Budget & Finance

Vallas Calls for Cuts To Private Companies

By Catherine Gewertz — April 02, 2003 3 min read
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The country’s largest-scale experiment with school privatization may be about to shrink.

Educators have been watching Philadelphia closely since last fall, when outside organizations began operating 45 of the city school system’s lowest- performing schools. But even before a full school year of that novel arrangement has elapsed, the district’s leader is proposing to cut funding for their fees in half.

Paul G. Vallas, who joined the 200,000-student district as its chief executive officer last July, after the decision to contract with private managers had been made, wants to shift $10 million of the $20 million paid to the groups this academic year to a high school reform program he unveiled in late February. The private groups receive the fees over and above basic student funding.

Mr. Vallas included the $10 million shift in presenting his $1.8 billion fiscal 2004 budget to the Philadelphia City Council last week. But he offered no details about how it would affect the two universities, two nonprofit groups, and three for-profit companies that serve as educational management organizations, or EMOs, in the city.

“We have no sense of how it will impact us directly,” said Adam Tucker, a spokesman for New York City-based Edison Schools Inc., a for-profit manager that runs 20 Philadelphia schools. “Our hope is that it won’t.”

The proposal is subject to approval by the School Reform Commission, the five-member panel named by Philadelphia’s mayor and Pennsylvania’s governor to run the district after the state assumed control in December 2001.

‘The Right Reasons’

Sheila Royal-Moses, a vice president of Victory Schools, a New York City company that operates five Philadelphia schools, said she found it hard to criticize Mr. Vallas’ proposal, since it would direct the money to one of the many areas that need improvement in the struggling, 264-school system.

“Even though it could compromise us in the work we’ve been doing— we’re not sure yet—he’d be taking the $10 million for all the right reasons, so you can’t help but support him,” Ms. Royal-Moses said.

Mr. Vallas, for his part, kept discussion of his reasons to a minimum. In documents presented to the City Council, he said that the impact of the EMOs’ fees on the district’s budget was “significant,” and that the organizations have faced challenges of school climate and culture as well as “instructional difficulties” in their start-up year. But he did not directly address their performance.

“It’s not that [Mr. Vallas] doesn’t think they’re not doing well. It’s that we can’t afford them at the level we’re paying them,” said Ellen K. Savitz, who as deputy chief academic officer oversees the EMO-run schools. “It’s like driving a Mercedes when you can only afford to be driving a Chevy.”

Mr. Vallas’ documents said that the district must decide this month whether contracts with any of the EMOs should be terminated at the end of the school year “for cause or convenience.”

The privatization effort, fueled by strong support from then-Gov. Mark S. Schweiker, a Republican, has drawn praise for its willingness to try a new model in a district in which all observers agree too many children lag behind. But it has been criticized by skeptics who question the companies’ financial motivations.

While there is no consensus on the effectiveness of the city’s fledgling experiment with privatization, a significant cutback in the fees that support it would send a clear signal, some observers believe.

“The message is that it’s not a priority item anymore,” said William Lowe Boyd, a professor of educational administration at Pennsylvania State University in University Park. He added that he would anticipate little pressure from the state capital to reverse that message, since Gov. Edward G. Rendell, a Democrat, is a vocal proponent of publicly run schools.

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