EAI fell to high hopes, unmet promises Company ran into political reality

November 23, 1995|By Mike Bowler | Mike Bowler,SUN STAFF

Education Alternatives Inc.'s grand experiment in school privatization took a mortal blow yesterday, leaving a two-part question unanswered after the company's rocky 3 1/2 years in Baltimore:

Did EAI, a profit-making company, improve public education in Baltimore -- and make a profit in the bargain?

EAI and its irrepressible chief, John Golle, still say yes -- and yes. But Tuesday, even as Mayor Kurt L. Schmoke and the school board were preparing to administer the coup de grace, Mr. Golle was insisting that his company had never earned the money his foes had claimed in Baltimore and that the mayor and city finance officials, in insisting on a $7 million reduction in EAI's contract, had based their analysis on "capricious and erroneous information."

John M. McLaughlin, editor of Education Industry Reports, which tracks the school privatization movement, said EAI's problem in Baltimore was that the company, in its eagerness to gain a foothold in the public school market, agreed to a contract that "failed to spell out the expectations on both sides. It did not lay out up front how the company was to be held accountable or what the consequences were if the company failed to perform."

And EAI's performance never lived up to the grandiose promises made by Mr. Golle in late 1991 and early 1992, when he was trying to sell his "Tesseract" program to Baltimore. An investigation by The Sun last spring found the company and its corporate partners cleaned up the schools and maintained them impeccably. EAI installed hundreds of computer terminals, put two adults in every classroom and trained teachers to build thinking skills and self-esteem among their students.

But test scores did not improve significantly, while other school experiments in the city, such as the private Calvert School partnership with the public Barclay School, showed solid improvement. EAI could point to some gains, but nothing approximating Mr. Golle's claim that Tesseract would produce "world-class" education.

Mr. Golle said Tuesday that the Tesseract schools "are on the verge of showing solid gains." But by then it was too late. An experiment that had been watched closely from one end of the education land to the other was laid to rest, more for financial reasons than educational ones.

EAI ran into the cold reality of urban education and city politics. The company chose a struggling urban system to establish a beachhead, and it was handed nine of Baltimore's most troubled schools. Mr. Golle signed a contract allowing the city to cancel with 90 days' notice. The escape clause, which Mr. Golle said this week was "a mistake," left EAI at the mercy of cost-cutting politics at a time of shrinking school resources.

Even if EAI had demonstrated the effectiveness of Tesseract, its pact with the city might have been a tempting place to find savings when Baltimore accumulated a school budget deficit of $32 million. One lesson is that it's dangerous for private contractors to be unprotected from the vagaries of municipal budgeting.

Then, too, EAI schools appeared to be robbing Peter -- the 173 schools it was not managing -- to pay Paul -- the nine schools under contract. The Sun and city analysts last June estimated the company got at least $18 million more to manage its nine original schools (and three added later) in the first three years than the city would have spent ordinarily.

This infuriated such politicians as City Council President Mary Pat Clarke and 2nd District City Councilman Carl Stokes, both of pTC whom accused the Minnesota company of profiting at the expense of Baltimore schoolchildren. It also made it difficult for EAI to build a political base in Baltimore; too many parents, principals, teachers -- and politicians -- looked on the Tesseract schools with envy.

"The contract was flawed from the beginning," said Mrs. Clarke, the only Board of Estimates member to vote against the pact four years ago. "We spent more on EAI schools than on the other schools. We allowed this company to take our tax money back to Minneapolis, and no one has ever known how much."

John Golle insisted until the end that the charge was bogus. "There is no money in those [EAI] schools!" he insisted Tuesday, still defiant. "If anyone can find it, they're welcome to it." The EAI chief said the $7 million reduction demanded by city officials in his company's $44 million contract this year "is more, much more total, than our company has taken back to Minnesota since 1992." That figure, before expenses, is "short of $6 million," Mr. Golle said.

Mr. Golle has consistently praised EAI principals and teachers, saying several times that "the problem isn't the people; it's the system." But Mr. Schmoke has said that he saw "black clouds on the horizon" four years ago when he learned that EAI intended to replace school paraprofessionals with college-educated "interns."

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