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Fall 2006 Vol. 14. No. 1 Focus on School District Contracting

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What is the 'diverse provider model?' How did we get it? Is it here for good?

By by Eva Gold on Sep 20, 2006 10:00 PM

Five years ago, the city and its schools were in turmoil over a proposal to turn over leadership of the school system and many of its schools to a for-profit company called Edison Schools Inc.

But out of discussions between city, state, and School District officials, a compromise reform plan emerged that took some of the heat off of Edison. At its core was what is now known as the “diverse provider model” of school management.

This model, in which six private, outside providers now manage a total of 41 schools across the city, put Philadelphia in the national education spotlight as the forerunner in a new trend towards increased involvement of the private sector in school management. These private sector providers include both for-profit businesses and nonprofit organizations.

The diverse provider model has not come cheap. Since 2002, the SRC has spent over $80 million for school management contracts with three national for-profit companies, two local nonprofit organizations, and two area universities (although the universities negotiated for less management responsibility and more focus on support for professional development). Next spring, the SRC will vote on whether to renew the contracts of the six providers currently managing schools.

Emergence of the model

In 2001, the Commonwealth of Pennsylvania took over the School District of Philadelphia. Many Republican state officials and some influential Democrats had long believed that large urban districts could not fix their own fiscal and academic problems. Their takeover plan was built on the premise of dramatically scaling up private sector involvement in Philadelphia's public education. Their plan, which drew heavily from an Edison Schools report that the governor had just commissioned for $2.7 million, called for Edison itself to manage up to 60 low-performing schools and take over many central office functions.

Privatization – especially the large role for Edison, whose reputation as an education management organization (EMO) was taking a beating nationally—met with massive pushback from students, parents, community members, local unions, and some local political leaders.

Despite the protests, state leaders remained firm that the private sector must be part of any solution in Philadelphia. As the local/state conflict heightened, interim School District Chief Executive Officer Philip Goldsmith and his colleagues introduced a compromise approach – that multiple organizations could manage schools in the District. This idea of a “diverse provider model” gained momentum as a way of meeting the state's requirement of involving the private sector while allaying local fears by reducing Edison's role.

In January 2002, the new School Reform Commission (at this time consisting solely of its chair, James Nevels) announced that other organizations besides Edison could apply to manage schools. In April 2002, the SRC selected seven private sector organizations (see chart) to manage 46 elementary and middle schools that had been identified as among the District's lowest performing. Edison was put in charge of 20 schools, more than any other provider but far less than the 60 the state had initially proposed.

With the plan in place, state legislators and the city agreed to provide additional funding to resuscitate Philadelphia's deficit-ridden schools. State support, however, was released on the condition that much of that new money be allocated to the private providers.

Schools, however, were not handed over lock, stock, and barrel to the providers. Paid anywhere from $450 to $881 extra per student, the private providers were to manage core school functions, such as school climate and the instructional program. The School Reform Commission's “thin management” approach, however, meant that teachers and principals in provider schools remained employees of the District and members of their respective unions. The District also retained authority over school budgets, as well as responsibility for special education, English Language Learners, facilities, transportation, and food services.

As the diverse provider model has evolved, the private providers have become, in the words of one District official, “part of the fabric of the system.” Most of the providers use all or part of the District's standardized Core Curriculum, in place since 2003. In 2005, most of the provider-managed schools were organized into one administrative region.

And the oft-stated belief of District CEO Paul Vallas that all schools are District schools, regardless of management model, has contributed to a collaborative atmosphere in which lines between public and private are blurred. The District has also extended the model by exploring other strategies for getting outside management support for schools, such as hiring university partners and turning over District schools to charter school operators.

The future of the model

In his book, Crash Course: Imagining a Better Future for Public Education, Edison founder Chris Whittle unabashedly states that “the multiprovider model [that] was created and first tested in Philadelphia … is a model for the nation.”

Indeed, many observers both locally and nationally have concluded that a combination of rising test scores in Philadelphia, lack of sustained public opposition to private sector management, and enforcement of federal No Child Left Behind (NCLB) accountability mandates will lead to the continuation of the Philadelphia experiment and to other districts using Philadelphia as a model for turning over low-performing schools to private managers.

While analyses of districtwide test score gains in elementary and middle grades over the past four years do show an improving system, they do not indicate that any individual providers are outperforming the group, nor do they indicate that the providers as a group are outperforming the District (see "Gap widens").

One provider is gone. In 2003, Chancellor-Beacon Academies, one of the original seven providers, had its contract terminated by the District “for convenience.” CEO Vallas claimed that the District would “dump what doesn't work and expand what does.”

Since then, five other schools have been put under private management, two that had been under private management closed, and three others that were privately managed no longer are. But despite these changes, District officials generally have advocated giving the various providers time to prove their worth.

With a vote on the renewal of providers' contracts looming next spring, however, the time to account for the providers' impact is rapidly approaching.

Is this diverse provider model working? Has the rate of improvement been adequate in the schools managed by private providers and receiving extra funds? What role has the presence of private providers played in the districtwide up-tick in performance? Beyond test scores, what impacts have private providers had on teaching, learning, and school climate in their schools?

Developing a citywide dialogue around these questions, which includes educator and parent perspectives from the schools involved, is critical to assessing if the diverse provider model has been worth the millions already invested in it.

About the Author

Eva Gold is a principal researcher at Research for Action and she is a Director of Learning from Philadelphia’s School Reform, a multi-year research and public awareness project.

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