By DOUG
SAUNDERS
Wednesday,
October 30, 2002 – Print Edition, Page A1, Globe and
Mail
Students already have to worry about exams, essay deadlines and staying
awake through math class. In Philadelphia, they have a new worry: What if
your school becomes a victim of the stock market meltdown?
Facing an educational crisis last year,
the city handed 20 of its worst-off high schools, in some of the most
abject slums in the country, to a private, for-profit company called
Edison Schools Inc. Now, those institutions appear to be going the way of
Enron, Tyco and WorldCom.
Edison, a high-flying firm that was the first school-management company
traded on a stock exchange, promised to provide computers, books and new
curriculums, and to raise test scores. In exchange, the school board would
give the company $881 (U.S.) a student.
Then came the crash. Over the summer, Edison's shares slid from the
year's high of $21.68 to less than a dollar on the Nasdaq Stock Market.
(The company traded yesterday at about 50 cents.)
In the classroom, this has had some bizarre effects.
Days before classes were to begin in September, trucks arrived to take
away most of the textbooks, computers, lab supplies and musical
instruments the company had provided -- Edison had to sell them off for
cash. Many students were left with decades-old books and no equipment.
A few weeks later, some of the company's executives moved into offices
inside the schools so Edison could avoid paying the $8,750 monthly rent on
its Philadelphia headquarters. They stayed only a few days, until the
school board ordered them out.
As a final humiliation, Chris Whittle, the company's charismatic chief
executive and founder, recently told a meeting of school principals that
he'd thought up an ingenious solution to the company's financial woes:
Take advantage of the free supply of child labour, and force each student
to work an hour a day, presumably without pay, in the school offices.
"We could have less adult staff," Mr. Whittle reportedly said at a
summit for employees and principals in Colorado Springs. "I think it's an
important concept for education and
economics." In a school with 600 students, he said, this unpaid work would
be the equivalent of "75 adults" on salary.
Although Mr. Whittle said he could have the child-labour plan in place
by 2004, school board officials were quick to say they would have nothing
to do with the proposal.
Mr. Whittle's past ventures included buying Esquire magazine in the
1970s and introducing Channel One, a commercial-sponsored educational television system, into public schools
in the 1980s.
But now he appears to have fallen on hard times, and has put up for
sale his 4½-hectare estate in New York's Hamptons. The home, which was
listed for $46-million, has eight bedrooms, a gym, an elevator, a pool,
tennis and basketball courts, and guest house.
Edison operates 150 schools in 23 states, but Philadelphia is its
largest and most visible challenge. Last year, the school board picked the
45 worst-managed schools and announced that it would privatize them. At
first, Edison was to take control of them all; later, in the face of
political protests, 25 of the schools were put into the hands of
non-profit school companies.
Edison officials were unable to implement some of their more innovative
educational policies, including longer
school days and years, because of Philadelphia's unions and low
budgets.
School board officials in Philadelphia are now debating their options.
"We want to make sure they have the financial resources to sustain [the
schools] through the school year," said Paul Vallas, the board's chief
executive.
Mr. Vallas has taken a tough disciplinary stand with the company,
withholding a $5-million payment to Edison this fall because the company
was seven weeks late delivering its financial statements.
Edison executives say the company is sound, and that its schools will
begin showing educational improvements.
"We are not going bankrupt. There is no threat of bankruptcy. It is
simply, flatly not true," Edison president Chris Cert told Michigan school
board officials last week.
Mr. Whittle has predicted a profit of $20-million this year and
announced Monday he intends to buy back 5.4 million of his company's
shares, or 10 per cent.
He also said that 84 per cent of his schools have seen "increased
student performance," against 8 per cent registering declines. Test-score
results for the Philadelphia schools are not yet available. | 