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For-Profit Firm To Run District In Minneapolis

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The Minneapolis school board last week tapped a private, for-profit consulting firm to take over the duties of superintendent of the 44,000-student district.

Although other private companies have managed selected schools and services in other districts, or run a system on a temporary basis, the board's arrangement with Public Strategies Group Inc. appears to be the first of its kind.

Public Strategies, which is headed by Peter Hutchinson and Babak Armajani, both former state finance officials, could be under contract with the Minneapolis board as early as next month.

Mr. Hutchinson will act as superintendent, leading a team of employees from the firm, district officials, and possibly other outside consultants that will help operate the schools, according to Mr. Armajani, the chief executive officer of Public Strategies.

Founded in 1990, the firm has consulted with several public institutions, including the Minneapolis city government and the city zoo, on streamlining their operations.

Another Minneapolis-based company, Education Alternatives Inc., provided the Duluth, Minn., schools with an interim superintendent--an employee of the firm--under a four-month contract last year. The company, which conducted a search for a permanent schools chief during that period, also explored the possibility of taking over the long-term management of the district. (See Education Week, March 18 and Aug. 5, 1992.)
E.A.I., which manages nine public schools in Baltimore and oversees instructional services at a public school in Dade County, Fla., has continued to pursue contracts to operate entire districts. (See Education Week, Oct. 14, 1992.)

In 1989, officials of the Chelsea, Mass., district turned over much of the district's operations to Boston University, a private institution, under a 10-year agreement.

'A Known Commodity'

But some observers say the situation in Minneapolis is unlike other efforts around the country to privatize district operations.

The decision "here is not part of any ideological or philosophical debate on how districts should be managed,'' said Ted Kolderie, a senior associate with the Center for Policy Studies in Minneapolis.

"Peter [Hutchinson] was the reason'' the firm was picked, Mr. Kolderie said. "He's a known commodity.''

Ann Kaari, the president of the school board, which voted 6 to 0, with one abstention, to hire the firm, said the district would not have considered "nontraditional candidates if we didn't know their track record.''

Public Strategies was hired to assist the district in financial planning last February. At that time, the board voted to suspend Superintendent Robert Ferrara after the district was sharply criticized for its handling of the budget.

Mr. Armajani, who called the board's decision to hire Public Strategies for the overall management of the system a "bold step,'' said his firm will enter into a contract that links its pay to performance. If the firm does not meet the stated objectives in the agreement--such as improving student achievement or reducing staff turnover--it will not be paid, he said.

The firm's pay is expected to be negotiated this week under the existing school budget.

Mr. Armajani estimated that the company could take in nearly half a million dollars in the first year of the contract, which accounts for the superintendent's $100,000 salary, as well as the pay of any other central-office administrators whose duties the company assumes.

Although the board's vote last week was to hire the firm to provide "leadership services,'' the company will probably recommend that its current contract for financial services be rolled into the superintendent's contract, Mr. Armajani said.

State Waiver Needed

Because Mr. Hutchinson does not have credentials as a school administrator, the board will have to request a state waiver before he can accept the superintendent's post.

A state finance commissioner under former Gov. Rudy Perpich, Mr. Hutchinson has also served in the Minneapolis mayor's office and with Dayton Hudson Corporation.

Although state officials have indicated that the waiver request will be granted, some observers said the firm's lack of school experience could be a handicap.

"Generally, we have felt that to be a school superintendent, it is important to be trained'' as a teacher, principal, or central-office administrator, said Gary Marx, the senior associate executive director of the American Association of School Administrators.

"It helps a great deal to have been down the same road'' as other educators, he argued.

The Minneapolis Federation of Teachers, however, was supportive of the decision to hire Mr. Hutchinson.

"He brings clear experience with the principles of quality management, which means that employees are a valued part of the institution,'' said Louise Sundin, the president of the 4,000-member union.

Ms. Kaari, the board president, said the decision was a mandate "to find a different way of operating.''

All of the other candidates being considered by the board had more conventional backgrounds, most as deputy or assistant administrators in urban school systems.

"We need our best educators in the classroom,'' Mr. Armajani said. "That's where they can make a difference.'' In the superintendent's office, he said, "you need someone who is an expert on leadership--a person who is accomplished in transforming organizations.''

But he added that Public Strategies does not intend to become a permanent fixture in school management in Minneapolis.

"We see ourselves coming in to make fundamental changes in the way the system works,'' he said, "and then bringing in skilled professionals to take over, eventually working ourselves out of a job.''

Search Criticized

But some community groups have criticized the board's search and its decision to hire the firm, charging that citizen input was limited during the process.

Yusef Mgeni, the president of the Urban Coalition, a public-policy and research group that works with low-income and minority communities in Minneapolis and St. Paul, said the local advisory committee that was appointed to work with the board on the superintendent search was asked to give only "watered-down assessments'' of the candidates.

In addition, he said, the coalition and other community organizations on the committee were prohibited from meeting as a whole after organized sessions with the board.

Mr. Mgeni said the Urban Coalition withdrew shortly after it was appointed to the committee because its leaders felt "it was meaningless'' to participate.

The Minneapolis Urban League's effort to seek a court injunction delaying the appointment of a superintendent was thwarted last month, but the group has said it will seek to block the board from obtaining the waiver needed for Mr. Hutchinson.

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