The latest hot idea in school reform is management by private, for-profit companies, and the leader in the field is Education Alternatives, Inc. (EAI). EAI, which has been managing nine schools in Baltimore, is apparently the top contender for a contract in Michigan. The company has an attractive come-on. It claims that, by combining business know-how and educational expertise, it can save failing schools and make money. And it will achieve these results using the per-pupil allowance the district already spends. This sounds like a terrific deal, but if the superintendents in Baltimore and Michigan-- and the other people who are currently talking up EAI-- knew their history a little better, they might hesitate.
Twenty years ago, during the Nixon administration, there was another public-private venture called "performance contracting" that was supposed to save public education. Performance contracting companies also offered what looked like a no-lose proposition. They would undertake to improve student performance in a given subject or subjects, and they would be paid only if students met certain standards.
The idea got enormous attention and praise from the press. Indeed, it sounded so impressive that the federal government funded demonstration projects all the country. But we soon began hearing horror stories. Classes were in chaos. On average, student scores in performance contracting schools were no better than scores in ordinary schools. And in some schools, the companies improved the kids' performance by giving them the same test over and over or-- more simply and directly-- by teaching them the answers to the tests.
Performance contracting ended in scandal because it turned out that, while these companies had a brilliant marketing idea, they had no educational expertise and no curriculum. They were, basically, one day ahead of the kids. And since there was a lot of money at stake, they were also willing to cheat. The performance contracting bubble lasted a couple of years before it burst, and nothing has been heard of the companies since. But now we have EAI. The same sort of praise is being heaped on this company and there are the same kinds of expectations. Have we reason to think it will do any better than the performance contractors? I don't think so.
Some readers will probably discount my skepticism because they assume that a teachers' union would be automatically opposed to letting a private, for-profit outfit manage schools. In fact, the union welcomed EAI when the company came to Baltimore. However, the relationship soured when the company quickly-- and without warning or explanation-- made a number of changes in what had been agreed on.
For example, EAI announced that it would put all special education students in EAI schools into regular classrooms and replace special ed teachers with "interns"-- recent college grads willing to work for $7 per hour and no benefits. This meant that youngsters with special needs were suddenly thrust into regular classrooms and that teachers who had no experience or preparation in working with kids like these had to take them on. And the fact that the interns were so poorly compensated virtually guaranteed a constant turnover-- the last thing in the world these youngsters need, given the instability of their lives. Was Education Alternatives, Inc., devious? Incompetent? Inexperienced? We didn't know.
When I asked for a meeting with EAI, I found out. The company heads told me that, after they had agreed to manage the schools in Baltimore, they realized the company didn't have the expertise to take on a project of this size and scope. So they told the mayor and the superintendent of schools the company would need another year to prepare. But the mayor and superintendent said "nothing doing." They had to show they were doing something about the schools right away, and unless the company was willing to start immediately, the deal was off. EAI got the same answer when it said that the most it could handle was three, not nine, schools. We know the rest of the story. Like the performance contracting companies, EAI lacked the expertise and really had nothing to sell. And like the performance contracting companies, EAI decided to go for it.
What's the harm? People tend to think that the situation is self-correcting: If the company does a poor job it will lose money and go out of business, and if it does a good job it will make money. But the people who run the company own a large number of shares, and these shares appreciate whenever a school district gives them a contract. Indeed, they have already sold lots of shares and made a lot of money. It's perfectly possible for them to become multimillionaires even if EAI turns out to be an educational disaster-- the way performance contracting did. Such is the nature of the marketplace.