For-Profit School Management Company Hits Hard Times

By Mark Walsh

Tesseract Group Inc., a pioneer in the growing business of managing public schools for profit, is facing a mounting barrage of bad news.

In recent months, the Scottsdale, Ariz.-based company—formerly known as Education Alternatives Inc.—replaced its founding chief executive officer, laid off one-fourth of its central administrative workforce, and closed three of its schools.

Then last week, Tesseract's interim CEO and its chief financial officer resigned, and the company said it was running out of money. The spate of troubles leaves the company's 37 preschools, private schools, and public charter schools, which serve some 8,000 students,...