Edison Project Prepares To Expand, Thanks to New Private Investment
The Edison Project received a new infusion of private financing last week that officials say will allow the company to triple its number of schools to 75 by the next academic year.
Included in the $56 million in new investment in the privately held education management concern is $20 million from J.P. Morgan Capital Corp. and $20 million from Investor AB, a large Swedish holding company that is the leading shareholder in such businesses as Saab automobiles and Ericsson mobile telephones.
"J.P. Morgan and Investor AB are major names in the global economy," Christopher Whittle, the founder and president of the New York City-based Edison Project, said in an interview. "This is the largest financing we've done since our inception. It will allow us to triple to 75 schools. At that point, we will be profitable."
Mr. Whittle and a group of his associates have invested another $10 million in the company, which this year is managing 25 public schools in eight states. Other investors are adding $6 million in new money.
The new financing brings to $161 million the amount that has been invested in the Edison Project since its inception in 1991, without earning a single dollar in profit. While many analysts have questioned the company's business prospects, Mr. Whittle has long contended that it could make money once it reached the number of schools where it would enjoy economies of scale.
The financial news comes soon after Edison released a report suggesting that students at some of the first schools it took control of in fall 1995 are showing notable achievement gains in reading and mathematics when compared with control groups.
For example, students who entered the Dodge-Edison Elementary School in Wichita, Kan., that fall had raised their test scores more than 25 percentiles on average against national norms by fall 1997.
"By any measure, this is extraordinary progress," says the report, released Dec. 15. The company billed the report as the first of what will be an annual series on the performance of its schools. The report is based on a variety of district- and Edison-administered tests, as well as on an Edison-funded analysis of the results by an expert from the Educational Testing Service.
The report acknowledges some trouble spots, such as at Washington Elementary School in Sherman, Texas, where passing rates for 3rd and 4th graders on the Texas Assessment of Academic Skills declined 1 point in reading and 10 points in math from 1995-96 to 1996-97.
The American Federation of Teachers is preparing its own analysis of student achievement in Edison Project schools. The report is expected to be released in the next few weeks and is not likely to be as rosy as the company's own report, said Howard Nelson, the senior associate director of research for the teachers' union, which has been a sharp critic of the private management of public schools.
"Wichita is clearly their best school," Mr. Nelson said. "But there is a whole different set of testing data on Kansas schools not mentioned in the Edison Project's report. That data [from a state assessment program] shows a completely different story in reading and math."
Mr. Nelson said the union's report would provide a more comprehensive analysis of data.