{\emph{(2) (False) advertising.}} For-profit schools' potential to
advertise begs the question: how will governments and voters ensure
that they acquire accurate and relevant information about their
schools? Given Sizer's observation that ``Empirical evidence on the
quality of schooling is meager and confusing,''\footnote{Sizer,
Theodore R. ``The Case for a Free Market.''  Reprint of the
\emph{Saturday Review}, January 11, 1969 in Hurwitz and
Tesconi. \emph{Challenges to Education: Readings for Analysis of Major
Issues} New York: Dodd, Mead, \& Co., 1973. p.441} and coupled with
the fact that what is ``meager and confusing'' can be easily
manipulated, decision-makers need to guard against the possibility
that information on schools is being actively distorted, something
that EAI actually did.\footnote{``News of improved test scores in
EAI's Baltimore schools (falsely reported, as it turned out) caused
stock prices to shoot up.'' (Ascher, Fruchter, and Berne 107). Shore
concurs (Richards, Shore, and Sawicky 58). Hill's article called EAI's
examinations ``significantly different from the tests by which all
Baltimore schools were evaluated.'' (p.67)}

\textbf{\emph{(3) Potential (un)profitability.}} While the thirst for profit
is the engine driving commercial education, with conservatives like
Lieberman proclaiming that ``[i]t is hardly to be doubted that private
enterprise could do a better job for less,'' (Lieberman 227) Paul
D. Houston, American Association of School Administrators's Executive
Director in 1994, casts doubts on the notion that businesses could
profit by running schools more efficiently.\footnote{The conservative
notion that the public sector is inefficient is discussed in Schrag,
``Red Ink''} He writes that when he consulted management consultants
during his service as a school superintendent, they ``had few real
suggestions to offer for significant savings'' and ``found it
remarkable that schools do as well as they do under the
circumstances.''\footnote{Houston, Paul D. ``Making watches or making
music.''  \emph{Phi Delta Kappan}, Oct94, Vol. 76 Issue 2, p133
[Ebsco]}

Houston paraphrases Princeton's William Baumol's explanation for why
this is so: ``the work government workers do is labor-intensive and
does not lend itself to the improvements created by technology in the
same way as do capital-intensive industries in the private sector''
(Houston). This would explain Edison's pervasive use of
computers.\footnote{Edison's Fourth Annual Report, page 9, mentions
the technology. The notion that it is a substitute for human teaching
originated in a WWS 470 lecture.}

Denis Doyle notes that for-profit schools also have one major
area of expense that non-profits do not: they are subject to
taxes.\footnote{Doyle, Denis P. ``The role of private sector
management in public education.''  Phi Delta Kappan, Oct94, Vol. 76
Issue 2, p128 [Ebsco]} %(fixme:add Edison's fears?)


\textbf{\emph{(4) Special-needs issues.}} Consider first the potential for
overclassification. It is not unique to
for-profits,\footnote{\emph{Sacramento v. Rachel H.} is the source of
the concept.} but like all financial issues, it is magnified by
for-profit control. The issue is that if the only way to make
special-needs students palatable to for-profit schools is to attach
huge funding bonuses to them, more students will be misdiagnosed and
placed in restrictive out-of-class programs, because so-called
mainstreaming policies are less likely to bring additional
funding. Ultimately, however, the incentives for improper
classification depend on the design of each state's program.

The dangers of overdiagnosing and assigning students to unnecessarily
restrictive programs can be reduced if the for-profit school adheres
to Edison's policy, ``responsible inclusion,''\footnote{Edison's own
explanation of the term: http://www.edisonproject.com/feature/f0.html}
which seeks to keep special-education students in regular classes
whenever possible. This reduces the chances that students will be
harmed by incorrect placements because placement is generally in the
normal classroom. Although this ``mainstreaming'' wins parents' praise
(according to the AFT), critics (the AFT again) call Edison's policy a
cost-saving measure, paraphrasing President [sic]\footnote{Schmidt is
currently the chairman, the report identified him as the president;
which he may have been on the date of the the remarks, which was 1997,
according to the report.} Benno Schmidt: ``the Edison program would
deliver excellent results for the great majority of kids classified as
special education--but in regular classroom settings. And while the
public schools used expensive specialists and resources, the Edison
program would deliver a program without
specialists.''\footnote{Nelson, Howard ``Student Achievement in Edison
Schools: Mixed Results in an Ongoing Experiment: IV. Cutting Corners''
American Federation of Teachers. [web: URL verified 12 Jan 2002]
http://www.aft.org/research/edisonproject/EDRESPND/Corners.htm}

Edison's response called the AFT's claim that ``responsible
inclusion'' is a budget-shaving measure ``both false and shockingly
ignorant,'' writing that ``an effective inclusion program costs
\emph{more} to implement because special education teachers must
support teachers in addition to special needs
students.''\footnote{Chubb and Cerf. Italics in PDF version [web: 11
Jan 02] http://www.aft.org/research/edisonproject/response.pdf}

In Edison's case, battles have erupted not over unnecessary
special-needs classifications, but over alleged attempts to sweep
special-needs students out of the schools, which are detailed later.

%( The alternative, to provide all children with the same funding, will
%leave those who truly are more expensive to educate in the cold: (line
%about a `fifty thousand dollar kid rolling through the
%door--where?)\footnote{SOURCE!???}.


\textbf{\emph{(5) Contract viability.}} Contractual disputes over
funding and assessment ravaged EAI's operations in Hartford and
Baltimore (Hill 62-67). A corporate contractual dispute that results
in a disruption of service has the same devastating effect as a
teachers' strike: some parties may win, but the students invariably
lose. The potential for these disputes may be enough to discourage
some politicians from ever contracting with for-profits. Others,
public and corporate officials alike, may learn from EAI's example and
make the terms of their contracts far more explicit.\footnote{Hill
discusses potential trends in contracts, among them ``future
districtwide management contracts'' and ``narrow-scope contracts'' on
pages 66-67.}

The roots of the problem run deeper than EAI's vague
legalese. Policymakers are loath to cede power when funding schools
because it leaves them politically accountable for school executives'
decisions over which they have no control.\footnote{Chubb, John and
Terry Moe. \emph{Politics, Markets, \& America's Schools}. Washington:
The Brookings Institution, 1990. p. 200. See also Hill p.66} Future
contractors will want to avoid the calamities that questions of
authority caused in Hartford (Hill 65). Any plans for widespread
publicly-financed enterprise-run education must explain how
politicians can be persuaded to take the responsibility of spending
public money on for-profits, while at the same time giving up control
over school decision-making.\footnote{Hill discusses these issues on
p.65-67}

Charter schools provide a middle way, allowing politicos to retain
some control with a lower possibility that innovations will be chafed
to death with red tape. They are by definition\footnote{Richards,
Shore, and Sawicky 52 quotes the US Dept. of Education's definition}
granted more freedom than public schools (and, tautologically,
for-profits under contract to run public schools in a specific manner)
to design their own policies. That is the freedom to say, as Advantage
Schools founder Stephen Williams told a reporter, ``You either like
the design or you don't.''\footnote{Schnaiberg, Lynn. ``Seeking a
Competitive Advantage.'' \emph{Education Week} December 8, 1999. [web:
last accessed 9 JAN 2002]
http://www.edweek.org/ew/ewstory.cfm?slug=15bizmain.h19\&keywords=profit}

\textbf{\emph{Letting the market solve.}} These five issues: budgeting,
advertising, profitability, viability and special-needs policies, are
all tied into a deeper issue: the motivations that stem from
profit-making. Policymakers can enact legal instruments to harness
these motivations for good, and free-market advocates can claim that
competition will compel school operators to spend and act
responsibly. All that is clear, however, is that perfect instruments
for controlling for-profit schools and measuring the good that they
produce have yet to be developed.

\section{Academic perspectives on privatization}
		   
%Two major positions: the skeptical liberal position, and the
%%change-advocating conservative position (who often resorts to
%attacking the public school system instead of constructing rational
%arguments.)

This section describes and summarizes several liberal and conservative
ideas related to privatization.

\subsection{The ideas}

In 1969, Theodore R. Sizer, in an article supporting competition and
choice, warned that ``[t]he marketplace should not be the total
arbiter of educational quality.'' ``Children,'' he wrote, ``are\ldots
poor judges of the `product' they are buying; their parents' judgment
is very uneven; and empirical evidence on the quality of schooling is
meager and confusing'' (Sizer 441).

Milton Friedman followed with \emph{Free to Choose}, which outlined
(among other ideas) his views on education: ``to bring learning back
into the classroom, especially for the currently most
disadvantaged,\ldots give all parents greater control over their
children's schooling\ldots,'' and recommends use of a ``voucher plan''
to create ``freedom to choose.'' As for Sizer's charge, he calls the
allegation that poor parents are also poor educational decision-makers
``a gratuitous insult.''\footnote{Friedman, Milton and
Rose. \emph{Free to Choose}. New York: Avon Books, 1981 p.150} The
plan was expanded in Chubb and Moe's contemporary title on choice,
which trumpets that choice ``has the capacity \emph{all by itself} to
bring about the kind of transformation that, for years, reformers have
been seeking to engineer in myriad other ways.''\footnote{Chubb, John
and Michael Moe. \emph{Politics, Markets, \& America's
Schools}. Washington, D.C.: The Brookings Institution, 1990. Italics
in original.} Chubb, an officer of Edison,\footnote{``People Behind
Edison'' [web: 10 Jan 2002]
http://www.edisonschools.com/overview/ov04.html} is now implementing
these ideas, the philosophical groundwork for today's for-profit
charter schools.

Lieberman, a for-profit schooling advocate, calls attention to the
potential management benefits of commercial operation. School board
officials, he argues, often cannot resist the ``temptation'' to
micromanage, even if the district would be better off if they did
not. Voters may also force their hands in
decision-making. ``Contracting out,'' he asserts, will free boards
from ``administrative issues'' and let them ``concentrate on
long-range policy'' (Lieberman 223-4). While a novel idea, this is the
exact opposite of what happened to EAI in Hartford.\footnote{Hill 65:
``the contractor and school board were unable to establish a clear
division of responsibilities''} It's clear why politicians are
reluctant to relinquish control when they spend public money---for the
same reason that ``school-based management'' will not succeed: schools
that make unpopular decisions will cause no end of headaches for
politicians (Chubb and Moe 200-201).\footnote{Hill 65-67 supplies
similar reasoning.}

In \emph{Rethinking School Choice} Henig catalogs the policy issues
that must be resolved before launching a choice program, laments the
verbal trickery that has helped politicians interpret calls for
``choice'' as calls for a specific program, such as voucher
distribution, and critiques the ``market metaphor'' in general as
corrosive to ``collective deliberation and collective response.'' The
root concern is that the presence of a means to avoid the bureaucracy
of the public school system, be it voucher plans, public-private
choice, or (in this paper) for-profit charters, lets voters ignore
public institutions by skipping around them, rather than enlisting
each other to improve them.\footnote{Henig, Jeffrey. \emph{Rethinking
School Choice: The Limits of the Market Metaphor}. Princeton:
Princeton University Press, 1994. Ch. 9 N.B.: I worked from the
electronic-reserves version of chapter 9, and found the year in the library catalog.}

Henig also has his doubts about profitability: contradicting
Lieberman's assertions about commercial efficiency, he notes that
EAI's Baltimore schools' spending exceeded that of similar schools
managed by the government by ``about 12\%.'' He also observes that
Edison ignores potential markets in many parts of the country: those
are the parts where education spending is not high enough to be
profitable (Henig 27-28).

Jonathan Kozol is concerned, as always, about segmentation. Writing of
for-profit schools in 1993, he invites us to ``strip away the fancy
language'' to find ``a social Darwinist scenario, a triage operation
that will filter off the fortunate and leave the rest in schools where
the children of the `better' parents do not need to see
them.''\footnote{Kozol, Jonathan. ``Kids as Commodities: The Folly of
For-Profit Schools.'' \emph{Business and Society Review}, No. 84
(Winter 1993)}
		     
It is not difficult to imagine commercial schools adopting the same
hierarchy as restaurants, clothiers, or automobile dealers, with those
losing the economic race reduced to scraping what little education
they can from the the choice-ravaged ruins of the public school
system. However, the language of Kozol's article indicates that he was
writing before Edison moved into public charter and public contract
schools instead of independent private schools.\footnote{ (Richards,
Shore, and Sawicky 55) mention this move.} In the harsh new world of
2002, Kozol seems an alarmist in his worries that the arguments used
in the push for intra-public-school choice are now justifying the
unthinkable: business-operated education.\footnote{Kozol. Richards,
Shore, and Sawicky mention Edison's move.} Today, the once-soaring EAI
is bankrupt (Walsh), and the Edison Project fails\footnote{``Edison
Schools, Inc.  (EDSN) Quarterly Report (SEC form 10-Q) Item
2. `Management's Discussion and Analysis of Financial Condition and
Results of Operations' '' Nov 14, 2001 [web: confirmed 10 Jan 2002]
http://biz.yahoo.com/e/l/e/edsn.html} to turn a profit---yet again.

Among those who hold low hopes for for-profit schools, some, such as
Rima Shore of the Economic Policy Institute believe that unsuccessful
attempts at privatization will demonstrate that public education is,
generally not the ill-managed cash-bleeding operation that its
enemies say it is (Richards, Shore, Sawicky 78). %(Fixme: More?)

\subsection{The academic summary}

Liberals are concerned about segmentation. Conservatives are concerned
about the decaying, monstrous bureaucracy of urban schools---and
everybody claims to be concerned with the children's well-being. The
liberal academic view, usually no advocate of expanding
government-sponsored public-private choice (primarily for Henig's fear
that it will ``erode'' discourse (Henig 222)), is not unsurprisingly
opposed to anything that might further divide the public, such as
for-profit charter schools. Conservatives view for-profit schools as a
means to circumvent the decades-old growth of lethargic educational
bureaucracy, saving the children with a school-machine powered by the
most potent of fuels: cash with minimal strings attached.

\section{The Background of BRCS}

The next two sections of this paper discuss the Boston Renaissance
Charter School, an Edison Project school in Massachusetts. It is an
oft-written-about institution, sharing many characteristics not just
with other Edison schools, but with for-profit institutions in
general. Like Edison Charter Academy,\footnote{Name drawn from
Economist, 01/06/2001, Vol. 358 Issue 8203, p28 [Ebsco]} National
Heritage's Vanguard Charter Academy, and the Edison system as a whole,
many of its students' parents approve of what it's doing.\footnote{See
Symonds and Donnelly, and the ``Fourth Report'', p25 (This popularity
may be due to the fact that parents \emph{choose} to send their
children to charter schools.)}. Like Edison's Seven
Hills\footnote{Zollers, Nancy J.; Ramanathan, Arun K. ``For-Profit
Charter Schools and Students With Disabilities: The Sordid Side of the
Business of Schooling.''  \emph{Phi Delta Kappan}, Dec98, Vol. 80
Issue 4, p297 [Ebsco], also Farber Mar98}, it faced question of
mismanagement in special education. It would be incorrect, however, to
imply that all for-profits can be described strictly in relation to
the BRCS model. Other major for-profit projects, differ in size,
scope, and type: EAI's Baltimore and Hartford operations, for
instance, were under contract to run public
schools,\footnote{According to Hill p.63 and the GAO report, p.3} not
start charter schools. And Renaissance, unlike the EAI schools, is
still in operation. But BRCS is representative, if only in that many
things that have happened to other for-profits have happened to BRCS,
and they have been documented in education literature.

The charter-school movement came to Massachusetts with the passage of
the Education Reform Act of 1993.\footnote{Zernike, Kate. ``Panel
backs adding of charting schools Bill allows changes at existing
schools'' [N.B.: this and all other mangled headlines were produced by
Dow Jones, which seems to have truncated subheadlines and stripped out
their punctuation] \emph{The Boston Globe}, June 25, 1997 [Dow]} Among
charter schools' professed purposes was the expectation that they
would ``stimulate the development of innovative programs within public
education,'' and ``provide parents and students with greater options
in choosing schools within and outside their school
districts.''\footnote{The Commonwealth of Massachusetts Advance
Legislative Service 1993 Regular Session. Chapter 71. House Bill
No. 1000. 1993 Mass. Als 71; 1993 Mass. H.B. 1000 Synopsis: An Act
Establishing The Education Reform Act Of 1993. (Retrieved using
Lexis-Nexis Legal Research). N.B.: the ``purposes'' for enacting
charter schools were numbered (1) (3) and (5). I assume that some of
them were struck out during deliberation, and the list was never
renumbered, but this may be an problem with Lexis-Nexis's database.}
While the Massachusetts Secretary of Education hailed charter schools
as ``lighthouses for public education,''\footnote{Redmond,
Lisa. ``State promotes charter schools.''  \emph{Telegram \& Gazette}
(Worcester, MA). Oct 29, 1993} with the passage of this bill, Edison
could start one in Boston.

Like many Edison schools,\footnote{According to Edison [web: 10 Jan
2002] http://www.edisonproject.com/design/d23.html} BRCS primarily
serves poor children. Housed in downtown Boston (Farber), Edison's
figures indicate that the school's student body is today 91\% black or
Hispanic, with 58\% receiving free or reduced price
lunches.\footnote{Edison Schools 2000-2001 Annual Report on School
Performance} This is not unusual; for-profit schools often appear in
poor, failing districts.  No one wants to have them run successful
suburban schools: for-profit management is regarded as a last-ditch
deadwood-cutting measure.\footnote{WWS 470 lecture} In its Annual
Report, Edison writes that its schools ``generally begin at\ldots at
levels well below those of other public schools in their
communities.''  It also acknowledges that it is usually engaged to run
an institution ``for the precise reason that achievement has
stubbornly resisted efforts at improvement'' (Edison ``Fourth Annual
Report'', part 1, p. 14-15).

\section{Implementation and efficacy of BRCS}

\emph{Information on implementation and evaluation is intertwined, so
  those sections have been fused.}

In late 1994, the Boston Renaissance Charter School was granted a
charter.\footnote{Hart, Jordana. ``Charter schools get nod to open 14
get state backing; Edison Project short'' [sic] The Boston Globe,
December 10, 1994}

The school, one of Edison's first, was assembled and implemented
quickly (Farber). The Edison package (to name a few of its pieces) of
Success for All, University of Chicago Mathematics (Fraker 24),
computers, fine arts, and a long school year (Chubb and Cerf) was
rounded out with a dignified building and an ``enthusiastic,
idealistic'' faculty (Farber). Its rapid deployment may be a source of
some of its early problems (Farber), many of which were documented by
Peggy Farber, a journalism graduate student who held a
t\^ete-\`a-t\^ete with John Chubb in the pages of the \emph{Phi Delta
Kappan}.

Farber's report and Chubb's 4,908-word\footnote{Farber's article was
6,047 words. Ebsco did the counting.} response\footnote{Chubb, John
E. ``Edison Scores and Scores Again in Boston'' \emph{Phi Delta
Kappan} November 1998, Vol. 80, Issue 3, p. 205 [Ebsco]} highlight
many of the recurring elements of the for-profit school
experience. Chubb points to Farber's ``isolated anecdotes,''
``two-year-old observations,'' and ``incendiary charges,'' as ``cases
that\ldots cannot be fairly understood in isolation from the context
in which they occurred,'' then he explains them. He points to the
school's new administrators, high ratings on surveys of parental
opinion, 1,600-entry waiting list, and low rate of ``student
turnover'' as indicative of Edison's successes. But as he must, he
admits that the school committed a civil-rights violation. (Chubb
``Scores Again'')

The case in question was raised by one student's parents who,
concerned that their child was mistreated, brought their case to the
US Department of Education's Office of Civil Rights. Confronted with
allegations of a civil rights violation, BRCS admitted one had been
committed, and resolved to prevent future infractions (Chubb ``Scores
Again). Farber also documented (and Chubb remarks upon) the debates
over discipline policies, the clashes between the school's first
principal and the administrator she hired to supervise the upper
grades, the massive faculty resignation (over one-third) by the end of
the 1997 school year, and the issues surrounding BRCS special
education. Case in point: Farber interviewed special-education teacher
Amy Babin, who considered BRCS the most ```dysfunctional setting'''
she'd ever seen. ```[E]verything,''' she said ```escalated to the
point of using physical restraints every time.'''

BRCS's performance is also a matter of contention. Edison included a
profile of BRCS in its annual report. Between 1998 and 2000, the
number of fourth-graders passing the Massachusetts Comprehensive
Assessment System tests with a ``proficient'' or ``advanced'' score
increased by ten percentage points in science and twelve percentage
points in mathematics. Eleven points more eighth-graders received
``proficient'' or better in English, nine points more received the
designation in math. The only regressions were in eighth grade science
and history.\footnote{Edison Fourth Annual Report on School
Performance. (Part 2) [web: confirmed 10 Jan 2002]
http://www.edisonschools.com/annualreport2001part2.pdf (Note: History
scores are listed as N/A for 1998.).}

While its gains are impressive, it's crucial to note that BRCS started
with low scores: zero percent ``proficient'' or better in eighth grade
mathematics in 1998 and single-digit ``proficient''-or-better-rates in
1998 fourth-grade math and English. In 2000, the number of fourth
grade ``proficient''-or-better English scores had only grown one
percentage-point, to 3 percent, and eighth grade
``proficient''-or-better science test-takers had moved from 1\% in
1998 to 2\% in 1999, only to drop to zero in 2000. The Edison report
summarizes BRCS's lifetime accomplishments as ``positive'' (Edison,
``Fourth Annual Report'', part 2, page 66).\footnote{The ``Achievement
Since School Opened: Positive'' declaration carries a note that the
evaluation mechanisms had changed in 1998. The AFT reports indicate
that Massachusetts implemented a different testing system in 1998
(http://www.aft.org/research/edisonproject/BOSTON/Boston.htm)}

Several institutions have studied Edison schools, including Boston
Renaissance (WMU iii). Among them is the Evaluation Center of Western
Michigan University.\footnote{Miron, Gary and Applegate, Brooks. ``An
Evaluation of Student Achievement in Edison Schools Opened in 1995 and
1996'' December 2000. The Evaluation Center, Western Michigan
University. Web:
http://www.wmich.edu/evalctr/edison/wmu\_edison\_rpt.pdf [web: checked
11 Jan 2002] p.253} WMU gave BRCS a ``mixed'' rating for it's overall
performance, comparing their findings to Edison's Third Annual Report,
which they quote: it also grades overall ``achievement'' as
``positive''\footnote{While Edison's Donna Reed indicated in an email
that the report had been taken down, AFT's website has a link:
http://www.edisonschools.com/annualreport2000.pdf.  The AFT page was
http://www.aft.org/research/edisonschools/relatedsites.html.} (WMU
253). WMU's conclusion was that ``students, on the whole, made gains
on the norm-reference test,'' (the SAT-9) but ``did not gain as much
as the district and state on the criterion-referenced test mandated by
the state [the MCAS].'' ``The results to date indicate that this
Edison school does not differ substantially from other district
schools.''\footnote{WMU report. p.118. The report notes that in these
studies, the data for different types of test (criterion-referenced or
norm-referenced) were charted differently: ``criterion-referenced
results'' were derived by ``tracing consecutive cohorts of students''
and ``norm-referenced'' derived by ``tracing individual students over
three or more years.''  I was unfamiliar with the terminology, the
page below was useful:
http://www.valdosta.edu/$\sim$whuitt/psy702/measeval/crnmref.html}

%The American Federation of Teachers also evaluated BRCS. Their data,
%however, counts ``passing'' as ``needs improvement'' or better rather
%than ``proficient'' or better. This boosts percentages
%considerably. WMU p105 indicates that Mass. DoE uses the former
%measure. However, AFT's report mixes longitudinal with cross-site
%studies,


%% As for poor children's opportunities, according to Edison's report,
%% student achievement has risen in 84\% of its schools since they opened
%% ---despite a student population that is becoming ``ever more
%% disadvantaged.''\footnote{``Edison Schools Fourth Annual Report on
%% School Performance'' (part 1) [web]
%% http://www.edisonschools.com/annualreport2001part1.pdf} In Boston,
%% 58\% of the students are on free/reduced price lunches. (an oft-used
%% heuristic for poverty)\footnote{The figure comes from Edison's
%% ``Fourth Annual Report.'' Chubb affirms that the statistic is used to
%% measure poverty in ``Scores again.''}

That conclusion is borne out in Massachusetts's own report on charter
schools, which shows that in 1999-2000 MCAS testing, BRCS students'
and surrounding districts' students' scores are comparable in grade 4:
BRCS is one point higher in each subject area. In grade 8, BRCS is
behind in science and math, while English scores are still
tied.\footnote{Massachusetts Charter School Initiative Report, 2001
p.120-123 [web: verified 10 Jan 2002]
http://www.doe.mass.edu/cs.www/reports/2001/01init\_rpt.pdf Note: The
``Renewal Inspection Report'' was of use in interpreting the data -- I
wasn't sure how to qualitatively judge the MCAS score differences
until I read it.}

A 1999 report\footnote{Fraker, Alan, et al. ``Renewal Inspection
Report'' SchoolWorks, Inc. Evaluation, October 3-6, 1999 [web:
verified on 11 Jan 2002]
http://www.doe.mass.edu/cs.www/reports/2000/inspection/boston\_ren.pdf
WMU's report also cites it.}  prepared during Edison's charter-renewal
process describes issues that may have contributed to these results,
which seem to revolve around ``the gap between the original design and
on-site realities,'' which the report calls ``considerable.'' (Fraker
24). While faculty ``morale'' was ``high'' (Fraker 26), those gaps
included an portfolio program specified in Edison plans that had gone
unimplemented (Fraker 4), technology utilization stifled by people who
``simply did not know how to use the equipment'' (Fraker 27), faculty
``turnover\ldots between 30 and 40 percent'' each year (Fraker 9), and
a disorganized ``internal assessment system'' (Fraker 21). (The
report, however, does have an upward tone in some areas: the school's
new principal was implementing many positive changes, ``improv[ing]''
the ``school climate and ethos.''  (Fraker 9))

In sum, the BRCS program certainly creates the perception of
opportunity.  Edison places computers throughout the school and in
teachers' and students' homes (Chubb and Cerf). The facility is
attractive (Farber), and the program, even if the implementation has
bugs, includes art and early language instruction (Chubb and
Cerf). Edison parents also do not pay tuition, which is good news for
the disadvantaged.\footnote{``Edison Schools - Frequently Asked
Questions'' [web: 9 JAN 2002]
http://www.edisonschools.com/contact/con\_faqs.html\#12}

The implementation is not without its problems.

As ``shockingly ignorant'' (Chubb and Cerf) as AFT's claims about
``responsible inclusion'' may be, Edison's treatment of special-needs
students appears to be in need of improvement. Farber's article
indicates that BRCS was engaged in ``counseling out:'' the practice of
encouraging parents to withdraw children the school finds difficult to
educate. Zollers and Ramanathan explain that this practice is quite
illegal, as charter schools are publicly financed (Zollers and
Ramanathan ``Sordid Side''). The parents of the child involved in the
civil-rights issue that Farber discusses were so advised (though the
administrator responsible later resigned, and the child returned to
BRCS) (Farber). 

Chubb wrote that the legislation the school was found to be violating
in the civil-rights case discussed by Farber was ``in an area of
special education that many public schools, including Renaissance, did
not understand'' (Chubb ``Scores again''). He asks what would happen
if a public school had BRCS's difficulties (this violation, and a
disagreement between administrators): ``Does anyone really believe
that they would be viewed as `emblematic' of anything?  Of course
not.''  (Chubb, ``Scores Again'') In fairness, Zollers and Ramanathan
admit that ``public schools have not had a good track record with
children with behavioral needs, but -- unlike for-profits -- they
don't have the luxury of dumping their troublesome students on another
school.''  (Zollers and Ramanathan ``Sordid Side''). But Farber's
story is not the only BRCS infraction: Zollers and Ramanathan related
another, involving a different parent who ``filed a nearly identical
discrimination complaint,'' a parent whose ``child began having
behavior problems.'' Thereafter, ``he was repeatedly suspended, sent
home early, and secluded in a separate classroom without an academic
curriculum.''  %(fixme: review Z-R behavior-vs-special-needs)

%\footnote{Check Chubb, Farber -- one of them says
%it's contrary to Edison policy}

%% Grousing over the legitimacy of charter schools, let alone
%% for-profits, continued throughout the 1990s.\footnote{Zernike,
%% Kate. ``Panel backs adding of charting schools Bill allows changes at
%% existing schools'' [sic] The Boston Globe, June 25, 1997 [Dow], and
%% Walker, Adrian ``A Confrontation on Charter Schools Legislators Say
%% For-Profit Firms Shouldn't Run Them''[sic] The Boston Globe, March 3,
%% 1998 [Dow]}

Consider Edison in light of the issues in section one. Edison isn't
saving money with cheap programs (Chubb and Cerf), and it is
attempting to recruit experienced faculty (Fraker 31). While its
internal reports are more impressive than others' external reports,
and the company reportedly ``canvassed Boston neighborhoods, promoting
their model school and promising a safe environment,'' (Zollers and
Ramanathan ``Sordid Side'') it does not appear that they engaged in
``huckster-type advertising'' (Lieberman 224). While the actual school
climate may not have been quite as impressive as Edison's plan would
indicate (Fraker 24), there does not seem to be an indication that
Edison was intentionally lying in its marketing.\footnote{And,
according to Fraker, the school seems to be improving in some areas.}
The school's charter seems stable; it was renewed in 2000
(Mass. Charter School Initiative Report, 120), indicating contractual
viability. Thus, the two remaining policy issues facing BRCS involve
its treatment of special-needs students and its parent company's lack
of profit.

\section{Considerations for future policymaking}

From BRCS, we learn that for-profits, while they may not always engage
in cost-cutting, lie in advertisements, and sign unstable contracts,
are still causes of concern in two areas: profitability and special
education.

Consider issue (3) from the first section: financial viability.  It
is, according to Lieberman, the chief question facing for-profit
schools (Lieberman 227).  Edison is losing money (though revenues are
rising).\footnote{According to the company website: [web: confirmed 12
Jan 2002] http://www.edisonproject.com/news/news.cfm?ID=9} EAI is
bankrupt (Walsh). Other schools are no better off: Education Week
remarked that Advantage (now Mosaica Advantage) Schools has been
``for-profit only in theory.''\footnote{Lynn Schnaiberg, ``Seeking a
Competitive Advantage'' Education Week, December 8, 1999 [web:
Accessed Jan 4, 2001]
http://www.edweek.org/ew/ew\_printstory.cfm?slug=15bizmain.h19}

Free-marketeers (rightly) claim that competition ensures
self-regulation: companies will fear that dishonesty will be
discovered, so they will be honest to retain market share. Innovation,
maximization of productivity, and minimization of expense, all of the
optimizations of the marketplace discussed by Lieberman (p216), occur
only when players are in direct competition. True competition exists
in this market only when multiple companies are bidding for and
operating schools in a district. In 1996, Shore argued that the
marketplace was too small to foster that sort of true competition
(Richards, Shore, and Sawicky 59). An experiment carried out in a
Pennsylvania town attempted it: it divided its to-be-managed schools
between three companies (Walsh), two of which have since
merged.\footnote{To operate its schools, the district enlisted three
different companies.  (According to Edison on June 4, Edison merged
with LearnNow, which would make it a 2-way contest [web: accessed 10
JAN 2002] http://www.edisonproject.com/news/news.cfm?ID=88)}

Will for-profit schools solve urban systems' problems without
competition? More importantly, will they solve those problems without
profits?  EAI tried and could not: Schrag writes that EAI's chairman
was quoted in \emph{Forbes} with plans to cut Baltimore's expenses by
one-quarter and skim off five percent in profits. In the end, EAI's
stock prices sank an order of magnitude lower.\footnote{Schrag,
Peter. ```F' is for Fizzle: The Faltering School Privatization
Movement''. The American Prospect, Vol 7, Issue 26. May 1-June 1,
1996} In 2000, the company was bankrupt (Walsh). The verdict is still
out on Edison. Confidence, however, is low: last month, \emph{Forbes}
admonished stockholders to jump ship.\footnote{Mulligan,
Megan. ``Streetwalker.''  Forbes, 12/24/2001, Vol. 168 Issue 16, p124
[Ebsco]: ``[s]everal insiders, no dunces, have been selling their
shares.  The stock has further to fall; short it.''} In its annual
report (as Schrag notes), Edison admits that the company may never
turn a profit.\footnote{Schrag, in the \emph{Nation} quoted the
quarterly report I cite earlier (the quotation is the same, but the
date of the article indicates that he must have used an earlier
version). Note: http://www.onlinewbc.org/docs/finance/cash.html aided
in my understanding of some of the terminology and correct a few
related mistakes in the paper. [web: It wasn't actually accessible; I
used Google.com's cache to read it.]}

\emph{The Wall Street Journal} reported in 1999 that another
for-profit provider, National Heritage Academies, though popular
enough to have a waiting list and admissions by lottery, also had yet
to turn a profit.\footnote{Golden, Daniel. ``Common Prayer: Old-Time
Religion Gets a Boost at a Chain Of Charter Schools.'' The Wall Street
Journal. September 15, 1999. Page A1 [Dow]} \emph{The Detroit News}
reported the company says that it's ``mildly profitable'' with
revenues of \$49 million in 2000, but, as the paper noted, it can keep
its figures confidential because it's privately
held.\footnote{Donnelly, Francis X. ``Schools join the private
marketplace.'' The Detroit News, October 28, 2001 [web:verified 12 Jan
2002] http://detnews.com/2001/business/0110/29/c01-328976.htm}
Incidentally, NHA's Christian focus landed its Vanguard Charter
Academy in federal court with the Michigan ACLU in a
religion-in-school case which was later dismissed due to lack of
evidence.\footnote{ACLU of Michigan Legal Docket,
http://www.aclumich.org/legal\_docket1.htm, and Franklin,
Amy. ``Federal court dismisses lawsuit against charter school.'' AP
Newswires. September 27, 2000 [Dow], and (AP) Judge hears complaints
against charter. The Grand Rapids Press, March 21, 2000 [Dow]. See
also [web: verified 11 Jan 2002]
http://my.voyager.net/$\sim$freethought/nha/}

What happens to students when businesses decide that the education
enterprise is unprofitable? Will they close the schools? Or just make
drastic cuts in services?

Both Edison and EAI are fighting to legitimize their industry. Henig's
reasoning in this direction can explain Edison's loss of money: they
are trying to ``build credibility and expand their base,'' and are
``willing to subsidize some early projects'' to do it.\footnote{Henig,
Jeffrey R. ``School Choice Outcomes: A Review of What We Know.''
Discussion paper for the Conference on School Choice, Law, and Public
Policy, School of Law, University of California, Berkeley, April
17-18, 1998 p.27} According to \emph{Business Week}, ``Whittle doesn't
expect a net profit until fiscal 2005[.]''\footnote{Symonds, William
C. ``Edison: Pass, Not Fail'' \emph{Business Week}, 7/9/2001 Issue
3740, p70}

Unprofitable school corporations, namely Edison, as Schrag notes,
assert that they will become profitable when they open more
schools. Edison has been continuously opening schools (Schrag, ``Red
Ink'') and has yet to turn a profit, as its SEC report
indicates.\footnote{``We have not yet demonstrated that public schools
can be profitably managed by private companies and we are not certain
when we will become profitable, if at all.'' (Schrag also quotes this
passage. Since his article was printed five months before the filing,
the passage must have also been part of the last quarter's report)}

Can the issues of profitability and special-needs irregularities be
connected? In other words, is ``counseling out'' fiscally motivated?
Zollers and Ramanathan think so: ``for-profits don't want to waste
resources on `problem kids.'  Instead, they use suspension and
seclusion, and, when those methods don't work, they counsel the
students out.'' Boston Public Schools data, they write, indicate that
while two ``students with disabilities'' have ``left the five
nonprofit charter schools in Boston,'' forty have left BRCS (Zollers
and Ramanathan ``Sordid Side'').

The popularity pattern repeats at other for-profits. Massive parental
support (over 80\%) emerged at Edison's San Francisco charter for a
petition to retain the school despite the school board's intentions to
the contrary (Symonds). At National Heritage Academies, ``[e]ven
Mr. Huizenga's [Huizenga is the founder of the company] son was placed
on a waiting list'' (Golden). In a survey of all its parents, Edison
found that roughly the same number (87\%) gave their school a grade of
``B'' or higher (``Fourth Annual Report'' 24-25). But along with their
popularity, the schools also face allegations of misdeeds that are not
limited to a single reporter's imagination, or to its Boston
operations. A San Francisco school board, for example, ``[received]
complaints\ldots that Edison was weeding out poor performers in order
to boost test scores.'' They ``found that 14 of 15 pupils suspended or
`counseled out,'\ldots were African-American boys.''\footnote{Breslau,
Karen; Joseph, Nadine; Scelfo, Julie "Edison's Report Card."
Newsweek, 7/2/2001, Vol. 138 Issue 1, p48 [Ebsco]}




%% What's the primary motivation of a company running a school for
%% profit? Money. A company that claims otherwise is betraying its
%% stockholders. 


%% If its charter or contract is dependent on adherence to a set of fixed
%% criteria, (perhaps minimal standardized-test scores, curricular
%% offerings, and safety standards) a well-run school will meet those
%% standards, be it for-profit or non-profit. If it is concerned about
%% competition, a well-run school will spend its budget surpluses to
%% improve its academic standing. The difference between a well-run
%% for-profit school and a well-run government or non-profit school is a
%% matter of what it does \emph{after} its standards are met and its
%% competition is beaten. A government school or non-profit school can
%% spend its surplus budget only on the students. A for-profit school,
%% however, must and will pass the surplus on as dividends to its
%% shareholders. 

%% A shrewd company can be expected to maximize student achievement
%% without arbitrarily cutting budgets -- after all, it wants to attract
%% customers. The question is: at what point does a marginal increase in
%% profits mean a significant decrease in student potential? As a
%% corollary, how much of the supposed savings that for-profits create
%% can we sacrifice as profit?

To keep for-profits on their toes, districts must review their
contracts and charters periodically. Whether such reviews will be
helpful is a different matter. The San Francisco school board's
attempts to remove Edison were nixed by parents' petitioning
(Symonds). A for-profit school that has no fear of losing its contract
(especially one in an area with failing public schools) will cut back
on the so-called extras to increase its profit (if it can do so
without losing customers). That is its obligation to its
shareholders.\footnote{Ascher's ``two masters'' observation comes to
mind.}  Edison is continually under review, so it doesn't have this
luxury.


%Edison's promoters, for example, say they offer
%programs and services well beyond the minimum (Chubb and Cerf). 

%Judging by today's figures, the for-profit K-12 education industry may
%never grow profitable enough to justify Jonathan Kozol's fears. 


Prudent policymakers will wait\footnote{An idea discussed in class
with regards to any reform that may separate children.} before
engaging Edison and its competitors. They should wait, at the very
least, for the completion of RAND's study\footnote{Edison mentions it
in their ``Fourth Annual Report.'' Schrag also mentions it in ``Red
Ink.''}  before expanding public use of private educational
corporations. Some may argue that urban districts should embrace
for-profit providers, for the education they offer could scarcely be
worse.\footnote{Frakt mentioned this idea, which I expanded in
discussions with another WWS 470 student.}  But given the inconclusive
results in Boston (while Renaissance is popular with parents, and the
students have made progress, they're not much better, and are
sometimes worse than their home districts on the MCAS)\footnote{See
Mass. and Edison reports}, given the allegations of difficulties with
special-needs students, given the potential instability of an industry
where profits are uncertain, and given the argument that Henig makes
--- that we ought to work within established democratic intuitions for
their own sake (Henig, ``Rethinking''), we ought to be certain of
positive results\footnote{A concept from WWS 470's lectures} before
entrusting the nation's poorest children to the tender mercies of
Mammon.\footnote{Schrag paraphrases Kozol on this notion: this is
``another example of how the poor were being sold to the lowest
bidder'' (Schrag, ``Fizzle'').}

%Poor kids? Generally, either failing schools and a desperate
%administration (Baltimore, Philadelphia (?), Hartford), possibly less
%despeate circumstances (Dade county ? , Boston Renaissance ?), or
%simple entreprenuership (less interesting, because it's not really
%reform -- just another kind of private school.)

%not worth a try? (making watches)

\end{doublespacing}

\end{document}

%note that it's zero tuition!

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% LocalWords:  LearnNow EAI Kozol's Chubb Ascher Ascher's al Brookings Henig un
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% LocalWords:  Ebsco Chubb's Symonds Tesconi Dodd Rima Sawicky BRCS Zernike Als
% LocalWords:  subheadlines BRCS's ete Babin verything Huizenga's Huizenga WMU
% LocalWords:  Breslau Scelfo amidst AFT's Miron Applegate WMU's MCAS rpt pdf
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% LocalWords:  EDSN Rubino htm Newswires Baumol's NHA Praeger Fruchter Berne
% LocalWords:  overclassification Henig's fixme ost noninvolvement Toda faqs
% LocalWords:  html everal Google's NHA's RAND's Fraker SchoolWorks ren Google
% LocalWords:  com's ven Lau's overdiagnose Frakt