Turning to outside organizations to do more jobs

Like private management of schools, contracting with private companies for curriculum and educational services has grown under the SRC, a study found.

by Betsey Useem and Kendal Rinko

Philadelphia public school leaders seeking solutions to pressing issues such as running disciplinary schools, training student teachers, or providing technology-based learning interventions have increasingly turned to external organizations to do the job.

Since the onset of the current wave of reform in 2002, the School District of Philadelphia has stepped up its contracting with a large and diverse set of organizations - local and national, large and small, for-profit and nonprofit-to assist with the work of school and District improvement, according to a new analysis of District contracts.

During the 2005-06 school year, the District budgeted about $500 million, a quarter of its operating budget, on contracted services of all types, up from $380 million in 2003-04. Another $96 million was allocated for contracts from the District's “categorical” grants budget.

The school system has not only undertaken the largest experiment with contracting out of the management of individual schools to outside “education management organizations” (EMOs), but it has also been pioneering the use of external vendors and partners in areas such as curriculum and instruction, and not just for traditional areas of contracting such as school construction and transportation.

In a study by Research for Action in Philadelphia, we examined SRC resolutions for contracts exceeding $25,000 in the key areas of educational and management services from January 2002 through June 2006.

Preliminary results from our study showed that the number of contractors in these areas of work doubled from 2002 to 2003, and increased thereafter but at a slower rate. Overall, the number of individual consultants and organizations doing business with the District increased from about 80 in 2002, the first year of the SRC's existence, to 183 in 2005, a year in which the Vallas-led reforms were in full swing. Partnership activity with external organizations has remained strong into 2006.

The numbers of contractors would have been higher had we taken on the extensive task of tracking the many providers of “supplemental education services” (tutoring) required by the federal No Child Left Behind Law.

In our analyses, for-profit firms and consultants formed a substantial part of the contractor pool - 26 to 46 percent depending on the year - but an array of nonprofit organizations, ranging from universities and other large institutions to community-based organizations, outnumber business-sector contractors.

Corporations and consultants, however, garnered a bigger share of overall contracting dollars. Our analysis of SRC contract resolutions during 2005, for example, showed that in the types of educational and management services we tracked, the SRC approved approximately $95 million in contracts for for-profit firms and consultants and about $50 million for nonprofit groups and institutions. (A substantial portion of the funds included in some of the contracts of nonprofit organizations, however, passes directly through to students or other participants in those programs. On occasion, a nonprofit may serve as a fiduciary agent for funds passing through to another contractor.)