United States General Accounting Office 

GAO Report to the Chairman, Committee on 

Education and the Workforce, House of 

Representatives 

October 2003 PUBLIC SCHOOLS 

Comparison of 

Achievement Results 

for Students Attending 

Privately Managed and 

Traditional Schools in 

Six Cities 

GAO-04-62 

Highlights of GAO-04-62, a report to the 

Chairman, Committee on Education and 

the Workforce, House of Representatives 

Over the last decade, a series of 

educational reforms have increased 

opportunities for private companies to 

play a role in public education. For 

instance, school districts have 

sometimes looked to private 

companies to manage poorly 

performing schools. The 

accountability provisions of the No 

Child Left Behind Act of 2001 may 

further increase such arrangements 

because schools that continuously fail 

to make adequate progress toward 

meeting state goals are eventually 

subject to fundamental restructuring 

by the state, which may include 

turning the operation of the school 

over to a private company. 

GAO determined the prevalence of 

privately managed public schools and 

what could be learned about student 

achievement in these schools from 

publicly available sources. To do so, 

GAO examined existing data on the 

number and location of privately 

managed schools and reviewed a 

variety of reports on student 

achievement. In addition, GAO 

compared standardized test scores of 

students attending privately managed 

public schools with scores of students 

attending similar traditional public 

schools. GAO identified privately 

managed schools that had been in 

operation for four years or more in 

6 large cities and matched these 

schools with a group of traditional 

schools serving similar students. 

GAO then analyzed student scores on 

state reading and math tests at selected 

grade levels, controlling for 

differences in student populations. 

October 2003 

PUBLIC SCHOOLS 

Comparison of Achievement Results for

Students Attending Privately Managed

and Traditional Schools In Six Cities 

The number of public schools managed by private companies has tripled in 

the last 5 years according to data compiled by university researchers, 

although such schools comprise less than 0.5 percent of all public schools. 

In the 2002-03 school year, nearly 50 private companies managed over 400 

public schools nationwide. These companies managed schools in 25 states 

and the District of Columbia, with about one-half of the schools located in 

Arizona and Michigan. Information on student achievement at these schools 

was available in the form of state- or district-issued school report cards and 

annual reports issued by the management companies. Although these 

reports provided valuable descriptive information, they were generally not 

designed to answer research questions about the relative effectiveness of 

privately managed schools compared with traditional schools in raising 

student achievement. Consequently, GAO conducted test score analyses 

that provide further insight into student achievement in these schools. 

Location of Public Schools Operated by Private Management Companies in School Year 

2002-03 

No schools 

1-20 schools 

> 20 

> 80 schools 

and < 60 schools 

Sources: GAO analysis of Arizona State University data; copyright © Corel Corp. All rights reserved (map). 

GAO’s analyses of student test scores in 6 cities yielded mixed results. 

Scores for 5th grade students in Denver and San Francisco were significantly 

higher in both reading and math in two privately managed schools when 

compared with traditional schools serving similar students. However, 4th 

grade scores in reading and math were significantly lower in a privately 

managed public school in Cleveland, as were 5th grade scores in two 

privately managed schools in St. Paul. In Detroit, where eight privately 

managed schools were studied, reading and math scores of 5th graders in 

privately managed schools were generally lower. In Phoenix, GAO found no 

significant differences. GAO’s results are limited to the schools and grade 

levels examined and may not be indicative of performance at other schools. 

www.gao.gov/cgi-bin/getrpt?GAO-04-62. 

To view the full product, including the scope 

and methodology, click on the link above. 

For more information, contact Marnie Shaul at 

(202) 512-7215 or shaulm@gao.gov. 
Contents 


Letter 

Results in Brief 


Background


Number of Schools Managed by Education Management 


Companies Is Increasing; Descriptive Information on 

Achievement Widely Available 

No Consistent Pattern of Differences in Scores on State Tests 

Found between Public Schools Managed by Private Companies 

and Comparable, Traditional Elementary Schools 

Concluding Observations 

Agency Comments 

1 

3 

4 

7 

17 

30 

31 

Appendix I Scope and Methodology 33 

Scope and School Selection 33 

Measures and Analytic Methods 36 

Limitations of the Analysis 39 

Appendix II Tables of Regression Results for Differences in 

Student Achievement Scores on State Assessments 

Appendix III 	 Characteristics of Privately Managed Schools and 

Comparable Traditional Public Schools in Detroit 

Appendix IV GAO Contacts and Staff Acknowledgments 55 

GAO Contacts 55 

Acknowledgments 55 

Related GAO Products 56 

Tables 

Table 1: State Assessment Schedules and Tests of Reading and 

Mathematics through Fifth Grade in Six Cities in School 

Year 2001-02 6 

Table 2: School Characteristics of the Privately Managed Schools 

and Comparison Schools in Denver and San Francisco 18 

Page i GAO-04-62 Privately Managed Schools 

41 

54 
Table 3: School Characteristics of the Privately Managed Schools 

and Comparison Schools in Cleveland and St. Paul 23 

Table 4: School Characteristics of the Privately Managed School 

and Comparison Schools in Phoenix 29 

Table 5: Regression Results for Differences in Student 

Performance on State Assessments at the Privately 

Managed and Comparison Schools in Denver 42 

Table 6: Regression Results for Differences in Student 

Performance on State Assessments at the Privately 

Managed and Comparison Schools in San Francisco 43 

Table 7: Regression Results for Differences in Student 

Performance on State Assessments at the Privately 

Managed and Comparison Schools in Cleveland 44 

Table 8: Regression Results for Differences in Student 

Performance on State Assessments at the Privately 

Managed School and Comparison Schools in St. Paul 

(School A Comparison) 45 

Table 9: Regression Results for Differences in Student 

Performance on State Assessments at the Privately 

Managed School and Comparison Schools in St. Paul 

(School B Comparison) 46 

Table 10: Regression Results for Differences in Student 

Performance on State Assessments at the Privately 

Managed and Comparison Schools in Phoenix 47 

Table 11: Regression Results for Differences in Student 

Performance on State Reading Assessment at the Privately 

Managed and Comparison Schools in Detroit 48 

Table 12: Regression Results for Differences in Student 

Performance on State Math Assessment at the Privately 

Managed and Comparison Schools in Detroit 51 

Figures 

Figure 1: Number of Public Schools Managed by Private 

Companies from School Year 1998-99 through 2002-03 8 

Figure 2: Location of Public Schools Operated by Private 

Management Companies in School Year 2002-03 and 

Annual Number of States with Such Schools Since 1998-99 9 

Figure 3: Number of Educational Management Companies from 

School Year 1998-99 through 2002-03 10 

Figure 4: Test Score Section of a Report Card for a Hypothetical 

School in Colorado for School Year 2002-03 13 

Page ii GAO-04-62 Privately Managed Schools 
Figure 5: Fifth Grade Reading Scores for the Privately Managed 

School and Comparison Schools in Denver on the 

Colorado Student Assessment Program 19 

Figure 6: Fifth Grade Reading and Math Scores for the Privately 

Managed School and Comparison Schools in San 

Francisco on the Stanford-9 Achievement Test 21 

Figure 7: Fourth Grade Reading Scores for the Privately Managed 

School and Comparison Schools in Cleveland on the Ohio 

Proficiency Test 24 

Figure 8: Fifth Grade Reading and Math Scores for the Privately 

Managed Schools and Comparison Schools in St. Paul on 

the Minnesota Comprehensive Assessment Program 25 

Figure 9: Fourth Grade Reading Scores for Privately Managed and 

Comparison Schools in Detroit on the Michigan Education 

Assessment Program 27 

Figure 10. Fourth Grade Math Scores for Privately Managed and 

Comparison Schools in Detroit on the Michigan Education 

Assessment Program 28 

Figure 11: Fifth Grade Reading and Math Scores for the Privately 

Managed School and Comparison Schools in Phoenix 30 

Abbreviations 

NCLBA No Child Left Behind Act of 2001 


LEP limited English proficiency 


OLS ordinary least squares 


This is a work of the U.S. government and is not subject to copyright protection in the 

United States. It may be reproduced and distributed in its entirety without further 

permission from GAO. However, because this work may contain copyrighted images or 

other material, permission from the copyright holder may be necessary if you wish to 

reproduce this material separately. 

Page iii GAO-04-62 Privately Managed Schools 
United States General Accounting Office 

Washington, DC 20548 

October 29, 2003 


The Honorable John A. Boehner 


Chairman 


Committee on Education and the Workforce 


House of Representatives 


Dear Mr. Chairman: 


In the last decade, reports of failing schools and low student achievement 


have given rise to a variety of educational reforms that have expanded 


opportunities for private companies to play a role in public education. In 


some cases, school districts have looked to private companies to manage 


poorly performing schools with the expectation of improving scores on 


state achievement tests. The accountability requirements of the No Child 


Left Behind Act (NCLBA) of 2001 may further increase such arrangements 


because schools that continuously fail to make adequate yearly progress 


toward meeting state proficiency goals may be eventually subject to 


fundamental restructuring by the state, including turning the operation of


the school over to a private management company.1


As the role of private companies in the management of public schools has 


developed, interest in students’ academic performance at these schools 


has grown. In light of the expanding role for private companies in public 


education, we agreed with your office to determine the prevalence of 


public schools managed by private companies and to report on what can 


be learned about student achievement in these schools from publicly 


available information sources. In addition, we agreed to compare student 


achievement in elementary schools operated by private companies in large 


urban areas with student achievement in similar traditional elementary 


schools. 


To determine the prevalence of privately managed schools, we obtained


information from research organizations on the number and location of 


public schools that have both instructional and noninstructional services 


provided by private companies. We relied primarily on a 2002-03 annual 


report compiled by Arizona State University that tracks nationwide growth


1

Public Law 107-110, Jan. 8, 2002. 

Page 1 GAO-04-62 Privately Managed Schools 
of for-profit educational management companies, the only such report of 

its kind we found.2

 We selectively verified data in that report with 

information compiled by the National Center for Education Statistics, the 

Center for Education Reform, the National Association of Charter School 

Authorizers, and university researchers in Michigan and New Jersey. To 

locate publicly available information on student achievement in privately 

managed schools, we examined a variety of Internet Web sites, including 

state, district, and the larger private management company sites. We also 

reviewed studies conducted by the companies and by other researchers, as 

well as performance reports issued by state and district school officials to 

learn what has been reported about achievement at these schools. 

To compare student achievement in public elementary schools operated 

by private companies with that at similar traditional schools, we analyzed 

individual student performance in specific grades on mandatory state tests 

of reading and mathematics. We identified 14 public elementary schools in 

larger urban areas across the country that had been continuously managed 

by private companies since the 1998-99 school year. These schools, 

managed by six private companies, were located in six cities: Cleveland, 

Ohio; Denver, Colorado; Detroit, Michigan; Phoenix, Arizona; St. Paul, 

Minnesota; and San Francisco, California. We matched each of the 

14 schools with a set of 2 or more traditional public schools in the same 

city that were similar in terms of grade span, enrollment, student race and 

ethnicity, and the percentage of students with limited-English proficiency, 

disabilities, and eligibility for the federally subsidized free and reducedprice school lunch program. (See app. I for details on the procedures used 

to match schools.) Using test scores for the school years 2000-01 and 

2001-02, we compared student scores in reading and math at one grade 

level in each of the 14 privately managed schools with scores of students 

in the same grade at the set of similar traditional schools. We also analyzed 

changes in individual students’ test scores over time in the three cities 

where such data were available—Denver, Phoenix, and San Francisco. 

Our analyses controlled for differences in characteristics of students 

attending the privately managed and traditional schools by using 

demographic characteristics—such as those used in selecting similar 

2

Arizona State University researchers at the Education Policy Studies Laboratory compile 

annual data on the number of companies and their schools by school type, grade level, size 

of enrollment, year opened, and location. See Alex Molnar, Glen Wilson, and Daniel Allen, 

Profiles of For-Profit Education Management Companies 2002-2003, (Tempe: Arizona 

State University, Jan. 2003). 

Page 2 GAO-04-62 Privately Managed Schools 
Results in Brief 

traditional schools—and student mobility to the extent that these data 

were available for individual students. We use the word significant—as in 

significantly higher or lower—throughout this report to mean statistical 

significance at a 95-percent confidence level, not to refer to the 

importance of the difference. Our study is constrained to varying degrees 

by incomplete data for some locations and by the lack of information on 

the reasons that individual students enrolled in these schools. In addition, 

our findings about student performance are limited to the particular 

grades in the privately managed and traditional schools we studied and 

may not be indicative of other grades or schools. For this reason, we do 

not identify the specific schools or the associated management companies 

in our study by name. A detailed explanation of our methodology, study 

limitations, and data verification procedures are found in appendix I. We 

conducted our work from January to October 2003 in accordance with 

generally accepted government auditing standards. 

The number of public schools managed by private companies has tripled 

in the last 5 years, according to data compiled by university researchers. 

Nevertheless, only slightly more than 400 public schools were privately 

managed in the 2002-03 school year, considerably less than 1 percent of all 

public schools. Managed by 47 private companies, these schools were 

located in 25 states and the District of Columbia, with about one-half 

located in Arizona and Michigan. Descriptive information about 

achievement at individual schools was widely available in the form of 

school report cards that identified the proficiency levels or achievement 

scores of students tested in the current year, relative to state standards 

and state or district averages. Three company reports presented 

information on changes in achievement over time for all their schools in 

one or more states. While providing useful information on student 

achievement, these reports were generally not designed to answer 

research questions about the relative effectiveness of privately managed 

schools compared with traditional schools. 

Our analyses of scores on state reading and mathematics tests in selected 

grades did not show a consistent pattern of superior student performance 

between schools managed by private companies and demographically 

similar traditional public schools in six cities. In two cities, Denver and 

San Francisco, students at the privately managed schools had on average 

significantly higher reading and mathematics scores than students at 

similar traditional public schools. Students at these privately managed 

schools also demonstrated greater academic gains over multiple years. 

However, in two other cities, Cleveland and St. Paul, student scores in 

Page 3 GAO-04-62 Privately Managed Schools 
Background 

reading and math were significantly lower in schools managed by private 

companies compared with similar traditional schools. In Detroit, results 

were somewhat mixed, although scores tended to be lower in the privately 

managed schools— reading scores were lower in 6 of the 8 privately 

managed schools and math scores were lower in 7 of the 8 privately 

managed schools, compared with similar traditional schools. In Phoenix, 

there were no significant differences in either reading or math between 

students at the two types of schools. Our results are limited to the schools 

and grade levels examined and may not be indicative of performance at 

other schools. 

The role of for-profit private companies in managing public schools is a 

fairly recent phenomenon. Until the early 1990’s, school districts 

contracted with private companies largely to provide noninstructional 

services, such as transportation, building maintenance, or school lunches. 

By the 1994-95 school year, however, the role of private companies had 

expanded to include instructional services in four school districts, as we 

reported in a 1996 GAO study.3

 These early decisions by school districts to 

contract with private companies often followed years of frustration with 

low student achievement in these schools. Since that time, the growth of 

private for-profit educational management companies has been aided by 

financial support from the business community and by the opportunities 

states have offered for greater flexibility in the provision of education 

services. 

Private for-profit management companies supply a wide array of 

educational and management services that may include providing the 

curriculum, educational materials, and key staff as well as payroll 

processing, busing, and building maintenance. The range and type of 

services vary by company, and to some extent by school within the 

company, as some companies have adapted their educational programs to 

the needs and interests of local areas. According to a study of for-profit 

educational management companies by Arizona State University, threequarters of schools operated by private for-profit management companies 

in school year 2002-03 served elementary grade students in kindergarten 

through fifth grade and in some cases continued to serve students in 

higher grades. The size of schools operated by private management 

3

See U.S. General Accounting Office, Private Management of Public Schools: Early 

Experiences in Four School Districts, GAO/HEHS-96-3 (Washington, D.C.: Apr. 19, 1996). 

Page 4 GAO-04-62 Privately Managed Schools 
companies varied from an enrollment of fewer than 100 students to more 

than 1,000 students, but averaged about 450. Several of the major 

companies reportedly served a predominantly low-income, urban, and 

minority student population. 

Private companies operate both traditional public schools and public 

charter schools. Some states or districts contract with companies to 

manage traditional public schools—often poorly performing public 

schools. These schools are generally subject to the same set of 

requirements that govern traditional schools within the district. More 

commonly, companies manage charter schools —public schools that 

operate under agreements that exempt them from some state and district 

regulations but hold them accountable for improving pupil outcomes. 

Enrollment in charter schools generally is not limited to defined 

neighborhoods, but may draw from larger geographic areas than is the 

case for most traditional schools and must be open to all, without 

discrimination, up to enrollment limits. Like traditional public schools, 

charter schools receive public funds and may not charge tuition for regular 

school programs and services, but may charge for before- and after-school 

services, extended day kindergarten, or pre-kindergarten classes. 

Public schools operated by private management companies, both 

traditional and charter, are subject to requirements of the NCLBA, 

including expanded testing requirements. Under this law, states must 

establish standards for student achievement and goals for schools’ 

performance. Results must be measured every year by testing all students 

in each of elementary grades three through five and middle school grades 

six through eight, starting in school year 2005-06,4

 and by assessing how 

schools have progressed in terms of improving the performance of their 

students. Information from these tests must be made available in annual 

reports that include the performance of specific student subgroups, as 

defined by certain demographic and other characteristics. During the 

school years covered in our study, states were only required to test 

students in one elementary, one middle school, and one high school grade. 

Table 1 identifies the different state testing schedules and instruments for 

the elementary grades in school year 2001-2002 in the cities where we 

made test score comparisons. 

4

This requirement takes effect as long as specified amounts of federal funding are provided 

for test administration. For more on this subject, see U.S. General Accounting Office, Title 

I: Characteristics of Tests Will Influence Expenses; Information Sharing May Help States 

Realize Efficiencies, GAO-03-389 (Washington, D.C.: May 8, 2003). 

Page 5 GAO-04-62 Privately Managed Schools 
Table 1: State Assessment Schedules and Tests of Reading and Mathematics 

through Fifth Grade in Six Cities in School Year 2001-02 

Elementary 

City, state grades tested State test administered 

Phoenix, Arizona 2 – 5 Stanford Achievement Test, 9th 

Edition 

San Francisco, California 2 – 5 Stanford Achievement Test, 9th 

Edition 

Denver, Colorado 3 – 5a Colorado Student Assessment 

Program 

Detroit, Michigan 4 Michigan Educational Assessment 

Program 

St. Paul, Minnesota 3 & 5 Minnesota Comprehensive 

Assessments 

Cleveland, Ohio 4 Ohio Proficiency Test 

Source: State education departments of the states shown. 

a

Reading was tested in all three grades, but mathematics was tested only in fifth grade. 

Infrequent state testing is one of several factors that have hampered 

efforts to evaluate the impact of privately managed public schools on 

student achievement. To assess the impact of school management, 

researchers must isolate the effects of private management from the 

effects of other factors that could influence students’ test scores, such as 

school resources or student ability. Ideally, this would be accomplished by 

randomly assigning students to either a privately managed school or a 

traditionally managed school, resulting in two groups of students generally 

equivalent except for the type of school assigned. However, random 

assignment is rarely practical, and researchers usually employ less 

scientifically rigorous methods to find a generally equivalent comparison 

group. For instance, in some cases, schools may be matched on 

schoolwide student demographic characteristics such as race or 

socioeconomic status. When such characteristics can be obtained for 

individual students in the study, validity is improved. In addition, validity 

is further improved when the progress of students can be followed over 

several years. However, if the data on individual student characteristics 

are unreliable or unavailable, as has often been the case, researchers 

experience difficulties developing valid comparison groups. Similarly, if 

individual test scores are available only for one grade rather than 

successive grades, researchers cannot reliably track the progress of 

student groups over time and compare the gains made by the two groups. 

In our 2002 report that examined research on schools managed by some of 

the largest education management companies, we found that insufficient 

Page 6 GAO-04-62 Privately Managed Schools 
Number of Schools 

Managed by 

Education 

Management 

Companies Is 

Increasing; 

Descriptive 

Information on 

Achievement Widely 

Available 

rigorous research existed to clearly address the question of their impact 

on student achievement.5

 Part of the reason that so few rigorous studies 

are available may stem from the difficulties inherent in this research. 

Although the number of public schools operated by private, for-profit 

management companies has risen rapidly in recent years, these schools 

still comprise a very small proportion of all public schools nationwide. 

Largely charter schools, the 417 privately managed schools were located in 

25 states and the District of Columbia in school year 2002-03, with about 

one-half in Arizona and Michigan. These schools were operated by 

47 private management companies. Descriptive information about 

achievement in these schools was widely available in the form of 

individual school report cards that often provided comparisons with state 

or district averages, but often not with similar traditional schools. Three 

management company reports summarized achievement gains over time 

for all their schools in one or more states, using various methodologies to 

illustrate student performance. School and company reports provided 

useful information on student achievement, but generally were not 

designed to answer research questions about the effectiveness of privately 

managed schools compared with traditional schools. 

While Numbers Are 

Increasing, the Percentage 

of Public Schools Managed 

by Private Companies 

Remains Small 

In school year 2002-03, at least 417 public schools were operated by 


private for-profit management companies, according to Arizona State 


University researchers.6

 This figure was three times greater than the 


number of schools operated by private management companies just 


4 years earlier, when there were only 135 schools, as shown in 


figure 1. Over three-quarters of the 417 schools were charter schools, and 


they comprised about 12 percent of charter schools nationwide. Despite 


the sharp rise in the number of public schools operated by management 


companies, they represented a small proportion of all charter and 


5

See U.S. General Accounting Office, Public Schools: Insufficient Research to Determine 

Effectiveness of Selected Private Education Companies, GAO-03-11 (Washington, D.C.: 

Oct. 29, 2002). 

6

Arizona State University researchers list only schools operated by management companies 

that the researchers can positively identify as for-profits, but additional schools and 

companies may exist that the researchers cannot positively identify. The researchers count 

as a single school the grades in one or more buildings that are under the supervision of a 

single principal. 

Page 7 GAO-04-62 Privately Managed Schools 
traditional schools in 2002-03. About one-half of 1 percent of all schools 

nationwide were privately managed schools. 

Figure 1: Number of Public Schools Managed by Private Companies from School 

Year 1998-99 through 2002-03 

Number of schools 

500 

417 

400 

300 

200 

100 

0 

1998-99 1999-00 2000-01 2001-02 2002-03 

School year 

135 

230 

285 

368 

Source: GAO graphic of Arizona State University data. 

Over the same 5 years, public schools operated by private management 

companies have also become more geographically widespread, according 

to data from the Arizona State University study. Figure 2 shows that in 

school year 1998-99, private management companies operated public 

schools in 15 states. By school year 2002-03, the companies had schools in 

25 states and the District of Columbia, with about 48 percent of the 

privately managed schools in Arizona and Michigan. Florida, Ohio, and 

Pennsylvania also had large numbers of schools as indicated by the map in 

figure 2, which shows the location of public schools operated by private 

management companies in school year 2002-03. 

Page 8 GAO-04-62 Privately Managed Schools 
Figure 2: Location of Public Schools Operated by Private Management Companies in School Year 2002-03 and Annual 

Number of States with Such Schools Since 1998-99 

Number of states 

School year 

0 

5 

10 

15 

20 

25 

30 

1998-99 1999-00 2000-01 2001-02 2002-03 

25 24 

22 21 

15 

No schools 

1-20 schools 

> 20 

> 80 schools 

and < 60 schools 

Sources: GAO analysis of Arizona State University data; copyright © Corel Corp. All rights reserved (map). 

Page 9 GAO-04-62 Privately Managed Schools 
The number of private management companies identified by the Arizona 

State University researchers also increased over the same period, but the 

companies varied greatly in terms of the number of schools they operated. 

As shown in figure 3, the number of companies increased from 13 in 

school year 1998-99 to 47 in school year 2002-03. Most of these companies 

were founded in the decade of the 1990’s, but since their founding, some 

companies have been consolidated or have gone out of business and have 

been succeeded by newly formed companies. In school year 2002-03, most 

of the companies were small, operating 15 or fewer schools each. Five 

medium-sized companies—Chancellor Beacon Academies; The Leona 

Group; Mosaica Education, Inc.; National Heritage Academies; and White 

Hat Management—operated from 21 to 44 schools each. The single largest 

company, Edison Schools, operated 116 schools. 

Figure 3: Number of Educational Management Companies from School Year 1998-

99 through 2002-03 

Number of companies 

50 

47 

40 

30 

20 

10 

0 

1998-99 1999-00 2000-01 2001-02 2002-03 

School year 

13 

20 21 

36 

Source: GAO graphic of Arizona State University data. 

Page 10 GAO-04-62 Privately Managed Schools 
According to the Arizona Sate University report, 43 of the 47 companies 

operating in school year 2002-03 managed only charter schools.7

 Charter 

schools have greater autonomy and decision-making ability in such areas 

as purchasing and hiring compared with traditional schools that are 

generally subject to district requirements, including labor agreements. 

Arizona researchers noted that state charter school laws have provided 

opportunities for private management that were not present earlier, and 

Western Michigan University researchers indicated that the growth of 

private educational management companies occurred soon after charter 

schools reforms were enacted in that state. They explained that some 

charter holders started their own private management companies and 

other charter holders sought the acumen and financial resources of 

management companies already established in the business.8 

Individual School Reports 

Describe Achievement 

Levels, and Some 

Company Reports 

Describe Gains Compared 

to State or District 

Averages 

Two kinds of reports available to the public —school reports and company 

reports — described student achievement at privately managed schools 

relative to national, state, or district averages in school year 2002-03. 

Referred to as school report cards, the detailed individual school reports 

generally provided a snapshot of how well students attending the school 

did in meeting state achievement standards for the year. These report 

cards were issued by states, school districts, and by some of the larger 

companies, like the Leona Group for its schools in Michigan.9

 Often 

available through the Internet, the report cards for individual schools 

generally described results of state tests in terms of the proficiency levels 

or achievement scores for the school overall, by grade level, subject 

matter, or in some cases, minority group or other subgroup.10 Some report 

cards also provided historical information on the school’s performance 

over several preceding years. School characteristics, such as the size, 

demographics, staffing, and finances, were included in many cases along 

with the proficiency levels or achievement scores. Figure 4 is an example 

7

Most of the schools managed by two of the other companies were charter schools, but less 

than one-third of the schools operated by Edison Schools and Victory Schools, Inc., were 

charter schools. 

8

See Jerry Horn and Gary Miron, An Evaluation of the Michigan Charter School Initiative: 

Performance, Accountability, and Impact, (Western Michigan University: July 2000). 

9

Individual school reports are also available from GreatSchools.net and from Standard & 

Poors for a limited number of schools. 

10NCLBA requires that report cards issued by states and districts include this information, 

but scores for very small subgroups may be withheld to protect the privacy of individual 

students whose scores might otherwise be inferred. 

Page 11 GAO-04-62 Privately Managed Schools 
of the test score section of Colorado’s school report card for a 

hypothetical school. 

Page 12 GAO-04-62 Privately Managed Schools 
Figure 4: Test Score Section of a Report Card for a Hypothetical School in Colorado 

for School Year 2001-02 

STUDENT PERFORMANCE 

Colorado students are assessed once a year in order to measure their performance on state 

academic content standards, using the Colorado Student Assessment Program (CSAP). The 

chart below shows the results for grades 3 - 5 in the subject areas for reading, writing and math 

for all students tested. 

CSAP 2002 Spring 

Grade 3 Grade 4 Grade 5 

Reading Reading Reading 

Overall Academic Performance for the 

2001-2002 school year . . . . . . . . . . . . . . . . . . . . Low 

Percent of Students 

Scoring Proficient and Advanced 

Student Test Scores Used 

For Calculating Overall Academic 

Performance 

% Advanced % Proficient % Partially 

Proficient 

% Unsatisfactory % No Score 

Your School District State 

Grade 3-5 Reading 40% 65% 

Grade 3-5 Writing 18% 51% 

Grade 3-5 Math 10% 55% 

Test Scores 

Used 88.8% 

Test Scores not 

used due to: 

Language 8.6% 

Alternative 

Assessment 0.0% 

New Student 2.7% 

. . . . . . . . . . 

. . . . . . 

. . . . 

. . . 

Writing Writing Writing 

Math Math Math 

Note: Percentages may not add to 100 due to rounding 

Not Tested Not Tested 

41% 

28% 

30% 

Source: GAO composite developed from Colorado’s Department of Education’s Web site www.state.co.us/schools. 

Note: The Colorado school report cards include an explanation of the factors used to develop the 

school’s overall academic performance in this section. 

Page 13 GAO-04-62 Privately Managed Schools 
As in Colorado, many school report cards compared results to the average 

in the state or school district, which allowed parents to see how well their 

children’s school was doing—not just in relation to state standards but 

also in relation to the performance of all other public schools in the state 

or district. However, these report cards were primarily designed to 

provide descriptive information for parents and to give an indication of 

school performance, not to evaluate the relative effectiveness of one 

school versus another. Report cards usually did not directly compare the 

performance of one school against other similar schools, and when they 

did, the comparison schools selected were, by necessity, matched at the 

school level, rather than the individual student level.11 Thus, differences in 

school performance at any particular grade might be due to differences in 

the students in that grade, as the reports released by the Leona Group 

warned, rather than due to factors related to the management or 

educational strategies of the school. For this reason, report cards, while 

useful to parents, are not the best source of information if the goal is to 

evaluate the effectiveness of one school compared with another. 

Company reports, a second source of school performance information, 

tended to provide a summary of how well students at all the company’s 

schools in one or more states were doing over a period of several years. 

Generally available through the Internet, reports from three companies— 

Mosaica Education, Inc.; the National Heritage Academies; and Edison 

Schools – emphasized broad patterns, such as gains in achievement test 

scores or proficiency levels that were averaged across schools, grades, and 

subjects tested. Our descriptions of the companies’ findings are based on 

their public reports and not on our independent review of their 

methodologies or conclusions. 

Both the Mosaica and National Heritage Academies reports compared 

student performance to national norms or state averages. The Mosaica 

Education, Inc., report summarized student gains on tests administered 

from the fall of school year 1999-2000 through the spring of 2001-02 at its 

11California compares each individual school’s rating with the ratings for a set of 100 other 

schools matched on certain demographic and other characteristics. The comparison 

schools selected by the state are not required to be within the same geographic area, so 

that, for example, a school in San Francisco might be matched with a school in San Diego. 

Colorado compares each individual school’s rating with those of other schools in the 

neighborhood that are selected for their geographic proximity rather than specially 

matched for demographic and other characteristics. 

Page 14 GAO-04-62 Privately Managed Schools 
18 schools in 5 states and the District of Columbia.12 According to the 

report, there was sustained growth in average achievement scores over 

time, with an increase in the proportion of Mosaica students scoring as 

well or better than the average student on a nationally normed test and a 

commensurate decrease in the proportion scoring at or below the 

25th percentile. On the basis of these test results, the report stated that 

about a third of Mosaica’s students ranked in the top one-half of the 

nation’s students in school year 2001-02. 

The National Heritage Academies report used individual student 

performance on the state’s achievement tests to compare two groups of 

students attending the company’s 22 schools in Michigan in school year 

2000-01—veteran students who took the test at least 2 years after they 

applied to the school and newcomers who took the test less than 2 years 

after they applied.13 The study found a relationship between time 

associated with the company’s schools and higher performance, with 

veteran students outperforming newcomers across all subjects and grades 

tested and also outperforming state averages on 8 out of 10 tests. The 

report cautioned, however, that such evidence is not proof of causation 

and that some other factors not accounted for in the study might be 

responsible for the results. 

The Mosaica and National Heritage Academies reports both provided a 

broad view of overall company performance that, along with school report 

cards, could give parents more information on which to base their 

decisions about their children’s schooling. However, like school report 

cards, these two company studies were not designed to more directly 

assess school effectiveness. Neither company report included 

comparisons with students at similar traditional schools or addressed the 

question of whether the patterns of achievement that they identified might 

also be found in other schools as well. 

12See R. William Cash, Mosaica Education Annual Report: Testing Results 1998-2002 

(WestEd: Nov. 2002). 

13See Gary Wolfram, PhD, Making the (Better) Grade: A Detailed Statistical Analysis of 

the Effect of National Heritage Academies on Student MEAP Scores, undated, 

www.heritageacademies.com/hillsdale.pdf, (downloaded June 30, 2003). Because 

enrollment dates were not available, application dates were used as a proxy for enrollment. 

Furthermore, because raw scores were not available, the analysis was based on the 

proficiency levels attained, ranging from 2 possible levels on the writing tests to 4 possible 

levels on the social studies tests. Other than gender, demographic data also were not 

available. 

Page 15 GAO-04-62 Privately Managed Schools 
Edison’s annual report for 2001-02 used a methodology that went further 

toward assessing school effectiveness than other company reports we 

examined.14 In addition to providing a summary of how well its students 

were doing over time, Edison compared some of its schools with 

traditional schools. Generally, the report summarized trends in 

performance at 94 of Edison’s 112 school sites in multiple states over 

several years, compared to state and district averages.15 According to the 

report, most schools had low levels of achievement at the time Edison 

assumed management, but achievement levels subsequently increased at 

most of its school sites. Trends were also provided for several subsets of 

its schools, including a comparison of 66 of the 94 Edison schools that 

could be matched with 1,102 traditional schools on two demographic 

variables. Traditional schools selected as matches were those considered 

similar in terms of the percentages of students who were AfricanAmerican and/or Hispanic and who were eligible for the free and reducedprice school lunch program, an indicator of low income.16 Edison 

compared the average scores of students in Edison schools with average 

scores of students in the traditional schools and found that its schools 

averaged gains that were about 2 percentage points or 3 percentiles higher 

per year than those of traditional schools and that about 40 of its 

66 schools outperformed the traditional schools. 

However, the Edison analysis was limited by the fact that it was conducted 

using aggregated, school-level data and did not control for differences in 

the individual students being compared.17 Edison noted that it has taken 

steps to strengthen the way it evaluates the progress of its students and 

schools by commissioning a study by RAND, a nonprofit research 

organization that has evaluated educational reforms. The study began in 

14See Fifth Annual Report on School Performance: 2001-2002 (Edison: Feb. 2003). 

15The report explains that 18 schools were excluded due to lack of data for two points in 

time. For the remaining 94 schools, trends were calculated from various beginning dates 

through 2001-02. The beginning dates varied by school, depending on when Edison 

assumed management, and ranged from school year 1995-1996 to school year 2000-01. 

16For the comparison, all traditional schools in a district were considered similar and 

included if their enrollment was within 10 percentage points of the Edison school on both 

student characteristics. If no traditional schools were that close, then they were considered 

similar and included if their enrollment was within 10 percentage points on one 

characteristic and 30 percentage points on the other characteristic. 

17An Edison official told GAO that the company did not have access to individual data on 

students at traditional public schools used for the comparison, so it was not able to 

conduct such an analysis. 

Page 16 GAO-04-62 Privately Managed Schools 
2000 and is scheduled for release in the summer of 2004. Where possible, 

RAND plans to compare the scores of individual Edison students to those 

of traditional public school students with similar characteristics. 

No Consistent Pattern 

of Differences in 

Scores on State Tests 

Found between 

Public Schools 

Managed by Private 

Companies and 

Comparable, 

Traditional 

Elementary Schools 

Differences in student performance on state assessments between 

privately managed public schools and comparable, traditional public 

schools varied by metropolitan areas for the grade levels in our study.18 

Average student scores were significantly higher in both reading and math 

for fifth graders in 2 privately managed schools, 1 in Denver and 1 in 

San Francisco, compared with similar traditional public schools, as were 

gains over time when we examined a previous year’s scores for these 

students. However, fourth grade scores in the privately managed school in 

Cleveland and fifth grade scores at 2 privately managed schools in St. Paul 

were significantly lower compared with scores in the similar traditional 

schools. In Detroit, average fifth grade reading scores were significantly 

lower in 6 of the 8 privately managed schools, and math scores were lower 

in all but 1 privately managed school. No significant differences in reading 

or math scores were found between the privately managed school and 

comparison schools in Phoenix. 

Scores on State Tests Were 

Higher in Privately 

Managed Schools in 

Denver and San Francisco 

Average scores on state tests for fifth grade students attending privately 

managed schools in Denver and San Francisco were significantly higher 

compared with students attending similar, traditional public schools. 

Table 2 shows the characteristics used in matching privately managed and 

traditional schools in Denver and San Francisco and how the selected 

schools compared on these characteristics.19 As shown, schools generally 

had high proportions of minority and low-income students (as measured 

by free/reduced-lunch program eligibility) and students with limited 

English proficiency (LEP). For our test score analyses, we were able to 

18The word significant is used in this section to refer to statistical significance. Differences 

discussed are significant at the 95-percent confidence level using ordinary least squares 

regression models. Due to concerns about certain assumptions inherent in these models, 

we also ran models using robust estimation procedures to calculate standard errors. For all 

models, the robust procedures yielded almost identical results to those of the ordinary 

least squares. See appendix I for further details. 

19For brevity, we show percent minority in this and similar tables. However, our matching 

process actually used various categories of race/ethnicity, depending on the data available 

for the site, rather than a single minority category. See appendix II for the exact categories 

used. 

Page 17 GAO-04-62 Privately Managed Schools 
obtain data on characteristics shown in table 2 for individual students in 

our study, as well as data on student mobility.20 We used these data in the 

test score analyses to further control for student differences in the grade 

level we studied. (See app. II, where tables 5 and 6 show detailed results of 

these analyses.) 

Table 2: School Characteristics of the Privately Managed Schools and Comparison Schools in Denver and San Francisco 

Privately managed/ Percent free and Percent special Percent 

City traditional Enrollment reduced lunch education Percent LEP minority 

Denver Privately managed 665 76 8 27 

Denver Traditional 645 77 4 40 

Denver Traditional 638 52 7 25 

Denver Traditional 403 80 8 52 

Denver Traditional 394 76 15 23 

San Francisco Privately managed 506 68 4 40 

San Francisco Traditional 474 96 9 51 

San Francisco Traditional 525 81 10 33 

Source: Common Core of Data school year 2000-01 and school districts. 

As shown in figure 5, in Denver the average reading score of 572 for fifth 

grade students in the privately managed public school is higher, compared 

with the average of 557 for students in similar traditional public schools. 

The average math score of 467 at the privately managed school is also 

higher than the 440 average score in the comparison traditional schools. 

For both reading and math, differences in scores remained significantly 

higher after we controlled for factors representing differences in the 

student populations. 

20In these analyses, a student is considered mobile if he or she did not attend the same 

school in the prior year. 

Page 18 GAO-04-62 Privately Managed Schools 

95 

95 

95 

96 

77 

95 

97 

96 
Figure 5: Fifth Grade Reading Scores for the Privately Managed School and Comparison Schools in Denver on the Colorado 

Student Assessment Program 

0 

100 

200 

300 

400 

500 

600 

Privately 

managed school 

Traditional 

public schools 

Average reading score 

572 557 

0 0 60 100

Average score in 

privately managed 

school 

Average score in 

traditional public 

school 

Percentile of student scores in traditional public schools 

5

Source: GAO data analysis. 

Note: Percentiles are derived from analyses that control for differences in student characteristics. 

Figure 5 also shows the difference in reading performance, controlling for 

other factors, between the typical student at the privately managed school 

and the average student at the same grade level in the similar traditional 

schools in Denver. The bell curve represents the distribution of combined 

student scores in the traditional schools, with the lighter figure 

representing the student scoring at about the 50th percentile. The shaded 

figure represents the average student from the privately managed school. 

Although this student’s score is at about the 50th percentile in the privately 

managed school, the same score would place him or her at about the 

60th percentile when compared against the scores of students in the 

traditional schools. The difference in math scores suggests a similar 

outcome—that is, the average student in the privately managed school 

Page 19 GAO-04-62 Privately Managed Schools 
would score at about the 60th percentile in the comparison traditional 

schools.21 

In San Francisco, fifth grade reading scores averaged 636 for students in 

the privately managed school and 627 for students in the comparison 

traditional schools. Performance in mathematics of 640 was also higher for 

fifth grade students at the privately managed school, compared with 

623 for students in the similar traditional schools. (See fig. 6.) As in 

Denver, these differences were significant when controlling for other 

factors. This analysis suggests that an average student in the privately 

managed school would likely exceed about 60 percent of students in the 

traditional comparison schools in reading and about 65 percent of those 

students in math. 

21See appendix I for a further discussion of this effect size illustration and additional 

analyses comparing the privately managed school in Denver with different groupings of the 

comparison traditional schools. 

Page 20 GAO-04-62 Privately Managed Schools 
Figure 6: Fifth Grade Reading and Math Scores for the Privately Managed School 

and Comparison Schools in San Francisco on the Stanford-9 Achievement Test 

Average score 

700 

600 

500 

400 

300 

200 

100 

0 

627 623 636 640 

Reading Mathematics 

Traditional public schools 

Privately managed school 

Source: GAO data analysis. 

In both Denver and San Francisco, we were able to examine student 

performance over time, and our findings of achievement over time were 

similar to the findings described above. Students attending the privately 

managed schools showed significantly greater gains over time than the 

students in the comparison traditional schools. Specifically, fifth-grader 

students in our study who had attended their privately managed schools 

since the third grade demonstrated significantly higher achievement gains 

between grades 3 and 5 than did such students in the traditional 

comparison schools.22 

22Third grade scores were available only for reading in Denver; in San Francisco both 

reading and mathematics were examined. 

Page 21 GAO-04-62 Privately Managed Schools 
Scores on State Tests Were 

Lower in Privately 

Managed Schools in 

Cleveland and St. Paul 

Average scores on state tests for fourth grade students attending privately 

managed schools in Cleveland and fifth grade students attending privately 

managed schools in St. Paul were significantly lower compared with 

scores of students attending similar traditional public schools.23 One 

privately managed school in Cleveland and 2 privately managed schools in 

St. Paul were examined, and as in Denver and San Francisco, the schools 

in our study from these cities were high minority and low-income schools. 

Table 3 shows the characteristics used to match schools in Cleveland and 

St. Paul and how the schools selected compared on these characteristics. 

For our test score analyses in Cleveland, we were able to obtain data on 

characteristics shown in table 3 for individual students in our study, as 

well as data on student mobility.24 In St. Paul, we obtained data on all 

characteristics shown in table 3 for individual students, except special 

education.25 In addition, we were able to obtain data on limited English 

proficiency. We used these data in the test score analyses for both cities to 

further control for student differences in the grade level we studied. (See 

app. II, where tables 7, 8, and 9 show detailed results of these analyses.) 

23See appendix I for a discussion of additional analyses comparing the privately managed 

school in Cleveland and St. Paul with different groupings of the comparison traditional 

schools. 

24In Cleveland, no students in our study were designated as limited in English proficiency. 

25The special education data we received on individual students in St. Paul were not 

complete and thus were not used in our analyses of individual test scores. 

Page 22 GAO-04-62 Privately Managed Schools 
Table 3: School Characteristics of the Privately Managed Schools and Comparison Schools in Cleveland and St. Paul 

Privately managed/ Percent free and Percent special Percent 

City traditional Enrollment reduced lunch education minority 

Cleveland Privately managed 411 77 4 

Cleveland Traditional 422 80 10 

Cleveland Traditional 496 88 8 

Cleveland Traditional 352 77 16 

Cleveland Traditional 561 99 8 

St. Paul Privately managed 116 70 12 

St. Paul Traditional 386 46 12 

St. Paul Traditional 484 48 12 

St. Paul Traditional 223 71 9 

St. Paul Traditional 348 59 10 

St. Paul Privately managed 126 71 14 

St. Paul Traditional 313 76 16 

St. Paul Traditional 223 71 9 

St. Paul Traditional 438 64 13 

St. Paul Traditional 524 68 17 

Source: Common Core of Data school year 2000-01 and school districts. 

Figure 7 shows average reading scores for the privately managed school in 

Cleveland and its set of comparable schools. The average scores were 

significantly lower for students attending the privately managed school in 

both reading and math for the school years examined after controlling for 

other factors. The magnitude of the difference in reading scores is shown 

in the same figure 7. As can be seen in the figure, the score of the average 

student in the fifth grade in the privately managed school falls at about the 

20th percentile when compared with student scores in the comparison 

traditional schools. Similarly, the difference in math scores implies that 

the average student in the privately managed school would score at about 

the 20th percentile in the traditional comparison schools. 

Page 23 GAO-04-62 Privately Managed Schools 

100 

100 

99 

99 

99 

51 

43 

50 

72 

69 

72 

82 

72 

76 

61 
Figure 7: Fourth Grade Reading Scores for the Privately Managed School and Comparison Schools in Cleveland on the Ohio 

Proficiency Test 

0 

50 

100 

150 

200 

250 

Privately 

managed school 

Traditional

public schools 

Average reading score 

192 

208 

0 20 0 100

Average score 

in privately 

managed school 

Percentile of student scores in traditional public schools 

Average score in 

traditional public 

school 

5

Source: GAO data analysis. 

Note: Percentiles are derived from analyses that control for differences in student characteristics. 

In St. Paul, we studied 2 privately managed schools (labeled school A and 

school B in figure 8) and used a different set of comparison traditional 

schools for each privately managed school. The average scores in both 

reading and math were significantly lower for students at both privately 

managed schools studied compared with similar traditional schools. 

Page 24 GAO-04-62 Privately Managed Schools 
Figure 8: Fifth Grade Reading and Math Scores for the Privately Managed Schools 

and Comparison Schools in St. Paul on the Minnesota Comprehensive Assessment 

Program 

School A comparisons School B comparisons 

Average score 

1,600 

1,469 

1,256 

1,176 

1,433 1,406 

1,400 

1,200 

1,000 

800 

600 

400 

200 

0 

Reading Mathematics Reading Mathematics 

1,313 1,261 

1,363 

Traditional public schools 

Privately managed school 

Source: GAO data analysis. 

The differences for the first privately managed school suggest that an 

average student at that school would score at about the 30th percentile in 

reading and the 20th percentile in math if attending the comparison 

traditional schools. The differences in scores at the second privately 

managed school imply that the score of an average student would be at 

about the 30th percentile in the comparison traditional schools in both 

reading and math. 

Page 25 GAO-04-62 Privately Managed Schools 
Scores on State Tests in 

Privately Managed Schools 

Varied in Detroit and Were 

Similar to Traditional 

Schools in Phoenix 

Average scores for fourth grade students in Detroit varied, but tended to 

be lower in both reading and math for students attending privately 

managed schools than for students attending similar traditional schools.26 

As in other locations, student populations in schools we studied in Detroit 

tended to be minority and low income. (See app. III for other school 

characteristics.) Except for race/ethnicity, we did not use individual 

student demographic data in the Detroit test score analyses because the 

demographic data we received on individual students did not appear to be 

accurate. In spite of these missing data, we believe the analyses provide 

useful information, given the degree of similarity among the matched 

schools. 

As shown in figure 9, reading scores were significantly lower for students 

in six of the privately managed schools compared with students in similar 

traditional schools in Detroit. The size of these differences generally 

suggested that an average student attending the privately managed schools 

would score at about the 30th percentile in the similar traditional schools. 

In one comparison (labeled C in fig. 9), reading scores were significantly 

higher in the privately managed school compared with similar traditional 

schools. Students at this privately managed school would likely perform at 

about the 70th percentile in the traditional schools. For one other privately 

managed school (comparison B), differences in scores were not 

significantly different. 

26For Detroit schools, because of difficulties obtaining data and changes in the test, we 

analyzed reading and math test scores for 1 school year—2001-02. 

Page 26 GAO-04-62 Privately Managed Schools 
Figure 9: Fourth Grade Reading Scores for Privately Managed and Comparison Schools in Detroit on the Michigan Education 

Assessment Program 

Average reading score 

400 

350 

300 

250 

200 

150 

100 

50 

0 

285 283 

297 292 287 295 293 296 298 296 297 294 

306 301 306 307 

Aa Bb Ca Da Ea Fa Ga Ha 

Detroit public schools 

Source: GAO data analysis. 

Traditional public schools 

Privately managed school 

a

Represents a statistically significant difference at the 95-percent confidence level. 

b

Not statistically significant at the 95-percent confidence level but approaches significance (p<.06). 

Note : There are two parts to this reading exam, story section and information section. The reported 

reading scores are an average of the two sections and are only for the 2002 school year. 

Math scores followed a similar pattern, with student scores significantly 

lower at 7 of the 8 privately managed schools when compared with similar 

traditional schools. Scores for average students in the privately managed 

school would range from about the 15th percentile to about the 

35th percentile in the traditional schools, depending on the particular set 

of schools compared. In the one higher-performing privately managed 

school (comparison B in fig. 10), an average student in this privately 

managed school would score at the 70th percentile in similar traditional 

schools. 

Page 27 GAO-04-62 Privately Managed Schools 
Figure 10. Fourth Grade Math Scores for Privately Managed and Comparison Schools in Detroit on the Michigan Education 

Assessment Program 

Average math score 

600 

498 513 500 

518 510 

531 525 516 529 530 523 513 

541 538 532 538 

500 

400 

300 

200 

100 

0 

Aa 

Detroit public schools 

Source: GAO data analysis. 

Ba Ca Da Ea Fa Ga Ha 

Traditional public schools 

Privately managed school 

a

Represents a statistically significant difference at the 95-percent confidence level. 

In Phoenix, scores of fifth grade students at the privately managed school 

did not differ significantly from scores at similar traditional schools. As in 

the other locations studied, both the privately managed and similar 

traditional schools had high percentages of minority and low-income 

students. Table 4 shows the characteristics of the schools in our study in 

Phoenix. For test score analyses, we were able to obtain reliable data for 

minority status for individual students. Additionally, we obtained reliable 

data on student mobility, and these were included in our analysis. Data on 

special education and limited English proficiency for individual students 

were not believed to be accurate and were not included. Individual student 

data on free and reduced-lunch eligibility were not available. 

Page 28 GAO-04-62 Privately Managed Schools 
Table 4: School Characteristics of the Privately Managed School and Comparison Schools in Phoenix 

Privately managed/ Percent free and Percent special Percent 

City traditional Enrollment reduced lunch education Percent LEP minority 

Phoenix Privately managed 1,066 96 25 50 

Phoenix Traditional 913 81 19 42 

Phoenix Traditional 682 97 15 48 

Phoenix Traditional 544 92 20 39 

Phoenix Traditional 1,138 97 9 49 

Source: Common Core of Data school year 2000-01 and state education department. 

Figure 11 shows average student scores for reading and math in the 

privately managed school and in the comparison traditional schools for 

Phoenix. Scores were not significantly different in either reading or math. 

We also analyzed changes in reading and math scores between third and 

fifth grade for those students who had tested in the same school in both 

years. Again, we found no significant difference between students 

attending the privately managed school and those attending traditional 

schools. 

Page 29 GAO-04-62 Privately Managed Schools 

88 

85 

95 

99 

95 
Figure 11: Fifth Grade Reading and Math Scores for the Privately Managed School 

and Comparison Schools in Phoenix 

Average score 

700 

600 

500 

400 

300 

200 

100 

0 

623 629 627 627 

Reading Mathematics 

Traditional public schools 

Privately managed school 

Concluding 

Observations 

Source: GAO data analysis. 

As opportunities increase for parents to exercise choice in the public 

education arena, information on school performance, such as that found in 

school report cards produced by many states, becomes more important. 

Such information can be useful to parents in making school choices by 

providing a variety of information about schools, including how they are 

performing in terms of students meeting state achievement standards or 

relative to statewide averages. 

However, educators and policymakers often want to know not only how 

well schools are performing but also the factors that contribute to their 

high or low performance so that successful strategies can be emulated. 

Answering this kind of evaluative question requires a different kind of 

methodology and more complex analyses to isolate the effects of the 

particular strategies of interest—educational practices, management 

techniques, and so on— from the many other factors that could affect 

student achievement. Although not a comprehensive impact evaluation, 

our study investigates the effect of school management by comparing 

Page 30 GAO-04-62 Privately Managed Schools 
traditional and privately managed schools and by controlling for 

differences in the characteristics of students attending the schools. In this 

way, our study provides a different type of information than that typically 

found in school report cards. 

While our study explores the role of school management, it has certain 

important limitations, as discussed earlier and in appendix I. Among these 

are data issues commonly encountered by educational researchers, for 

instance, lack of test score data for successive years and unreliable 

demographic data for individual students in some sites. However, with the 

implementation of NCLBA, more rigorous studies should be possible, as 

annual testing of all grades is phased in and with expected improvements 

in the quality of demographic data resulting from requirements to report 

progress for various subpopulations of students, based on such 

characteristics as race and low-income status. 

Finally, our mixed results may be evidence of the complexity of the factor 

under study. Our study analyzed differences between 2 categories of 

schools, grouped by whether they were traditional, district-managed 

schools or managed by a private company. However, these schools may 

have differed in other ways not included in our study—for example 

curricula, staff composition and qualifications, and funding levels—and 

these factors may also have affected student achievement. Any of these 

factors or combination of factors could account for the differences we 

found or may have masked the effects of differences we otherwise would 

have found. 

Agency Comments 	 We provided a draft of this report to the Department of Education for 

review and comment. Education’s Executive Secretariat confirmed that 

department officials had reviewed the draft and had no comments. 

Page 31 GAO-04-62 Privately Managed Schools 
We are sending a copy of this report to the Secretary of Education, 

relevant congressional committees, appropriate parties associated with 

schools in the study, and other interested parties. We will make copies 

available to others upon request. In addition, the report will be available at 

no charge on GAO’s Web site at http://www.gao.gov. 

If you or your staff have any questions about this report, please call me at 

(202) 512-7215. See appendix IV for other staff acknowledgments. 

Sincerely yours, 

Marnie S. Shaul, Director 

Education, Workforce, and 

Income Security Issues 

Page 32 GAO-04-62 Privately Managed Schools 
Appendix I: Scope and Methodology 


To compare achievement of public elementary schools in large cities 

operated by private management companies with similar traditional public 

schools, we analyzed individual student scores on state assessments in 

reading and mathematics. We matched each privately managed public 

school with 2 to 4 traditional public schools located in the same city that 

were similar in terms of size, grade span, and student characteristics. To 

confirm the reasonableness of the matches, we spoke with principals in all 

of the privately managed schools in our study and visited most of the 

schools. We also spoke with principals and visited many of the traditional 

schools selected. For selected grade levels, we compared the individual 

student scores of students attending the privately managed schools with 

those of students in the similar traditional public schools. We also 

compared changes in individual student performance over time where 

such data were available. This appendix describes the scope and school 

selection, outcome measures and analytic methods, and the limitations of 

the analysis. 

Using available public information,1

 we attempted to identify all privately 

managed public elementary schools in large urban areas that had been in 

continuous operation by the same management company since the 

1998-99 school year.2

 We defined a large urban area for this study as a 

central city with a population of at least 400,000 in a standard metropolitan 

statistical area with a population of at least 2,000,000. We identified 

17 public elementary schools managed by private companies meeting 

these criteria.

3

 The 17 schools were located in Cleveland, Ohio; Denver, 

Colorado; Detroit, Michigan; Phoenix, Arizona; St. Paul, Minnesota; and 

San Francisco, California. 

Scope and School 

Selection 

1

The most comprehensive source we found for this information was a report done by 

Arizona State University. We selectively verified data in this report with other sources, such 

as compilations done for the Center for Education Reform and the National Association of 

Charter School Authorizers. 

2

If an elementary school managed by a private company also included middle or high 

school grades, the school was retained in the study if other selection criteria were met. 

3

We identified schools in Washington, D.C., and Miami, Florida, that met our selection 

criteria. We did not include Miami in this study because we previously reported the results 

of a study of the privately managed school at this site. See U.S. General Accounting Office, 

Public Schools: Insufficient Research to Determine Effectiveness of Selected Private 

Education Companies , GAO-03-11. (Washington, D.C.: Oct. 29, 2002). We did not include 

Washington, D.C., because we were concerned about obtaining reliable data. 

Page 33 GAO-04-62 Privately Managed Schools 
Appendix I: Scope and Methodology 

We matched each of these privately managed schools with 2-4 similar 

traditional public schools in the district where the privately managed 

school was located.4

 To select similar traditional public schools, we 

employed a “total deviation” score procedure. For each public elementary 

school in the defined public school district and the privately managed 

school, we determined the following school characteristics: (1) racial and 

ethnic percentages,5

 (2) percent special education, (3) percent eligible for 

free and reduced lunch, (4) percent limited-English proficient,6

 and 

(5) student enrollment. We calculated z-scores (the statistic that indicates 

how far and in what direction the value deviates from its distribution’s 

mean, expressed in units of its distribution’s standard deviation) for each 

characteristic, and then calculated the absolute value of the difference 

between the z-score of the privately managed school and the z-score of 

each traditional public school on that characteristic. For each school, we 

summed the absolute difference in z-scores into a total deviation score. 

The total deviation score represents the sum of the differences between 

the privately managed public school and the candidate traditional public 

schools. 

Traditional public schools were considered a close match if the total 

deviation score divided by the number of characteristics for which we 

computed z-scores was less than or equal to 1.0. A score less than or equal 

to 1.0 indicates that the traditional school did not deviate from the 

privately managed school by more than 1 standard deviation when 

averaging across all variables considered in the match. For example, if 

8 variables were used to calculate the total deviation score and the total 

deviation score was 7.8, the amount that the candidate school deviated 

from the privately managed school would be, on average, less than 

1 standard deviation. All comparison schools selected for our analyses met 

this criterion for a close match. 

4

In Phoenix, the Phoenix Unified High School District was used as the district demarcation 

for drawing matching traditional public schools. 

5

The specific matching variables varied from city to city. If students in a given racial or 

ethnic group comprised less than 10 percent of the student population in the privately 

managed school and if students in that racial or ethnic group comprised less than 

10 percent of the student population for the other schools in the district, excluding 

outliers, we excluded that racial or ethnic group as a specific matching variable. 

6

We sought, but were not able to obtain for use in the matching process, data on percentage 

of students with limited English proficiency for schools in St. Paul and Detroit. 

Page 34 GAO-04-62 Privately Managed Schools 
Appendix I: Scope and Methodology 

After mathematically selecting close matches, we consulted with public 

school district officials about the schools selected.7

 These considerations 

led to adjustments to our final selection of matches as follows. In St. Paul, 

traditional public schools closely matching the privately managed schools 

included magnet schools and neighborhood, that is, attendance-zone, 

schools. The two “best” matching magnet schools and the two “best” 

neighborhood schools were selected as matches for the analysis. Similarly 

in Cleveland, traditional public schools closely matching the privately 

managed schools included former magnet schools and traditional 

neighborhood schools. For balance in matching, the two “best” matching 

former magnet schools and two “best” matching neighborhood schools 

were selected as matches for the analysis. In Denver, the five closest 

matching schools were all located in a distinct neighborhood, 

geographically distant from the privately managed school. In consultation 

with local school district personnel, the two “best” matching schools from 

this area and the two “best” matching schools from outside this area were 

selected for the analysis. In San Francisco, one of the three traditional 

school matches was discarded because it had a special teacher training 

program, resulting in only two matches with the privately managed school. 

In Detroit, the best three matching traditional schools were selected 

except in one instance where one of the matching schools was discarded 

because a subsequent site visit determined that the school had selection 

criteria for attendance based upon prior achievement. In Phoenix, there 

were 21 elementary school districts located in the city, and 13 of these 

districts comprise the Unified Phoenix High School District. Since the 

privately managed schools were located within the Unified Phoenix High 

School District, we selected matches from among the 13 school districts in 

the Unified Phoenix High School District using the “best” matching school 

of each elementary school district as a pool from which we selected the 

best four matches, each from a different school district. 

Two privately managed schools in Phoenix and one privately managed 

school in Cleveland were dropped from the analysis because no matching 

traditional schools were found using our methodology. This resulted in a 

total of 14 privately managed schools included in the study, 8 of which 

were located in Detroit. Schools selected were managed by Designs for 

Learning, Inc.; Edison Schools; The Leona Group; Mosaica Education, Inc.; 

Schoolhouse; and White Hat Management. 

7

Phoenix had multiple school districts, so we consulted with state officials. 

Page 35 GAO-04-62 Privately Managed Schools 
Appendix I: Scope and Methodology 

Measures and 

Analytic Methods 

We used student reading and math scale scores on routinely administered 

state assessments as measures of academic achievement. At the time of 

our study, the most recent data available were for school year 2001-2002. 

Test scores and student characteristic data were obtained from either the 

school district or state education agency. We used a variety of approaches 

to verify the accuracy of these data. In most cases, we verified data by 

comparing a sample of the data received against school records examined 

at the school site. In Detroit, data verification indicated student lowincome, special education, and mobility data provided by the state were 

unreliable, and we decided not to use these data in our final analyses. In 

Phoenix, data verification indicated that student limited-English 

proficiency and special education data provided by the state for the 

privately managed school were unreliable and this was confirmed with 

diagnostic analysis. Therefore, we were unable to include these control 

variables in our final analyses. 

For each privately managed school and its set of matched, comparison 

schools, we selected the highest elementary grade for which test scores 

were available. We collected test score information for 2 school years, 

2000-01 and 2001-02, except in Detroit where only 2001-02 scores were 

used due to difficulties obtaining data and changes in the test given. For 

each site, we compared reading and math student scores in the privately 

managed school(s) with the scores of same-grade students in the set of 

matched, comparison schools. The scores for the 2000-01 and 2001-02 

school years were combined in the analysis.8

 In addition, in three locations 

where testing occurred more frequently, Denver, Phoenix, and San 

Francisco, we obtained third grade scores for students who had taken the 

state assessment in the same school and examined the difference in scores 

over time. 

For each site, we conducted multivariate ordinary least squares (OLS) 

regression analysis to quantify differences in student achievement while 

controlling for school type and student characteristics. Specific 

independent variables included in the regression model were as follows: 

• 	 School type, with the traditional public school being given a value of 1 and 

the privately managed school a value of 0. 

8

Diagnostic analysis determined that school year was not related to achievement scores in 

all sites except for reading scores in San Francisco. 

Page 36 GAO-04-62 Privately Managed Schools 
Appendix I: Scope and Methodology 

• 	 Mobility, with a value of 1 given to students not attending for 2 years the 

same school at which he or she took the state assessment. 

• 	 Limited English proficiency (LEP), with a value of 1 given if the child was 

designated as limited-English proficient.9 

• 	 Special education, with a value of 1 given if the student was enrolled in 

special education.10 

• 	 Low-income, with a value of 1 indicating the student was eligible for free 

or reduced lunch.11 

• 	 Race and ethnicity, with a value of 1 given for the child’s appropriate 

minority racial/ethnic identity. Each child was placed in only one racial 

category, and the number of racial categories used varied from place to 

place. When numbers for a particular racial group in a city were small, 

they were combined collectively as “other minority.” (Specific racial and 

ethnic identities employed in each city are set out in the results in app. II.) 

Student achievement on reading and mathematics were analyzed 

separately for each privately managed public school with its set of 

matched schools. The regression formula was: 

Assessment Scorei = β1i + β2iSchool Type + β3iMobility + β4iLEP + 

β5iSpecial Education + β6iLow-income + β7iRace/Ethnicity + εi 

where, (1) i is the individual student, (2) low-income is determined by eligibility for free 

and/or reduced lunch, and (3) race and ethnicity are distinct codes dependent upon the 

geographical area. 

We also performed analyses on different groupings of the comparison 

schools in Denver, Cleveland, and St. Paul. In Denver, 2 of our matched 

schools were in a distinct neighborhood that school district personnel 

9

There are degrees of LEP; however, the data did not allow us to differentiate the degree of 

limitation. 

10There are degrees of disability; however, the data did not allow us to differentiate for the 

degree or type of disability. 

11In cities where both free and reduced-lunch variables were provided, the analysis 

considered them separately. 

Page 37 GAO-04-62 Privately Managed Schools 
Appendix I: Scope and Methodology 

believed might be atypical; in Cleveland and St. Paul several of the 

matched schools were magnet or former magnet schools. We re-analyzed 

the data in each of these cities using these groupings as factors. The 

overall results were unchanged, with the exception that in Denver, reading 

scores were not significantly different when the privately managed school 

was compared with the 2 schools not in the distinct neighborhood. 

In Denver, San Francisco, and Phoenix, for the students in the grades we 

analyzed, we also obtained the prior years’ reading scores if the student 

took the test in the same school. For this analysis, the regression formula 

used the difference between reading scores in the highest elementary 

grade and that of 2 years earlier as the dependent variable. The 

independent variables were similar to those employed in the cross 

sectional analysis with the exception that the reading/mathematics score 

for the period 2 years earlier was also included as an independent variable. 

The regression formula was: 

Difference in Scorei = β1i + β2iSchool Type + β3iMobility + β4iLEP + 

β5iSpecial Education + β6iLow-income + β7iRace/Ethnicity + 

β8iAssessment Score 2 Years Earlier + εi . 

In conducting these analyses, we performed certain diagnostic and 

analytic tests to confirm both the appropriateness of aggregating 

categories in our analyses and the reasonableness of assumptions 

pertaining to normality and homogeneity of variance. In addition, we 

determined the extent of missing data and performed sensitivity analyses 

to assess the effect on our results. We determined that missing case level 

data had a negligible effect on our results. 

To illustrate the magnitude of differences found, we computed effect sizes 

based on standardized mean differences. Using the OLS regression results, 

we divided the unstandardized coefficient associated with school type by 

the pooled standard deviation to obtain z-scores for average students in 

the privately managed and traditional schools. The reported percentile 

was the area of the normal curve associated with the z-scores. 

Tables 5-12 in appendix II list the regression results and independent 

variables included in our analyses. The size and significance of the 

differences we report were derived from OLS regression models. We 

obtained results that were almost identical to the OLS results when we 

Page 38 GAO-04-62 Privately Managed Schools 
Appendix I: Scope and Methodology 

Limitations of the 

Analysis 

used robust estimation procedures to calculate the standard errors 

associated with the estimated differences. We also considered robust 

regression models that allowed for the clustering, and lack of 

independence, of students within schools. These models yielded 

somewhat fewer differences that were statistically significant at the 

95-percent confidence level. We do not focus our reporting on the results 

of the models that account for clustering, however, since the statistical 

properties and validity of such models when applied to data with a very 

small number of clusters (in this case, 3 to 5 schools) is questionable.12 

However, changes to significance levels of the school type coefficients due 

to robust standard errors and robust standard errors with clustering are 

noted in appendix II. 

The findings in this study are subject to typical limitations found in quasiexperimental designs. We examined the highest elementary grades tested 

for school years 2000-01 and 2001-02, and student achievement in these 

grades and years may not be indicative of student achievement in other 

grades and years in those schools. In addition, our matching process may 

not have produced equivalent groups for comparison. We mitigated this 

potential problem by using individual student characteristics in our 

analyses. However, reliable and complete student demographic data were 

not available in all sites, which resulted in the elimination of important 

factors from the model in several sites. In addition, other factors such as 

student ability, prior achievement, operating environment, reasons 

students enrolled in privately managed schools, and parental involvement, 

may be related to student achievement and are not accounted for in the 

study. Finally, our examination of student performance over time, that is, 

changes in achievement between grades, also has some limitations. First, 

the data allowed a study of achievement over time in only 3 of the 6 sites. 

In addition, the analyses included only students who continuously 

attended the school over the time period studied, and this in some cases 

eliminated more than half of the subjects from the analyses. We were 

12See Jeffrey M. Wooldridge, Econometric Analysis of Cross Section and Panel Data 

(Cambridge: MIT Press, 2002), p.135. 

Page 39 GAO-04-62 Privately Managed Schools 
Appendix I: Scope and Methodology 

unable to determine whether those students who remained in the school 

for this period were different in some important way from those who left. 

Page 40 GAO-04-62 Privately Managed Schools 
Appendix II: Tables of Regression Results for 

Differences in Student Achievement Scores 

on State Assessments 

Tables 5-12 in this appendix show the variables used in the OLS regression 

models and the results of those analyses. The results are presented 

separately by city and for each privately managed school and its particular 

set of matching traditional schools, with reading and math presented 

within the same table in all cases, except Detroit. The number of 

observations, shown as N, is the total of the observations in the privately 

managed school and its set of comparison schools used in each regression 

analysis. 

We also ran similar regression analyses using robust estimation 

procedures with and without clustering, as discussed in appendix I. In 

most cases, effects of school type remained significant at the 95-percent 

confidence level. Exceptions are indicated by table notes. 

Page 41 GAO-04-62 Privately Managed Schools 
Appendix II: Tables of Regression Results for 

Differences in Student Achievement Scores 

on State Assessments 

Table 5: Regression Results for Differences in Student Performance on State 

Assessments at the Privately Managed and Comparison Schools in Denver 

Denver 

Dependent variable: reading 

N = 703 

F = 22.112 significance .000 

Independent variable Coefficient Standard error Significance 

Constant 630.8 8.9 

Traditional school -13.2 5.3 .014a 

Mobility -15.7 4.8 .001 

Special education -60.3 6.6 .000 

Limited English proficiency -38.9 5.9 .000 

Free lunch eligible -17.7 5.2 .001 

Reduced lunch eligible 0.6 6.8 .932 

African American -36.1 7.6 .000 

Latino -24.4 8.3 .003 

Other minority -35.8 16.3 .028 

Dependent variable: mathematics 

N = 704 

F = 22.120 significance .000 

Independent variable Coefficient Standard error Significance 

Constant 521.6 10.3 

Traditional school -24.0 6.2 .000a 

Mobility -14.4 5.5 .009 

Special education -81.9 7.5 .000 

Limited English proficiency -20.7 6.8 .002 

Free lunch eligible -19.5 6.0 .001 

Reduced lunch eligible 3.9 7.9 .625 

African American -34.1 8.6 .000 

Latino -24.1 9.5 .011 

Other minority -1.9 18.7 .921 

Source: GAO data analysis. 

a

Using robust standard error procedures with clustering, the effect of school type approaches but 

does not reach significance at the 95-percent confidence level. (p = 0.06 for reading; p = 0.09 for 

math.) 

Page 42 GAO-04-62 Privately Managed Schools 
Appendix II: Tables of Regression Results for 

Differences in Student Achievement Scores 

on State Assessments 

Table 6: Regression Results for Differences in Student Performance on State 

Assessments at the Privately Managed and Comparison Schools in San Francisco 

San Francisco 

Dependent variable: reading 

N = 388 

F = 6.158 significance .000 

Independent variable Coefficient Standard error Significance 

Constant 651.9 7.1 

Traditional school -7.8 3.4 .022a 

Mobility -12.7 5.9 .031 

Special education -18.5 7.9 .019 

Limited English proficiency -19.5 3.8 .000 

Free lunch eligible -3.5 3.8 .362 

Reduced lunch eligible 2.6 6.3 .684 

African American -17.8 7.6 .020 

Latino 1.7 7.3 .815 

Asian -8.9 7.5 .237 

Other minority -17.3 8.9 .052 

Dependent variable: mathematics 

N = 394 

F = 7.666 significance .000 

Independent variable Coefficient Standard error Significance 

Constant 658.0 7.1 

Traditional school -13.3 3.3 .000 

Mobility -14.5 5.8 .013 

Special education -7.4 7.8 .341 

Limited English proficiency -12.0 3.8 .002 

Free lunch eligible -4.5 3.7 .231 

Reduced lunch eligible -1.8 6.2 .769 

African American -27.3 7.5 .000 

Latino -5.3 7.2 .467 

Asian -7.7 7.4 .302 

Other minority -19.6 8.7 .026 

Source: GAO data analysis. 

a

Using robust procedures with clustering, the effect of school type is no longer significant at the 

95-percent confidence level. 

Page 43 GAO-04-62 Privately Managed Schools 
Appendix II: Tables of Regression Results for 

Differences in Student Achievement Scores 

on State Assessments 

Table 7: Regression Results for Differences in Student Performance on State 

Assessments at the Privately Managed and Comparison Schools in Cleveland 

Cleveland 

Dependent variable: reading 

N = 631 

F = 18.454 significance .000 

Independent variable Coefficient Standard error Significance 

Constant 192.7 5.7 

Traditional school 15.6 2.1 .000 

Mobility 1.1 1.6 .496 

Special education -17.1 2.6 .000 

Free lunch eligible -0.4 1.7 .815 

Reduced lunch eligible 3.9 3.2 .233 

Minority 0.8 5.1 .876 

Dependent variable: 

mathematics 

N = 650 

F = 19.289 significance .000 

Independent variable Coefficient Standard error Significance 

Constant 204.8 8.2 

Traditional school 24.7 3.0 .000 

Mobility -1.4 2.3 .551 

Special education -19.3 3.6 .000 

Free lunch eligible -2.8 2.4 .250 

Reduced lunch eligible 2.6 4.5 .568 

Minority -17.5 7.4 .018 

Source: GAO data analysis. 

Page 44 GAO-04-62 Privately Managed Schools 
Appendix II: Tables of Regression Results for 

Differences in Student Achievement Scores 

on State Assessments 

Table 8: Regression Results for Differences in Student Performance on State 

Assessments at the Privately Managed School and Comparison Schools in St. Paul 

(School A Comparison) 

St. Paul 

Dependent variable: reading 

N = 459 

F = 41.904 significance .000 

Independent variable Coefficient Standard error Significance 

Constant 1,478.6 50.7 

Traditional School 128.3 49.1 .009 

Limited English proficiency -160.1 33.8 .000 

Free/reduced lunch eligible -114.3 23.2 .000 

African American -149.5 25.8 .000 

Other minority -41.9 31.9 .191 

Dependent variable: mathematics 

N = 452 

F = 34.238 significance .000 

Independent variable Coefficient Standard error Significance 

Constant 1,368.4 51.1 

Traditional school 185.3 49.6 .000 

Limited English proficiency -98.8 34.6 .004 

Free/reduced lunch eligible -112.8 23.4 .000 

African American -157.7 26.1 .000 

Other minority -24.6 32.4 .448 

Source: GAO data analysis. 

Note: Special education data were available for only one school year and so were not included in the 

final analyses. Diagnostic analyses were run for the one year that special education data were 

available to test for the effects of including special education in the model. When special education 

was included, school type remained significant at the 95-percent confidence level. 

Page 45 GAO-04-62 Privately Managed Schools 
Appendix II: Tables of Regression Results for 

Differences in Student Achievement Scores 

on State Assessments 

Table 9: Regression Results for Differences in Student Performance on State 

Assessments at the Privately Managed School and Comparison Schools in St. Paul 

(School B Comparison) 

St. Paul 

Dependent variable: reading 

N = 494 

F = 22.061 significance .000 

Independent variable Coefficient Standard error Significance 

Constant 1,415.9 36.1 

Traditional school 90.5 33.5 .007 

Limited English proficiency -161.3 25.1 .000 

Free/reduced lunch eligible -54.6 19.3 .005 

African American -86.0 22.8 .000 

Other minority 14.6 28.4 .607 

Dependent variable: mathematics 

N = 474 

F = 18.883 significance .000 

Independent variable Coefficient Standard error Significance 

Constant 1,343.0 33.8 

Traditional school 103.3 31.7 .001 

Limited English proficiency -84.6 22.6 .000 

Free/reduced lunch eligible -42.0 17.9 .020 

African American -110.9 21.3 .000 

Other minority 10.2 25.5 .690 

Source: GAO data analysis. 

Note: Special education data were available for only one school year and so were not included in the 

final analyses. Diagnostic analyses were run for the one year that special education data were 

available to test for the effects of including special education in the model. When special education 

was included, school type remained significant at the 95-percent confidence level. 

Page 46 GAO-04-62 Privately Managed Schools 
Appendix II: Tables of Regression Results for 

Differences in Student Achievement Scores 

on State Assessments 

Table 10: Regression Results for Differences in Student Performance on State 

Assessments at the Privately Managed and Comparison Schools in Phoenix 

Phoenix 

Dependent variable: reading 

N = 838 

F = 16.304 significance .000 

Independent variable Coefficient Standard error Significance 

Constant 646.6 4.0 

Traditional school -3.9 2.5 .116 

Mobility -15.5 2.1 .000 

African American -12.1 5.2 .019 

Latino -12.8 3.7 .001 

Other minority -1.1 5.2 .831 

Dependent variable: mathematics 

N = 882 

F = 9.931 significance .000 

Independent variable Coefficient Standard error Significance 

Constant 637.6 4.0 

Traditional school 0.8 2.5 .765 

Mobility -12.7 2.1 .000 

African American -13.8 5.3 .010 

Latino -4.8 3.7 .195 

Other minority 4.6 5.3 .388 

Source: GAO data analysis. 

Note: Special education and limited English proficiency were removed as independent variables 

because the data received were considered unreliable. 

Page 47 GAO-04-62 Privately Managed Schools 
Appendix II: Tables of Regression Results for 

Differences in Student Achievement Scores 

on State Assessments 

Table 11: Regression Results for Differences in Student Performance on State 

Reading Assessment at the Privately Managed and Comparison Schools in Detroit 

Detroit - Privately Managed School A 

N = 208 

F = 6.428 significance .000 

Independent variable Coefficient Standard error Significance 

Constant 309.8 7.3 

Traditional school 11.6 3.2 .000a 

African American -16.2 6.9 .020 

Other minority -10.0 10.2 .327 

Detroit - Privately Managed School B 

N = 176 

F = 1.361 significance .257 

Independent variable Coefficient Standard error Significance 

Constant 294.6 12.3 

Traditional school -9.0 4.6 .054a,b 

African American 7.1 12.0 .556 

Other minority 12.9 26.5 .627 

Detroit - Privately Managed School C 

N = 339 


F = 19.182 significance .000


Independent variable Coefficient Standard error Significance 


Constant 306.3 1.9 

Traditional school -10.1 2.3 .000a


Detroit - Privately Managed School D 


N = 418 


F = 4.263 significance .000 


Independent variable Coefficient Standard error Significance 


Constant 285.2 14.7 

Traditional school 6.8 2.1 .001a


African American 6.3 14.6 .666 


Other minority 32.0 25.2 .205 


Page 48 GAO-04-62 Privately Managed Schools 
Appendix II: Tables of Regression Results for 

Differences in Student Achievement Scores 

on State Assessments 

Detroit - Privately Managed School E 

N = 186 

F = 3.450 significance .018 

Independent variable Coefficient Standard error Significance 

Constant 300.8 16.9 

Traditional school 9.2 2.9 .002a 

African American -3.5 16.7 .836 

Other minority -7.1 19.3 .712 

Detroit - Privately Managed School F 

N = 300 

F = 6.536 significance .002 

Independent variable Coefficient Standard error Significance 

Constant 286.8 2.4 

Traditional school 9.3 2.8 .001a 

Other minority -23.3 21.4 .276 

Detroit - Privately Managed School G 

N = 229 

F = 5.014 significance .002 

Independent variable Coefficient Standard error Significance 

Constant 273.0 14.2 

Traditional school 12.4 3.3 .000a


African American 11.9 14.2 .405 


Other minority 18.8 16.7 .262 


Detroit - Privately Managed School H 


N = 367 


F = 12.531 significance .000


Independent variable Coefficient Standard error Significance 


Constant 283.8 3.0 

Traditional school 12.4 2.4 .000 


African American -5.2 4.2 .214 


Other minority 7.9 6.7 .235 


Latino -0.3 2.6 .893 

Limited English proficiency -25.6 4.2 .000 

Source: GAO data analysis. 

Note: Where results do not include race or ethnic variables, all students at the privately managed 

school and comparable schools used in the regression analysis were African American. 

Page 49 GAO-04-62 Privately Managed Schools 
Appendix II: Tables of Regression Results for 

Differences in Student Achievement Scores 

on State Assessments 

a

Using robust standard error procedures with clustering, the effect of school type is not significant at 

the 95-percent confidence level. 

b

Using robust estimation procedures without clustering, the effect of school type is significant at the 

95-percent confidence level. 

Page 50 GAO-04-62 Privately Managed Schools 
Appendix II: Tables of Regression Results for 

Differences in Student Achievement Scores 

on State Assessments 

Table 12: Regression Results for Differences in Student Performance on State Math 

Assessment at the Privately Managed and Comparison Schools in Detroit 

Detroit - Privately Managed School A 

N = 208 

F = 8.573 significance .000 

Independent variable Coefficient Standard error Significance 

Constant 529.4 12.2 

Traditional school 25.7 5.4 .000a 

African American -15.2 11.5 .188 

Other minority -6.0 16.9 .721 

Detroit – Privately Managed School B 

N = 176 

F = 2.967 significance .0-34 

Independent variable Coefficient Standard error Significance 

Constant 522.0 17.0 

Traditional school -18.6 6.4 .004a 

African American 9.9 16.5 .549 

Other minority 23.7 36.5 .518 

Detroit - Privately Managed School C 

N = 342 


F = 13.258 significance .000


Independent variable Coefficient Standard error Significance


Constant 524.5 3.0


Traditional school 13.6 3.7 .000a


Detroit - Privately Managed School D 


N = 420 


F = 22.959 significance .000


Independent variable Coefficient Standard error Significance


Constant 512.0 20.2 

Traditional school 23.5 2.8 .000 

African American -3.1 20.0 .876 

Other minority -0.5 34.6 .988 

Page 51 GAO-04-62 Privately Managed Schools 
Appendix II: Tables of Regression Results for 

Differences in Student Achievement Scores 

on State Assessments 

Detroit - Privately Managed School E 

N = 188 

F = 2.977 significance .033 

Independent variable Coefficient Standard error Significance 

Constant 572.1 28.7 

Traditional school 10.9 4.9 .028a 

African American -54.4 28.3 .056 

Other minority -58.5 34.6 .092 

Detroit - Privately Managed School F 

N = 297 

F = 41.445 significance .000 

Independent variable Coefficient Standard error Significance 

Constant 500.2 3.7 

Traditional school 37.9 4.2 .000 

Other minority -16.2 31.3 .606 

Detroit - Privately Managed School G 

N = 231 

F = 4.644 significance .004 

Independent variable Coefficient Standard error Significance 

Constant 505.7 20.4


Traditional school 17.7 4.8 .000


African American 7.0 20.4 .731


Other minority 15.7 24.0 .515


Detroit - Privately Managed School H 


N = 366 


F = 19.86 significance .000 


Independent variable Coefficient Standard error Significance


Constant 498.8 4.1


Traditional school 27.0 3.3 .000


African American -5.1 5.7 .368


Other minority 12.7 9.0 .160


Latino 0.3 3.5 .934


Limited English proficiency -33.2 5.6 .000


Source: GAO data analysis. 

Note: Where results do not include race or ethnic variables, all students at the privately managed 

school and comparable schools used in the regression analysis were African American. 

Page 52 GAO-04-62 Privately Managed Schools 
Appendix II: Tables of Regression Results for 

Differences in Student Achievement Scores 

on State Assessments 

a

Using robust standard error procedures with clustering, the effect of school type is not significant at 

the 95-percent confidence level. 

Page 53 GAO-04-62 Privately Managed Schools 
Appendix III: Characteristics of Privately 

Managed Schools and Comparable 

Traditional Public Schools in Detroit 

Privately Managed/ Percent free Percent Percent 

traditional Enrollment and reduced special ed minority 

Private - A 867 68 3 

Traditional – A 693 81 4 

Traditional - B 538 58 3 

Traditional - C 594 78 5 

Private - B 354 79 11 

Traditional - A 594 78 5 

Traditional - B 158 79 7 

Traditional - C 389 74 3 

Private - C 322 39 8 

Traditional - A 485 43 12 

Traditional - B 434 47 4 

Traditional - C 446 65 5 

Private - D 1108 46 3 

Traditional - A 538 58 3 

Traditional - B 369 47 4 

Traditional - C 677 53 2 

Private - E 368 70 9 

Traditional - A 389 74 3 98 

Traditional - B 487 67 5 100 

Traditional - C 524 62 5 100 

Private - F 319 75 7 95 

Traditional - A 214 68 7 89 

Traditional - B 389 74 3 98 

Traditional - C 451 80 0 98 

Private - G 716 37 3 100 

Traditional - A 538 58 3 100 

Traditional - B 677 53 2 100 

Traditional - C 369 47 4 100 

Private - H 452 46 10 79 

Traditional - A 561 73 0 76 

Traditional - B 705 65 2 72 

Traditional - C 586 84 2 76 

Sources: GAO data analysis from Common Core of Data school year 2000-01 unless otherwise noted. Special education data were 

from school Web sites. Limited English proficiency data were not available. 

Page 54 GAO-04-62 Privately Managed Schools 

100 

100 

100 

99 

99 

99 

100 

98 

99 

100 

100 

95 

100 

100 

99 

99 

100 
Appendix IV: GAO Contacts and Staff 

Acknowledgments 

GAO Contacts 	 Deborah Edwards (202) 512-5416 

Patricia Elston (202) 512-3016 

Acknowledgments 	 In addition to those named above, Peter Minarik, Mark Braza, Douglas M. 

Sloane, and Shana Wallace made key contributions to this report. Deidre 

M. McGinty and Randolph D. Quezada also provided important support. 

Page 55 GAO-04-62 Privately Managed Schools 
Related GAO Products 


Title I: Characteristics of Tests Will Influence Expenses; Information 

Sharing May Help States Realize Efficiencies. GAO-03-389. Washington, 

D.C.: May 8, 2003. 

Public Schools: Insufficient Research to Determine Effectiveness of 

Selected Private Education Companies. GAO-03-11. Washington, D.C.: 

October 29, 2002. 

School Vouchers: Characteristics of Privately Funded Programs. 

GAO-02-752. Washington, D.C.: September 10, 2002. 

Title I: Education Needs to Monitor States’ Scoring of Assessments. 

GAO-02-393. Washington, D.C.: April 1, 2002. 

School Vouchers: Publicly Funded Programs in Cleveland and 

Milwaukee. GAO-01-914. Washington, D.C.: August 31, 2001. 

Charter Schools: Limited Access to Facility Financing. 

GAO/HEHS-00-163. Washington, D.C.: September 12, 2000. 

Charter Schools: Federal Funding Available but Barriers Exist. 

GAO/HEHS-98-84. Washington, D.C.: April 30, 1998. 

Charter Schools: Recent Experiences in Accessing Federal Funds. 

GAO/T-HEHS-98-129. Washington, D.C.: March 31, 1998. 

Charter Schools: Issues Affecting Access to Federal Funds. 

GAO/T-HEHS-97-216. Washington, D.C.: September 16, 1997. 

Private Management of Public Schools: Early Experiences in Four School 

Districts. GAO/HEHS-96-3. Washington, D.C.: April 19, 1996. 

(130220) Page 56 GAO-04-62 Privately Managed Schools 
GAO’s Mission 

Obtaining Copies of 

GAO Reports and 

Testimony 

The General Accounting Office, the audit, evaluation and investigative arm of 

Congress, exists to support Congress in meeting its constitutional responsibilities 

and to help improve the performance and accountability of the federal 

government for the American people. GAO examines the use of public funds; 

evaluates federal programs and policies; and provides analyses, 

recommendations, and other assistance to help Congress make informed 

oversight, policy, and funding decisions. GAO’s commitment to good government 

is reflected in its core values of accountability, integrity, and reliability. 

The fastest and easiest way to obtain copies of GAO documents at no cost is 

through the Internet. GAO’s Web site (www.gao.gov) contains abstracts and fulltext files of current reports and testimony and an expanding archive of older 

products. The Web site features a search engine to help you locate documents 

using key words and phrases. You can print these documents in their entirety, 

including charts and other graphics. 

Each day, GAO issues a list of newly released reports, testimony, and 

correspondence. GAO posts this list, known as “Today’s Reports,” on its Web site 

daily. The list contains links to the full-text document files. To have GAO e-mail 

this list to you every afternoon, go to www.gao.gov and select “Subscribe to e-mail 

alerts” under the “Order GAO Products” heading. 

Order by Mail or Phone 	 The first copy of each printed report is free. Additional copies are $2 each. A 

check or money order should be made out to the Superintendent of Documents. 

GAO also accepts VISA and Mastercard. Orders for 100 or more copies mailed to a 

single address are discounted 25 percent. Orders should be sent to: 

U.S. General Accounting Office 

441 G Street NW, Room LM 

Washington, D.C. 20548 

To order by Phone:	 Voice: (202) 512-6000 

TDD: (202) 512-2537 

Fax: (202) 512-6061 

Contact: To Report Fraud, 

W Web site: www.gao.gov/fraudnet/fraudnet.htm aste, and Abuse in E-mail: fraudnet@gao.gov 

Federal Programs Automated answering system: (800) 424-5454 or (202) 512-7470 

Jeff Nelligan, Managing Director, NelliganJ@gao.gov (202) 512-4800 Public Affairs 	 U.S. General Accounting Office, 441 G Street NW, Room 7149 

Washington, D.C. 20548