A Private Delusion: The Edison Project

Every Friday, the teachers at Elm Creek Elementary in southwest San Antonio wear white t-shirts emblazoned with large blue letters that spell the word "Edison." Instead of school pride, the shirts reflect company unity and loyalty to the private company that runs their school. And unlike "spirit days" at most elementary schools, when students and teachers are encouraged to wear t-shirts sporting the school mascot, or at least the school colors, at Elm Creek, Friday spirit days are for teachers only. While it's not exactly news that the Edison Project hopes to make its fortune by privatizing the operation of public schools across the country, most Edison projects have involved older schools burdened with the intractable educational problems that privatization promises to solve. Elm Creek is brand new -- and the Southwest Independent School District turned it over to a private company at a time when other communities -- even in privatization-happy Texas -- are becoming disillusioned with the private operation of public schools.Elm Creek is twenty-five miles southwest of downtown San Antonio -- just within the city limits in a neighborhood of modest houses scattered along unmarked, dilapidated roads. "Hay For Sale" signs outnumber the sparse street signs, and at the intersection closest to the school a blinking red light placed atop a large barrel serves as the four-way stop sign. According to Superintendent Richard Clifford, SWISD is approximately the 40th from the bottom in per capita income among the 1,100 school districts in Texas.Yet the 1996 and 1997 Texas Education Agency Accountability Ratings show SWISD as "academically acceptable," which means that in terms of performance SWISD is doing better than many -- and trailing very few -- other Texas school districts. As far as TEA and the administrators at South West San Antonio are concerned, the district is not turning to the Edison Project in response to a crisis or even to serious problems at Elm Creek. Instead, Edison boosters claim, the company will provide students and parents greater choice in education. "It's another choice for families," Elm Creek Principal Tammy Brinkman says. "We in SWISD have always tried to provide choices for students and offer different kinds of things besides the traditional calendar and the traditional school setting, because not all children are the same. They don't all have the same needs or learn in the same way."But why is SWISD looking to a private company -- especially this private company -- to provide those choices and meet those needs? The brief history of the Edison Project in Texas, after all, has not exactly been distinguished. One of Edison's four original campuses opened two years ago in Sherman, and this fall Edison is expanding into a second elementary school there. Yet Edison's experience in Sherman has been less than ideal."We have not been pleased by our test results at Washington Elementary," Sherman ISD Assistant Superintendent for Instruction Phillip Garrett says of the district's Edison campus. "At our other schools, our test results are going up, and at Washington they aren't."Garrett does believe that Edison is doing a good job and that test results will improve with time, and while Edison claims that standardized test results have improved at every one of the dozen campuses it has operated for at least one full year. So test scores at Washington Elementary might yet improve and Edison might yet deliver what it has promised.But other Texas school districts have not bought what Edison is selling. Districts as diverse in demographics, size, and performance as Houston ISD, Spring Branch ISD (northwest of Houston), Austin ISD, Lubbock ISD and Alamo Heights ISD (a wealthy San Antonio suburb) have spurned Edison's advances -- and their resistance to Edison's sales campaign has been steady, even after Edison retained the services of Bill Kirby to convince schoolboards that turning their campuses over to the Edison Project is sound educational policy. Kirby, who has worked as a professor of education and as Texas Education Commissioner, is known to most Texans as the defendant in the Edgewood v. Kirby school-finance lawsuit, in which Edgewood ISD went to court to fight for equitable funding for property-poor school districts. He did not respond to interview requests for this story.All the News That FitsStudents, parents, and teachers are familiar with Edison's parent company, Whittle Communications, which created Channel One -- a closed-circuit TV narrowcast now wired into many Texas schools. The core of Channel One's program is ten minutes of daily "news" and two minutes of advertising, all written and produced for school-age audiences. Before Whittle Communications president and Edison Project founder Christopher Whittle sold the closed-circuit network to raise money for the Edison Project, Channel One had become the focus of a heated debate. Many educators saw Channel One as a golden technological opportunity: schools that joined the program received, free of charge, all of the necessary hardware -- including color televisions for every classroom, VCRs, and satellite links -- in exchange for agreeing to show Channel One's program to all students every school day. But just as many opponents argued that students in public schools should not be captive audiences for advertisers. The California-based Center for Commercial Free Public Education has been organizing "UNPLUG," a national campaign to remove Channel One from public schools. The media watchdog group Fairness and Accuracy in Reporting (FAIR) recently released a report excoriating Channel One's content and questioning its educational value. In California the San Jose Mercury News published a 1992 investigative report describing Channel One's aggressive targeting of predominantly minority school districts desperate for funding. And New York has banned the programming in public schools there. Yet more schools in Texas subscribe to Channel One than in any other state.Something For NothingIt was Channel One's promise of free technology that lured poor and minority school districts, and the Edison Project follows Channel One's lead in using giveaways to entice clients: Edison will implement a new, heavily researched curriculum; Edison will provide every classroom in the school with computers, will create a computer lab on the campus, and will network all of these new computers; Edison will also provide the family of every student with a home computer. These, along with a longer school year and longer school days, are great perks for parents."We got some of our higher parent satisfaction scores of any school from our Edison school," said Sherman administrator Garrett.But while most parents are sold on the "free" technology, not all educators are buying it. According to University of Wisconsin-Milwaukee education professor Alex Molnar, the nation's leading critic of public education for profit, there is no free lunch. "The Edison Project is an attempt to explicitly make high-tech systems in schools a mechanism for earning direct profits for investors," Molnar said. According to Molnar, the EdisonProject, like Channel One, demonstrates how a "relatively simple technology, such as satellite broadcasting, can be used to establish a connection between instructional innovation and corporate profit." To Molnar, there is a lot more marketing strategy than sound educational principle in Edison's plans for public education. "Although the educational program that the computer will support is only vaguely described, many people react to the promise of a computer as if they had just won the lottery. It is a clever marketing tool."Molnar's argument is supported by reporter Todd Oppenheimer in the June issue of Atlantic Monthly.In a long feature, Oppenheimer looks at numerous studies which conclude that computers do not necessarily improve instruction -- especially for elementary -- school students, the very group that Edison is focusing on in the twenty-five campuses it is now operating. "Schools' enthusiasm for [computer-based educational] activities is not universally shared by specialists in childhood development ... [whose] greatest concern is for the very young -- preschool through third grade, when a child is most impressionable. First they consider it important to give children a broad base -- emotionally, intellectually, and in the five senses -- before introducing something as technical and one-dimensional as a computer." And most districts do not have curricula written for the integration of computers, so the machines often compete with rather than complement classroom instruction. But perhaps none of these concerns should worry parents at SWISD. Although every classroom at Elm Creek is outfitted with three new computers, I toured the entire school during two class periods and did not see a single classroom computer that was even turned on.Blowing Sixty MillionNot long after launching the Edison Project in 1991, Whittle grabbed national headlines by announcing that Benno Schmidt would resign the presidency of Yale University to become CEO and president of the Edison Project. Whittle promised to surround Schmidt with a core group of educators, technophiles, and business people who would devote two years and $60 million to developing a revolutionary curriculum for Edison schools. After both time and money were exhausted, no revolution had taken place. Instead, Benno Schmidt's design team recommended a math curriculum designed at the University of Chicago and a language arts curriculum designed at Johns Hopkins."Developing a school program requires a lot of experience," Molnar said, "and these bozos coming together couldn't do shit ... . They began to buy things off the shelf." Whittle now admits that Edison's curriculum does not represent an educational breakthrough. "With these schools, there's nothing new," he said, "if you take everything individually."Even taking everything collectively, Elm Creek's principal agreed that Edison is bringing little more to SWISD than "the technology push" and a great deal of excitement. She cited the influx of computers as a catalyst to teach children "technology as a second language." SWISD Superintendent Clifford has a more traditional notion of what a second language is and believes that Edison will provide one for every student at Elm Creek Elementary. "This gave us an opportunity to offer a second language to all students at the campus," Clifford said, "and so [in kindergarten] we will be beginning Spanish as a second language to all children, regardless of whether they're bilingual or not. The emphasis, as those kids transition into middle school, will be moving into Latin, and then into a third language as they get to high school."Molnar dismisses Edison's ambitious language plans, saying that as far as he knows, the Edison Project employs no linguistic curriculum specialists. Without a specific, quality curriculum, such rhetoric, Molnar says, "sounds like authentic western gibberish to me." Edison has retained a "language teaching" consultant but does not have a permanent staff member working on second-language programs.If the foreign-language program is as ambitious as Clifford believes it is, Edison will have to find the money to do what no other school district can seem to afford in Texas, where language programs are often resisted for financial and other reasons. And if Edison hires enough foreign language teachers to educate every student at Elm Creek, what will happen to stockholders' dividends?A Lot More Than Lunch MoneyWhile its critics have their doubts about the educational value of the revolution Edison promises, few of them -- ranging from The New Republic to educator and author Jonathan Kozol to the late President of the American Federation of Teachers, Albert Shanker -- question Edison's profit potential, or the company's ability to wring profits from tight public school budgets.Clifford and Garrett, on the other hand, don't see Edison profiting from their districts. Garrett told The New York Times that he would "be surprised if they were making a profit in Sherman." Clifford was more forthright. "They're not going to make any money from the SWISD," Clifford said in an interview. He predicts that Edison will use Elm Creek as a loss-leader, a deficit-producing program that will attract attention and ultimately bring in a net profit by leading to more lucrative contracts around the country."We see an opportunity for us to be a flagship of this project ... ," Clifford said. "Edison is very interested in working with us to model a true bilingual program."If he's correct, potential Edison buyers will have to consider that what works at Elm Creek might not work in other districts -- where Edison ultimately will have to make a profit. Edison is extremely (excessively, opponents charge) reluctant to release financial data, but in Molnar's Giving Kids the Business: The Commercialization of America's Schools, it is clear that the company has had persistent financial troubles. Dating back to his initial efforts in the early 1990s, Whittle has failed to reach his own fundraising goals for the Edison Project; indeed, Schmidt might be the greatest single asset Whittle succeeded in attracting.Late last year, Edison announced a $30.5-million infusion from an "investor group." A closer look shows that Whittle and Schmidt are themselves two of the eight investors listed (and two of only four individuals investing). This financial shell game is not new to Whittle's ventures.In 1995, Edison announced a major investment of $30 million; but a closer look revealed that $3 million came from a group led by Benno Schmidt and a whopping $15 million came from Whittle himself. Edison's financial future couldn't have been helped by George Bush's defeat in 1992. Bush's Secretary of Education Lamar Alexander, who supports privatizing public schools and using tax vouchers to create school choice, is both a close friend and a former investor of Whittle's (they met while both attended the University of Tennessee). Molnar cites reports that Whittle paid Alexander $125,000 in consulting fees during Alexander's tenure as governor of Tennessee. Alexander also bought $100,000 worth of stock in Whittle Communications Corporation, transferred the stock to his wife, and collected $330,000 one year later when Whittle bought the stock back. Alexander's departure from the Department of Education hurt Whittle's fundraising prospects and caused him to scale back his plans. In 1992, Whittle projected that Edison would run 200 school campuses nationwide by 1996. Last year the company had contracts with twelve campuses, and for the 1997-98 academic year Edison is running twenty-five schools. Even now, Edison is not making a net profit and shareholders have yet to see their first dividends.Milking Every DropGarrett and Clifford's claims that Edison isn't making a profit on their campuses might come as a surprise to Chris Whittle and Benno Schmidt. Whittle claimed that all twelve Edison schools turned a profit last year, and, according to Nancy Van Meter of the American Federation of Teachers, Schmidt recently told a Smith Barney investment conference in New York that Edison achieved its projected 4 to 8 percent profit at each site. Profits on campuses do not cover Edison's administrative payroll and the cost of its New York office; and if the information gleaned from Whittle and Schmidt is correct, that is why the company is in the red. The only way out of the red is to increase profits on campuses, and Schmidt has identified the four methods the company will use to do just that:* capture the "whole dollar";* educate special-education students without using the expensive specialists used in public schools;* hire a teacher mix with younger, less-experienced teachers who command lower salaries;* gain control of the "non-academic" facets of the school and raise efficiency.The latter three strategies are traditional ways to cut school budgets (especially slashing labor costs, i.e., teachers), thereby moving even more money into the corporate profit column. Edison's demand to "increase efficiency" underlies all attempts of private industry to fulfill traditionally governmental functions, and it is based on a single-minded, uncomplicated procedure: take in as much money as possible and spend as little as possible.The first strategy -- upon which the others are predicated -- means that Edison wants to take as much of every tax dollar paid for the students as possible. According to Van Meter, Schmidt estimates that most districts spend only 60 cents of each tax dollar on actual school campuses. Thus, if Edison can "capture" more than 60 cents, it can spend more on its campus and pocket the difference. For this to happen, either the administrative costs for which districts allocate the other 40 cents per dollar will have to be cut, or students not on Edison campuses will be left with less than 60 cents per dollar so that Edison can make a profit.These numbers help explain why most Edison schools are elementary schools, where per-student costs are usually about two-thirds of the cost of middle and high school students. Many Edison contracts -- including the SWISD contract -- pay the company the average expenditure per student district-wide, multiplied by the number of students enrolled at the Edison campus. So Edison can sustain an elementary school's current budget using only two-thirds of the money it receives from the district -- and then divide the remaining one-third among computers, corporate expenses, and dividends to investors. Meanwhile, the district's other schools all operate on lower than usual funding to cover the difference. In 1997-98, SWISD will pay Edison $4,277.54 per student. That is the state per-student district average (after deducting costs for school buses, food service and physical plant maintenance). Clifford estimated Elm Creek's enrollment is "almost right at 585 students." Using Benno Schmidt's estimate of a 4 to 8 percent return -- and if Elm Creek is indeed not a loss-leader -- the Edison Project can expect to turn a profit of between $100,000 and $200,000 in South West San Antonio this year.Unmarked BillsWhat the Edison Project does with its profits and how it allocates $2.5 million SWISD will give it to operate Elm Creek is not public knowledge. Edison repeatedly invokes its rights as a private company to refuse requests for financial disclosure. And neither Whittle nor Schmidt will discuss their salaries, each of which is reported to exceed $1 million per year."Since Edison, unlike a public school district, is not financially transparent," Molnar writes, "it is virtually impossible to uncover conflicts of interest, to assess the financial health of the company and its ability to discharge its obligations, or even to make sense of its claims of profit or loss in a particular district."So taxpayers at SWISD have no right to know how Edison is spending the public's money at the Elm Creek Campus. Whittle's track record in Texas is hardly reassuring here either. In 1994, Houstonian Karen Miller had to go through the Attorney General's office to compel the TEA to release a list of Texas schools contracting with Channel One. Miller passed the list to the Harris County tax assessor, who realized that Channel One hadn't paid property taxes on the equipment installed in Texas schools. The results were twofold: first, Channel One paid $2 million in back taxes and penalties due to Harris County; second, tax records revealed that the equipment Channel One gave to schools was worth far less than the $50,000 (closer, in fact to $18,000 on average) per school they publicly proclaimed.The deliberate financial opacity of a company whose founding metaphor is that of the electric light bulb illuminating the world allows school administrators to perpetuate the myth that "Edison's not making any money here." And that myth allows Edison to continue expanding. It seems unlikely that taxpayers would allow Edison to take over a school and profit from tax dollars if they knew Edison would pocket a lot of money that was earmarked for education. But for Molnar and other Edison critics, Edison's profit margin is not the real issue. Contracting with Edison, they argue, is a waste of public money."If [Edison] is using existing teachers and implementing off-the-shelf curriculum and they don't control services [i.e., food service, physical plant, transportation]," asks Molnar, "what are they doing that the superintendent can't do?"Elm Creek will implement the curricula recommended by Edison, and the school will extend the school year by twenty days, but SWISD could make all of these changes without Edison. As Elm Creek Principal Brinkman conceded in an interview, it at least appears that it now takes even more bureaucracy to make some basic changes the district could have made on its own. So why does the Edison Project continue to expand? For troubled schools led by administrators who have to contend with a universal dislike and distrust of government, a partnership with Edison is seen as both a daring move in pursuit of improved performance and a marriage with the private sector. The Edison Project provides good PR and political cover while the district appears to take a bold step toward improving schools. Yet if the experiment fails, the fault lies with the company; if the Edison Project succeeds, school administrators reap the rewards of their foresight. How else to explain the growth and popularity of a company that keeps tax dollars as profit, without giving anything educationally unique in return?Three years ago, the Hartford Business Journal editorialized: "State and local governments have been running these [school] systems around the world for years. They end up running them because there's no money it, just like there's no money in running a police department, fire department and so on. You can't turn an inherently unprofitable business into a profitable one just by turning it over to the private sector." Perhaps not, but it seems the Edison Project can turn the unpopular business of running schools into a popular one by the same method. Along the way, Edison can line the pockets of investors and give taxpayers less than they bargained for. What a deal.


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