June 21 — 12:00 am, 2007

As contracts are cut, discipline schools get gentler treatment

Amidst a swirl of controversy and considerable parent protest, the School Reform Commission has spent weeks considering whether to renew the contracts of six education management organizations, or EMOs.

But another set of contracts with school managers, worth far more money, has gotten far less scrutiny – those with three for-profit companies that operate alternative and discipline schools.

These companies receive a total of about $40 million to serve fewer than 3,500 students who have been expelled from regular schools or are seeking to return after dropping out. They were spared from the District’s plan to negotiate a 10 percent cut in outside contracts – and to terminate some contracts entirely – to help close last fall’s surprise $73 million budget gap.

Instead, these companies were denied promised annual cost-of-living increases that were built into their five-year contracts.

District officials say the special treatment is because, unlike the EMOs, the companies – Community Education Partners (CEP), Camelot Schools of Pennsylvania, Inc., and Cornell Abraxas – assume responsibility for the cost of educating each student rather than just receiving an add-on management fee like the EMOs.

“As we work through this process, we were trying to cut the contracts that impacted the classroom the least,” said spokesperson Amy Guerin. “These alternative education contractors provide direct classroom services, facilities, and highly-trained staff for an at-risk population.”

Foregoing the cost-of-living increase next year in these contracts could save the District as much as $2 million. “That is not insignificant,” Guerin said.

But as deep cuts have been made across the District and the SRC faces a need to find additional savings, some education activists are concerned that there has never been a thorough evaluation of what, exactly, Philadelphia is getting for the huge outlay of funds on disciplinary schools. The District has never had any public discussions of the best options for dealing with school safety and discipline, hasn’t provided any data to back up the per-pupil outlays, and hasn’t explained why one provider gets more per pupil than another.

“This is a substantial amount of money, and there just aren’t hard facts out there,” said Len Rieser of the Education Law Center, which advocates for the legal rights of students.

By contrast, three studies, one done in-house, evaluated the effectiveness of the EMOs. Their conclusion – that the EMO-operated schools did no better than ones run by the District in improving student achievement – sparked citywide debate on the wisdom of keeping the private managers. They mobilized parents, riled the companies, and put pressure on the School Reform Commission and legislative supporters of privatization to justify their decision-making.

On the discipline schools, however, “public accountability just hasn’t been there,” Rieser said. With such tight budgets, “the whole point of getting information to the public is so that we can talk about the best uses of money we have.”

Community Education Partners, the oldest and largest of the discipline school operators, receives the lion’s share of the alternative education funds – some $30 million – for three discipline schools (CEP at Hunting Park, Allegheny, and Miller) and an accelerated school for overage high schoolers and returning dropouts. Their funding dwarfs the District’s $19 million combined payout to all six EMOs this year.

Camelot gets about $8 million for two discipline schools (Boone and Shallcross) and one accelerated school, and Cornell Abraxas about $2 million for a program that serves troubled third and fourth graders.

Any suggestion that CEP and the other providers aren’t sharing in the pain of the cutbacks is not true, said Barbara Braman, senior vice president of CEP and a former longtime District official.

“We were not spared at all,” she said. This will be the second budget year in which CEP and other providers took a freeze in the promised increase based on the Consumer Price Index, which will be an effective 4.2 percent cut from what was anticipated, Braman said.

“We lost income, and we didn’t cut direct services to kids,” she said. “You make other economies – do other things.”

Braman would not say exactly what economies were made to accommodate the freeze, or whether it cut into company profits. "I can say that the people who work in the schools didn’t even know there was a freeze," she said.

As public and legislative concerns about school safety have grown, the for-profit industry that promised to take the most troubled students out of circulation and give them a dose of behavioral and academic medicine grew along with it, with CEP in the lead. The Pennsylvania General Assembly in 1999 started a special grants program for districts that used private companies to run discipline schools.

Former superintendent David Hornbeck first brought Nashville-based CEP to Philadelphia in 2000. Subsequently, the SRC and recently departed CEO Paul Vallas undertook a massive expansion of slots for students with serious infractions, outsourcing all disciplinary schools to for-profit providers and a few nonprofits, while dramatically expanding CEP’s role. These company-run schools have now completely replaced the expensive and largely ineffective discipline schools that the District had run itself for decades.

“It happened by fiat,” Rieser said of this sea change in policy. “I don’t think there was any public discussion of what the District’s approach to school discipline problems should be. I don’t think those of us outside the District and some of those inside have a very extensive idea of how successful CEP is with kids educationally and how justified the substantial extra expenditure of money is.”

One issue is that CEP is paid not based on how many students actually enroll and attend, but based on its building capacity. That means that it can be paid for students not actually being served. Its original contract was based not only on actual enrollment, but on day-to-day attendance. That was changed, however, when CEP signed a new five-year deal in May 2004.

Moreover, based on documents from the District, CEP gets roughly $3,000 more per student than Camelot. But there has never been any study of the effectiveness of Camelot’s program vs. the one at CEP, which relies largely on students learning at their own pace at a computer.

The District is limited in how much funding it can divert from slots in disciplinary schools, since the state legislature has been providing funds specifically for that purpose through “Alternative Education Demonstration Grants.”

The SRC passed a 2007-08 budget that counts on receiving an additional $54 million from the state, which includes $22 million in such grants. But that amount is not now included in Gov. Rendell’s proposed budget. In the past, Rendell has called for more accountability for the money.

The biggest champion of the grants – and of CEP – has been State Rep. John Perzel, who had considerable clout as Speaker but has less now that he is no longer in the House leadership.

SRC James Nevels was in Harrisburg June 19 lobbying for the additional funds. He could not be reached for comment.

Rieser said that raising questions about the effectiveness of the discipline schools is not well received.

“If you ask questions about it, it’s been presented that these schools in their current form at their current cost are what we need in order to have some degree of safety in Philadelphia,” he said. “Any discussion is almost treated as somehow being unconcerned about school safety. But there are lots of ways money can be spent to improve school safety. This is only one.”

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