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Hartford Officials Agree To Pay EAI $3 Million

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After a series of setbacks in recent months, Education Alternatives Inc. has received some good news on at least two fronts.

The Hartford, Conn., school district has agreed to pay the school-management company some of the money EAI says it is owed, and recent test results from schools the company runs in Baltimore showed substantial improvement.

The $3 million payment approved by the Hartford school board on Dec. 29 is for educational programs spelled out in the Minneapolis-based company's contract to manage the city's schools.

Still unresolved, however, is an increasingly heated dispute between city and company officials over an additional $3.9 million EAI says it is owed. The company had threatened to leave the city if the company was not paid by Dec. 31, but a company official said last week that payment of the $3 million led the company to ease away from that threat.

Meanwhile, the Hartford board is reviewing the deadline for the city to turn over management of all the district's finances to EAI. Though called for in the initial contract, that transition has not yet taken place.

School board officials say the board hopes to meet this month with company officials to discuss the transition.

Stephanie Lightfoot, the school board president, said the district is scheduled to give financial control to EAI in April, but that the board wants to extend the deadline until June 30.

District officials could opt out of the contract with the company as early as June, but no definite plans have been discussed. "Getting rid of EAI is an option," Ms. Lightfoot added. "We just don't know yet."

The uncertainty in Hartford comes amid recent turmoil for the company, including the cancellation of its contract with the Baltimore public schools and the departure of several of its top executives.

The Baltimore school board voted in late November to terminate the company's five year contract to run nine city schools after only 3-1/2 years. City and company officials had failed to agree on the company's share of cuts in the district's $647 million budget. (See Education Week, Nov. 29, and Dec. 6, 1995.)

Promising Results

Weeks after Baltimore voted to end its relationship with EAI, the district received results from the previous spring's Maryland School Performance Assessment Test.

The statewide test, given to 3rd, 5th, and 8th graders, showed larger improvements in the nine schools run by EAI than in other city yes? sd

District officials said they were pleased with the improvements, but were reluctant to credit EAI. "It would be speculative to say the scores would [have gone] up with or without EAI's contributions," said Nat Harrington, a district spokesman.

Mr. Harrington said the decision to terminate the city's contract with EAI was separate from the issue of the schools' performance on the tests

"The district always expected most test scores to go up, not because of EAI but because of the new testing program that was put into place," Mr. Harrington said. "The test results had no bearing over whether EAI remained."

Company officials, however, said the positive scores vindicated the company's work in the city.

"We are disappointed that Baltimore has acted to end our partnership just when students are starting to show real gains," said John T. Golle, EAI's chief executive officer, in a statement last month.

Welcome Payment

Despite the agreement on the $3 million payment in Hartford, the city last week was still refusing to pay the company the disputed $3.9 million.

District officials say that money is supposed to come from the savings EAI promised to achieve through more efficient management of the school system.

"Those savings haven't materialized," Ms. Lightfoot said.

In July 1994, Hartford became the first district in the country to agree to relinquish substantial control of its schools to a private company.

The company has continued to operate amid the recent controversy and has also weathered in recent months the departure of several key officials.

The most recent was the Dec. 22 resignation of the chief financial officer, Franklin L. Kuhar.

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