Edisons shaky finances raise concerns

PHILADELPHIA – Edison Schools Inc., the for-profit management corporation hired to run 20 Philadelphia schools, saw its stock plummet to $1.37 per share on May 17, raising fresh concerns about the proposed school privatization plan. Edison stock has lost 89 percent of its value in one month.

In its third quarter earnings report, filed with the Securities and Exchange Commission (SEC) two days late, Edison said it needs $30-$50 million in order to open new schools here this September. The SEC has just completed a three-month inquiry into Edison’s accounting practices, finding that Edison exaggerated how much revenue it had. Because the company cooperated, it was not fined.

Philadelphians have protested against privatization of its public schools ever since former Gov. Tom Ridge hired Edison for $2.7 million to do an assessment of the city’s schools last August. Ridge’s successor, Gov. Mark Schweiker, has insisted that Edison play the major role in a state takeover of Philadelphia schools.

Schweiker wanted to hand Edison the central management of the Philadelphia schools as well as management of 45 low-performing schools at the time of the state takeover in December 2001. But the School Reform Commission (SRC), with three of its five members appointed by Schweiker, gave only 20 low-performing schools to Edison and divided central management tasks between Edison and several other companies. The commission appeared to be skeptical of Edison’s poor financial records and its poor record in raising achievement in poorly performing schools elsewhere.

Boston Renaissance Charter School has just cancelled its contract with Edison, though the contract was scheduled to run until 2005. An Edison school in Las Vegas is considering cancellation because Edison has not lived up to promises in its contract.

However, Schweiker is insisting that the SRC continue negotiating a contract with Edison and says he has confidence that Edison will come up with the money and have schools ready in the fall.

Meanwhile, a pair of federal judges agreed to hear a lawsuit filed by the Philadelphia City Council and several advocacy groups seeking to overturn the December takeover of the schools. However, the judges would not rule on the plaintiffs’ request for a preliminary injunction to prevent the SRC from awarding contracts until the lawsuit is resolved.

Public education advocates say the state takeover has brought only chaos to the Philadelphia schools, not reform. Nearly 500 teachers have applied for transfers from the 70 schools targeted for state action, and more than 400 teachers have resigned or applied for retirement. A number of schools are scheduled to become charter schools and their staff will not be eligible to join the union, the Philadelphia Federation of Teachers.

On top of these problems facing the city’s schools, the state legislature did not include in its budget the $75 million promised to the Philadelphia schools for the next year. Gov. Schweiker told the SRC he will try to get the funds.

The author can be reached at phillyrose1@earthlink.net