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Hartford City Officials Float Plan To Keep EAI on in Financial Role

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The saga of Education Alternatives Inc. in Hartford, Conn., took another surprising twist last week as city officials suggested they might keep the company on to oversee the finances of the school district.

The development came barely two weeks after the Hartford school board ended its arrangement with Minneapolis-based EAI to run five schools and oversee the 25,000-student district's budget.

And it placed EAI in a tug of war between city officials who were considering retaining its services, and the school district, which locked the company out of schools where it had installed computers and office equipment.

School board members said last month that they had lost patience with EAI in negotiations over finances. (See Education Week, Jan. 31, 1996.)

The Hartford city government has control of the district's finances, and much of the pressure to dump EAI came from several city officials. That made even more startling the news last week that the mayor and a key City Council member had floated a proposal for retaining EAI in a financial-oversight role.

"It's worth considering," Mayor Michael P. Peters told the Hartford Courant newspaper. EAI could handle "just the financial part and let the educators educate."

No Guarantee

The idea of keeping EAI in a partial role appeared tied to the potentially nasty legal mess that surrounds the dissolution of the 1 1/2-year-old contract.

John B. O'Connell, the chairman of the City Council's budget committee, told the Courant that keeping EAI as a consultant would end the legal dispute and help solve the district's chronic financial problems. "It settles the financial impact, and it gets the city and the board and education system moving forward," he said.

Tom Drohan, a spokesman for EAI in Hartford, confirmed that the idea was under discussion but said there was no guarantee it would materialize. "This is going to require a meeting of the minds and an absolute commitment [by the city] to go forward," he said.

However, the school board is not likely to go along with any plan that would keep EAI in the city, said Ted Carroll, the vice president of the board. "I think this is an idea that's dead in the water."

EAI contends that Hartford is in violation of its contract for not reimbursing the company $11.5 million in expenses. The company has threatened to remove computers and other office equipment it installed in the five schools where it had an educational presence, as well as in 27 others where it merely had a management role.

Late last month, city and school officials barred representatives of EAI and its subcontractors from entering schools.

They warned local police to watch for any company officials entering schools. The district also activated alarm systems, including those at some schools that had been installed by EAI.

'Bone of Contention'

EAI has threatened to sue over the equipment and the money it says the district owes.

Under EAI's contract with Hartford, the company was supposed to earn a profit from any savings it found in the district's budget.

Some city officials have said EAI is not owed any money under the terms of the contract, but the company says it should be reimbursed for equipment or for performing basic services.

Mr. Drohan said last week that the dispute over the company's equipment was at a standstill.

"The city is standing between us and our property," he said. "Obviously it's a bone of contention, and we have protested it with the city."

Mr. Carroll said the district wants to prevent disruptions to students, and he pointed out that the district has not yet formally canceled the contract. "Once the contract is terminated, then EAI has the absolute right to take its equipment out," he said.

EAI is also on its way out in Baltimore, where the school board voted in November to cancel a five-year contract under which the company managed nine schools. (See Education Week, Nov. 29 and Dec. 6, 1995.)

But the parting there seems more amicable. Baltimore gave EAI 90 days' notice, leaving the company until March 4 to pull out of city schools.

N.Y.C. Walkout

In yet another example of the potentially troublesome nature of school-privatization efforts, custodial aides at eight New York City schools went on strike last week and left the boilers turned off.

The four-hour walkout Feb. 7 left the Brooklyn schools without heat or hot water, forcing administrators to send about 10,000 students home or to other schools.

The strike followed the cancellation of contract negotiations between the employees' unions and Johnson Controls World Services Inc., one of several companies hired by the district to oversee custodial functions at 52 schools.

A Deal Dispute

1994

July: Hartford school board begins contract negotiations with Education Alternatives Inc. to allow the private company to take over management of the entire district.

October: Board formally hires EAI.

1995

May: School board rejects EAI's proposed budget for the district amid growing opposition among employees and their unions to the management arrangement.

June: EAI proposes scaling back contract by initially focusing reform efforts on five schools.

November: Hotly contested school board race results in slim 5-4 majority in favor of EAI contract. Supporters had held seven of the board's nine EAI stock price jumps 13.3 percent the day after the Nov. 7 election.

December: In an apparent partial resolution to contract difficulties, the board says it will pay $3 million to EAI; an additional $3.9 million the company says it is owed remains in dispute.

Also, EAI Chairman John T. Golle tells company shareholders that after difficulties in Hartford and Baltimore, which ended its contract in November, the company will focus on suburban and rural school districts.

1996

January: EAI loses the support of three key board members, and the board votes to seek an end to the contract because of disagreements over finances. EAI says the district is violating its contract by refusing to reimburse expenses and threatens to remove computers and other equipment. District blocks EAI officials' access to its equipment in schools.

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