Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: MONDAY, November 1, 1993 TAG: 9312010342
SECTION: EDITORIAL PAGE: A9 EDITION: METRO
SOURCE: JAMES K. GLASSMAN
DATELINE: LENGTH: Long
Baltimore hired Education Alternatives Inc. last year to take over nine decaying schools with a total of 4,800 students. The Minneapolis-based firm receives $5,918 per pupil - the same amount the city's public schools spend annually. Its job is to boost academic performance, using existing teachers who keep their union contracts.
I'm no education expert, but I spent Tuesday afternoon at one of the Education Alternatives schools and came away impressed, even inspired.
The school, giant Harlem Park, is in the midst of a violent, depressing neighborhood in southwest Baltimore. But even on a rainy day it was crackling with energy, with enthusiastic students and teachers.
When the company took over the 30-year-old school, the windows were broken (2,000 pounds of broken glass were hauled away), the walls marked by bullet holes from assault guns. Now, the place literally sparkles, with graffiti-less walls, lockers painted hot pink, shining tile corridors, and an education program that uses computers, clustered desks and bright innovation.
There's nothing mysterious here. Baltimore, like the average U.S. school district, spends only about half its dollars on instruction, the rest on overhead. And ``overhead'' means administration; the physical plant often gets short shrift.
The company brought in Johnson Controls World Services Inc. to provide maintenance, security, food and transportation, and KPMG Peat Marwick to handle the finances. Together, they cut the schools' overhead costs. The bulk of the savings went into teaching, with the rest dropping to the bottom line.
``It's called capitalism,'' smiles John T. Golle, Education Alternatives' effervescent 49-year-old chairman.
EAI made its first profit ever in the fiscal year that ended June 30, a net of $1.1 million on revenue of $30 million. Golle's personal investment in the company - $3 million - is now worth more than $25 million.
The stock market is enthusiastic about EAI even though running schools is not a high-margin business such as making microchips or software. But the volume is potentially enormous.
Last year, the United States spent $250 billion on its public schools. Set next to those figures, EAI's goal of $1 billion in revenue by 1997 seems modest. It's not hard to imagine a $20 billion industry by the year 2000.
EAI has the field practically to itself, but not for long. Christopher Whittle's Edison Project, launched to far too much fanfare in 1991, has redirected its efforts. After failing to raise the funds to build a chain of 1,000 low-tuition private schools, Edison now wants to run public schools that already exist. It expects to sign between ``a half dozen and a dozen'' contracts with school districts in the next year, and operations will begin in September 1995.
As Education Alternatives' experience shows, the answer to the public schools problem isn't how much is spent - but how. In 1960, for example, 68 percent of public school funds went into instruction; today, the figure is 53 percent. This is an enterprise that spends half on its product and half on its overhead!
While U.S. industry has become more productive, public education has moved in the opposite direction. Over the past 20 years, school enrollments have fallen 7 percent, but the number of teachers is up 17 percent, and non-teaching staff is up 40 percent. In constant dollars, school spending climbed 50 percent faster than per-capita income between 1972 and 1992.
And what have we reaped for this huge investment? Here's just one dismal statistic: Thirteen-year-olds in the United States ranked 12th out of 14 sample countries in science test scores, lagging behind Scotland, Slovenia and Spain.
Thanks to a successful stock offering, EAI has the capital that many of these public school systems lack. So the company can make investments that will pay off down the line - both in better-educated students and in lower operating costs.
EAI uses computers in a teaching method it developed called Tesseract (after a term in ``A Wrinkle in Time,'' Madeleine L'Engle's popular children's book) that stresses individual study plans for each student and daily tracking.
The method appears to be working - both in Miami, where EAI has been operating South Pointe Elementary (also in a blighted inner-city area) since fall 1991, and in Baltimore, where test scores jumped sharply last spring.
As for the unionized teachers, though they were skeptical at first, they're now firmly on board. EAI has given them the tools they've requested (even business cards and their own phones), but the company is holding them strictly accountable.
Says Golle: ``We got them together [at Harlem Park] and said, 'Here's the deal: If you do your job, you get to keep it. If you don't, you don't.'''
So I asked the obvious question of any ruthless capitalist: ``How many teachers have you fired?''
He grinned and held his thumb and forefinger up in a big circle.
\ James K. Glassman is the former editor of Roll Call and former publisher of the Atlantic Monthly.
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