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Superintendent for Hire

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Minneapolis school officials want to make one thing clear: They are not "privatizing'' the city's public schools.

Since the school board tapped Public Strategies Group Inc., a local, for-profit consulting firm, to lead the district beginning last month, Minneapolis has been thrust into the limelight as a leader in the national movement to turn over the management of public schools to the private sector.

The St. Paul-based company is frequently compared to Education Alternatives Inc., the firm running 11 public schools in Baltimore, and Whittle Communications, which last fall announced it will seek to manage public schools.

But district officials argue that such comparisons cannot be made.

Public Strategies, they say, is only providing "leadership services'' to the 44,000-student Minneapolis system. Most decisions about curriculum and instruction will continue to be made by educators, and policies will still be set by the school board.

In addition, the firm is not "in the business'' of managing public schools,'' but plans to groom district leaders to assume the job when its contract expires in several years, says Peter Hutchinson, the president of Public Strategies and the firm's lead man in the superintendency.

Public Strategies is interested in "changing overall the incentives in the district: changing the financial incentives, changing the structure, and creating a reward system,'' observes Joe Nathan, the director of the Center for School Change at the University of Minnesota.

The decision to hire the firm, school officials add, was based on Hutchinson's track record as a financial consultant to the district and his success in transforming other public organizations.

"It's very important that this not be seen as privatization,'' says Judith L. Farmer, a 13-year veteran of the city's school board. "We didn't go out to recruit a private firm. We hired someone we knew, whose work we had seen.''

"There are many good administrators out there,'' she adds. "But one of the main things we felt had to happen here was that the central office itself would have to change.''

Growing Pains

For years, Minneapolis was the very model of an urban public school system that worked. Students scored well on standardized tests, the schools were well-funded, and the city somehow managed to avoid the social plagues that were devastating other cities.

In recent years, however, the number of low-income and minority students in the district has grown, while student achievement has declined. At the same time, the city has begun to experience rising unemployment, increased crime, and a staggering demand for social services.

The changes, says Curt Johnson, the deputy chief of staff for Gov. Arne Carlson of Minnesota, have residents fearing that their mid-size city will go the way of its larger Midwestern neighbors, Chicago and Detroit. There, many affluent residents have fled to the suburbs, leaving the inner-city problems to fester.

"The sentiment in Minneapolis is that we have to do something different, we cannot let this slide,'' adds Johnson, who has closely monitored the situation in the school district. "It puts a lot more pressure on the schools if people are going to stay in the city.''

But in acting to improve the schools, the board decided that a "hotshot'' superintendent from outside the district was not the answer to its problems.

The city's schools "have been through several cycles like that in the past,'' Johnson remarks. "Each time, the disillusionment follows the great expectation.''

Louise Sundin, the president of the 4,000-member Minneapolis Federation of Teachers, agrees.

"Our best hope was that whoever came in would challenge us to think differently, move more quickly, and see things from a new perspective,'' says Sundin, whose union supported Hutchinson in his bid for the superintendency. (See Education Week, Nov. 10, 1993.)

Building a Reputation

Peter Hutchinson built a strong following in the district when his firm cleaned up the school finance-and-operations division early last year. At the time, school officials were still stinging from the series of financial blunders that led to the ouster of Superintendent Robert Ferrara and one other top school official. (See Education Week, Feb. 10, 1993.)

Public Strategies got much of the credit for a recent, favorable audit by the accounting firm Deloitte & Touche, which found that the district's finances were sound and management was improving. The schools' general-fund balance was about $3.6 million as of June 1993, a healthy figure at a time when state aid was dropping sharply.

Several school officials observe that Hutchinson was something of a savior for the district when it sorely needed a jolt of credibility.

During the district's search for a new superintendent last fall, Hutchinson, 44, and his partner, Babak Armajani, 47, the chief executive officer of the firm and now essentially the number-two leader in the district, capitalized on their dual role as insiders with school district experience and outsiders with fresh ideas. In many ways, their status as noneducators played in their favor in a field full of traditional candidates.

"People who are supposed to know how to do things are sometimes embarrassed to ask'' questions, Hutchinson says. "We're not burdened by any sense of the past. We only care about what works. We see that as a tremendous advantage.''

Narrowing the Gap

Sitting in his new office at district headquarters, located in a dreary former factory on the city's north side, Hutchinson snacks on an apple as he describes his plan of attack.

He has set out an ambitious plan for the district, centered on improving student achievement, particularly for minority students. For example, minority elementary students are improving at a slower pace than their white peers, said Bill Brown, the district's director of research, evaluation, and assessment.

In 1990, local voters passed a tax levy earmarked for schools, the revenues from which were intended to reduce the average class size to 25 students and to improve achievement. While class sizes have, indeed, come down since then, the achievement gap remains a problem.

Hutchinson has pledged to close the gap, develop ways to assess growth in achievement, and review and improve both curriculum and instruction. Such achievement-related goals are worth a total of nearly $100,000 to the firm in the first six months of its performance-based contract.

Under the contract, Public Strategies will be paid only for the goals it meets. The goals--which also include such areas as financial management and community support--are assigned payments of $1,000 to $35,000 each, for a six-month total of $214,000. The firm is also being paid a six-month base salary of $30,000. (See Education Week, Jan. 12, 1994.) Either party can terminate the three-year contract with 30 days' notice.

Details of how Hutchinson intends to accomplish the student achievement goals probably will not be known until the end of the firm's first six-month work plan, but some observers already worry that the new leader is setting himself up for failure.

"The student-achievement piece [Hutchinson] has bitten off is much bigger than he dreams,'' says Sundin of the teachers' union.

"You might want to admire his courage more than his judgment,'' says Johnson of the Governor's office. "I don't know if those [goals] can be met by anybody, under any circumstances.''

Georgina Y. Stephens, a member of the state board of education, says she feels the firm's plan to improve achievement is "ill defined.''

When the state board voted in December to approve a three-year waiver for Hutchinson, who does not have administrative credentials, Stephens unsuccessfully proposed granting a provisional, six-month waiver. After that time, she argued, the board could decide whether the firm was headed in the right direction.

Hutchinson "talked about closing the gap and improving student achievement, but that's so generic,'' Stephens adds. "They needed time to flesh out their plan.''

'Domain of Professionals'?

Hutchinson seems to have faith that, as the district's approach to management changes, and the organization become more service-oriented, its problems will become easier to tackle.

He blames lackluster student performance, for example, on the general failure of the district to respond to the needs of students.

"Children have access to so much, we have to compete for'' their interest, he says. "As far as I know, every urban school district is having this problem. Because of the inertia that exists in large bureaucracies, students changed but the organizations didn't.''

To that end, Hutchinson and Armajani are spending as much time as possible with their "customers,'' seeking out students and parents during their routine school visits.

"We get some of our best ideas for management from talking with kids,'' Armajani says. "I don't think there is any day that we visit a school that we don't come back with new ideas. We keep thinking this is the domain of professionals, but it isn't.''

Although the firm expects to remain in the superintendency for three to five years, is is operating on half-yearly work plans in order to adapt to the district's needs.

"We think this district is filled with good people. There's no shortage of educational expertise,'' Hutchinson says. "The challenge is to bring all the expertise into play on what we're trying to do.''

Plain Speaking

During an early-morning faculty meeting at Hiawatha Elementary School, Hutchinson fields teachers' questions--most regarding the needs of disadvantaged students and the financial squeeze on schools.

Hiawatha, a 300-student, K-3 school in a blue-collar neighborhood on the south side of town, is surrounded by neat rows of bungalows, which look even tidier under a new blanket of snow.

When he addresses the teachers--and, in fact, in most of his interactions with district officials and employees--Hutchinson does not come off as a company man, despite the fact that he has spent most of his working years in the private sector. He has a low-key, almost folksy style, and is rather tentative, almost shy, in his comments.

He does not lapse into the arcane terminology used by some educators, but instead boils down his comments to the essence of his message.

Later, Hutchinson acknowledges that he and his colleagues at Public Strategies decided that "the brutal truth'' would be the hallmark of their superintendency. If that means saying, "I don't know,'' well then, so be it, he adds.

So far, that approach seems to sit well with district officials. And everyone involved seems content to leave detailed educational tasks to educators and school policies to the school board, while Public Strategies tackles broader administrative tasks.

"How do you motivate people? How do you change the climate of an organization? How do you give rewards and incentives, and deal with the legislature, the business community, the press?'' Farmer, the school board member, asks. "These are the questions the superintendent has to deal with.''

Checks and Balances

With Hutchinson in the lead position in the district, Armajani--a specialist in organizational development and leadership--will act as leader of the district's 12-member executive team.

The top management of the district, the team will include the two men and one other employee from the firm, as well as key central-office administrators. It is expected to be formed by this month.

The central-office members of the team could almost be described as second-stringers for the district, since they are expected to assume leadership when Public Strategies gradually works itself out of the job, as planned.

Getting this group to work collaboratively--transforming the way its members view school management--will be the firm's first challenge.

"We need to get everybody to leave their titles at the door, including Peter,'' Armajani explains. "This allows us to rant and rave and be passionate, without worrying about overwhelming'' one another.

Armajani and Hutchinson, both avid believers in the "reinventing government'' movement, say they have spent most of their careers trying to figure out how to fix what's wrong with the public sector.

After meeting in the early 1970's at the graduate school of government at Princeton University, the two Minneapolis natives returned home and found jobs at city hall. But they went their separate ways when the mayor, a Democrat, was not re-elected.

While Armajani worked as a management consultant and in state government, Hutchinson spent 14 years at the Dayton Hudson Corporation, becoming a company vice president at age 31.

He gravitated to the public sector again, however, working for a year as the state finance commissioner under former Gov. Rudy Perpich before setting up Public Strategies with Armajani in 1991.

'A Virtual Organization'

Hutchinson jokingly refers to Public Strategies as a "virtual organization.'' There are only three full-time employees, and consultants "constantly plug in and out'' of projects.

The company, whose business has primarily come through word of mouth, took on the Minnesota Zoo as its first project. The firm now has more than 10 public-sector clients, including a few outside the state.

Although the contract with the city schools will demand all of Hutchinson's time and at least half of Armajani's time, the company will continue to pursue other accounts to keep the business growing, Armajani says.

Last month, the firm won a $35,000 contract with the Fremont, Calif., city government, and this month hopes to win a contract to "reinvent Puerto Rico,'' or at least its government, Armajani says.

Observers say the firm has carved a niche for itself, and developed a reputation for hard, creative work.

"People thought we were crazy,'' Hutchinson says. "They thought we couldn't make a business out of challenging public organizations to change. But the truth is they want to change.''

Or most of them do, he adds.

All of the firm's business is done on a pay-for-performance basis. The model, Hutchinson says, has backfired only once.

After the firm completed a project coordinating early-learning services for families in the Minneapolis area, their clients--the mayor's office, the school district, and the McKnight Foundation, among them--were not satisfied with the results. Public Strategies swallowed some $30,000 in costs, Hutchinson says.

"We've never missed a payroll,'' he adds quickly. "But there have been months that have been very tight.'' Nevertheless, during its three years of operation, the company has cleared about $1.4 million in profits.

Community Watch

Local civic groups and school employees are watching Hutchinson closely. With expectations at an all-time high in the district, some observers say, he and the firm will have to plan their moves perfectly.

"People are curious and hopeful, and are willing to give this group a chance,'' Principal Joseph Lee of Hiawatha Elementary School says. "But I think they realize that this job is a major undertaking.''

The local office of the Urban League is one of a handful of civil-rights and interest groups tracking the firm's performance. The group was dissatisfied with the district's selection process for superintendent, arguing that the board never made it clear that it was open to unconventional candidates. Some critics also would have preferred a minority candidate for the job.

But several members of the league worked with Hutchinson in designing the first work plan. The firm incorporated seven of the league's nine recommendations for improving the district, says Stella Whitney-West, the group's vice president for community outreach and advocacy.

"We're going to continue with that working relationship, but we're going to hold Public Strategies accountable'' for the recommendations, she adds. "Students, particularly minority students, are not progressing at this point.''

Sundin, the union president, says the district will make strides in achievement only if Hutchinson succeeds in supporting professionals at the sites. If he fails to do that, she adds, "the honeymoom may be over.''

The new superintendent says he welcomes the scrutiny. Hutchinson notes that his firm, and the district, have only one thing to be concerned about: keeping their customers happy.

He pauses, then adds: "This is our community, too. If we do crummy, we still live here. That creates a different kind of accountability.''

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