It is no secret that your editor is sceptical about the financial viability, claims to superior academic performance, and scaleability of Charter and Education Management Organizations (CMO, EMO). There will be exceptions (and here), but the rule is likely to be organizations with test scores that are on average not much better or worse than school districts, perpetually dependent on cash infusions from foundations or investors, and most important huge opportunity costs as measured by higher performing school improvement options.

Still, there are other opinions, the evidence doesn’t point uniformly in your editor’s direction, and the jury is still out. Three items uncovered while preparing the July 5 issue of School Improvement Industry Announcements – Providers speak to this debate.

• Northern California’s Aspire Schools has the most transparent financial picture of all the MOs, possibly because its use of public debt vehicles requires the promulgation of audited financial statements. According to its 2005-6 statement, the CMO looks to be pretty close to break-even with its current network of 11 schools and 3600 students. This year’s gap between revenues and $30 million in expenses was met with under $1 million in grants.

• Meanwhile, Imagine Schools, a national CMO built on the failing EMO, Chancellor Schools, could only be more opaque if it were funded by New School Venture Fund (Aspire being the exception that proves that rule). Still, in its 2006 annual report, Imagine's unaudited financials show that it required a bit over $2 million to fill its revenue gap and cover nearly $100 million in expenses.
These numbers don’t tell us as much as we’d like. We don’t know how much of the narrowing is attributable to accounting and/or operational flukes. At least as important, we don’t know about deferred expenses, the most important being whether staff are being stretched thin (burnt out) in order to keep costs in line. We know that each new school requires a multi-million dollar start-up investment.  Still, it's worth reviewing the statements, figuring out the network size/enrollment required for each to break even and following the story.

• As reported by the New York Times Jennifer Medina, Los Angeles CMO Green Dot, which embraced the unionization of its teaching force, has been asked to help New York’s United Federation of Teachers run a charter in that city.

There is no more demanding test of any school improvement model. Add a school in your own city, and it may be that success has to do entirely with local factors – including culture, demographics, politics and above all the specific individuals associated with the enterprise. (This is why one of your editor’s rules of investment decisions is “community relations don’t scale.”) Add a school on the other side of the continent and the “model” – the materials, procedures, curriculum, training, means of quality control, etc, etc – may be proved wanting. And if success is about the managers rather than the model, management will find itself drawn from home frequently enough to disrupt operations of the core enterprise. It’s a risky move. Good luck to Steve Barr.