In the EMO Model, Profits Will Always Come First

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To the Editor:

In response to "Analysts Debate Long-Term Viability of EMO Model" (Aug. 9, 2006):

For-profit education management organizations, or EMOs, are intrinsically incompatible with public school operations, despite the rhetoric emanating from these companies. That’s because the fundamental purposes of businesses and schools are irreconcilably at odds.

Edison Schools Inc. serves as a case in point. Back in the early 1990s, the entrepreneur Christopher Whittle became convinced that he could succeed where public schools had failed, and make money in the process. He based this delusion on economies of scale. But time has shown that renovating schools, purchasing equipment, and training teachers remain expensive tasks no matter how often they are repeated. As a result, by 2003, Edison’s stock had plunged from $38 to below a dollar per share. Edison was able to stay alive only because it merged with the New York City investment firm that manages the Florida Retirement System—the state’s pension fund for public employees, roughly half of them teachers or school workers—for $174 million.

Free-market advocates claim that the Edison experience is an aberration. But the reality is that whenever EMOs are faced with making decisions that are faithful to the bottom line, they will inevitably vote in favor of financial strategies over the welfare of students. That will please shareholders—but not parents.

The sooner we disabuse ourselves of the notion that schooling is an economic enterprise subject to the same forces that work in other policy areas, the sooner we can begin to deal honestly with the inequities that account for the huge differences in educational quality in our public schools.

Walt Gardner
Los Angeles, Calif.

Vol. 26, Issue 01, Page 50

Published in Print: August 30, 2006, as In the EMO Model, Profits Will Always Come First
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