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Minneapolis Approves Pact With Private Firm

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The private firm hired to run the Minneapolis public schools could receive nearly half a million dollars a year if it meets specified educational and administrative goals, under a pay-for-performance contract approved by the school board.

The pact outlining goals and compensation for the firm's first six months of management was approved by the board last month.

The action followed a decision by the state board of education to grant a three-year waiver to Peter Hutchinson, the president of Public Strategies Inc. and the firm's lead person in the superintendency.

Although he has been trained as a teacher, Mr. Hutchinson, a former state finance commissioner, does not have the credentials required to be a school administrator in Minnesota.

Under the agreement, Public Strategies will be paid a base salary of $30,000 over six months for administrative duties.

The company could earn an additional $214,000 during that period if it meets goals outlined in the work plan. If the board is not satisfied with the firm's performance, however, it will not be paid. Either group can terminate the contract on a month's notice.

Minneapolis is the first school system to turn over management of the entire district to a private, for-profit firm on a long-term basis.

Education Alternatives Inc., a Minnesota-based company that pioneered the private management of public schools, is currently the only other firm that has entered into a similar agreement. E.A.I. handles managerial and instructional services for nine public schools in Baltimore, as well as nonteaching services for two other schools in the district. It also oversees instruction in a Dade County, Fla., school.

Goals Outlined

Before setting goals for Public Strategies' stewardship of the Minneapolis district, Mr. Hutchinson met with students, teachers, and administrators to see what they wanted accomplished in the schools. (See Education Week, Nov. 17, 1993.)

The goals outlined in the contract are each assigned a payment, ranging from $1,000 to $35,000. They include developing a plan to measure growth in student achievement and increasing the amount of time students spend on meaningful classroom instruction.

Because the district and the company agreed to negotiate a new work plan every six months, a more detailed set of goals is expected to be set out this summer.

"Our idea is to be as flexible as possible,'' by adopting a strategy that will allow the district to constantly reassess its progress, said Ginny Craig, a spokeswoman for the district.

Mr. Hutchinson and the school board expect "it will take about six months to get some of this baseline data and come up with a plan for change,'' she added.

Under the pact, the firm will continue to provide the district with financial services and planning. The school board contracted with Public Strategies last year to help it streamline those operations.

The district is expected to pay for the firm's services with funds set aside to fill several vacancies in the central office, a $35,000 grant for restructuring from the McKnight Foundation, and the superintendent's $100,000 salary.

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