United States General Accounting Office

GAO Report to Congressional Committees

April 1996 PRIVATE MANAGEMENT

OF PUBLIC SCHOOLS

Early Experiences in Four

School Districts

G O A

years

1921 - 1996

GAO/HEHS-96-3

GAO United States

General Accounting Office

Washington, D.C. 20548

Health, Education, and

Human Services Division

B-259870 

April 19, 1996

The Honorable Nancy L. Kassebaum

Chairman, Committee on Labor

 and Human Resources

United States Senate

The Honorable Arlen Specter

Chairman, Subcommittee on Labor,

 Health and Human Services,

 Education, and Related Agencies

Committee on Appropriations

United States Senate

As you requested, we are providing our report about the early experiences of four school

districts that contracted with private companies for management of their public schools.

As arranged with your office, unless you publicly announce the contents of this report earlier,

we plan no further distribution until 30 days after its issue date. At that time, we will send

copies of this report to the Secretary of Education, appropriate congressional committees, and

other interested parties. If you have any questions about this report, please call me at

(202) 512-7014 or Fred Yohey, Assistant Director, at (202) 512-7218. Other GAO contacts and

acknowledgments are listed in appendixes IX and X.

Cornelia M. Blanchette

Associate Director, Education and

 Employment Issues
Executive Summary

Purpose Troubled by children’s low test scores, as well as their low attendance,

promotion, and graduation rates, educators and parents have searched for

ways to improve public schools. School districts nationwide are

experimenting with a range of reform options, one of which is private

management of public schools.

Because of their interest in school reform, the Chairman, Senate

Committee on Labor and Human Resources; and the Chairman,

Subcommittee on Labor, Health and Human Services, Education and

Related Agencies, Senate Committee on Appropriations, asked GAO to

provide information on the early experiences of school districts that

contracted with private, for-profit companies for management of the

public schools. Specifically, GAO was asked to describe (1) what the private

companies and school districts were required to do under the contracts,

(2) what happened in the school districts as the contracts were being

implemented, and (3) the impact of private management efforts on school

students.

To respond to this request, GAO (1) visited the four school

districts—Baltimore City Public School District, Baltimore, Maryland;

Dade County Public Schools, Dade County, Florida; Hartford School

District, Hartford, Connecticut; and Minneapolis School District,

Minneapolis, Minnesota—that had contracts with private, for-profit

companies for school management in school year 1994-95 and

(2) reviewed the contracts and reported school operating expenses and

analyzed student outcome data.

Background School districts have historically contracted with private companies for

noninstructional services, such as student transportation, building

maintenance, and food provision. Some school districts have also

contracted with private companies for limited instructional services to

specific student groups, such as at-risk children. To date, however, only a

few districts have signed contracts with private companies for managing

their public schools. More specifically, only four school districts had

contracts with two private companies—Education Alternatives, Inc. (EAI)

and Public Strategies Group (PSG)—to provide such services in the 1994-95

school year.

Results in Brief The four school districts, which GAO visited, gave their private

management companies varying authority and responsibilities. For

Page 2 GAO/HEHS-96-3 Private Management of Public Schools
Executive Summary

example, EAI had a 5-year contract with the Baltimore City Public School

District to manage 91

 of the district’s 183 schools and a 5-year contract

with the Hartford School District to manage all of the district’s 32 schools.

In contrast, EAI’s 5-year contract with the Dade County Public School

District gave the company authority to implement its instructional

approach in only one of the district’s schools. PSG, on the other hand, has a

3-year contract with the Minneapolis School District to provide leadership

to the district, including a superintendent, and to achieve certain specific

goals, such as improve students’ test scores and attendance and reduce

suspensions.

The districts’ experiences during the implementation of the contracts also

differed substantially. In Baltimore and Hartford, where opposition in the

community was considerable, implementation was difficult, and the

contracts were terminated or will be terminated before the expiration of

their 5-year terms. In Baltimore, both the district and EAI cited the district’s

budgetary constraints as the reason for contract termination. Regarding

the Hartford contract, EAI said it ceased services due to the district’s

failure to pay for services rendered in accordance with the contract.

Hartford, on the other hand, said that the relationship broke down because

EAI concluded that it would not operate under the contract as written. In

contrast, in Dade County and Minneapolis, where opposition was virtually

nonexistent, implementation was easier, and EAI and PSG, respectively,

were generally able to implement their contracts. The Dade County

contract expired in June 1995, and the Minneapolis contract remains in

effect until December 1996.

In Baltimore, EAI implemented its instructional approach and changed

spending patterns for the nine schools by spending more than the district

had spent on facilities and computer hardware and software. In Hartford,

EAI focused its management efforts on 6 schools and provided fax

machines and copiers for the district’s 32 schools. In Dade County, EAI also

implemented its instructional approach, which included the use of

computer technology and teacher training, in one school. In Minneapolis,

PSG’s president served as the superintendent, and the company partially

achieved some of the goals specified by its contract.

Regardless of the status of the contract, these private management efforts

yielded mixed results. Although scores on standardized achievement tests

did not substantially improve in the three districts where test scores were

1

Baltimore and EAI subsequently entered into three additional contracts, each for one school.

However, GAO included only the first contract, which covered nine schools, in its study because this

contract was the largest and was signed much earlier than the additional three.

Page 3 GAO/HEHS-96-3 Private Management of Public Schools
Executive Summary

available for analysis in all four districts, the private management

companies made changes that benefited students. For example, student

attendance improved in Dade County and Minneapolis. In addition, EAI’s

instructional approach, implemented in Baltimore and Dade County,

placed teaching assistants—most of them with college degrees—in every

classroom. Moreover, EAI also enhanced school building repair and

maintenance and increased the number of computers in Baltimore and

Hartford, giving students greater access to computers.

Principal Findings

Responsibility and

Authority Varied Under

Contracts

Under the contracts, private companies and districts had varying authority

and responsibilities for managing schools. In Baltimore, EAI received the

average per pupil allocation to manage 9 of the district’s 183 schools and

implement an instructional approach. With the money, allocated to EAI in

monthly allotments, the company was to pay the costs of operating the

nine schools, including employees’ salaries and benefits, utilities, leasing

costs, and repairs and maintenance. EAI was to keep any money left over

after all school expenses had been paid as compensation for its services.

In Dade County, EAI agreed to raise over $2 million to implement its

instructional approach in one of the district’s schools. This money, which

was controlled and disbursed by the district, was used to pay the cost of

implementing EAI’s instructional approach, including its consulting fee. EAI

also helped the district in hiring a newly built school’s principal and

teachers. The district was responsible, however, for managing all other

aspects of the school, such as its budget, food service, and building

maintenance and repair.

Under the Hartford contract, EAI was to make recommendations for

improving instruction. EAI was to also manage the operations of the

32-school district with the funds available under the district’s school

appropriation and grant money, including federal and state grants. EAI and

Hartford, however, ultimately disagreed on the interpretation of many key

contract provisions relating to the payment and control of funds.

Minneapolis’ contract requires that PSG provide leadership services to the

district. Specifically, PSG serves as the school district superintendent for a

monthly fee of $5,000 and is compensated for achieving certain goals,

Page 4 GAO/HEHS-96-3 Private Management of Public Schools
Executive Summary

objectives, and assignments in the district’s improvement agenda. For

example, the agenda specified that PSG improve student test scores and

attendance, reduce suspensions, enhance district leadership, and improve

community trust in the district’s schools. Except for the superintendent’s

salary, PSG is only paid when it completes assignments and meets the

contract goals and objectives. PSG characterizes its contract as a

“pay-for-performance” contract.

School Districts’

Experiences in

Implementing Private

Management Differed

In implementing private management, Dade County’s and Minneapolis’

efforts were generally supported by such stakeholders as the school board

and teachers union. In Dade County, where the contract expired in

June 1995, EAI helped the district hire the principal and teachers for the

school and implemented its instructional approach. In Minneapolis, which

has a contract in effect until December 1996, PSG’s president serves as the

superintendent, and, during the first 18 months of the 3-year contract, PSG

partially achieved some of the goals it was required to accomplish under

the contract.

Both the Baltimore and Hartford districts faced opposition in the

community to private management companies. For example, in Baltimore,

the teachers union opposed EAI’s requirement that teaching assistants have

90 college credits or be transferred to nonprivately managed schools.

Citing budget constraints, the district terminated its contract with EAI in

March 1996. In Hartford, where the district has announced that it will

terminate its contract, resistance reached its peak when EAI submitted a

budget proposal to eliminate a substantial number of teaching jobs.

Even with the opposition in the community, EAI was generally able to

implement the Baltimore contract. The company reported spending about

the same amount each year on direct operations for the nine schools as

the district had reported spending during the year preceding the contract.

However, EAI allocated funds differently by spending more on facilities and

computers and less, in the first year of private management, on general

and special education instruction.

In Hartford, the district and EAI agreed that EAI would prioritize its efforts

in 6 of the 32 schools. Hartford, in responding to a draft of this report,

stated that EAI suggested this six-school focus to achieve “showcase

results quickly as a strategy to build community support.” Hartford

explained, however, that the district could not come to an agreement with

EAI on new payment terms, and EAI was unwilling to continue to perform

Page 5 GAO/HEHS-96-3 Private Management of Public Schools
Executive Summary

under the existing contract. According to EAI, however, it ceased services

to the district due to the failure of the Hartford district to pay it for

services rendered in accordance with the contract.

Benefits From Private

Management Efforts

School students enjoyed a number of benefits as a result of private

management. In Dade County and Minneapolis, district officials reported

that attendance rates improved. In addition, in Minneapolis, officials

reported that suspension rates for all Minneapolis students in school year

1994-95 generally decreased from school year 1993-94. In Baltimore and

Dade County, students received individualized instruction because EAI

placed a teaching assistant, who usually had a college degree, in each

class. In addition, in Baltimore, Dade County, and Hartford, students had

access to more computers. In Baltimore, schools were cleaner and better

maintained and repaired; EAI also painted the schools, improved heating

and air conditioning, repaired bathrooms, and improved landscaping. To

reduce energy costs, EAI also retrofitted lighting in the Baltimore schools.

In Hartford, EAI was in the process of repairing school buildings and

installing computers and computer labs in 5 of the district’s 32 schools.

Despite the positive impact of private management efforts, one measure of

student outcome—scores on standardized achievement tests—did not

substantially improve in Baltimore, Dade County, and Minneapolis.

Because the Hartford schools were in the early stages of contract

implementation, student outcomes were not available for assessment.

Recommendations GAO is making no recommendations.

School District and

Company Comments

Comments on a draft of this report were requested from the Department of

Education and the four school districts and two companies that were the

primary focus of GAO’s work. Only the Department of Education declined

to provide comments. In general, the comments, which are addressed in

chapter 5, clarified or provided additional information pertinent to issues

discussed in the report. Changes have been made where appropriate.

Appendixes IV through VIII contain the text of the comments.

Page 6 GAO/HEHS-96-3 Private Management of Public Schools
Page 7 GAO/HEHS-96-3 Private Management of Public Schools
Contents

Executive Summary 2

Chapter 1 

Introduction

12

Characteristics of School Districts Selecting Private Management 13

Private Companies Bring Different Approaches to School

Management

14

Objectives, Scope, and Methodology 15

Chapter 2 

Authority and

Responsibilities

Varied Under Private

Management

Contracts

19

EAI Given Broad Authority to Manage Nine Baltimore Public

Schools

19

EAI Had Authority to Implement the Tesseract Instructional

Approach in One Dade County School

20

EAI Given Authority to Manage the Operations of Hartford

District’s 32 Schools

21

The Minneapolis School District Contracted With PSG for

Leadership and the Achievement of Specific Goals

22

Chapter 3 

School Districts’

Experiences in

Implementing Private

Management

Contracts

23

EAI, With Some Opposition, Was Generally Able to Implement Its

Baltimore Contract

23

EAI Unable to Fully Implement Its Contract With the Hartford

School District

25

EAI Met the Terms of Its Contract With Dade County Public

Schools

26

PSG Achieved Some of the Goals Specified in Its Minneapolis

Contract

27

Chapter 4 

Results of Private

Management on

Public School

Education

28

Attendance and Suspension Rates Improved in Some Districts 28

Students Received Individualized Instruction, and Teachers

Received Training

29

Students Had Greater Access to Computers 29

School Building Maintenance and Repairs Improved 29

Companies Have Been Catalysts for Districts’ Rethinking the

Status Quo

29

Impact of Private Management on Students’ Standardized Test

Scores

30

Page 8 GAO/HEHS-96-3 Private Management of Public Schools
Contents

Chapter 5 

GAO’s Observations

and Comments From

School Districts and

Companies

32

School District and Company Comments 32

School Districts’ Comments 33

Private Management Companies’ Comments 33

Appendixes Appendix I: Methodology Used in Baltimore Test Score and

Attendance Analyses

36

Appendix II: Results of Baltimore Test Score and Attendance

Analyses

43

Appendix III: Data Supporting the Baltimore Test Score and

Attendance Analyses

50

Appendix IV: Comments From the Baltimore City Public School

District

58

Appendix V: Comments From Dade County Public Schools 59

Appendix VI: Comments From the Hartford School District 60

Appendix VII: Comments From EAI 66

Appendix VIII: Comments From the Minneapolis School District

and PSG

71

Appendix IX: Acknowledgments 75

Appendix X: GAO Contacts and Staff Acknowledgments 76

Tables Table 3.1: Reported Operating Expenses in Nine Baltimore

Schools Before and During Private Management

25

Table III.1: Pairs of Schools in the Analyses 50

Table III.2: Means and Effect Sizes, MSPAP Reading Scores 50

Table III.3: Ns and Variances for Effect Sizes, MSPAP Reading

Scores

51

Table III.4: Means and Effect Sizes, MSPAP Math Scores 52

Table III.5: Ns and Variances for Effect Sizes, MSPAP Math

Scores

53

Table III.6: Means and Effect Sizes, CTBS Reading Scores 54

Table III.7: Ns and Variances for Effect Sizes, CTBS Reading

Scores

55

Table III.8: Means and Effect Sizes, CTBS Math Scores 56

Table III.9: Ns and Variances for Effect Sizes, CTBS Math Scores 57

Table III.10: Days Absent 57

Table III.11: Days Absent 57

Page 9 GAO/HEHS-96-3 Private Management of Public Schools
Contents

Figures Figure II.1: Longitudinal Analysis: CTBS Reading Scores 44

Figure II.2: Longitudinal Analysis: CTBS Math Scores 45

Figure II.3: Changes in CTBS Reading Scores 46

Figure II.4: Changes in CTBS Math Scores 47

Abbreviations

ANOVA analysis of variance

CTBS Comprehensive Test of Basic Skills

EAI Education Alternatives, Inc.

MSPAP Maryland State Performance Assessment Program

NCE normal curve equivalent

PSG Public Strategies Group

Page 10 GAO/HEHS-96-3 Private Management of Public Schools
Page 11 GAO/HEHS-96-3 Private Management of Public Schools
Chapter 1 

Introduction

School districts’ contracting with private, for-profit companies reflects an

increasing trend toward private management of public services and

concerns about the quality of U.S. education. As a result, school districts

nationwide are experimenting with a range of reform options, including

school-based management,2

 charter schools,3 and contracting with private

companies for management of their public schools.

School districts have historically contracted with private companies for

noninstructional services, such as student transportation, building and

vehicle maintenance, and food provision. School districts have also

contracted with private companies for limited instructional services to

specific student groups, such as at-risk children. To date, however, despite

considerable discussion, only a handful of districts have signed contracts

with private companies to manage schools or school districts.

In some school districts, the decision to contract with a private company

for school management followed years of frustration with school

performance. School districts began contracting with private companies in

the hope that they would (1) bring new ideas and a bold new direction to

public schools and (2) do a better job of educating children.

Federal and state laws support innovative efforts to improve education.

For example, under the Goals 2000: Educate America Act, enacted by the

Congress in 1994, state education agencies may use federal funds for state

planning and evaluation activities involving local efforts to contract with

private management organizations to reform public schools. Some states

have laws authorizing charter schools that permit private companies to

enter the public education arena. Under such laws, private companies,

teachers, school administrators, and other members of the community

may propose, create, or manage a publicly funded school.

2

For more information on school-based management, see Education Reform: School-Based

Management Results in Changes in Instruction and Budgeting (GAO/HEHS-94-135, Aug. 23, 1994).

3

Charter schools, which are authorized by state legislatures, are public schools that are created by

parents, teachers, school administrators, and other members of the community. These schools have

considerable autonomy and often operate free from such external controls as teachers’ unions and

district and state requirements. For more information on charter schools, see Charter Schools: New

Model for Public Schools Provides Opportunities and Challenges (GAO/HEHS-95-42, Jan. 18, 1995).

Page 12 GAO/HEHS-96-3 Private Management of Public Schools
Chapter 1 

Introduction

Characteristics of

School Districts

Selecting Private

Management

In school year 1994-95, four school districts—Baltimore City Public School

District, Baltimore, Maryland; Dade County Public Schools, Dade County,

Florida; Hartford School District, Hartford, Connecticut; and Minneapolis

School District, Minneapolis, Minnesota—had contracts with private

companies for school management.4

Baltimore City (Maryland)

Public School District

In Baltimore, 1 in 4 citizens is functionally illiterate. The average student is

a poor, African American child living in a female-headed, single-parent

household; he or she has not met state standards for test scores, has

missed 1 in 5 days of school, and has only 1 chance in 2 of earning a high

school diploma.

For its 183 schools, the Baltimore City Public School District spent an

average of $5,948 per student in school year 1994-95. However, Baltimore

spent $40,000 less per classroom than districts in the nearby Maryland

suburbs. School officials believed that Baltimore’s lower classroom

funding level made it difficult for the district to address the low test

scores, low attendance rates, and extremely high secondary school

dropout rate.

Dade County (Florida)

Public School District

The Dade County Public School District is an inner city district with a

multicultural population. Foreign-born students enter the schools at a rate

of 11,000 to 15,000 per year. Nearly 60 percent of the district’s students

have a native language other than English. In school year 1994-95, over

half of the students received a free or reduced-priced lunch, an indicator

of poverty.

For its 286 schools, the Dade County Public School District spent an

average of $4,773 per student in fiscal year 1994-95. About 18 percent of

the students drop out of school each year. In school year 1993-94, almost

40 percent of Dade County’s students scored in the bottom quartile in

reading on standardized tests.

Hartford (Connecticut)

School District

Hartford is the poorest city in Connecticut. Nevertheless, the Hartford

School District spent $8,688 per pupil in school year 1994-95, well over the

national average of $5,170. Despite such funding, district officials believed

the district lacked the resources to operate its schools in a “proper and

4

In the 1995-96 school year, five additional public schools in Boston, Massachusetts; Mt. Clemens,

Michigan; Sherman, Texas; Wichita, Kansas; and Wilkinsburg, Pennsylvania are receiving management

services from private companies. This report does not discuss these districts’ experiences.

Page 13 GAO/HEHS-96-3 Private Management of Public Schools
Chapter 1 

Introduction

efficient” manner. Teacher salaries, which averaged about $58,000 a year,

consume a significant portion of the district’s budget.

In the 32-school district, test scores are well below the state average.

About 16 percent of students drop out each year; about 93 percent of

students are minority. The district has 40 percent of the state’s bilingual

students and 16 percent of its students are special education students. In

school year 1994-95, approximately 78 percent of Hartford students

received free or reduced-price lunches.

Minneapolis (Minnesota)

School District

The Minneapolis School District is in a large, multicultural city, which has

undergone dramatic changes in ethnicity, race, and income during the past

20 years. In school year 1994-95, 36 percent of the families received

benefits from Aid to Families With Dependent Children; 65 percent of

children in first grade were eligible to receive free or reduced-price

lunches.

In the Minneapolis School District, where the average per pupil

expenditure was $6,408 in school year 1994-95, minority children account

for 61 percent of the students. That number is projected to reach

70 percent by 1998. In school year 1994-95, 39 percent were African

American children; 12 percent, Asian American; 4 percent, Hispanic

American; 7 percent, Indian American; and 39 percent, white American.

These children come from families in which over 70 different languages

and dialects are spoken. Languages include Cambodian, Hmong, Lao,

Russian, Spanish, Ukrainian, and Vietnamese, among others. The gap in

test scores between minority and white students has persisted and is

growing yearly.

Private Companies

Bring Different

Approaches to School

Management

Two private companies—Education Alternatives, Inc. (EAI) and Public

Strategies Group (PSG)—had contracts with school districts for school

management in the 1994-95 school year. The companies differ in their

approaches to providing services.

EAI’s Approach EAI’s approach focuses on three aspects of the schools: education,

facilities, and financial management. EAI has joined with three other

companies—KPMG Peat Marwick, Johnson Controls World Services, Inc.,

and Computer Curriculum Corporation—to provide services to schools.

Page 14 GAO/HEHS-96-3 Private Management of Public Schools
Chapter 1 

Introduction

Collectively, they refer to themselves as the Alliance for Schools That

Work. As the lead company of the alliance, EAI is responsible for overall

school management and provides education management through its

Tesseract5

 instructional approach. Major components of Tesseract include

a personal education plan for each child, low adult-to-student ratios in the

classroom, continuous training for teachers, active parental involvement,

the use of computer technology in instruction, and special education

inclusion.6

Other companies in the alliance provide additional services. KPMG Peat

Marwick, the world’s largest public accounting and consulting company,

offers financial management assistance. Johnson Controls World Services,

Inc., which has operated, maintained, and managed facilities for over a

century, provides supervision and maintenance of buildings, energy use,

transportation, and other noninstructional services for schools. Computer

Curriculum Corporation, owned by Paramount Communications, the

world’s largest entertainment and educational publishing corporation,

provides computer-based, instructional software.

PSG’s Approach PSG provides superintendent services for the Minneapolis School District.

Its president functions as the Minneapolis School District’s superintendent

and leads a team of employees from PSG who help manage the school

district. According to PSG, it focuses on helping schools in several ways,

including improving performance. The company’s stated goal is to develop

current Minneapolis district administrators to take over the management

of the schools when the company’s contract expires.

Objectives, Scope,

and Methodology

Because of their interest in school reform, the Chairman, Senate

Committee on Labor and Human Resources, and the Chairman,

Subcommittee on Labor, Health and Human Services, Education and

Related Agencies, Senate Committee on Appropriations, asked that we

provide information about the experiences of school districts that have

contracted with private companies for management of their public

schools. Specifically, we were asked to describe (1) what the private

companies and school districts were required to do under the contracts,

(2) what happened in the school districts as the contracts were being

5

The word Tesseract, a registered EAI trademark, comes from a children’s book, A Wrinkle in Time, by

Madeleine L’Engle. In the book, the word is defined as a fifth-dimensional corridor leading to

destinations otherwise beyond reach.

6

Inclusion, as used by EAI, describes placing special education children in regular classrooms instead

of self-contained classrooms. Classroom teachers are responsible for educating all students in the

classroom.

Page 15 GAO/HEHS-96-3 Private Management of Public Schools
Chapter 1 

Introduction

implemented, and (3) the impact of private management efforts on

students.

To obtain this information, we used several methodologies: contract

reviews, site visits, and review and analysis of reported school operating

expenses and student outcomes. We reviewed the contracts for and visited

schools in the four districts that had contracts for school management

with private, for-profit companies in school year 1994-95. Our study

excluded the five additional districts that had signed contracts for private

company management of schools in the 1995-96 school year because the

districts either had not begun operating under the contracts or had only

been doing so for a few months. Our study also excluded school districts

with contracts for only highly specialized instructional services, such as

teaching foreign languages or tutoring. Nor did we study districts that

contracted solely for noninstructional services.

Site Visits We visited the Baltimore City, Dade County, Hartford, and Minneapolis

school districts. Three of these districts had contracts with EAI and one

with PSG. By visiting only districts with contracts in effect for the 1994-95

school year, we were able to observe program implementation.

In each district, we talked to stakeholders—superintendents, school board

members, private company officials, school administrators, city council

members, teachers, principals, teachers union representatives, and

parents. We asked about the changes that had taken place under the

private company’s direction, including services provided, difficulties in

program implementation, and results to date. Except for the Minneapolis

School District, where primarily superintendent services were provided,

we visited privately managed schools.

Analysis of Student

Outcomes

In the Baltimore City Public School District, which had the longest running

and most comprehensive private management effort under way, we

analyzed 4 years of data on student outcomes for seven of the nine

privately managed public schools.7

 We reviewed data for 1 year before

private management as well as for 3 years during private management. We

matched each privately managed school with a similar8

 nonprivately

7

Although the company managed nine schools, we limited our analysis to the seven elementary schools

that included kindergarten through fifth grades because (1) more test score data were available for this

group and (2) the pool from which to select a comparison school was larger.

8

Schools were matched on the basis of demographics and test scores before private management.

Page 16 GAO/HEHS-96-3 Private Management of Public Schools
Chapter 1 

Introduction

managed school and then compared standardized student test scores and

attendance. (See table III.1 in app. III for a list of schools in the analysis.)

We looked at only two areas for test scores, reading and math. For both

areas, scores were available from routinely administered standardized

tests. We used normal curve equivalent (NCE) scores from the

Comprehensive Test of Basic Skills (CTBS) and, when available, outcome

scale scores from the Maryland State Performance Assessment Program

(MSPAP). (See app. I for a discussion of our selection of statistical

procedures and technical details about the analyses.)

We used two types of analyses—longitudinal and cross-sectional—to

compare student outcomes. In both types of analyses, we compared test

scores and attendance measures of students attending the privately

managed schools with those of students attending matched, nonprivately

managed schools. In the cross-sectional analysis, we performed the

comparison at the school level, analyzing each year separately,

disregarding changes in the student population from year to year. In the

longitudinal analysis, we limited the analysis to those students who were

enrolled in a privately managed school (or its matched, comparison

school) for the entire 3-year period. Students meeting this criterion were

aggregated into a privately managed or nonprivately managed group for

the analysis.

We did not conduct our own analyses of student outcomes for test scores

and attendance in the Dade County or Minneapolis school districts.

Instead, we used findings from evaluations conducted by the districts

themselves, which sometimes included measures other than test scores

and attendance (for example, suspensions). We did not analyze student

outcome data for the Hartford School District, which was in the relatively

early stages of implementation.

Analysis of Reported

School Operating

Expenses

Of the four school districts we visited, Baltimore City and Hartford were

the only districts in which the company was to manage school or district

budgets. Although Hartford was not far enough along in its budget

implementation for a financial analysis, we did compare reported

operating expenses for Baltimore for 1 year before private management

with reported operating expenses for 2 years during private management.

To carry out our analysis, we obtained and reviewed reported operating

expense data provided by the district and EAI. We could not, however,

Page 17 GAO/HEHS-96-3 Private Management of Public Schools
Chapter 1 

Introduction

determine the reliability of the expenses provided by the Baltimore district

because audits were not done for individual schools. When we attempted

to verify the EAI data, EAI would not provide the supporting documentation

we needed. As a result, we based explanations for differences between

reported operating expenses before and during private management solely

on oral or written explanations from EAI and Baltimore City Public School

District officials. However, for the nine Baltimore schools, we were able to

reconcile EAI’s fiscal year 1993 and 1994 expenses with its audited

statements of cash receipts and disbursements.

We did our study between December 1994 and December 1995 in

accordance with generally accepted government auditing standards.

Page 18 GAO/HEHS-96-3 Private Management of Public Schools
Chapter 2 

Authority and Responsibilities Varied Under

Private Management Contracts

The four school districts we visited gave private companies varying

authority and responsibilities in managing their schools. Under the

contracts, school districts also retained varying powers and

responsibilities and compensated the companies in different ways. Except

for the Minneapolis contract, however, the contracts that school districts

had with private companies were similar in their lack of requirements for

improving student outcomes, which are traditionally measured by test

scores and attendance and graduation rates.

EAI Given Broad

Authority to Manage

Nine Baltimore Public

Schools

In July 1992, the Baltimore City Public School District signed a 5-year

contract with EAI that gave EAI broad authority and responsibility for

managing 99

 of the district’s 183 schools. Under the contract, EAI was to

(1) implement its Tesseract instructional approach, which included

supplying computers for use as instructional tools and college-educated

teaching assistants; (2) provide building maintenance and other

noninstructional services; (3) manage the nine schools’ budgets; and

(4) determine school staffing levels for the nine schools with the approval

of the school district superintendent. The district could terminate the

contract upon 90 days’ written notice.

The company had authority to discuss matters concerning the nine

schools with union representatives and to participate in evaluating

employees at the schools after obtaining the required approval. However,

EAI could not reprimand or terminate any school system personnel. EAI also

had authority to hire its own personnel to implement its Tesseract

approach.

In managing the nine schools, EAI could either pay a subcontractor to

provide noninstructional services or purchase them from the district;

however, EAI could not subcontract for instructional services without the

district’s expressed agreement.

Annually, the Baltimore City Public School District was to pay EAI in 12

monthly installments, with the amount of each installment based on the

district’s historical expenditure patterns. The total payment to EAI was to

be the districtwide average per pupil expenditure multiplied by the total

number of students in the nine schools. With the money, which totaled

$26.7 million in the first contract year, EAI was to pay the costs of

operating the nine schools, including employees’ salaries and benefits,

9

Baltimore and EAI subsequently entered into three additional contracts, each for one school.

However, we included only the first contract, which covered nine schools, in our study because it was

the largest and was signed much earlier than the additional three.

Page 19 GAO/HEHS-96-3 Private Management of Public Schools
Chapter 2 

Authority and Responsibilities Varied Under

Private Management Contracts

utilities, leasing costs for computers and other equipment, and repairs and

maintenance.10 EAI paid the district $3.4 million to cover the nine schools’

share of central support services provided by the district, leaving EAI

$23.3 million for the direct operation of the schools.

Under this payment arrangement, EAI’s payment for managing the nine

schools was the difference between the total payment received from the

school district—excluding interest earned and grant money—and the cost

of operating the schools. For the first 2 years of the contract, EAI reported

gross profits of $1.9 million and $3.3 million, respectively. According to an

EAI official, these were gross, and not net, profits because they did not

reflect time that EAI’s corporate staff spent on contract matters.

EAI Had Authority to

Implement the

Tesseract

Instructional

Approach in One

Dade County School

The Dade County Public School District’s 5-year contract with EAI, which

covered June 1990 through June 1995, gave the company the authority to

implement its Tesseract instructional approach at Dade County’s South

Pointe Elementary School. However, EAI was to raise the money needed to

implement the Tesseract program with the cooperation of the district. EAI

was also to help the district hire the school’s principal and its teachers.

The district was responsible for managing all other aspects of the school,

such as its budget, food service, and building maintenance and repair. The

contract allowed the district or EAI to terminate the contract at the end of

any academic year upon 90 days’ prior written notice.

Under the contract, EAI agreed to raise over $2 million, of which

$1.4 million was to be raised in the first 3 years. This amount was to

supplement the funds the school ordinarily received from the district to

provide school services. The district was to deposit the money that EAI

raised under the contract into an interest-bearing account from which only

the district could withdraw money. The money was to be used to pay for

special staff needs, instructional materials and equipment, and EAI’s

out-of-pocket expenses and consulting fee.

10EAI was only responsible for the ordinary maintenance and repair of the nine schools. The district

was responsible for major repairs or capital expense items, as well as repairs for asbestos-related

conditions.

Page 20 GAO/HEHS-96-3 Private Management of Public Schools
Chapter 2 

Authority and Responsibilities Varied Under

Private Management Contracts

EAI Given Authority

to Manage the

Operations of

Hartford District’s 32

Schools

The Board of Education for the Hartford School District signed a 5-year

contract with EAI in November 1994, which became retroactive to

July 1994. Under the contract, EAI was to perform management and

operations tasks necessary to achieve the goals of the district’s strategic

plan. EAI was to also assume responsibility for managing the operations of

the 32 schools in the district while the Board of Education retained

policy-making and ultimate decision-making authority. Unlike the

Baltimore and Dade County contracts, the Hartford contract did not

specify that EAI implement its Tesseract instructional approach. Rather, EAI

was to recommend and implement enhancements to the educational

program. In addition, the contract stated that over the 5-year term EAI

expected to spend about $20 million on technology and software

initiatives and $1.6 million on building improvements. EAI was also to

recommend and, with approval of the Board of Education, implement

enhancements to improve student performance, including staff training

and student evaluation.

EAI was given authority to purchase materials and services from

commercial sources and to make recommendations concerning staffing

levels; organizational structures; and the hiring, assignment, duties,

compensation, discipline, and discharge of district employees, including

the superintendent. However, the Board of Education remained the final

authority for all personnel and organizational structure decisions. The

contract also allowed EAI to provide advice during negotiations with labor

organizations, but the Board had the statutory responsibility for collective

bargaining and administering contracts with labor organizations.

Under the contract, the district’s entire annual school appropriation and

all grant money (including federal and state grants), which totaled about

$200 million in the first contract year, were to be used by EAI to manage

the schools. EAI and Hartford, however, ultimately disagreed on the

interpretation of many key contract provisions relating to payment and

control of funds.

The district had the right to terminate the contract upon 90 days’ written

notice to EAI. EAI could also terminate the contract if it believed that the

annual appropriation was insufficient to meet all contractual financial

requirements.

Page 21 GAO/HEHS-96-3 Private Management of Public Schools
Chapter 2 

Authority and Responsibilities Varied Under

Private Management Contracts

The Minneapolis

School District

Contracted With PSG

for Leadership and the

Achievement of

Specific Goals

In December 1993, the Minneapolis School District signed a 3-year

contract with PSG. Under the contract, the district employed PSG to provide

leadership to the district, including a superintendent. PSG’s president was

designated superintendent. The company was to implement the district’s

improvement agenda, which included, among other things, to improve

students’ test scores and attendance rates, instruction, and curriculum;

reduce suspensions; enhance district management and accountability; and

maintain community trust and involvement in the schools. As

superintendent, PSG was responsible for the school district finances but

within the district’s budget and payable systems. The contract allowed the

district or PSG to terminate the contract with 30 days’ advance written

notice.

Under the contract, PSG was to be paid a monthly fee of $5,000 for serving

as superintendent. In addition, the company would receive additional

compensation for achieving the objectives in the district’s improvement

agenda. PSG characterizes the contract as a “pay-for-performance”

contract. For each goal or objective, the district established indicators,

such as changes in test scores and attendance rates, that were intended to

help the district assess the extent to which the goal had been achieved.

The agenda could be amended from time to time to reflect additional goals

and objectives.

Page 22 GAO/HEHS-96-3 Private Management of Public Schools
Chapter 3 

School Districts’ Experiences in

Implementing Private Management

Contracts

The four school districts that awarded private management contracts had

different implementation experiences. The Baltimore and Hartford

contracts proved difficult because of some opposition in the communities

to private management of the public schools, while Dade County and

Minneapolis implementation was easier because private management was

generally supported.

EAI, With Some

Opposition, Was

Generally Able to

Implement Its

Baltimore Contract

In Baltimore, the mayor, superintendent, and, initially, the teachers union

supported private management of the public schools. The school district

selected for private management only those schools with principals who

were interested in private management. In addition, the district gave

teachers who did not want to teach in privately managed schools the

option of transferring to other schools in the district. The teachers union,

however, opposed EAI’s requirement that teaching assistants11 have at least

90 college credits.

The teaching assistants who did not meet this requirement were

transferred from the privately managed schools to other schools in the

district. EAI replaced these assistants with a larger number of teaching

assistants, who usually had college degrees. The Baltimore teachers union

protested the transfers as well as the replacements. The union contended

that the original teaching assistants were valuable because they were

experienced and from schools’ neighboring communities and therefore

provided inner-city children much needed relationships with familiar,

trusted adults.

In addition, some people opposed EAI’s special education inclusion model

and the manner in which it was implemented.12 One group who opposed

the model believed that the real motive of EAI’s special education inclusion

program was to reduce the number of special education teachers and

thereby reduce costs. In addition, a national teachers union questioned

whether the decision to implement the inclusion model was in the

children’s best interest. To further complicate EAI’s efforts to implement

inclusion, the U.S. Department of Education found that EAI had not

followed the procedures as required by the Individuals With Disabilities

11Baltimore refers to its teaching assistants as paraprofessionals while EAI refers to them as

instructional interns.

12For a discussion of the advantages and disadvantages of such programs, see Special Education

Reform: Districts Grapple With Inclusion Programs (GAO/T-HEHS-94-160, Apr. 28, 1994).

Page 23 GAO/HEHS-96-3 Private Management of Public Schools
Chapter 3 

School Districts’ Experiences in

Implementing Private Management

Contracts

Education Act before changing special education students’ placements by

moving them to regular classrooms.13

Even with such opposition, EAI was able to generally implement its

contract. However, with over 1 year remaining in the 5-year contract, the

school district decided to terminate the contract effective March 1996.

School district officials had tried to negotiate with EAI to reduce the

amount of money EAI would receive to operate the nine schools because of

unexpected districtwide expenses. EAI would not agree to the reduced

amount, and the district decided in November 1995 to terminate the

contract.

Our analysis of reported operating expenses before and during private

management of the nine schools found that EAI spent about the same each

year on direct operations as the district had spent in the year before the

contract (see table 3.1). However, EAI allocated funds differently. In its first

year, EAI spent less on general instruction and special education

instruction but significantly more on facilities. In the second year, EAI’s

overall reported costs were similar to those of its first year, but, again, EAI

allocated funds differently. EAI increased its spending for general

instruction (primarily because of salary increases) but spent less than it

had in the previous year on special education. EAI also spent less on

facilities than it had in the previous year (primarily, according to an EAI

official, because of the facility upgrading done during the first year), but

the company continued to spend more than the district had previously

spent on facilities.

13These procedures include having a meeting about the change in placement with parents, teachers,

and other members of an educational management team. Baltimore and EAI, as a result, operated

under a plan whereby they are required to correct all violations.

Page 24 GAO/HEHS-96-3 Private Management of Public Schools
Chapter 3 

School Districts’ Experiences in

Implementing Private Management

Contracts

Table 3.1: Reported Operating

Expenses in Nine Baltimore Schools

Before and During Private

Management Operating expenses

Dollars in millions

Program category

Before

private

management

(school

year

1991-92)

First year of

private

management

(school year

1992-93)

Second year of

private

management

(school year

1993-94)

Teaching

General instruction $14.0 $13.2 $14.5

Special education

instruction 2.3 1.2 1.0

Food services 1.1 1.1 1.1

Transportation 0.2 0.3 0.2

Facilities 2.8 4.4 3.8

Total $20.4 $20.2 $20.6

Note: To make the figures comparable, we reclassified some categories. The table also excludes

administrative overhead because we could not get comparable data from Baltimore for the year

before private management.

EAI Unable to Fully

Implement Its

Contract With the

Hartford School

District

Although most school board members in Hartford supported private

management of public schools, many in the district did not agree with

them. The superintendent, for example, had several concerns about the

district’s decision to enter into a contract with EAI. The teachers union, as

well as other unions, opposed private management from the onset,

possibly at least in part because they viewed EAI as a vehicle for reducing

teaching jobs.

Opposition reached its peak when EAI submitted a budget proposal for

school year 1995-96 that would have eliminated a substantial number of

teaching positions. EAI wanted to cut teacher costs and use the savings to

help fund technology initiatives specified in the contract, as well as invest

in clean and safe schools, implement site-based management, and improve

instruction. However, most school board members would not support the

reduction in teachers. In commenting on a draft of this report, EAI said that

it believed that such a cut was warranted, saying school district

teacher-pupil ratios, determined by the district’s contract with the teachers

union, had resulted in a system that was “overstaffed by millions of dollars

of personnel.” According to Hartford, the cuts would have resulted in

Page 25 GAO/HEHS-96-3 Private Management of Public Schools
Chapter 3 

School Districts’ Experiences in

Implementing Private Management

Contracts

massive violations of class size limitations contained in the district’s

agreement with its teachers union.

During the first year of the contract, the district and EAI agreed that EAI

would prioritize its efforts in 6 of the 32 schools. Hartford, in responding

to a draft of this report, stated that EAI suggested this six-school focus to

achieve “showcase results quickly as a strategy to build community

support.” EAI was to provide specific education management services to

the six schools. These services included (1) training teams of staff for

site-based management in five schools and one adult learning center and

(2) providing technology improvements, such as computers. In

January 1996, however, Hartford announced that it would terminate its

contract with EAI. According to Hartford, the relationship broke down and

the contract will be terminated because EAI concluded that it would not

operate under the contract as written. EAI, on the other hand, said that it

ceased services to Hartford due to the district’s failure to pay it for

services rendered in accordance with the contract. In its 1995 annual

report to its stockholders, EAI stated that it had recorded costs totaling

$5.5 million for the Hartford contract but acknowledged uncertainties

about whether the district would reimburse it.

EAI Met the Terms of

Its Contract With

Dade County Public

Schools

The Dade County School Board and the teachers union supported EAI’s

Tesseract program for one of the county’s newly constructed public

schools. EAI also helped the district hire the school’s principal and

teachers, helping to ensure the support of those who would implement the

program.

EAI raised $1.4 million of the over $2 million agreed to under the contract

and was able to implement its Tesseract instructional approach. The

company also received in-kind donations estimated at about $285,000.

Most of the money raised was used to pay for teaching assistants’ salaries

and computer hardware and software.

Dade County officials said that they were generally pleased with EAI. The

contract expired in June 1995 but was not renewed. According to district

officials, EAI wanted a larger role in school management, but the district

would not agree to this.

Page 26 GAO/HEHS-96-3 Private Management of Public Schools
Chapter 3 

School Districts’ Experiences in

Implementing Private Management

Contracts

PSG Achieved Some

of the Goals Specified

in Its Minneapolis

Contract

The Minneapolis school board unanimously agreed to sign the contract

with PSG amid general support for the company serving as school

superintendent. District officials, however, did not view this decision as

private management of their schools. The school board’s search for a

superintendent was the same one used to select previous superintendents.

This time, however, the board encouraged nontraditional

candidates—those without training or experience in education—to apply.

PSG’s president was a well-known member of the Minneapolis community.

He had previously served as a consultant to the district and had been

instrumental in improving financial management in the district’s schools.

As of June 1995, after 18 months of the 3-year contract, the Minneapolis

School District determined that PSG had partially achieved some of the

goals and paid PSG 66 percent of the $716,500 that PSG was to receive under

the contract if it had fully achieved each goal. For example, the company

was paid when the suspension rate dropped, attendance increased, and

families’ involvement in their children’s education increased. PSG was also

paid when it developed baseline measures for assessing student

performance, identified the predictors of effective teaching, and developed

a strategic plan for the district. It was not paid, however, when student test

scores did not improve or when it did not negotiate the teachers’ contract

to the district’s satisfaction. The contract with PSG remains in effect until

December 1996.

Page 27 GAO/HEHS-96-3 Private Management of Public Schools
Chapter 4 

Results of Private Management on Public

School Education

Regardless of whether private companies fulfilled their contract

obligations, we found that contract services yielded some benefits for

students in all four districts. For example, students received individualized

instruction and had greater access to computers and cleaner school

buildings. In addition, private management companies have served as

catalysts for districts’ rethinking of the status quo.

Despite the positive impact of private management efforts, however, one

measure of student outcome—scores on standardized achievement

tests—did not substantially improve in Baltimore, where we analyzed test

scores. Similar results were also reported in Dade County and

Minneapolis. Hartford test score data, however, were not available for

analysis at the time of our review.

Attendance and

Suspension Rates

Improved in Some

Districts

In Dade County and Minneapolis, attendance rates improved; in

Minneapolis, suspension rates declined. According to a Dade County

internal evaluation, after 2 years of private management,14 attendance in

the privately managed elementary school improved significantly compared

with another similar school in the district: Absences declined an average

of 1.6 days per student, from 10.5 in school year 1990-91 to 8.9 in school

year 1992-93.15

The Minneapolis School District reported slight districtwide improvements

in attendance. Attendance rates increased from 90.5 percent in school year

1993-94 to 90.7 percent in school year 1994-95, according to district

officials. Suspension rates for all students in school year 1994-95

decreased in 7 of 10 months compared with school year 1993-94. The

decrease in suspensions, a PSG contract goal, is a result of a change in how

student discipline is managed, district officials said.

Our analysis of attendance rates for Baltimore showed that they did not

improve for students in the privately managed schools compared with the

rates for students in the nonprivately managed schools. (See app. II for the

details on our Baltimore attendance rate results.)

14Evaluation of the Saturn School Project at South Pointe Elementary School, Dade County Public

Schools, Office of Educational Accountability (Miami, Fla.: 1994).

15According to the Dade County evaluation, these results were found to be statistically significant. No

follow-up studies have been conducted to determine if the gains in attendance were sustained.

Page 28 GAO/HEHS-96-3 Private Management of Public Schools
Chapter 4 

Results of Private Management on Public

School Education

Students Received

Individualized

Instruction, and

Teachers Received

Training

In Baltimore and Dade County, EAI implemented its Tesseract instructional

approach, resulting in more individualized instruction and additional

teacher training. For example, in Baltimore, as part of its Tesseract

approach, EAI said it removed desks and replaced them with tables to

facilitate teacher-student and student-student interaction. EAI also

provided weekly teacher training in its Tesseract approach, which

included training in the Tesseract philosophy and implementation,

instructional technology, and leadership.

Students Had Greater

Access to Computers

The Baltimore, Dade County, and Hartford contracts specified that EAI

provide computers. In Baltimore, for example, EAI leased about 1,100

computers for the nine schools. A typical classroom had four networked

computers, and each school had one or more computer labs. EAI also

provided fax machines, copiers, and telephones for teachers in their

classrooms. In Hartford, EAI’s strategy was similar. EAI installed computer

labs in 5 of Hartford’s 32 schools. EAI also said that it provided copiers and

fax machines for all 32 schools.

School Building

Maintenance and

Repairs Improved

In Baltimore and Hartford, EAI provided school building repair and

maintenance. In Baltimore, officials told us that the nine schools were

cleaner as well as better maintained. EAI spent money to paint the schools,

improve heating, and install air conditioning. In addition, EAI spent money

on bathroom repair and plumbing, fence repair, landscaping, and

preventive maintenance. The company also retrofitted lighting in the nine

schools, which brightened classrooms and is expected to reduce energy

costs. In Hartford, EAI completed several types of repairs throughout the

district, concentrating on six of the district’s schools.

Companies Have Been

Catalysts for Districts’

Rethinking the Status

Quo

Private companies have served as catalysts for school districts’ rethinking

and challenging the status quo. In Baltimore, the superintendent said that

the entire school district has become more competitive because of EAI’s

presence. For example, he said that other schools—concerned that

functions, such as maintenance, would be contracted out—are doing a

better job in those areas. He also said that the schools are operating in a

more business-like manner.

In Dade County, the district is seeking ways to continue to have

college-educated teaching assistants in classrooms, although the contract

Page 29 GAO/HEHS-96-3 Private Management of Public Schools
Chapter 4 

Results of Private Management on Public

School Education

with EAI has expired. In this case, district officials sought to continue an

EAI innovation.

In Hartford, some district officials were concerned that teachers’ salaries

consumed too much of its budget and asked EAI to help it negotiate the

teachers’ contract. EAI succeeded in helping to secure a zero increase in

the teachers’ salaries for 1 year.

In Minneapolis, the school board hired what it considered to be a

nontraditional superintendent—a private company. In addition, PSG’s

president, who serves as the school district superintendent, does not have

the traditional background in education. This may change the way district

officials view future candidates for superintendent, officials stated.

Impact of Private

Management on

Students’

Standardized Test

Scores

In the Baltimore and Dade County privately managed schools—scores on

standardized achievement tests, a traditional measure of student learning,

showed no improvement when the scores were compared with those in

other comparable schools. Similarly, in the Minneapolis district, scores on

standardized achievement tests did not improve. For Hartford, test score

data were not yet available because the district was still in the early stages

of implementation.

In our own test score analyses of Baltimore schools, we found little or no

difference between scores of students in privately managed schools

compared with students in other similar schools. In general, scores tended

to be significantly lower in privately managed schools in the 1992-93

school year, during the year in which private management was beginning

in Baltimore, compared both with school year 1991-92 scores and with

scores of other similar schools. During the second and third years of

private management, however, scores in privately managed schools

increased, so that by the end of the 1994-95 school year, little or no

difference remained between scores of students in privately managed and

other similar schools. (See app. II for the details on our Baltimore test

score results.)

Dade County’s evaluation of EAI’s Tesseract instructional approach, after 2

years, showed no improvement in test scores compared with another

similar Dade County school.16 Although test scores of students in the

privately managed schools improved, they improved at a rate similar to

that of students in the comparison school. In Minneapolis, children’s test

16Evaluation of the Saturn School Project at South Pointe Elementary School.

Page 30 GAO/HEHS-96-3 Private Management of Public Schools
Chapter 4 

Results of Private Management on Public

School Education

scores showed no improvement after 2 years under private management.

In fact, the learning gap between minority and nonminority children

widened, according to the district. Thus, in Minneapolis, PSG did not

achieve two of its goals—improving test scores of all children and

narrowing test scores between minority and nonminority students.

Although standardized achievement tests provide a widely accepted

measure of student learning, they do not measure attainment of the entire

range of educational objectives. Standardized achievement tests tend to

measure core skills and knowledge common to the curricula of most

states, not necessarily the curricula of particular classrooms or districts

and not more abstract forms of learning. Thus, such tests may not measure

a child’s creative thinking, values, and sense of personal and community

responsibility—all qualities parents and teachers we interviewed

mentioned as important educational goals. In some districts, some parents

and teachers said they saw positive effects on children in privately

managed schools, even though standardized test score results did not

improve.

In addition, standardized achievement tests tend to be better suited to

measuring the cumulative effects of instruction; thus, it may take several

years before improved learning is reflected in standardized test scores.

This may partly account for the lack of overall improvement in test scores

in Baltimore, Dade County, and Minneapolis.

Page 31 GAO/HEHS-96-3 Private Management of Public Schools
Chapter 5 

GAO’s Observations and Comments From

School Districts and Companies

To improve educational outcomes for their students, school districts in

Baltimore, Dade County, Hartford, and Minneapolis contracted with

private, for-profit companies to manage individual schools or entire school

districts. These contracts reflected considerable variation in the authority

and responsibilities school districts were willing to give these private

companies. For example, EAI was to focus its instructional approach in

only one school in Dade County but was to manage the entire Hartford

School District.

Our work suggests that implementing the contracts was more difficult in

some school districts than in others because the companies faced more

community opposition. The level of opposition appeared to depend on the

extent to which groups in the community perceived themselves as losing

something. The strongest opposition occurred in Hartford, where the

company was viewed as a vehicle for reducing the number of teachers. On

the other hand, companies faced almost no opposition in Dade County,

where private management was used in a new school for which teachers

and staff had not been hired, or in Minneapolis, where the private

intervention involved primarily the superintendent position.

Although scores on standardized achievement tests did not substantially

improve in the three districts where test scores were available for analysis,

in all four districts, the private management companies made changes that

benefited students. For example, students enjoyed individualized

instruction, greater access to computers, and improved building

maintenance and repair.

In the end, three of the four contracts had either expired, been terminated,

or were in the process of being terminated. In Baltimore, the cited reason

for contract termination was budget constraints. In Hartford, the company

cited the district’s failure to pay for services rendered in accordance with

the contract; the district cited the unwillingness of the company to operate

under the contract as written as the reason for the impending contract

termination. The Dade County contract expired at the end of its 5-year

term. The Minneapolis contract remains in force until December 1996.

School District and

Company Comments

A draft of this report was provided for review and comment to the

Department of Education as well as the school districts (Baltimore City,

Dade County, Hartford, and Minneapolis) and companies (EAI and PSG) that

were the primary focus of our work on private management of public

schools. Only the Department of Education declined to provide comments.

Page 32 GAO/HEHS-96-3 Private Management of Public Schools
Chapter 5 

GAO’s Observations and Comments From

School Districts and Companies

In general, the comments clarified or provided additional information

pertinent to issues discussed in the report.

School Districts’

Comments

Baltimore’s Superintendent of Public Instruction stated that he and his

staff had no recommended changes or concerns about the report’s

contents. The superintendent added that much was learned from the

district’s experience with private management, although Baltimore’s

relationship with EAI had ended. According to the superintendent, the

district plans to continue to implement EAI strategies and programs, which

he said have proven successful and beneficial to students.

The Dade County School Board provided several technical comments that

we incorporated in the report where appropriate.

The Hartford Board of Education provided its interpretation of the

fundamental structure and essential terms of its private management

contract with EAI. As noted in our report, the Hartford district and EAI

disagree on the interpretation of many key contract provisions.

The Hartford School District also commented that neither opposition nor

the district’s budgetary problems prevented EAI from implementing the

contract. We modified the report to reflect the district’s view. The district

also made several technical comments that we incorporated throughout

the report where appropriate.

Comments from the Minneapolis School District were incorporated in the

comments provided by PSG. PSG’s comments are discussed in the following

paragraphs.

Private Management

Companies’

Comments

EAI was particularly concerned that we used spring 1992, rather than

spring 1993, test score results to determine the base year for measuring

the academic performance of Baltimore students based on the

Comprehensive Test of Basic Skills (CTBS). In explaining its preference for

using spring 1993 test score results, EAI stated that its first priority after it

was awarded the Baltimore contract in July 1992 was to focus on failures

of the physical plant and safety issues. According to EAI, initial resistance

to staff development programs also hindered progress in implementing

improved instructional techniques. In addition, it took until February 1993

to install approximately 1,100 computers in the nine Baltimore contract

schools. Because the CTBS test was again given in March 1993, EAI believes

Page 33 GAO/HEHS-96-3 Private Management of Public Schools
Chapter 5 

GAO’s Observations and Comments From

School Districts and Companies

that the spring 1993 testing date is a far more accurate baseline date than

is March 1992.

We disagree with EAI’s position on this issue and believe that 1992 is the

appropriate baseline year. Using spring 1992 scores as a baseline provides

a benchmark of student performance immediately before EAI’s assuming

management in the fall of 1992. Our goal was to assess changes in student

performance that occurred while these schools were under EAI

management. Using 1993 scores as the baseline ignores the impact of the

first year of EAI management and thus fails to assess the entire experience.

EAI also maintained that we failed to note the results of the Maryland State

Performance Assessment Program (MSPAP) in our report. MSPAP is a test

that measures student performance on tasks that require critical thinking,

high-level problem solving, and the integration of knowledge. Our analyses

do include MSPAP test scores to the extent they were available, and these

results are discussed in appendix II of the report. EAI also made several

technical comments that we incorporated in the report where appropriate.

In PSG’s comments, which also included comments from the Minneapolis

School District, the company discussed the issue of accountability. In PSG’s

view, its willingness to be accountable for the results it produces for the

entire school district is the key to building accountability throughout the

rest of the local system. In this regard, the company believes

accountability must be adopted by stakeholders throughout the

educational system, including teachers in their classrooms, principals in

their schools, and parents and community members. Accountability

throughout the system is imperative, PSG believes, for students to succeed.

PSG also provided technical comments on the information contained in our

draft report that we incorporated as appropriate. The most significant

point on which we disagree with PSG concerns payment for superintendent

services. Our report states that PSG was to receive a monthly fee of $5,000

for serving as superintendent. PSG said that, instead, the fee for

superintendent services is paid on a pay-for-performance basis; that is, it

would only be paid if the district were satisfied with PSG’s progress as

superintendent. Because we found no such qualifications in our analysis of

the PSG contract, we did not change that statement in our report.

Page 34 GAO/HEHS-96-3 Private Management of Public Schools
Page 35 GAO/HEHS-96-3 Private Management of Public Schools
Appendix I 

Methodology Used in Baltimore Test Score

and Attendance Analyses

This appendix discusses the methodology used in analyzing standardized

test score and attendance data of seven privately managed schools in the

Baltimore City Public School District.17 It also presents general limitations

of the study and defines terms used in the report.

A number of individuals with educational, statistical, or methodological

expertise assisted us in various portions of our test score and attendance

analyses. (See app. IX for the names and affiliations of these people.)

Methodology Using student data provided by the district’s Accountability Office for the

school year before private management (1991-92), we statistically matched

each privately managed school with a similar district-managed school.

Students in the latter schools served as a comparison group for two types

of analyses: (1) a longitudinal analysis, which analyzed test scores and

attendance of students who remained in the same school for the entire

3-year period (1992-93 through 1994-95), and (2) a cross-sectional analysis,

which analyzed test scores and attendance of students on a year-by-year

basis without regard to changes in student population from one year to the

next. For all statistical tests, we rejected the null hypotheses if the

observed significance levels were less than .05.

We limited our test score analyses to the areas of reading and math. We

extracted from the district’s data files reading and math scores as

dependent measures from routinely administered achievement and

performance tests. For the 1991-92 through 1994-95 school years,18 we

used normal curve equivalent (NCE) scores for reading and math from the

Comprehensive Test of Basic Skills (CTBS). In addition, for students in

third and fifth grades, we used reading and math outcome scale scores

from the Maryland State Performance Assessment Program (MSPAP) for

school years 1992-93 and 1993-94.19

We used the number of days the student was absent for the year as the

dependent variable in the attendance analyses. We standardized this

17We limited our analysis to the seven elementary schools that included kindergarten to fifth grades

because more test score data were available for this group and the pool from which to select a

comparison school was larger. (See table III.1 in app. III for a list of these schools.)

18We used 1991-92 data in selecting the comparison schools and as covariates in the longitudinal

analyses.

19Data were available for MSPAP only for school years 1992-93 and 1993-94. Only students in third,

fifth, and eighth grades participate in the assessment.

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Appendix I 

Methodology Used in Baltimore Test Score

and Attendance Analyses

variable by taking the ratio of days absent to days on roll and projecting

number of days absent to a 180-day school year.

We included in our analyses students enrolled in the selected privately

managed or comparison schools who met the following criteria: (1) they

had been on the rolls of the school at least 170 days of the school year and

(2) they were not identified as receiving special education services greater

than intensity level 3.20 Students were excluded from test score analyses if

they had no score on the particular outcome (for example, CTBS reading

score) used in the analysis.

Selecting the Comparison

Schools

We used the Statistical Package for the Social Sciences k-means clustering

procedure to match each privately managed school with a similar

district-managed school. Matching was done on the basis of the following

school characteristics: enrollment, attendance rate, promotion rate, racial

composition of student body, proportion of students receiving

free/reduced lunch, proportion of special education students, mobility

rate, and CTBS scores. The clustering procedure compared the

characteristics of the schools and calculated a “distance” measure to

represent the similarity between the cluster center (that is, the privately

managed school) and each of the other schools. We selected as the

comparison school the school identified as being closest (that is, with the

smallest distance measure) to the privately managed school.

The Longitudinal Analysis The longitudinal analysis assessed test scores and attendance of students

enrolled in a privately managed or comparison school in the 1992-93

school year and who remained in that school through the 1994-95 school

year. For these analyses, we combined school populations to form a single

group of students from privately managed schools and a single group of

students from comparison schools.

We performed separate analyses for reading, math, and attendance. The

groups for the reading analysis consisted of 689 students in the privately

managed group and 733 in the comparison group. For the math analysis,

the privately managed group had 470 students, and the comparison group

had 488 students. The attendance analysis consisted of 870 privately

managed school students and 855 comparison students.

20See “Definitions of Terms” in this app. for an explanation of intensity level 3.

Page 37 GAO/HEHS-96-3 Private Management of Public Schools
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Methodology Used in Baltimore Test Score

and Attendance Analyses

We used a repeated measure analysis of variance (ANOVA) technique to

provide the overall test of group effect for the longitudinal analyses. The

repeated measure ANOVA procedure produces an omnibus test of

significance that adjusts for the increased probability of Type I error (that

is, concluding that the groups in question are different when in reality they

are not) inherent in multivariate designs.

Although schools were matched on the basis of data from the school year

immediately preceding private management (1991-92), attrition that

occurred in school years 1992-93 through 1994-95 threatened the

equivalency of the surviving student groups. To mitigate this threat, we

used 1991-92 data as covariates in each of the longitudinal analyses to

provide statistical adjustment for nonequivalence introduced by attrition.

Since the covariate adjusted for main effects only, means used in

discussion of year-to-year changes do not reflect this adjustment.

Because longitudinal analysis focuses on changes in an individual

student’s performance over time, it is well suited for assessing educational

interventions that may impact outcome measures slowly or over a longer

period of time. However, because the analysis included only that subset of

students who remained in the same school for the 3-year period, results

are not necessarily generalizable to the relatively large proportion of the

district’s students who are more mobile and may change schools one or

more times during a school year.

The Cross-Sectional

Analysis

The cross-sectional analysis compared student test scores and attendance

for each year of the private management contract (1992-93 through

1994-95), without regard to changes in the student population from year to

year.

We performed cross-sectional test score analyses at the school level.

One-way ANOVA was used to compare reading and math scores of students

in each pair of schools. We used means and variances from these analyses

to compute effect sizes, which were then cumulated to provide summary

findings. (See tables III.3, III.5, III.7, and III.9 in app. III for group sizes

used in these analyses.)

To perform the cross-sectional attendance analyses, we combined school

populations to form a single group of students from privately managed

schools and a single group of students from comparison schools. (See

table III.11 in app. III for group sizes for these analyses.)

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Appendix I 

Methodology Used in Baltimore Test Score

and Attendance Analyses

Cross-sectional analysis does not take into account changes in individual

students’ scores. Instead, it compares the averages of students in the two

matched schools for each year under study. Cross-sectional analysis is

more sensitive to detecting short-term effects of educational changes and

is commonly employed to provide descriptive information about school

performance.

Interpretation and

Computation of Effect

Sizes

Interpretation of Effect Sizes Effect sizes (referred to as “d” in the computation formula) are measures

of the overlap between the distributions of the experimental and control

groups when the underlying scale has been standardized so that σ equals

1. Thus, in this study, d can be translated into the proportion of

comparison school scores that are less than (or more than) the average

score in the privately managed school.21

An effect size of zero means that the average score in the comparison

school was equal to the average score in the privately managed school, or,

alternatively, the scores of 50 percent of students in the comparison

school were higher than the average score in the privately managed

school. A negative effect size means that the scores of more than

50 percent of students in the comparison school were higher than the

average student in the privately managed school; a positive effect means

that fewer than 50 percent of students in the comparison group scored

better than the average student in the privately managed group.

As with other estimates, an effect size must be interpreted on the basis of

two factors: (1) the confidence with which the estimate is made and

(2) the practical importance of an effect of this size.

Tables III.2 through III.9 in appendix III show the computed effect sizes

and variances. Indications of statistical significance were based on a

95-percent confidence interval.

Once statistical significance of the estimate has been established, the issue

of practical importance must be considered. Judgments about practical

importance are typically made relative to the experimental context and the

21L.V. Hedges and I. Olkin, Statistical Methods for Meta-Analysis (San Diego: Academic Press, Inc.,

1985), p. 76.

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Appendix I 

Methodology Used in Baltimore Test Score

and Attendance Analyses

standards that have been established in that particular field. In educational

research, effect sizes of .5 have been offered as a conventional measure of

practical significance.22 The National Institute of Education’s Joint

Dissemination Review Panel suggested that usually an effect size of .33,

but at times as small as .25, may be considered educationally significant.23

To recognize relatively small effects, we chose to target our discussions to

effects of .25 or greater.

Computation of Effect Sizes To aid in interpreting findings and aggregating results, effect sizes were

computed for each finding24 using the formula

d = Y - Y E C

s

3

4N - 9 1 -

where YE is the mean of the experimental group (privately managed

schools), YC is the mean of the control group (comparison schools), and s

is the pooled standard deviation. Variances were calculated for the

individual effects by the following formula:

σ ( 2 d) = + n + n E C

n n E C

d2

2 (n + n ) E C

∧

Effect sizes were cumulated using the following method that gives greater

weight to those individual effects having lower variances:

d =

k 

2 i=1

Σ d

σ (d ) +

k 

i=1

Σ 2

1

σ (d ) i i ∧ ∧ i

Confidence intervals for effect sizes were computed using the following

standard formulas:

δ U+ + = d + 1.96 (d )				 σ

∧

δ L+ + = d - 1.96 (d )				 σ

∧

General Limitations of

the Study

Assessing the impact of program change in a field setting is extremely

difficult. Any study that attempts to do so encounters problems such as

the following:

22P. Rossi and S. Wright, “Evaluation Research: An Assessment of Theory, Practice and Politics,”

Evaluation Quarterly, Vol. I (1977), pp. 5-52.

23G.K. Tallmadge, The Joint Dissemination Review Panel Ideabook (Washington, D.C.: National

Institute of Education and U.S. Office of Education, 1977).

24For more information, see Hedges and Olkin, pp. 75-106.

Page 40 GAO/HEHS-96-3 Private Management of Public Schools
Appendix I 

Methodology Used in Baltimore Test Score

and Attendance Analyses

• No random assignment to groups. We could not randomly assign students

to a treatment or control group to ensure initial equivalency of the groups.

We attempted to adjust for this shortcoming by selecting comparison

schools matched as closely as possible on relevant characteristics and by

using statistical techniques (for example, covariate analysis) to control for

initial differences on key characteristics.

• Lack of experimental control. The independent variable could not be well

defined and may have differed from school to school. The independent

variable in this study was the type of school management, privately

managed or district managed. However, this variable was operationalized

in somewhat different fashion from school to school as teachers and

principals implemented the Tesseract approach under somewhat different

circumstances and with varying levels of enthusiasm.

For example, some interviewees told us that veteran teachers tended to

resist implementing the Tesseract approach. On the other hand, a number

of the newer teachers we interviewed were enthusiastic about it. We were

told in one school that teachers were given a great deal of flexibility in

deciding which parts of the approach to use in their classrooms. Thus, a

great deal of variability may have existed in the operationalization of

private management from school to school.

• Attrition. Students in these schools were highly mobile, so loss of subjects

affected these analyses. The long-term effects of program change may take

several years for student scores to fully reflect them and so may be

difficult to measure with highly mobile students, as are students in

Baltimore City Public Schools.

• Measurement difficulties. Standardized achievement tests, such as the

ones used to provide the dependent variables in these analyses, are widely

accepted as measures for use in educational evaluations; however, they

have shortcomings when used for this purpose. One of the major

criticisms of using standardized tests for evaluating educational programs

is that they may not be capable of measuring mastery of the specific

objectives of the instructional program being evaluated; rather, they

measure more general skills and knowledge. Thus, standardized tests may

be relatively insensitive to detecting specific gains, especially in the short

term.

Furthermore, school personnel and parents associated with schools in this

study mentioned broad goals as some of the desired outcomes of

educational changes. For example, they wanted students to become better

citizens, become self-directed learners, and show improved general

Page 41 GAO/HEHS-96-3 Private Management of Public Schools
Appendix I 

Methodology Used in Baltimore Test Score

and Attendance Analyses

problem-solving abilities. In general, standardized test scores are not

intended for, nor well suited to, measuring these broader goals.

Definitions of Terms

Comprehensive Test of

Basic Skills (CTBS)

A standardized achievement test given annually to all students in

kindergarten through fifth grade in the Baltimore City Public School

District that measures basic skills in reading, language, spelling, math,

study skills, science, and social studies.

Days Absent A variable constructed from student attendance records to standardize the

attendance base to a full school year. We calculated an absentee rate by

dividing days absent by days on roll, then projected this rate to a 180-day

school year basis.

Maryland State

Performance Assessment

Program (MSPAP)

Assessments given in third, fifth, and eighth grades in reading, writing,

language usage, math, social studies, and science. These tests measure

student performance on tasks that require critical thinking, high-level

problem solving, and the integration of knowledge.

MSPAP Outcome Scale

Score

A version of the MSPAP outcome score described in the 1994 Score

Interpretation Guide for MSPAP as “directly comparable across outcomes in

the same content area, across years, and to the MSPAP proficiency levels.

These scores are expressed on the MSPAP scale score scale and range, as do

the content area scale scores, from 350 to 700.”

Normal Curve Equivalent

(NCE)

A normalized version of a test score often used for federal reporting

purposes. These scores have a mean of 50 and a standard deviation of

about 21. The values of 1, 50, and 99 on this scale coincide with percentile

ranks of 1, 50, and 99; but other values do not coincide.

Special Education,

Intensity Level 3

One of six levels describing intensity of special education services

available. Students classified as Level 3 may receive special educational

services not to exceed an average of 3 hours per school day.

Page 42 GAO/HEHS-96-3 Private Management of Public Schools
Appendix II 

Results of Baltimore Test Score and

Attendance Analyses

This appendix discusses the results of our analyses of achievement and

attendance data conducted on selected privately managed schools in the

Baltimore City Public School District.25 (For a discussion of the

methodology used in these analyses, see app. I.)

Test Score Analyses Our test score analyses of Baltimore’s schools indicated that, overall, test

scores of students attending privately managed schools were similar to

those of students attending the matched, district-managed, comparison

schools. Although schools varied in some of the analyses, overall, we

found little difference between test scores in privately managed and

comparison schools.

Longitudinal Analysis The longitudinal analysis, which tracked the group of students who

remained in the same school during the 3-year period (1992-93 through

1994-95), showed overall test score results in reading and math to be

similar between students in privately managed and comparison schools

after adjusting for the presence of initial difference.26 Reading and math

scores for both groups declined over the 3-year period compared with

1991-92 scores. For students in privately managed schools, these scores

sharply declined in 1992-93 (the implementation year), followed by

increases the next 2 years. Scores of students in comparison schools, on

the other hand, declined less sharply in 1992-93 but continued to decline in

each of the next 2 years. Figure II.1 shows that reading scores showed this

pattern.27

25The University of Maryland, Baltimore County, conducted an evaluation of the privately managed

schools in Baltimore that included test score and attendance analyses. Those findings generally agreed

with the results presented here.

26Although schools were matched for this analysis on the basis of 1991-92 characteristics, the

equivalency of the groups was affected by attrition over the 3-year period. To compensate for this fact,

we used 1991-92 test score and attendance data as a statistical control for this inequality.

27Means for individual years shown in figs. II.1 and II.2 have not been adjusted for variance accounted

for by 1991-92 scores.

Page 43 GAO/HEHS-96-3 Private Management of Public Schools
Appendix II 

Results of Baltimore Test Score and

Attendance Analyses

Figure II.1: Longitudinal Analysis:

CTBS Reading Scores

Comparison Group (N=733)

Testing Year

Privately Managed Group (N=689)

CTBS Reading Scores

45.6

44.6

40.0

47.2

38.4

42.4

39.2 40.2

1991-92 1992-93 1993-94 1994-95

0

5

10

15

20

25

30

35

40

45

50

Note: Means reported in this graph illustrate changes in average scores over time. They have not

been adjusted for variation accounted for by 1992 test scores. After adjusting for this initial

difference, no significant difference was found between scores of students in the privately

managed group and scores of students in the comparison group.

Although year-to-year changes were sometimes significantly different

between the privately managed and comparison groups, offsetting patterns

of increase and decline resulted in an overall finding of no statistically

significant difference in reading after adjusting for the presence of initial

difference. As figure II.2 shows, the pattern of change in math scores from

year to year was similar to that found in the reading scores. Although both

groups declined in the first year, the decline in the privately managed

schools was greater. However, in the following years, scores in the

privately managed schools increased, while the scores in the comparison

group continued to decline.

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Appendix II 

Results of Baltimore Test Score and

Attendance Analyses

Figure II.2: Longitudinal Analysis:

CTBS Math Scores

Comparison Group (N=488)

Testing Year

Privately Managed Group (N=470)

CTBS Math Scores

45.1

43.0

42.7

47.5

37.6

45.4

40.5 41.8

0

5

10

15

20

25

30

35

40

45

50

1991-92 1992-93 1993-94 1994-95

Note: Means reported in this graph illustrate changes in average scores over time. They have not

been adjusted for variation accounted for by 1992 test scores. After adjusting for this initial

difference, the overall decline in scores was somewhat greater for the privately managed group.

Unlike reading scores, however, when the 3 years are considered together,

the decline in math scores in the privately managed group was statistically

significant, even though the 1994-95 scores of the privately managed group

were slightly higher than the comparison group’s. This finding of overall

difference between the two groups may be accounted for largely by the

substantial decline in scores in the privately managed group in 1992-93, the

implementation year.

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Results of Baltimore Test Score and

Attendance Analyses

Figures II.3 and II.4 depict the pattern of change over the years expressed

in change from the groups’ 1991-92 averages. The initial decline both in

reading and math scores is apparent in these figures. For both reading and

math, after this initial large decline, scores in the privately managed group

show a pattern of steady improvement.

Figure II.3: Changes in CTBS Reading

Scores (Longitudinal Analysis)

Testing Year

1991-92 1992-93 1993-94 1994-95

Privately Managed Group

Comparison Group

-3.96

-1.63

-2.57

-3.14

-7.26

-2.22

-8

-6

-4

-2

0

Changes From 1992 Average Score

Page 46 GAO/HEHS-96-3 Private Management of Public Schools
Appendix II 

Results of Baltimore Test Score and

Attendance Analyses

Figure II.4: Changes in CTBS Math

Scores (Longitudinal Analysis)

-7.87

-2.41

-4.50

-4.96

-5.73

-2.77

Testing Year

Privately Managed Group

Comparison Group

1991-92 1992-93 1993-94 1994-95

-10

-8

-6

-4

-2

0

Changes From 1991-92 Average Score

Cross-Sectional Analyses Results of the cross-sectional analyses were similar to those of the

longitudinal analysis. Overall, we found little difference in student

achievement in privately managed and comparison schools. When MSPAP

scores were used as the outcome measure, no significant difference was

found between the privately managed group of students and the

comparison group in either reading or math scores. (Tables III.2 and III.4

in app. III show school-level and overall effects sizes28 for the MSPAP

analyses.)

Tables III.6 and III.9 (in app. III) show similar findings using CTBS scores as

the outcome measure. Although small, the cumulated effects for CTBS

scores in both reading and math were statistically significant in favor of

the comparison group. However, effects of this small size are not

28Effect sizes are measures of the overlap between the distributions of the experimental and control

groups when the underlying scale has been standardized so that σ equals 1. See app. I for additional

information on interpreting effect size.

Page 47 GAO/HEHS-96-3 Private Management of Public Schools
Appendix II 

Results of Baltimore Test Score and

Attendance Analyses

conventionally considered to have practical educational significance. (See

app. I for additional discussion of interpreting effect sizes.)

Because the cross-sectional analyses were done at the school level, these

analyses revealed the variation in effect among pairs of schools. In some

pairs, students in the privately managed school performed better; in

others, students in the comparison school performed better. In most cases,

the effects were relatively small.

Three of the seven privately managed schools (Dr. Rayner Browne, Harlem

Park Elementary, and Sarah M. Roach), however, show a more definite

pattern of underperformance compared with their matched schools. In

these cases, effect sizes were great enough to warrant further attention.

Determining whether this underperformance is an artifact of the

comparison or a result of some change in the privately managed school or

in the comparison school is beyond the scope of this study.

Attendance Analyses Overall, our analyses of student attendance data showed little difference

between attendance patterns of students in privately managed schools and

students in comparison schools. We found no difference in the number of

days absent for nonmobile students (those remaining in the same school

for the 3 years) in the longitudinal analysis and little difference when the

entire student population was considered in the cross-sectional analysis.

Longitudinal Analyses Our longitudinal analysis of attendance data revealed that attendance

patterns of nonmobile students attending privately managed schools were

similar to attendance patterns of nonmobile students attending

comparison schools. When we analyzed attendance of nonmobile students

in privately managed and comparison schools, we found no significant

difference between the groups. Both groups showed a general pattern of

improved attendance for the period. (Table III.10 in app. III presents these

results.)

Cross-Sectional Analysis Our year-by-year analysis of the period also showed a general trend

toward improved attendance for both privately managed and comparison

groups. As table III.11 (in app. III) shows, no significant difference existed

in attendance rates of students attending privately managed schools and

students attending comparison schools in 1992-93, the first year of private

management. However, in 1993-94 students in the privately managed

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Results of Baltimore Test Score and

Attendance Analyses

schools were absent, on average, about 3 days per year more than students

in the comparison schools. In 1994-95, this difference declined to 1 day a

year. Findings for both 1993-94 and 1994-95 were statistically significant.

Page 49 GAO/HEHS-96-3 Private Management of Public Schools
Appendix III 

Data Supporting the Baltimore Test Score

and Attendance Analyses

Table III.1: Pairs of Schools in the

Analyses Privately managed school Comparison school

Pair 1 Dr. Rayner Browne Furman L. Templeton

Pair 2 Mildred Monroe Park Heights

Pair 3 Harlem Park Elementary Pimlico

Pair 4 Edgewood Hilton

Pair 5 Sarah M. Roach James Mosher

Pair 6 Mary E. Rodman Liberty

Pair 7 Graceland Park-O’Donnell

Heights

Charles Carroll, Barrister

Table III.2: Means and Effect Sizes, MSPAP Reading Scores

1992-93 1994-95

School Grade 3 Grade 5

School effect

size Grade 3 Grade 5

School

effect size

Cumulated

effect

Dr. Rayner Browne 444 469 –.03 451 458 +.23 +.10

Furman L. Templeton 447 469 430 457

Mildred Monroe 456 480 +.19 431 487 –.24 0

Park Heights 450 470 465 481

Harlem Park Elementary 434 469 –.21 443 446 –.43a –.33

Pimlico 461 465 467 465

Edgewood 464 487 +.04 473 474 –.11 –.04

Hilton 468 479 483 474

Sarah M. Roach 474 488 –.09 456 484 –.24 –.17

James Mosher 483 485 491 475

Mary E. Rodman 450 465 +.11 456 456 –.26 –.07

Liberty 451 453 462 476

Graceland ParkO’Donnell Heights 455 469 –.37 453 459 –.22 –.29

Charles Carroll, Barrister 487 473 459 474

Overall effect –.12

Note: Effect sizes are measures of the overlap between the distributions of the experimental and

control groups when the underlying scale has been standardized so that σ =1. See app. I for

additional information on interpretation of effect sizes.

aSignificantly different from 0 to .05 level.

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Data Supporting the Baltimore Test Score

and Attendance Analyses

Table III.3: Ns and Variances for Effect Sizes, MSPAP Reading Scores

1992-93 1993-94 Cumulated effect

School σ2 N σ2 N σ2

Dr. Rayner Browne .027 63 .025 69 .052

Furman L. Templeton 94 98

Mildred Monroe .031 56 .037 54 .068

Park Heights 75 58

Harlem Park Elementary .019 88 .015 128 .034

Pimlico 139 156

Edgewood .015 110 .014 128 .030

Hilton 165 154

Sarah M. Roach .023 107 .021 101 .044

James Mosher 75 97

Mary E. Rodman .012 188 .013 184 .025

Liberty 146 133

Graceland ParkO’Donnell Heights .029 80 .028 84 .057

Charles Carroll, Barrister 66 63

Overall effect .006

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Data Supporting the Baltimore Test Score

and Attendance Analyses

Table III.4: Means and Effect Sizes, MSPAP Math Scores

1992 1993-94

School Grade 3 Grade 5 Effect size Grade 3 Grade 5 Effect size

Cumulated

effect

Dr. Rayner Browne 450 470 +.49a 473 472 +.74a +.61a

Furman L. Templeton 422 456 424 447

Mildred Monroe 450 462 +.33 432 487 –.01 +.17

Park Heights 418 464 474 461

Harlem Park Elementary 434 467 –0.62a 446 448 –.47a –54a

Pimlico 469 490 475 462

Edgewood 483 487 +.66a 493 458 +.05 +.35

Hilton 448 464 485 461

Sarah M. Roach 489 469 –.39a 453 457 –.87a –.63a

James Mosher 484 513 512 474

Mary E. Rodman 437 449 +.22 454 461 –.16 +.03

Liberty 437 436 487 448

Graceland ParkO’Donnell Heights 452 460 –0.32 456 444 –0.30 –.31

Charles Carroll, Barrister 480 462 477 468

Overall effect –.05

Note: Effect sizes are measures of the overlap between the distributions of the experimental and

control groups when the underlying scale has been standardized so that σ = 1. See app. I for

additional information on interpretation of effect sizes.

aSignificantly different from 0 at .05 level.

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Data Supporting the Baltimore Test Score

and Attendance Analyses

Table III.5: Ns and Variances for Effect Sizes, MSPAP Math Scores

1992-93 1993-94 Cumulated effect

School σ2 N σ2 N σ2

Dr. Rayner Browne .029 57 .031 58 .060

Furman L. Templeton 98 86

Mildred Monroe .034 53 .040 50 .074

Park Heights 73 57

Harlem Park

Elementary .018 103 .017 109 .035

Pimlico 137 136

Edgewood .016 105 .016 113 .032

Hilton 168 144

Sarah M. Roach .026 106 .026 85 .051

James Mosher 68 89

Mary E. Rodman .013 181 .013 179 .026

Liberty 145 131

Graceland

Park-O’Donnell

Heights .030 75 .027 76 .057

Charles Carroll,

Barrister 63 53

Overall effect .006

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Data Supporting the Baltimore Test Score

and Attendance Analyses

Table III.6: Means and Effect Sizes, CTBS Reading Scores

1992-93 1993-94 1994-95

School Mean Effect size Mean Effect size Mean Effect size

Cumulated

effect

Dr. Rayner Browne 28.3 –.45a 32.3 –.21a 30.4 –.43a –.36a

Furman L. Templeton 37.0 36.7 38.9

Mildred Monroe 36.0 –.05 43.2 +.07 42.6 –.05 –.01

Park Heights 36.8 41.9 43.6

Harlem Park Elementary 32.2 –.54a 30.3 –.60a 37.2 –.06 –.41a

Pimlico 42.4 42.0 38.6

Edgewood 49.0 +.03 47.5 –.09 47.5 +.14 +.02

Hilton 48.5 49.4 44.7

Sarah M. Roach 41.6 –.30a 38.2 –.52a 42.4 –.48a –.43a

James Mosher 47.6 48.6 53.3

Mary E. Rodman 41.0 –.02 38.8 .00 45.3 +.10 +.02

Liberty 41.3 38.9 43.1

Graceland ParkO’Donnell Heights 35.7 .00 33.6 –.34a 35.8 –.22a –0.19a

Charles Carroll, Barrister 35.6 39.8 40.2

Overall effect –.17a

Note: Effect sizes are measures of the overlap between the distributions of the experimental and

control groups when the underlying scale has been standardized so that σ =1. See app. I for

additional information on interpreting effect sizes.

aSignificantly different from 0 at .05 level.

Page 54 GAO/HEHS-96-3 Private Management of Public Schools
Appendix III 

Data Supporting the Baltimore Test Score

and Attendance Analyses

Table III.7: Ns and Variances for Effect Sizes, CTBS Reading Scores

1992-93 1993-94 1994-95

Cumulated

effect

School σ2 N σ2 N σ2 N σ2

Dr. Rayner Browne .008 216 .007 252 .009 219 .003

Furman L. Templeton 315 330 269

Mildred Monroe .009 193 .010 180 .010 186 .003

Park Heights 302 235 212

Harlem Park Elementary .005 406 .005 435 .005 366 .002

Pimlico 470 475 452

Edgewood .005 403 .005 386 .005 347 .002

Hilton 498 474 449

Sarah M. Roach .006 353 .006 346 .006 313 .002

James Mosher 311 311 330

Mary E. Rodman .004 587 .004 560 .004 536 .001

Liberty 478 436 412

Graceland ParkO’Donnell Heights .008 280 .007 321 .008 321 .003

Charles Carroll, Barrister 235 235 219

Overall effect .000

Page 55 GAO/HEHS-96-3 Private Management of Public Schools
Appendix III 

Data Supporting the Baltimore Test Score

and Attendance Analyses

Table III.8: Means and Effect Sizes, CTBS Math Scores

1992-93 1993-94 1994-95

School Mean Effect size Mean Effect size Mean Effect size

Cumulated

effect

Dr. Rayner Browne 28.2 –.42a 32.0 –.16 32.02 –.41a –.32a

Furman L. Templeton 36.9 35.1 41.8

Mildred Monroe 39.2 +.12 46.7 +.17 47.5 +.23a +.17a

Park Heights 36.7 43.2 42.7

Harlem Park Elementary 32.4 –.50a 37.2 –.30a 37.9 –.04 –.28a

Pimlico 43.0 44.0 38.7

Edgewood 49.5 +.04 51.4 +.12 51.3 +.27a +.14a

Hilton 48.6 48.6 45.0

Sarah M. Roach 37.7 –.51a 39.0 –.38a 48.8 –.12a –.34a

James Mosher 48.3 47.2 51.5

Mary E. Rodman 38.3 –.01 39.5 +.12 47.4 +.27a +12a

Liberty 38.6 36.9 41.0

Graceland ParkO’Donnell Heights36.8

+.11 35.4 –.17a 40.6 –.09a –.05

Charles Carroll, Barrister 34.5 38.9 42.4

Overall Effect –.08a

Note: Effect sizes are measures of the overlap between the distributions of the experimental and

control groups when the underlying scale has been standardized so that σ =1. See app. I for

additional information on interpreting effect sizes.

aSignificantly different from 0 at .05 level.

Page 56 GAO/HEHS-96-3 Private Management of Public Schools
Appendix III 

Data Supporting the Baltimore Test Score

and Attendance Analyses

Table III.9: Ns and Variances for Effect Sizes, CTBS Math Scores

1992-93 1993-94 1994-95

Cumulated

effect

School σ2 N σ2 N σ2 N σ2

Dr. Rayner Browne .010 175 .009 200 .010 173 .003

Furman L. Templeton 260 280 233

Mildred Monroe .010 166 .012 152 .012 154 .004

Park Heights 249 196 171

Harlem Park Elementary .006 338 .005 351 .006 300 .002

Pimlico 399 399 377

Edgewood .005 341 .006 321 .006 291 .002

Hilton 431 410 379

Sarah M. Roach .008 302 .007 291 .007 275 .003

James Mosher 251 261 264

Mary E. Rodman .005 484 .005 471 .005 437 .002

Liberty 388 367 340

Graceland ParkO’Donnell Heights .009 232 .009 249 .009 271 .003

Charles Carroll, Barrister 195 191 176

Overall effect .000

Table III.10: Days Absent (Longitudinal

Analysis) 1991-92 1992-93 1993-94 1994-95

Students in privately

managed schools (N=870) 13.8 12.1 9.5 9.7

Students in comparison

schools (N=855) 13.4 13.0 8.6 9.4

Note: Significance test of overall difference not significant at .05 level.

Table III.11: Days Absent

(Cross-Sectional Analysis) 1991-92 1992-93 1993-94 1994-95

Students in privately

managed schools

14.0

(N=2,425)

14.4

(N=3,118)

13.0a

(N=3,127)

12.9a

(N=2,961)

Students in comparison

schools

14.0

(N=2,490)

14.9

(N=3,242)

10.2

(N=3,103)

11.8

(N=3,049)

aDifferences found in 1993-94 and in 1994-95 were statistically significant at .05 level.

Page 57 GAO/HEHS-96-3 Private Management of Public Schools
Appendix IV 

Comments From the Baltimore City Public

School District

Page 58 GAO/HEHS-96-3 Private Management of Public Schools
Appendix V 

Comments From Dade County Public

Schools

Page 59 GAO/HEHS-96-3 Private Management of Public Schools
Appendix VI 

Comments From the Hartford School

District

Page 60 GAO/HEHS-96-3 Private Management of Public Schools
Appendix VI 

Comments From the Hartford School

District

Page 61 GAO/HEHS-96-3 Private Management of Public Schools
Appendix VI 

Comments From the Hartford School

District

Page 62 GAO/HEHS-96-3 Private Management of Public Schools
Appendix VI 

Comments From the Hartford School

District

Page 63 GAO/HEHS-96-3 Private Management of Public Schools
Appendix VI 

Comments From the Hartford School

District

Page 64 GAO/HEHS-96-3 Private Management of Public Schools
Appendix VI 

Comments From the Hartford School

District

Page 65 GAO/HEHS-96-3 Private Management of Public Schools
Appendix VII 

Comments From EAI

Page 66 GAO/HEHS-96-3 Private Management of Public Schools
Appendix VII 

Comments From EAI

Page 67 GAO/HEHS-96-3 Private Management of Public Schools
Appendix VII 

Comments From EAI

Page 68 GAO/HEHS-96-3 Private Management of Public Schools
Appendix VII 

Comments From EAI

Page 69 GAO/HEHS-96-3 Private Management of Public Schools
Appendix VII 

Comments From EAI

Page 70 GAO/HEHS-96-3 Private Management of Public Schools
Appendix VIII 

Comments From the Minneapolis School

District and PSG

Page 71 GAO/HEHS-96-3 Private Management of Public Schools
Appendix VIII 

Comments From the Minneapolis School

District and PSG

Page 72 GAO/HEHS-96-3 Private Management of Public Schools
Appendix VIII 

Comments From the Minneapolis School

District and PSG

Page 73 GAO/HEHS-96-3 Private Management of Public Schools
Appendix VIII 

Comments From the Minneapolis School

District and PSG

Page 74 GAO/HEHS-96-3 Private Management of Public Schools
Appendix IX 

Acknowledgments

We acknowledge the assistance of the following experts: Dr. Jack

Edwards, Defense Manpower Data Center; Dr. John A. Nunnery, Director,

Bureau of Educational Research, College of Education at the University of

Memphis; Dr. Nambury Raju, Professor of Psychology at the Georgia

Institute of Technology; and Dr. Randall R. Robey, Assistant Professor,

Curry School of Education at the University of Virginia. These individuals

provided valuable assistance for our test score and attendance analyses;

however, they do not necessarily endorse the positions taken in the report.

Page 75 GAO/HEHS-96-3 Private Management of Public Schools
Appendix X 

GAO Contacts and Staff Acknowledgments

GAO Contacts Fred Yohey, Assistant Director, (202) 512-7218

Sherri Doughty, Project Manager, (202) 512-7273

Acknowledgments In addition to those named above, the following individuals made

important contributions to this report: Lemuel Jackson coauthored the

report and led the Minneapolis case study, Patricia Cazares coauthored the

report and led the Hartford and Dade County case studies, Benjamin

Jordan coauthored the report and assisted with the case studies, Deborah

McCormick led the Baltimore test score and attendance analysis and

assisted with the case studies, Susan Poling led the contract analysis and

assisted with the case studies, Louise DiBenedetto and Suzanne Murphy

led the Baltimore expense analysis, and Laurel Rabin and Elizabeth

Williams assisted in writing the report.

(104800) Page 76 GAO/HEHS-96-3 Private Management of Public Schools
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