Pa. Auditor General Blasts Edison Contract

By Catherine Gewertz — November 27, 2002 4 min read
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The state of Pennsylvania violated its own competitive-bidding rules because it was “hellbent” on awarding Edison Schools Inc. a $2.7 million “sweetheart deal” to study the Philadelphia school district, the state’s auditor general charged last week.

In a searing 64-page report, Robert P. Casey Jr. said the Pennsylvania Department of Education had broken procurement laws when it awarded the New York City-based school-management company the contract in July 2001 without entertaining competing bids.

The audit report is available from the Pennsylvania Department of the Auditor General. (Requires Adobe’s Acrobat Reader.)

He blasted the department for proceeding without enough evidence that Edison’s fee was reasonable, that it was the most qualified contractor for the job, or that the study was necessary. More than a dozen analyses of the district had been performed in the previous five years, the report says.

Taken together, Mr. Casey said, the findings suggest that the decision was driven more by close ties than appropriate business practice, though he acknowledged he had no information to illuminate the nature of those ties.

“State officials were hellbent on giving Edison this contract, and the way they went about it shows how intertwined they are with Edison,” he asserted. “It’s very troubling.”

Edison’s study and its subsequent $60 million, five-year contract to run 20 of the 45 Philadelphia schools now under private management have long attracted controversy. But Mr. Casey’s audit findings threw a spark into the debate at a time when the beleaguered, 200,000- student district had been focusing on the nuts-and-bolts tasks of running schools amid big changes spurred by a state takeover last December.

The audit was released a day after the Philadelphia City Council filed a lawsuit in the state’s highest court to challenge the state takeover as a violation of the city’s home-rule charter. The suit was filed in federal court last year, but the court held that it should be heard in state court.

Edison officials dismissed the audit findings as politically motivated. They noted that Mr. Casey, a Democrat who unsuccessfully sought the governor’s seat this year, is a foe of school privatization. In addition, they said, the auditor general has long been at odds with state Secretary of Education Charles B. Zogby, who shares the pro-privatization view of former Gov. Tom Ridge, the Republican who appointed him.

“Our opponents will try to do anything to derail Edison Schools,” said company spokesman Adam Tucker. “We were simply a vendor hired to do the job. Our report formed the foundation for the reform happening now, and that’s evidence that we did a first-rate job.”

David La Torre, a spokesman for Gov. Mark S. Schweiker, who replaced Mr. Ridge after he became the Bush administration’s director of homeland security, said he was “disappointed” that Mr. Casey was “playing the role of partisan attack dog.” The Edison study was “a great investment” that will help the district improve, Mr. La Torre maintained.

Mr. Zogby remains confident that the education department followed proper procedures in hiring Edison, said department spokeswoman Beth Gaydos-Williams. The department has contended that an “emergency procurement” provision in the law allowed it to hire Edison without competitive bids, because a study was needed within 60 days as part of talks between Gov. Ridge and Philadelphia Mayor John F. Street, a Democrat, over the fate of the city’s schools.

Avoiding Bids?

But Mr. Casey’s report disputed that claim, contending the department had gotten approval from the state’s department of general services to proceed with the Edison contract before the deadline for the study was set. That raises the question, he said in the report, of whether the deadline was simply a “ploy to justify” avoiding competitive bids.

F. Joseph Merlino, who independently examined Edison’s contract, said Edison never adequately examined a set of interrelated problems that drove the district’s crisis and led to its takeover. The state underfunds the district, he said, leaving city teachers underpaid, which drives a high turnover rate, which in turn contributes to poor student performance.

“It was an outrageous sum of money to spend for inferior research,” said Mr. Merlino, who trains city mathematics teachers through a grant program based at La Salle University in Philadelphia. “It was a document that justified a political takeover.”

The audit findings confirm a feeling among some Pennsylvania educators that the state seemed unusually eager to award the contract to Edison, said Thomas J. Gentzel, the executive director of the Pennsylvania School Boards Association.

“It struck a number of us as being a bit odd when Edison was called on to do this work, especially when a rumor circulated and was later confirmed that Edison was going to be asked to run a number of schools,” he said. “It seemed inappropriate on its face. There was a concern everything had been lined up in advance.”

Not so, said Mr. Tucker, the Edison spokesman. But he acknowledged that the Republican administration and Edison share a philosophical outlook that views private management as a potentially potent aid to school improvement. “It’s an obvious connection,” he said.

A version of this article appeared in the November 27, 2002 edition of Education Week as Pa. Auditor General Blasts Edison Contract


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