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Houston Eyes For-Profit Company To Run School Programs

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The Houston school board is expected this week to consider a proposal to turn over the management of the instructional programs at two elementary schools to a new private, for-profit company.

Under the proposal, made by the Houston-based firm Performing Schools Corporation, the firm would provide the schools with curricular materials, teacher training, and a guarantee of improved student performance. According to the proposal, the firm would use a phonics program that has stirred controversy in the district in the past.

The district's superintendent and the head of its dominant teachers' union said in interviews last week that they were inclined to support the proposal.

In Nashville, meanwhile, the school board last month spurned another new for-profit firm, Alternative Public Schools Inc., in its bid to create and manage a public magnet school.

Like Education Alternatives Inc. of Minneapolis--the first and, so far, the only private firm to assume the management of public schools--both P.S.C. and A.P.S.I. seek to make a profit by providing public schools with services that are central to the instructional mission of public education. (See Education Week, Oct. 14, 1992.)

"What you have here is an emerging $100 billion industry,'' said John D. Privett, the president of Performing Schools, who said he envisions the start-up of a variety of companies "competing on the basis of performance and cost to the district.''

Frank R. Petruzielo, the superintendent of the Houston schools, said the firm's proposal "injects into our system a new degree of instructional focus and accountability that otherwise would not be here.''

Seen as Stepping Stone

Mr. Petruzielo said the Houston board will likely consider at its meeting this week whether to award a three-year contract to bring P.S.C. into two elementary schools with low-performing students.

He said the service would cost the district an additional $250,000 a year, or $100 per pre-kindergarten student and $250 per student in kindergarten through the 5th grade.

Such a fee would cover the company's costs, said Mr. Privett, who since 1979 has been the president of a nonprofit company concerned with education finance, but it would not provide for any profit. Instead, he said, the firm views the contract as a potential stepping stone to additional business down the road at a profitable fee of about $300 per student.

The contract will likely call for the company to bring about an average student-achievement gain of about 1.1 grade levels per year, and to accept a prorated cut in its payment if it fails to meet its objective. (On average, youngsters would be expected to record a one-grade achievement gain in a year.)

Mr. Petruzielo said the Houston board opened the door to a relationship with Performing Schools in March when it passed the "Houston Schools of the Future Initiative,'' which authorized the superintendent to solicit proposals from the private and public sectors to develop innovative instructional programs.

Under its proposal, P.S.C., which incorporated in November, plans to use an instructional program called Direct Instruction Teaching Arithmetic and Reading, or DISTAR.

The DISTAR approach--which is phonics-based, heavily structured, and paces children through drills--has come under fire in Houston and elsewhere from advocates of the whole-language approach. (See Education Week, Nov. 20, 1991.)

Mr. Petruzielo maintained last week, however, that the controversy over DISTAR has largely subsided there and that the district has encouraged its use in schools with low-performing students.

He also said he believes Houston's taxpayers would find private-sector involvement in the school system "far more palatable'' than increased district expenditures on training.

Not all district officials share that view, however.

Rod R. Paige, the vice president of the school board, last week questioned why the district's central office has failed, despite years of urging from people within the system, to replicate the successful use of DISTAR at a local elementary school.

But Gayle Fallon, the president of the 4,100-member Houston Federation of Teachers, said she would support giving P.S.C. the contract, largely because the firm had worked closely with her union and guaranteed that no jobs would be lost.

"When we tell them something is objectionable, they take it out'' of the contract, Ms. Fallon said.

Nashville Says 'No'

In Nashville, meanwhile, Alternative Public Schools took a different approach to the teachers' unions when it approached the Nashville school board with a proposal to create and manage a new magnet school with an international theme.

While P.S.C. would leave the existing staff in place, and E.A.I. has negotiated with the Baltimore Teachers Union in an attempt to replace aides in the nine schools it manages there, A.P.S.I. had proposed that its school be staffed with teachers who would be considered company employees.

"That is a difference that creates a significant political problem for us,'' conceded William R. DeLoache, who helped found the firm in December.

"On the other hand,'' he predicted, such an approach "would achieve a significant result'' by removing ineffective teachers from the system.

The Nashville board voted 5 to 4 last month to break off discussions with A.P.S.I. and to drop all discussion of privatization for the rest of the school year.

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