The Wrath of Cooper
There was a moment last week at Cooper Elementary School when Minneapolis School Board chair Judy Farmer took on the persona of a kindergarten teacher. Several speakers had been interrupted by the angry crowd, and downright heckling had begun. Farmer stepped to the microphone and waited for the room to quiet. "Let's take a lesson from what we teach our children and try and take turns," she said with a warm smile. "We need to have a productive give-and-take here tonight. We need to play fair."
But the 150-some Cooper teachers and parents in attendance were in no mood to settle down. For weeks their smallish brick schoolhouse in south Minneapolis's river district had been abuzz with rumors that administrators planned to turn Cooper over to for-profit Edison Schools Inc. Farmer, along with superintendent Carol Johnson and Edison executives, was there to calm the waters.
"We're here to present you an opportunity," Johnson told the crowd. "Cooper is making excellent progress, but we want to make sure we do everything possible to explore other options that may contribute to [its] success." No decisions had been made, the super stressed, calling the meeting an "exploratory discussion."
Cooper staffers and parents, however, had a different take. They'd termed the event a "parent rally" and had strung a huge banner, signed by most of the school's K-5 students, across the stage. "We know Cooper rules," it read. "Why don't you?" People lined up at the microphone, often vehemently arguing with Edison vice president of development Deborah McGriff. At one point a translator asked whether any of Cooper's Somali parents wished to make comments. The only response was: "We very much like Cooper school and would like to see it stay the way it is."
Finally, a mother asked the evening's defining question: "If the parents say we don't want this, are you going to go away?" The answer came two days later when district officials sent out a letter stating that they'd decided to leave the school alone.
For administrators, however, that wasn't the end of the story: In fact, the defeat at Cooper may have marked the beginning of a whole new headache.
In 1998 the district signed a contract with the local social-service agency Project for Pride in Living (PPL) to set up an experimental public school managed by Edison, a publicly traded company that runs 79 schools nationwide, including 3 in Minnesota (see "Reading, Writing, and Revenue," October 20). The contract stipulated that the district would provide Edison/PPL with space for 1,200 students by the start of the school's fourth year. Some 550 K-7 kids now attend classes at Edison/PPL's site in the former Brown Institute at Hiawatha Avenue and Lake Street; for next year, the contract envisions an enrollment increase of 300, with an additional 350 in 2001.
The problem, says David Dudycha, the district's director of policy and planning, is that administrators don't quite know where to put those extra students. In addition to Cooper, he says, south Minneapolis's Morris Park Elementary was being considered. But after last week's debacle, that option is out. "We thought there might be a greater buy-in by the parents [for the Edison program], but there wasn't," Dudycha explains. "We are not currently looking at an existing elementary program as a possible site." Instead, he says, the district will explore the possibility of leasing space near the current Edison/PPL site. "We're looking wherever we can find a spot."
Cathy Sullivan, a kindergarten teacher at Cooper who helped organize the rally, says the district was wise to give up. Had Edison taken over the school, she claims, few staffers would have stayed--a prediction backed up by five other teachers attending the meeting. "I would never work for a for-profit corporation," she states, her voice shaking. "It just disgusts me."
Teachers around the district, Sullivan continues, are familiar with the troubles that led 75 percent of Edison/PPL's teachers to resign before the first year was out. "I don't know what they're going to do," she concludes. "The word is around--they're going to run into [opposition] wherever they go."
The dominant question at the November 29 meeting, however, had nothing to do with personnel troubles: What those in attendance demanded to know, over and over again, was how the company could make a profit while operating on the same revenues public schools receive. Edison's McGriff was visibly agitated when she responded that the firm does not cut corners: On the contrary, she said, it invests money upfront for high-tech equipment, a longer school year, and the like. "We bring $1.5 million to start every one of our schools," she noted.
"You keep saying the same thing," someone called from the audience. "What generates the profit? Who's paying for that extra stuff?"
The exchange continued in an almost comical fashion as McGriff explained Edison's corporate philosophy while one parent after another asked the same question. Finally, board chair Farmer put an end to the debate by bluntly stating, "Honestly, no one is quite sure how they'll ever make a profit. They have some big investors. But right now, there's only hunches. I'm about as curious as you are."
According to documents filed with the Securities and Exchange Commission, Edison has incurred losses in excess of $140 million in its eight-year history. And the company's initial public stock offering on the NASDAQ last month didn't help matters: Investors weren't willing to pay more than $18 a share, far less than the expected range of $22 to $25. The New York Post called the launch a "dud" while noting that Edison founder Chris Whittle and president Benno Schmidt had still made out nicely--Whittle's share of the company is now worth some $205 million, while Schmidt's is valued at $16.7 million.
"Well, it wasn't dramatic, that's for sure," says Bill Parent, a consultant at Boston-based investment and consulting firm EduVentures. Investors didn't like Edison's complicated business strategy and heavy losses, he says; still, many believe the company will make money, just not anytime soon. "Everybody right now is just sort of sitting and waiting," Parent offers.
Duane Ellis, Edison's regional vice president for the Midwest, agrees. "As Edison continues to grow," he argues, "we will achieve significant economies of scale which will allow us to reach profitability."
But that argument, cited by Edison officials whenever the company comes under fire, has been drawing increasing scrutiny. Recently, Dallas superintendent Bill Rojas clashed with his school board over a plan to have the firm take over nine public schools. The board voted against the idea, with several members questioning Edison's financial situation and business strategy. The next day, Rojas showed reporters tin cans emblazoned with the names of Edison's sharpest critics, placed a $20 bill in each, and announced that he was ready to "tin-cup" for the $30 million investment Edison had promised. He also offered to try "special education techniques" on any board members who didn't see the advantages of working with the company. After the resulting firestorm blew over, the board voted to turn six schools over to Edison.
Ellis, who attended the Cooper meeting, says the company must work harder to overcome what he considers negative stereotyping by critics. "The profit motive may, in their minds, skew what they believe our company will do," he sighs. "It was a very uncomfortable night."
Cooper parent Stefan Kren has another idea for how Edison might avoid similar pummelings in the future. Sitting in his car after the meeting, his long gray hair pulled back in a ponytail and a very utilitarian pair of glasses perched on his nose, Kren shakes his head in disbelief: "They come in here behind this shield of Armani suits and gold jewelry. I mean, maybe that kind of thing works in Minnetonka, but it's just not going to go over very well with this crowd." With a smirk, he adds: "These guys have to do a better job on their homework."
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