Thursday, June 16, 2005

Edison in Chester: How Plan Failed

Thu, Jun. 16, 2005

A school privatization effort in Chester Upland ends in disappointment and doubt.

By Dale Mezzacappa/ Philadelphia Inquirer Staff Writer

Edison Schools Inc. will leave the Chester Upland School District this month with losses the company puts at $30 million and modest improvements in student achievement, having failed in its effort to show that a private company could rescue such a troubled urban district.

It leaves in its wake a disappointed community, vexing questions for policymakers over what to do next, and doubts about privatization - one of the key strategies of the federal No Child Left Behind law.

The state-imposed partnership was troubled from the start. Edison shared authority with a wary district administration, and lost crucial support in the community when it could not deliver on its lofty promises. From the beginning, Edison said it lacked accurate information on what it could expect from the district.

"It may be erroneous to assume it is easy to turn around achievement in public schools simply by changing management structures," said Chad d'Entremont, assistant director for the National Center for the Study of Privatization in Education at Columbia University's Teachers College.

Chris Whittle, Edison's founder and president, said he believed that privatization can work and that Chester is an anomaly.

"I don't think anyone, us or the state, fully understood the extent of Chester's financial plight," Whittle said.

Edison's losses consist of $8.6 million in infrastructure investments, such as wiring and computers, and more than $20 million in operating costs, Edison officials said. Edison said it is still owed $2.2 million in fees.

Chester Upland has a decades-long history of problems.

In deep debt, it was declared fiscally distressed and taken over by the state in 1994. In 2000, the legislature passed the Education Empowerment Act targeting low-performing districts; for Chester Upland, it meant an immediate takeover and privatization.

The partnership, pushed by the state onto a reluctant district, had too many problems, Whittle said. A more cooperative partnership could have worked better, he said, pointing to Edison's records in Philadelphia, where it operates 20 schools, and Baltimore, where it operates three. Philadelphia, encouraged by Edison's progress, recently awarded the company control of two additional schools.

Thomas Persing, a member of the Board of Control that hired Edison, agrees that the hybrid administrative arrangement and confused lines of authority in Chester made Edison's job tougher.

"I would think that if there ever is going to be a school district that is going to be totally run by an organization such as Edison, it has to take complete control of the district, everything," he said.

Within 90 days of starting to run the schools - on Sept. 11, 2001 - Edison knew it faced heavy losses, said Richard O'Neill, the company's top-ranking official in Chester. He said financial records and enrollment projections from the district were not accurate.

The company decided to stay because Chester provided one of the nation's first examples of a state's taking over a district and employing a company to fix it, O'Neill said.

"If you look at state intervention as a line of new business, it had strategic value, and we were prepared to take financial losses as well as to honor the original spirit of the five-year engagement," he said.

Persing, chairman of the Board of Control at the time, said he found it hard to believe Edison lost as much money as it says. He also denied that the district somehow misled Edison about enrollment.

"We gave them the numbers that were enrolled in the district schools, we gave them the numbers enrolled in the charter schools," he said. "Their contention was that when they put together their wonderful curriculum, they would bring back kids from charters and parochial schools. They thought students would flock back, but it didn't happen."

Many were rooting for Edison to succeed.

"It was my personal hope that they would use Chester as a laboratory," said Charles Gray, a community activist who was on the Board of Control that brought the company in. "Give it a couple of years here, they could have turned this district around and taken it to market, to larger districts around the country."

Gov. Tom Ridge and other legislative leaders, unwilling to simply pour more state aid into an impoverished district, hoped that Chester Upland would be a shining example of the value of private management. And the people of Chester Upland hoped the experiment would provide them with the things they and their children did not have: state-of-the-art technology, small classes, better trained teachers.

All of those hopes were dashed.

"Edison had promised it would offer a second language starting in elementary school, they promised technology for those who didn't have technology in the home; that never happened," said Portia West, who initially opposed privatization but later spoke up for Edison. "They made promises they didn't keep."

Still, she said, "I loved the curriculum that they had. My daughter did extremely well in fourth grade when Edison came in."

In hindsight, too many things went wrong.

"The district controlled too many things that were directly related to instruction for us to be successful: personnel, security, maintenance, technology," O'Neill said. It could hire and fire teachers, and many of them declined to attend company-run professional development sessions.

The three-member Board of Control that ran the district had wanted competition for school management and initially awarded contracts to three companies after each had made presentations at community meetings.

But when the dust settled, Edison bought out one of the companies, Learn Now, while the other, Mosaica, pulled out.

As a result, both sides agree, the board and the district administration came to regard Edison as an adversary, not a partner in improving learning. Things got so bad, Edison officials said, that maintenance workers refused to move books and materials from storage rooms to classrooms.

Juan Baughn, who grew up in Chester, worked for Learn Now and then became Edison's first chief operating officer, said, "The community felt that Edison came in arrogantly. I also think that people would have been much more receptive if Mosaica and Learn Now had still been a part of the picture. I think they saw it as Big Brother bullying the little kids."

Founded by Whittle in 1992 as a private company, Edison went public in 1999. But its stock price plummeted after the company received a contract in Philadelphia that was not as large as expected, and Whittle and the stockholders took it private in November 2003.

Mark Jackson, an analyst for EduVentures Inc., said Edison's losses in Chester do not "put Edison at risk financially."

Since going private, he said, the company had done well by diversifying services and products it offers to districts.

"The expectations for profit in whole-school management that existed in the [privatization] movement... is not nearly as attractive as it was in the early days," he said. "It's laden with obstacles."

Chester Upland is searching for a new superintendent and school principals, even as it tries to deal with a charter school population that is still growing.

Edison's chief supporter in Chester Upland, former Pennsylvania Education Secretary Charles Zogby, said he was disappointed.

"Bringing in a management company, I thought we'd be bringing in the necessary capacity to really operate the schools as they needed to be. Obviously, not all of it went according to plan."

What will work in Chester now? "That's a good question, I truly don't know," Zogby said.

Contact staff writer Dale Mezzacappa at 215-854-5112 or

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