Published Online: April 16, 1997

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EAI Seeks To Team With Developers To Build Charter Schools in Arizona

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Picture a new housing development that winds around freshly paved cul-de-sacs. A school is nestled in the middle of this planned community: a neighborhood school that children walk to and that developers and home builders can use as a marketing tool.

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Now picture this: That neighborhood school is a publicly funded charter school, and it's being run by a for-profit education-management company and was built largely with private dollars.

It's a vision that some developers, home builders, state policymakers, and education companies are hoping eventually to make a reality in fast-growing Arizona. Similar ideas are under discussion in Florida, another boom state.

"Most of what we've seen all over the country in charters are the sort of mom-and-pop schools being opened as an alternative to public schools," said Jeffry Flake, the executive director of the Phoenix-based Goldwater Institute, a think tank that promotes economic freedom, limited government, and individual responsibility. "There's no reason why charter schools can't become the new neighborhood public school."

While observers say it is far-fetched to think that privately run charter schools would ever eclipse the traditional neighborhood district school, the ideas being advanced in Arizona and elsewhere are sure to provoke debate and criticism among educators.

Charter schools are independent public schools run by groups of parents, teachers, and others free of most constraints of regular school districts.

Under what many consider the nation's most expansive charter school law, Arizona has granted a charter to Minneapolis-based Education Alternatives Inc. to operate as many as 12 independent public schools in the Phoenix area. The company is talking to Arizona developers about establishing EAI charter schools in planned communities, said Philip E. Geiger, EAI's president. In one agreement under negotiation, a single development eventually could yield spots for five or six schools as it grows, he said. Boston-based Advantage Schools Inc. also has received an Arizona charter, and other for-profit education companies have expressed interest in Arizona and many other states.

A recent meeting sponsored by the Goldwater Institute and the Homebuilders Association of Central Arizona brought together nearly a dozen such companies--including EAI, the Edison Project, and Sabis School Network--and developers, builders, lawmakers, and Arizona's state schools chief to discuss neighborhood charter schools.

Marketing Niche

Arizona is especially inviting to companies like EAI. A strong school choice state, Arizona's political environment is pro-development and pro-privatization. In just two years, the state has allowed roughly a third of the nation's approximately 480 charter schools.

Growth is high and taking place in property-poor, outlying areas where strapped local districts often can't build schools fast enough to accommodate the newcomers. That situation has led to a building crunch and overcrowded schools.

State lawmakers are under the gun to find a solution to Arizona's school facilities woes in response to a 1994 school finance lawsuit brought by poor districts.

All sides, proponents say, have something to gain in the new arrangements being discussed in Arizona:

  • Developers who link up with for-profit companies to establish charter schools can market tuition-free, privately run public schools to customers. The developers figure they'll see schools go up in their new communities faster and for less money in the private sector than they can by working with local districts. Some Phoenix-area bedroom communities have issued moratoriums on home construction because there is no money to build schools to keep up.
  • Assuming that a developer sees enough potential advantage to strike a deal and help build, and possibly own, a building that it would lease or rent to a privately run charter school, the education companies would have a brand-new school to move into without having to put out big money up front to build it. And Arizona lawmakers may approve some state money for the facilities needs of charter schools. For now, many charter schools are in makeshift or nontraditional sites and operate on shoestring budgets.
  • School districts, the argument goes, would see less overcrowding and have less pressure to go further into debt to build schools.

"This [idea] definitely has applicability to other states," said Jeanne Allen, the president of the Center for Education Reform, a Washington-based group that advocates charter schools and school choice.

Barriers Ahead

But the prospect does not excite everyone.

''It does concern me a great deal," said Barbara A. Robey, the director of government relations for the Arizona School Boards Association. She said developers sometimes donate land to districts or strike other deals, "but others don't see that they have any responsibility whatsoever. As a state we're not doing enough to evaluate what we're doing. We just throw open the door and say, 'Y'all come.'"

In the short run, the idea makes financial sense, said R. Craig Wood, a school finance expert at the University of Florida in Gainesville. But the long-term effects, financial and otherwise, could be damaging.

"There's a difference between a neighborhood school and a neighborhood country club that's subsidized by taxpayers," said Mr. Wood, a charter school critic. "The larger question is: 'What is best for society as a whole?'"

And there are barriers to maneuver before the concept takes off.

In Arizona, for example, the average per-pupil state aid is relatively low, which presents a challenge for for-profit companies to do business. Under current state law, charter school enrollment can't be restricted to a particular geographic area, though there may be a push to change that. Developers would be wary of investing time and money if they cannot be sure that their customers' children have priority to attend the local charter school.

And the path would have to be smoothed so that municipalities could have developers set aside land for a charter school, the same way they do now for district schools, said Connie Wilhelm, the executive director of the Homebuilders Association of Central Arizona.

Building Relationships

Experts note that strong relationships between developers, builders, and schools are not unheard of. But the possible link with privately run public charter schools adds a new twist.

For example, some districts in California and Florida levy impact fees on developers to help pay for growth. In Florida, the Walt Disney Co.'s real estate development arm is in the midst of building a 5,000-acre community called Celebration. Disney plans to install in the new community a state-of-the-art public school, slated to open next fall, and run it along with the Osceola County school district and Stetson University in DeLand, Fla. A temporary school opened last fall in the community. ("Disney Holds Up School as Model for Next Century," June 22, 1994.)

Another Florida-based real estate development business, the Arvida Co. in Boca Raton, has set up an education division run by the former superintendent of North Carolina's Charlotte-Mecklenburg schools and the Prince George's County, Md., schools.

John A. Murphy makes sure that the education needs of new homeowners and their children are met.

Arvida will continue to focus on working with school districts to guarantee quality for development residents, but it is also considering adding privately run charter schools to the mix, Mr. Murphy said.

"There's no question that the key marketing component in any development of the future is going to be the quality of the schools," Mr. Murphy said last week.

"The fact that the development community has come to recognize that is certainly going to help public schools throughout the country."

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