Some Hard-Knock Lessons About Public-Private Partnerships - management of Baltimore City schools by Education Alternatives Inc

School Administrator, Jan, 1997 by Walter G. Amprey

What One District Gained from Its Privatization Experience

Few issues of late have been as divisive in American public education as privatization. If a public-sector organization contracts for private services, it may be perceived by some as a betrayer of public trust and by others as a paragon of courage and genius.

But buying outside services from private vendors is certainly not new to public schools. School districts always have sought services, supplies, and resources from the private sector. We have contracted for food services, financial services, data management, legal services, and special education services. Our buses and books and pencils do not come from foundations. They come from people who are in the business of providing a good product and a good service for a return that will include a profit.

In Baltimore, we looked to the private sector to help us achieve management reform and accountability, and to provide cost-effective strategies for our operations. We got much more than we bargained for.

First Impressions

In the summer of 1992, the Baltimore City Public Schools entered into a $133 million, five-year contract with Education Alternatives Inc. EAI oversaw the management and instruction of eight elementary schools and one middle school. (Later, three more schools contracted with EAI for management services.) As part of the agreement, EAI also provided facilities management, some staff development, and financial management.

In the spring of 1996, our district severed its relationship with EAI. The contract was canceled for several reasons, but not one was failure by either of the partners. In many respects, our school system will never be the same because of this public-private partnership.

What first impressed me about EAI was "The Tesseract Way" of instruction. In Tesseract schools, I observed classrooms where children were achieving in an environment of high expectations. They received individualized attention through personal education plans, and they benefited from each classroom's low adult-to-child ratio. Parents and families were actively involved in decision making. Teachers used cooperative learning strategies and technology-assisted instruction. Most important, Tesseract schools' philosophy focused on helping all children achieve. I saw this approach as a solution to the crisis in urban education.

We can argue that this approach is simply sound pedagogy and would work no matter who provides it, but EAI brought something to the urban classroom that most public-sector organizations could not--readily available resources and capital. Operating as part of the Alliance for Schools that Work, EAI tapped the services of KPMG Peat Marwick for financial management, Johnson Controls World Services for facilities management, and Computer Curriculum Corporation for computer-assisted instructional management.

In public schools, significant reform has been stifled by bureaucracy. Decades of self-serving rules, policies, and procedures have produced an educational gridlock that only preserves the bureaucracy. With EAI, a private company could untie my hands.

Contract Terms

EAI's agreement with the Baltimore City Public Schools expanded the contractual relationship of a vendor and a school system. Basically, all operational responsibilities were to be managed with authority and autonomy delegated to EAI and coupled with accountability. EAI had the autonomy to determine whether it would provide the services directly or whether it would contract back with the school system for delivering those services. The general framework of the contract provided for a periodic transfer of funds based upon a negotiated per-pupil allocation for educational and most noninstructional services. EAI also had partial discretion to select staff, curriculum delivery, instructional methodology, training, and other areas supporting instruction.

The contract offered a five-year conditional commitment with yearly reviews. We could terminate the contract at any time if we gave 90 days' notice.

My New Role

EAI managed nine of Baltimore's 182 schools in collaboration with school district staff. As superintendent, I maintained fiduciary responsibility, but the key to this arrangement was the sharing of responsibility and power.

EAI and school system staff agreed to appoint a liaison to represent the superintendent and to manage personnel. The liaison, a school district employee, was responsible for staffing decisions and disciplinary measures and for adhering to the policies and procedures of the Baltimore City Public Schools.

In November 1995, the Baltimore City Board of School Commissioners voted to serve 90 days' notice to terminate the contract. The immediate cause of contract termination was a significant budget shortfall. We simply could not afford to continue paying EAI at the negotiated rate, and EAI could not afford to lower its costs to meet our offers.

What We Learned

As pioneers in the uncharted territory of private management of public schools, both Education Alternatives Inc. and our school district learned some "hard-knock" lessons about contracting for educational services--and about the politics of funding and managing an urban school district. These invaluable lessons will help us navigate future partnerships.