1. Overview

Management at EAI expects the partnerships to reduce operating and administration spending by 25 percent, enabling EAI to reinvest 20 percent back into the classroom – and make a 5 percent profit.

Just under half (47 percent) of all public school staff are nonteaching personnel.[68] According to the U.S. Department of Education, public schools operate with five times the number of noninstructional personnel per student compared to private Catholic schools. In 1987-88, for example, the public schools had approximately one full-time noninstructional employee on the payroll for every 30 students. The Catholic schools, by comparison, used one non-instructional staff employee for every 150 students.[69] Within the classroom, U.S. private schools on average have 15 percent fewer pupils per teacher than public schools.[70]

Some staff requirements in the public schools are due to programs such as special education or other federally mandated services. Even after these programs are accounted for, however, public schools have proportionately higher numbers of noninstructional personnel than their private sector counterparts.

2. Private Management of Public Schools

A growing number of school districts are looking to the private sector for basic education services, and several private sector firms now offer management services to public schools. These comprehensive services may entail managing a single school or an entire district. The firms typically are given the same per-pupil funding as the public schools and assume full responsibility for all aspects of school operations, including administration, teacher training, and noninstructional functions such as building maintenance, food service, and clerical support.

The most prominent of such firms is Education Alternatives, Inc. (EAI). EAI is a private, for-profit management and consulting firm specializing in education. In June 1990, it signed a contract with a public school to manage South Pointe Elementary School in Dade County, Florida. Under the terms of the five-year, $1.2-million contract, EAI agreed to reduce student-teacher ratios, expand teacher training, increase the use of technology in the classroom, and implement its own innovative curriculum program, Tesseract.

Two years later, in June 1992, EAI signed a five-year $28 million contract with Baltimore Public Schools to manage both the curriculum and general services of eight elementary schools and one middle school. EAI has engaged Johnson Controls World Services to provide comprehensive building cleaning, maintenance and repair, and the accounting firm of KPMG Peat Marwick to assist with school financial operations.

Management at EAI expects the partnerships to reduce operating and administration spending by 25 percent, enabling EAI to reinvest 20 percent back into the classroom – and make a 5 percent profit.[71] For their part, school districts incur no additional costs because EAI operates the schools for the average annual per-pupil cost, about $5,500 in Baltimore, already allocated for public education.[72]

Yet schools often enjoy enhanced service quality. For example, EAI's partnership with Johnson Controls World Services in Baltimore has led to an upgrade in facilities maintenance (See Case Study on page 11).

At South Pointe Elementary, EAI's efforts have been well-received by teachers, unions, and administrators alike. "Their training of teachers is the best I've seen in 35 years," says South Pointe Lead Teacher Linda Lentin. She points out that the teachers at South Pointe worked in conjunction with school administrators over a period of time to bring EAI to the school. In Baltimore, by contrast, there was some resistance from the teaching staff, because administrators "didn't give those teachers time to develop an open attitude toward the program," says Lentin.[73]

Because both the school and EAI's role in it are new, test-score results are not yet available. Says Lentin, "We think we'll see a small gain, but obviously you don't make those gains overnight. You have to give us some time, and give the kids some time." Perhaps one of the best indicators of the school's promise to date is the fact that a number of affluent families have chosen to send their children there despite the fact that over 90 percent of the school's students qualify for the federal lunch program for low-income students, according to Lentin. Says Lentin, "They said these [affluent] parents would never come, would never entrust their children to an inner-city school. EAI has helped us do that."[74]

Since the advent of contracts between EAI and the public schools, at least two more private-management companies have entered the market. Whittle Communications, which launched the Edison Project, a plan to construct 1,000 for-profit private schools, also intends to offer its services to public schools, including charter schools. According to Benno Schmidt, president of Edison, "We're going to bring our design to public schools where we're wanted, where we're invited and where we're given freedom."[75] Another start-up company, Alternative Public Schools, Inc. (APSI), based in Nashville, also offers management and curriculum-development services. Like EAI, APSI would provide management and curriculum-development services. Unlike its competitor, however, APSI plans to hire and train its own teachers to staff the public schools.

Not all private-management efforts are comprehensive in scope. Many school districts contract with management consultants for specific needs. The Detroit Public Schools, for example, contracts with Wilkerson & Associates to assist Detroit's 24 "Empowered Schools" in making the transition from conventional operation to autonomous charter schools. The consulting firm is assisting with team building as the school develops a new governance structure. It has established an automated financial-management system and helps the schools manage a competitive bidding process for purchasing goods and services. "We make sure we do knowledge transfer as well so [public administrators] can acquire the skills they need to do the work after our contract expires," says Wilkerson consultant Renee Bundy.[76] "The involvement with an outside firm was the major factor in helping these educators and parents at the schools be able to really concentrate on teaching children," says Larry Patrick, board member and past president of the Detroit Board of Education.[77]

The efforts of these private firms and the public schools in partnership with them signal a shift in the way schools manage administrative and instructional operations. Such services have traditionally been handled in-house, but with public pressure for school improvement, more schools may tap into the expertise and flexibility that private sector management firms can provide.