As reported by Catherine Gewertz at Education Week, Mensah Dean at the Philadelphia Daily News and Martha Woodall of the Philadelphia Inquirer, that city's School Reform Commission decided 3-1 to extend the contracts of the district's six private school managers for another school year. The organizations will remain in the 38 schools they now operate, including 12 where their test performance is generally considered unsatisfactory.

Payment arrangements have been altered. Recognizing the district's financial problems, all providers will now be paid $500 over the average per pupil expenditure in schools managed by the central office. This amounts to a $250 cut for Edison and Victory Schools, as well as nonprofits Universal Companies and Foundations Inc., and a $50 raise for Temple University and the University of Pennsylvania.

The Commission also announced its intent to seek proposals to turn around on the order of 60 schools in corrective action status under NCLB, including 17 now managed by the six providers.

Observations:

1. By keeping the existing contracts and providers in place, the Commission is in a better position to manage the district overall.

While there are practical reasons for the contract extension - the disruption of transitioning schools back to district management for the coming school year, the fact that state assistance to the city's schools is tied to having outside contractors, and the advantages of coordinating the end of the school management contracts with the issuance of the new RFP - they all point to a larger truth. The Commission understands the advantage of "live options."

Here school management providers are not relevant so much because they raise test scores, but because they shift the balance of power in district management from the unions and bureacracy back to the Commission. Yes, they are on the whole doing no better than the traditional system, but they are also doing no worse. This is a point for all school boards to ponder. Before school managers came along, the best alternative to a negotiated agreement (BATNA) that boards had with teachers unions and accepting bureacratic resistrance to change was a strike. With outside managers, the union's best alternative to an agreement with the board, and the bureaucracy's best alternative to accepting reform, is fewer jobs. The possibility of expanding management companies' work gives the unions and bureaucracies pause in their negotiations with the administration. They have no other employer to negotiate with as a group. By the same token, the possibility that a management organization could lose its contracts to the bureaucracy or another provider  - or expanding their contracts in a district, puts the school board in a better negotiation position with each management organization.

2. It's not clear whether the providers dodged a bullet or took one. The small raise is trivial for the universities; the pay cut is anything but trivial for the rest.  Consider the two for-profits.

Philly represents about one third of Victory Schools' network. Weighing the cost of walking away from that, the possibility of additional uncompensated costs if it stays and trys to improve performance, and - it is successful - the possibility of winning contracts for some of the 60 schools about to come on the market, it's not surprising that they immediately expressed an intention to accept the contract extension.

For Edison, the picture is more complicated. On the one hand, its school network is much larger than Victory's, but since the firm offers a wide range of services, it's hard to say just how important the Philly contract is as a matter of gross margin or net revenue. It is their largest contract in their largest state. 

More important, while the Commission's extension decision suggests that doing no better than the district is not necessarily an end to doing business with that district, it's probably not good enough to win a school management contract with the next district. If Edison walks from Philly, it will be a long time before it gets another contract of that magnitude. If it takes the offer and succeeds in improving test scores, Edison will substantially increase its prospects for winning new work in new cities, as well as gaining more work in Philly.

Your editor predicts Edison will take the offer, because its owners will not prefer the strategic alternative. Whether the firm decides to walk or gamble and then fail, it will have to downsize and retrench, because it will not grow in any significant way for several years. A dice toss makes more sense.

3. Are the providers' managements and boards pyschologically committed to do "whatever it takes" to raise scores significantly in the next year, do they have the resources, and even with unlimited resources is it possible to make politicaly significant improvements in school performance in the next year?

As for the last question; other things being equal, your editor would bet against it. There are few such miracles in school reform.

However, if your editor were placed in charge of the effort and given the corporate checkbook he would do certain things.  First, create an Individualized Educational Plan for each of the lowest performing students, pay attention to it daily, and bring in a group of experts to help make sure each student is diagnosed correctly, receiving the right treatments, and on the right path. Second, get every student the best tutoring program for their particular learning challenge - whether or not it happens to be Newton. Third, increase the ratio of instructional staff to students, by bringing in senior specialists in Edison's curriculm programs like Success for All, and hiring teaching assistants in whatever guise necessary - teacher trainees, interns etc. Fourth, put Edison-controlled staff on a six-day work week, with Saturday devoted to "attack planning" for the next week. Fifth, create some kind of a "war room" in Philly to provide the intelligence and warning required to redeploy Edison controlled resources as needed. Sixth, keep as many kids after school as possible, in tutoring or enrichment. Seventh, any and every action that will marginally improve the prospects for improved performance. Eigth, a school-wide bonus program if the required performance target is achieved.  In short, a "controlled swarm" of approaches aimed at improving the test performance of specific students.

If Edison simply does what it has been doing in Philly, except better on the margins, it won't get the dramatic improvements it needs. Nevertheless, your editor expects that's exactly what the firm will chose to do; in which case they should walk away - using the pay cut as justification, start to retrench and retool, and prepare to re-enter the market in a big way two years from now.