Edison's Red Ink Schoolhouse

For Edison Schools, Inc., April was the cruelest month. Edison, a $1.3 billion corporation that in 2000-01 ran what it counts as 113 schools (some with the same principal under the same roof) enrolling some 57,000 students, is the largest and easily the most visible of the nation's so-called EMOs, the for-profit Educational Management Organizations operating public schools, and thus the nearest thing to an emblem for the school privatization movement. But this has not been a happy spring for the company. On March 27 the San Francisco school board voted to break Edison's five-year contract to manage the city's Edison Charter Academy unless certain conditions were met within 90 days. At almost the same moment, it became clear that Edison wouldn't get anywhere near the number of parent votes it needed to win the right to run five New York City schools, as it and many of its Wall Street friends had hoped. And that, not surprisingly, accelerated the slide in the company's stock from a February peak of just over $38 to a fifty-two-week low in mid-April of just under $16.

Nor was that all. In Dallas, where Bill Rojas--the same superintendent who in 1998 had rammed the Edison contract through a divided San Francisco board--had engineered an Edison contract to run seven of that district's schools, board members were beginning to suspect that under its contract with Edison, the district was paying the company considerably more per student than it was spending for similar students in the schools that it was operating. The district recently estimated that the difference could be running to as much as $20 million a year. (Rojas, fired by Dallas after eleven months on the job, is now working for Advantage Schools, an Edison competitor.)

In Inkster, Michigan, where Edison had contracted to run a troubled four-school district that was on the verge of a state takeover, school board members were complaining about lack of information about the company's expenses. In nearby Pontiac, where Edison runs the Edison-Perdue Academy, school trustees were talking about ending a contract midstream. And in Goldsboro, North Carolina, the Wayne County school board voted unanimously to terminate Edison's management of two schools.

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