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Minneapolis Ends Unique Management Contract

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The Minneapolis school board late last week abruptly ended its pioneering partnership with a private management company that has served as the district's superintendent since 1993.

The school board and Public Strategies Group Inc. held a joint news conference May 29 to announce that they were ending the unusual arrangement. Board members and Peter Hutchinson, the PSG executive who effectively served as the 46,000-student district's superintendent, denied that the change was prompted by recent controversies over disappointing test scores.

"That is not the case," said a letter to school employees from Mr. Hutchinson and the school board chairman, Bill Green. "This change in leadership does not signify a change in direction."

However, there has been widespread disappointment in the city's African-American community over recent results from statewide tests showing that more than 90 percent of Minneapolis' black students failed part of a basic-skills test. The school board has been criticized by the local chapters of the Urban League and the National Association for the Advancement of Colored People.

Search To Begin

psg has put into place "great structures and mechanisms for improving student achievement, and that's what we hired them to do," said Judy Farmer, a school board member. "But implementation is not their strong suit."

Mr. Hutchinson is a former department store executive and state finance commissioner who was initially brought in to help manage a financial crisis. Impressed with his handling of that problem, the school board hired his company to serve as the district's superintendent--the first arrangement of its kind in the nation. ("For-Profit Firm To Run District In Minneapolis," Nov. 10, 1993.)

Under the performance-based contract, the district has paid the company about $1.1 million since 1994. Public Strategies won a contract renewal last year that was to run until 1998, but the agreement allows for either side to terminate it at any time.

This spring, amid the disappointing state test results, Mr. Hutchinson asked for a two-month leave of absence. Some board members indicated a desire to return to conventional leadership, observers said.

Katrina Reed, the district's labor-relations director, was named interim superintendent. Officials said they would launch a nationwide search for a new schools chief.

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