Failing Students, Rising Profits

Failing Students, Rising Profits

The Community Education Partners (CEP) serves students the public schools don’t want–and it makes millions.


Morris Gandy’s son was a problem student throughout elementary school, playing hooky and acting up. A few days after he began sixth grade in 2002 at Gillespie Middle School in Philadelphia, he was suspended. Gandy, a single parent, beseeched the principal, “What can you do for a problem child?” He got no help.

Then a neighbor told him about Community Education Partners (CEP), an alternative school for kids like his son. So Gandy enrolled the boy, expecting that teachers there would know how to handle him. Instead, the situation went from bad to worse. “The teacher said my son shot him in the head with a rubber band,” Gandy said. “I said, ‘What are you going to do about it? This is supposed to be a school for troubled kids.'” His son told Gandy that all they did was watch movies. He went truant. “They are supposed to be the experts on the kids outside the box. They are supposed to get them back inside the box,” Gandy said. “They couldn’t hold his interest.”

Morris Gandy is what you’d call a dissatisfied CEP customer. CEP, however, continues to prosper. Founded ten years ago in Houston, the company entered the private-school market at a time when Texas was a roiling caldron of Republican politics and Enron-style corporate dealing–and a laboratory for education reform. George W. Bush was governor, the mantra was accountability for public schools and the tools were high-stakes testing and privatization. What emerged from the mix were the so-called Texas Miracle, which boosted student achievement; Rod Paige as President Bush’s Education Secretary; and ultimately Bush’s No Child Left Behind (NCLB) law, authored by Texas education player Sandy Kress.

The Texas Miracle has since been debunked as so much manipulation of test scores and phony graduation rates. Paige, who rode to the White House on its falsehoods, is history. And Bush’s NCLB is sagging under the weight of impossible test goals and unfunded mandates, with even some Republicans now criticizing it. But privatization in public education and the credo of accountability through testing still chug along.

CEP is one beneficiary. Despite a tarnished history and no independent evidence that its student-customers fare better than in regular public schools, CEP uses political clout to carve a niche market serving students the public schools don’t want, and it makes millions in the process. CEP’s story is a primer on how the politics of education reform serve business interests. Its success represents the triumph of free-market ideology over sound pedagogy and the fallacy of the accountability-through-testing approach to teaching. “It’s fair to say they [CEP] have avoided true scrutiny,” said Carl Shaw, a former Texas state official who evaluated CEP’s program. “Their modus operandi is political, not educational and not scientific.”

The CEP Program: Be Here, Be Tested

CEP contracts with public school districts in Houston, Atlanta, Philadelphia, Richmond and Orlando, and in the Pinnellas and Bay districts in Florida, to run alternative schools for students in grades six through twelve who’ve been suspended for behavioral problems. Most students sent to CEP also are academically failing, and the vast majority are African-American and Latino. CEP’s contract requires that students spend 120-180 days in the program–far in excess of the typical ten-day suspensions public schools impose on misbehaving students. CEP’s rationale is that it needs time to transform kids’ behavior and academic performance, but the company also has an obvious financial incentive for a longer placement. CEP’s per-student charge varies by district, but it’s more than the districts spend per pupil on regular students. In Orlando CEP gets $8,865 per pupil, double the district’s own cost. Philadelphia pays CEP about $13,000 per pupil–almost twice the district’s $7,000 average cost. “We charge more. We’re a premium product,” said Randle Richardson, the CEO of CEP. “Anyone can warehouse a child.”

CEP renovates abandoned big-box stores or industrial spaces, creating sex-segregated “learning communities.” The students can’t mingle and are walked in groups to bathrooms at specific times. Lunch is provided in their classrooms. Students may not bring money to school and are screened as if going through airport security, shoes and coats off. Teachers take attendance with an electronic fingerprint scanner that transmits the information back to CEP headquarters for payment. Some critics have called CEP schools “soft jails.”

CEP boasts that it employs “certified teachers and degreed individuals with experience in behavior management, counseling or social services.” But CEP faces the same shortage of certified teachers the public schools do, and it pays lower salaries. In its early Houston days, says Marsha Sonnenberg, a Fort Worth educator who consulted for CEP, “they used some people from corrections and some they trained. Some had been from the streets themselves and rehabbed. Some were a little more like me.” Irving Mitchell, principal of CEP’s Atlanta school from August 2003 to January 2004, said his school had few certified teachers and high turnover, so on an average day classes were doubled up. “There was very little instruction, because you were dealing with fights and staff shortages,” Mitchell said. Richardson said CEP pays for teacher-certification training when needed, and that such classes are brought onsite for his Philadelphia staff.

“Be Here, Behave and Be Learning,” is CEP’s motto, but it should include “Be Tested,” because students spend much of their learning time at computers with Plato, a self-paced tutorial that tests and assesses achievement. CEP uses Plato data to prove its claims of student improvement, but assessment experts give Plato mixed reviews, and some who’ve worked with it say cheating is not difficult.

Political Juice

Richardson founded CEP with his college buddy Phil Baggett, CEP’s vice chairman. Richardson says his inspiration came from his early years as a small-town lawyer taking $50 juvenile delinquency cases from the family court judge. Then Richardson ran the Tennessee Farmers Home Administration, making loans to low-income homeowners. John Danielson, who would become Under Secretary of Education to Paige, was also a founder. Initial investors included Bill McInnes, formerly of the Hospital Corporation of America, and Tom Beasley, founder of the Corrections Corporation of America, the private prison company. CEP’s early investors put up $65 million; the company is now backed by Stephens Inc., a Little Rock, Arkansas, investment bank, and the Texas Growth Fund, a private equity firm created by the Texas legislature with public employee pension funds. Richardson says CEP’s annual revenues are $70 million.

Richardson bristles at questions about Beasley’s role, sensitive to critics who’ve likened CEP schools to juvenile jails. “We had discussions early on that we are not going to be correctional,” Richardson said. “Tom understood. He said, ‘I’m an investor. You guys are here to run the company.'” But like Beasley, Richardson saw a ripe business opportunity in privatizing a public service–one that, like prisons, deals with society’s messy failures. CEP’s first contract was to operate a juvenile detention alternative-education program for Harris County, Texas.

Giving CEP entree into the Texas education scene was George Scott, then president of the Tax Research Association, a nonprofit education-reform group in Houston, and now a senior writer for the online newspaper Education News. Scott, who was close to Paige when Paige was Houston schools superintendent, helped CEP score its first public school contract, with the Houston district. Scott said he told Paige, “Rod, this is it. This is privatized accountability at its best.” Scott later became a CEP critic, though, charging that the company evaded real accountability for a program that was educationally flawed and a waste of taxpayer money. “I look back on my role with CEP, my dedication and commitment to accountability, and it is the greatest professional disgrace in my career,” Scott said. “As long as the district and the vendor have influence over accountability measures, it is corrupt.”

Richardson says his background is in government, but it’s his Republican Party credentials that pay off. Like Tom Beasley before him, Richardson was Tennessee’s GOP chair–from 1992 to 1995–helping to lead Republicans “out of the wilderness and into control of statewide offices,” according to one news account. Richardson soft-pedals his political ties, calling himself a “Howard Baker Republican” and insisting CEP is above the partisan fray. But CEP has thrived on the accumulated political juice Richardson and his cohorts have squeezed, mostly Republican-flavored, since its founding.

In Texas CEP executives cultivated powerful friends, hiring Houston school board member Larry Marshall as a $6,000-a-month consultant and landing an endorsement from George Bush Sr. at the opening of CEP’s first Houston school. “They were putting together the juiciest political team,” Scott said. “They had powerful people at their beck and call.” Political pull helped CEP waltz into Florida. Richardson and Baggett contributed to Charlie Crist’s successful 2000 run for state education commissioner and to Governor Jeb Bush’s 2002 campaign. In 2001 CEP’s Florida lobbyist Juhan Mixon helped write a provision in a state appropriations bill that earmarked $4.8 million for “Alternative Schools/Public Private Partnerships.” It was “to serve a minimum of 500 or more disruptive and low performing students”–a description tailored to CEP. Mixon also lobbies for several Florida school districts, including Bay, which hired CEP.

In Philadelphia CEP found privatization high on the agendas of then-Governor Tom Ridge, a Republican, and state politicians. The state took control of the bankrupt Philadelphia school district in 2001, and state legislators made privatizing schools one of the conditions for the bailout. CEP’s chief political ally has been Republican State House Speaker John Perzel, whose beefy visage graces the company’s website along with his testimonial. Richardson, Baggett and CEP execs have contributed more than $11,000 to Perzel’s campaigns. CEP’s five-year, $28-million-a-year contract with Philadelphia schools was renewed in May 2004 with no debate.

Accountability in Action

CEP is a product of the high-stakes testing and accountability approach to education reform, which aims to run public schools like businesses whose products are students. Yet holding CEP accountable has been a quixotic undertaking because of the fluidity of the student population, the malleability of statistics and the company’s political savvy. The few totally independent evaluations of CEP’s effectiveness have rated it poorly. Several evaluations were paid for by CEP, like one in 1999 by Bush Sr. Education Department appointee Diane Ravitch, whose glowing endorsement of CEP’s Houston program appears on CEP’s website. Others were based on testing data completely controlled by CEP.

In Texas CEP’s first brush with evaluation was a lesson in the pitfalls of accountability and the importance of data control. In 1997 Texas state education commissioner Mike Moses hired Carl Shaw, former chair of the Texas Education Agency’s (TEA) assessment committee and head of Houston’s testing for fourteen years, to assess CEP’s first contract, the juvenile detention program. Shaw found limited student progress after six months in CEP, and after a year, actual regression. “I could find no evidence that there was a strong-enough academic program in place to produce change,” he said. “One report I wrote for [the Houston Independent School District] said few CEP students would be smart enough for prison education. It’s shocking, and here’s a company touted as a leader.” Shaw said CEP head Richardson was angry at his findings and his refusal to compromise his work. “The first reaction I had from Richardson was, ‘I am more powerful than you,'” Shaw said.

CEP executives turned to Scott, the taxpayers’ group president, for backup. “They wanted support that his test had gone awry,” Scott said. “I told them I was 100 percent into Dr. Shaw’s approach.” Scott says discussions he and CEP had been having about a consultancy and shares of founders stock broke down because Scott refused to repudiate Shaw. Richardson says CEP raised concerns about Shaw’s tests having “both positive and negative aberrations,” and that they couldn’t be validated by the TEA. Richardson noted that his relationship with Scott soured after the problems with Shaw’s testing emerged.

Next up was Dr. Tom Kellow, an evaluation specialist for Houston’s schools. In 1999 Superintendent Paige asked Kellow to evaluate CEP–but he was forbidden to visit the school and could only use data CEP provided. Kellow learned that CEP’s contract stated that it could only be held accountable based on its own in-house testing, not the statewide Texas Assessment of Academic Skills (TAAS). “What I found is what Carl Shaw found,” Kellow said. “The longer [students] stayed, the worse their performance.” Although under NCLB all schools must meet Adequate Yearly Progress (AYP) standards for specific percentages of students testing at grade level in math and reading, the TEA exempts CEP. For both 2003 and 2004, the AYP status of CEP’s two Houston schools is listed as “Not Evaluated.” CEP’s school profiles on the Houston schools website also reveal that the company evades the accountability that public schools face: No TAAS scores are listed and no information is provided for either state or district accountability measures.

Houston continues to contract with CEP despite those early assessments, but Dallas’s public school district was more discriminating. Dallas hired CEP in 1999, with a five-year, $10 million yearly contract. But after three years the district bowed out; its own evaluation of CEP in 2002 recommended ending the contract, stating that “the model of education provided by [CEP] was untenable from a pedagogical standpoint. The reliance on non-certified teachers for the bulk of the student-teacher interaction was useful for the company to save money, but was not a design in the best interest of the students…. Students who attended Community Education Partners did not do very well academically.” CEP had refused to provide its budget data, the report noted, making it impossible to know just how it was spending the district’s money.

Dallas’s report and a series of critical articles about CEP in the Houston Press, an alternative newsweekly, helped New Orleans public schools decide against a contract with CEP, according to former school board president Cheryl Mills. But Atlanta public schools ignored the negative press and evaluations, contracting with CEP four years ago. CEP’s Atlanta school was the target of community organizing in early 2005 after the Atlanta Voice, a black newspaper, ran a series exposing serious inadequacies at the CEP school. The articles were based on the accounts of former CEP principal Mitchell and of a former teacher. “It became a dump for human waste,” Mitchell said. “Accountability is with the Atlanta school board for disenfranchising these kids. There was a contract and expectations, and I feel they were not met. The statistics show they weren’t met.”

Atlanta schools deputy superintendent Kathy Augustine called Mitchell “disgruntled.” She said she was unaware that students could not take books home, that there was no homework or that there was a teacher shortage. “I think we’re improving,” Augustine said. “It’s a developing relationship. Finding leadership is key to that.” She said she had no evidence that CEP was not living up to its contract. Told that CEP’s school had failed to meet AYP standards for reading and math in the 2003-04 school year, Augustine said, “The AYP piece is different for nontraditional schools because children are very fluid.” She noted that the school board had voted to extend CEP’s contract through 2009.

In Philadelphia even supposedly independent evaluations of CEP were dependent on company-controlled data. In March Philadelphia released an evaluation of CEP’s two schools conducted by researchers at Temple University. The report surveyed seventy students and seventy parents who offered positive reports on CEP’s program–a fraction of more than 4,300 students CEP has served. In evaluating student academic growth, the report relied entirely on CEP’s own Plato data, which claim astounding gains of three to four “grade levels” in reading and math for students who spend 180 days at CEP–but there’s no indication of how many students actually stay that long. The school district itself partakes of the statistical spin. Paul Socolar, editor of Philadelphia Public School Notebook, an independent newspaper, noted that in 2004 the district issued a CEP fact sheet that excluded CEP scores on the statewide standardized test for eighth graders, which had gone down; in January of this year the district excluded results for CEP eleventh graders, which had gone down. “It’s a total manipulation of data,” Socolar said. And as for meeting the AYP standards, CEP’s Philly schools don’t.

CEP’s Richardson says the proof of his company’s success is that districts keep renewing their contracts. The question is how success is defined. Public schools have strong incentives to remove the lowest-performing students from their classrooms and make them CEP’s problem, especially since the passage of No Child Left Behind. “CEP was a way to get around NCLB,” said Mitchell. “If you move these kids from the regular school program, you automatically decrease the dropout rate and get a gain on your test scores. So you contract those kids out; they’re in a separate environment, but they aren’t counted in the total.” For Socolar, CEP is a political solution to the public system’s failures: “From the beginning, the concern that jumped out about CEP is whether putting these students in the hands of private companies is a way of putting them out of sight and out of mind,” he said. While the public schools are hammered by the accountability-through-testing mandates of NCLB, CEP skirts the same accountability and proves the uselessness of high-stakes testing as an education strategy. Judging CEP by its test data only seems to make sense because the company and school districts that hire it buy into that accountability measure. Test scores, in truth, can never be an end in themselves–or proof that children are learning. That’s why NCLB is phony education reform.

At the end of an interview Richardson asked in almost plaintive tones, “Are we the enemy?” Well, yes and no. CEP may be doing a poor job, but it’s only a symptom of the crumbling national commitment to public education, including the public schools’ failure to educate huge percentages of mostly black and Latino students. Vouchers and other privatizing efforts in education have still not gained the momentum that conservatives had hoped for. But companies like CEP in the expanding private education industry help chip away at the public school infrastructure by targeting a market–the “bad students”–that has few advocates. CEP promotes privatization in a more quiet, effective way than Chris Whittle’s troubled Edison schools have. And Richardson’s future ambitions reveal an astute understanding of the changing nature and needs of today’s student population: He’d like to run schools for overage students–17- or 18-year-olds who work or raise families and need flexible programming, the students who “don’t fit in the box,” he says.

As the box holding traditional students shrinks, one challenge facing public school educators is how best to serve all students–from high achievers to the most disruptive kids like Morris Gandy’s son. If the public sector abdicates its responsibility to educate all children, businessmen like Randle Richardson are ready to step in.

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