Inside Scoop
Who Profits When For-Profits Run Schools?

Money changes hands-but student achievement doesn't budge.

When education management organizations (EMOs) emerged in the 1990s, proponents vowed that private firms could successfully manage public schools, earn a profit, and teach the public education "monopoly" a few things in the process. With Edison Schools, Inc., possibly the best-known EMO, dogged by financial and management problems, let's look at these firms' track record.

How many schools are being managed by EMOs?
National data are scarce. Edison Schools, Inc., the nation's largest EMO, runs more than 130 schools with more than 75,000 students. Its size would make it one of the 50 biggest school districts.

EMOs have acquired considerable business from charter schools. Of the nation's 2,400 charter schools, between 250 and 400 are estimated to be managed by EMOs.

Have EMOs introduced innovative techniques to schools?
Proponents of privatization argue that EMOs would innovate and that other public schools would reap the benefits of their breakthrough ideas. In fact, most of the ideas proffered by EMOs-such as increased use of technology, integrated curriculum, or team teaching-already exist in the public schools.

"Without question, there is no evidence of 'revolutionary' breakthroughs by EMOs with respect to curriculum, instructional strategies, or use of technologies," notes Henry Levin of the National Center for the Study of Privatization in Education.

Moreover, many contracts between EMOs and districts stipulate that instructional models and materials are proprietary, so schools may have to pay for any good ideas and techniques.

Are students in schools managed by EMOs learning more?
In its last annual report, released in fall 2001, Edison reported on 74 of the 113 schools it operated that year. Sixty-two of them had raised their scores, eight had declined, and four were unchanged. Although EMOs such as Edison frequently cite higher student achievement in the schools they operate, other analysts offer a different conclusion.

Gary Miron and colleagues at the Evaluation Center at Western Michigan University reviewed results at 10 schools Edison had operated for more than four years. They found that student achievement at the Edison schools began at levels below national norms and did increase-but no faster than student achievement in other district schools.

One of the most carefully controlled studies was carried out in Miami/Dade County, Florida, where Edison managed the Henry Reeves Elementary School from 1996 to 2001. The achievement of pupils at Reeves did not exceed those of students in other district schools over the course of the project-even though Reeves students received 30 more instructional days per year.

Moreover, a study by Miron and Christopher Nelson found that Michigan charter schools run by EMOs actually scored worse than those not run by EMOs on all measures save one.

Are private management firms more efficient?
Levin says EMOs have tried three basic strategies to cut costs: 1) hire less experienced teachers, 2) provide a bare-bones pedagogy and implement standard operating procedures across sites, and 3) recruit and retain students who are less demanding of resources, meaning fewer students with moderate to severe behavioral or learning needs.

In addition to cutting costs, privatization was supposed to make operations run more smoothly and earn profits for shareholders. "The paradox is that the EMOs' costs are considerably higher because of generous staffing, salaries, and benefits in their central headquarters-with stringent cost controls at school sites," says Levin.

How do EMOs serve the unique needs of local communities?
To successfully operate multiple schools, EMOs have to develop and market a system of teaching and learning that it can export to far-flung sites. In business, this becomes known as the company's "brand." But "the whole concept of creating 'brand' is inimical to the notion of local control of schools," says NEA staffer Heidi Steffens. "The central control required to create schools that look and feel and educate like all a company's other schools contradicts the need for every school to respond to its students and community."

What's the future of EMOs?
It's impossible to predict, but the path to profits has been turbulent and-so far-unsuccessful. Edison has seen its stock drop from $36 to a dollar per share. Steffens notes that Edison has lost, or is about to lose, a total of 22 schools under contract because of low test scores, declining student enrollment, or high teacher turnover.

The New York Times summed thesituation up best. "The only way to improve public education is to provide every student with a bright, well-trained teacher and an orderly, well-run school. That tends to be labor-intensive-and expensive-and may never be profitable on the scale that the stock market requires."

--John O'Neil

For more:

• Visit the Edison Project homepage at www.edisonschools.com.

• Read What's Public About Charter Schools: Lessons Learned About Choice and Accountability (Corwin 2002), by Gary Miron and Christopher Nelson. The book lists details of the role and effects of EMOs in Michigan's charter schools. For a summary or to order, go to www.corwinpress.com.

• Check out the Miami/Dade study at www.dade.k12.fl.us/edeval/edison.pdf.