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Proponents of Private Management Weigh Options

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Pittsburgh

The management of education is no longer just the domain of school boards and professional educators.

Economists are crunching numbers and applying their theories to the burgeoning field of private management of public schools. Business experts are examining how contracts between private companies and school districts are structured and how their performance should be evaluated.

A conference here last month at the University of Pittsburgh's graduate school of business demonstrated that schools are truly anybody's business, even while the debate rages about whether that development is good or bad.

Eugene W. Hickok, Pennsylvania's secretary of education, welcomed the growing outside interest at the July 9 conference, sponsored by the business school's Center for Research on Contracts and the Structure of Enterprise. "There is much education can learn from the private sector," he said.

Separately, however, a new book from the liberal Economic Policy Institute argues that there is no empirical evidence that private management can improve schools. Early participants in private contracting, such as Education Alternatives Inc. and the Edison Project, have not created a true competitive market for education services, says the book, Risky Business: Private Management of Public Schools.

The approximately 200 participants at the Pittsburgh conference gathered just a few miles from one of the nation's most controversial private-management projects.

Nearby Example

In Wilkinsburg, Pa., a Pittsburgh suburb, the school board last year contracted with Nashville-based Alternative Public Schools Inc. to run one of its elementary schools. The district furloughed 24 teachers at Turner Elementary School to allow APS to bring in its own staff.

The National Education Association and its state and local affiliates have strongly opposed the arrangement, which is being challenged in state courts.

At the conference here, Peter Thompson, the chairman of the Wilkinsburg school board, and John C. Eason, the president of APS, called the arrangement's first year a success. It is too early for academic results, however, and Mr. Eason said the effort could not be adequately judged after just a year.

"We've been encouraged by most people to look at the long term," he said. "We want to have good long-term scores."

That comment went to the heart of the question about how private-management efforts should be evaluated.

While factors such as pupil attendance, dropout rates, morale, and school atmosphere are often cited as important, participants stressed that improved student achievement is the central goal for a school district that turns to private companies.

"Outcomes are and should be paramount," said Richard L. Ferguson, the president of American College Testing, a nonprofit research and assessment organization based in Iowa City, Iowa. "But what will we accept as evidence that learning has occurred? It's not as simple as it looks on first blush."

Several observers pointed to the controversy over student test scores in the nine Baltimore schools run until last spring by Minneapolis-based EAI. EAI's role there became mired in disagreements over test data and budget issues.

Robert M. Schwab, a economics professor at the University of Maryland in College Park, argued that standardized tests are a problematic means of evaluating private managers of education.

Educators can tailor their curricula and teaching methods to such tests, he noted. And it is not clear that such tests even measure valuable skills, even though the public may have little else to rely on.

Participants said a move toward privatization should come with expectations that go beyond a quick fix.

"We try these new programs, and immediately there is a drumbeat [asking], 'What did we learn?'" said Eric A. Hanushek, a professor of economics and public policy at the University of Rochester in New York.

Early Lessons

Beyond fast improvements, the 190-page book from the Washington-based Economic Policy Institute examines private management of education as far back as a late 1960s experiment with "performance contracting" encouraged by the federal government.

Among the first was the Texarkana school district's contract with a private company for remedial-education services. According to Risky Business, a testing scandal in Texarkana, which straddles Texas and Arkansas, effectively ended the experiment with performance contracting.

Max B. Sawicky, an economist with the Economic Policy Institute, argues in another section of the book that the difficulty of measuring a school's role in student success makes it hard to evaluate the effectiveness of contracts with private managers.

"Unlike other services, such as trash pickup, the educational 'product' is difficult to define, measure, and interpret," he writes.

A true market of private managers of public education is still elusive because of the relatively few companies in the business, he adds. In several cases, companies have been hired without competitive bids, and once in place, districts have a vested interest in the contracts' success.

"Very little has gone right" with the scarce examples of private management of public schools in recent years, Mr. Sawicky writes.

"The almost uniformly negative experience with contracting should motivate education reformers to be more careful," he adds.

"What remains to be seen is whether governments can effectively organize competition among their own suppliers in the educational arena," the book states. "The record to date is not good."

Copies of Risky Business are available for $19.95 plus shipping from the Economic Policy Institute. Phone (800) 374-4844.

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