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Published in Print: July 11, 2001, as Deal Reached To Keep Edison In S.F. School

Deal Reached To Keep Edison In S.F. School

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In a compromise that ends the threat of losing a high-profile contract, Edison Schools Inc. will sever its relationship with the San Francisco school district but is poised to continue managing an elementary school there under a state charter.

Meanwhile, the field of charter school management was shaken last week with the news that Mosaica Education Inc., a New York City-based operator of 11 schools, will acquire Advantage Schools Inc., a Boston-based company running 15 schools.

Edison, also based in New York City, ran into trouble in the 60,000- student San Francisco district after the election of an anti-privatization slate to the school board in November. In March, the board voted 6-1 to begin revoking the company's contract to run the 500-student Edison Charter Academy.

The board cited a report by district staff members that charged Edison with irregularities such as encouraging the transfer of low-achieving students to other schools and a failure to provide a bilingual education program. The move came about the time that parents at five New York City public schools overwhelmingly rejected a proposal to have Edison take over management of their schools. ("New York City Votes Are a Blow to Edison," April 11, 2001.)

The San Francisco compromise helps Edison save a closely watched contract, although the company faces stiffer financial terms. Under the plan, the district school board voted against extending its charter agreement with Edison, which allows the company to ask the state board of education to issue a charter instead. The charter-friendly state board is expected to go along with the plan later this month.

Edison would have to begin paying rent to the school district for use of the charter school's building, and the company would lose some $235,000 in funding related to a desegregation consent decree.

Jill Wynns, the president of the San Francisco board of education, said during a June 28 meeting approving the compromise that Edison had agreed to provide students with "due process rights prior to counseling them to leave the school."

R. Gaynor McCown, an Edison senior vice president, said: "We're very happy to be in the building and to get on with the business of educating children. We're sorry we had to go through all of this."

Edison executives told investors recently that the company expects to operate 139 schools serving 75,000 students next academic year, up from 113 schools and 57,000 students in 2000-01. The publicly held company has not yet turned a profit managing charter and traditional public schools.

Charter Purchase

Lack of profits is also believed to be a factor behind the July 2 acquisition of Advantage Schools by Mosaica Education.

Mosaica said in a news release that it was acquiring Advantage in an all-stock deal. Both companies are privately held, and no financial terms were disclosed.

Advantage was founded in 1996 by Steven F. Wilson, a former education aide to then-Gov. William F. Weld of Massachusetts. It has had backing from several prominent venture capital firms, most recently a $28 million infusion in February led by Credit Suisse First Boston Equity Partners.

But the company has reportedly had losses of $30 million since 1997, and its board recently removed Mr. Wilson as chief executive officer. The company also laid off half its 80 employees last month.

Mosaica said the combined company would have operations in nine states and the District of Columbia next school year.

Vol. 20, Issue 42, Page 8

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