More School Districts Hand Over the Classroom Keys to Private Firms : Education: Many believe public systems are incapable of dealing adequately with the deficiencies and social ills they now confront.

WASHINGTON — Last week, it happened in Baltimore. In the recent past, it was the same story in Miami; in Duluth, Minn., and in North Carolina.

Beleaguered parents and public school officials agreed to share the keys to their classrooms with private entrepreneurs who promised to improve the quality of education for urban children while producing a profit for themselves.

As they attempt to respond to rising community frustration over poor achievement scores and escalating dropout rates, some urban school administrators are reaching a radical conclusion: Public school systems may be incapable of dealing adequately with the host of educational deficiencies and social ills they now confront, and private ventures may provide new solutions.

“It’s not so much that school districts feel that they can’t run their schools any more, it is more the fact that they can’t,” says Anna David, an education researcher for the Reason Foundation, a Los Angeles-based nonprofit public policy think tank that advocates privatizing many governmental services.

“What you’re seeing is a crunch time,” David said. “The options for schooling are not very varied. Privatization is the only option left.”

The turn to private industry represents a sharp departure from the century-old public school system, under which local government assumed total responsibility for providing education for every school-age child.

Today, local school administrations are giving up varying degrees of hands-on involvement in schools.

In some districts, administrators are taking half-steps into privatization by purchasing educational services or advice from for-profit firms. In others, school officials are yielding a far larger role to private companies, giving them control over virtually all aspects of schooling, including hiring teachers, developing curriculum, operating classes and maintaining buildings.

Officials in the few school districts willing so far to test such programs appear desperate for measurable gains in pupil achievement. And in community after community, parents seem less willing to wait for whatever other educational reforms may emerge from the protracted debate taking place between the White House and Congress.

In Baltimore and Miami, local school officials are giving Minneapolis-based Education Alternatives Inc., a five-year-old company, the green light to operate existing schools as they see fit, although the districts retain ultimate responsibility and could sever their relationship in the future.

Education Alternatives plans to run nine Baltimore public schools that serve 5,100 inner-city students. Under the terms of a contract that is still being negotiated, Education Alternatives promises to conduct small classes with two teachers, provide individual lesson plans for every child, supply computers in every classroom and aggressively encourage parental involvement.

Company officials say they guarantee an improvement in the students’ performance at the risk of losing future business with the school district.

School officials have tentatively agreed to give the firm wide authority over classroom discipline, curriculum and operations.

The cost to the school district will be $26.1 million, about what it currently spends to operate the nine schools. The firm promises to cut wasteful spending and administrative costs at a rate of $300,000 per year at each of the nine schools. The firm’s earnings are to come from a slice of the savings.

Baltimore School Supt. Walter G. Amprey calls the pilot program “a major step in our efforts to revitalize and improve our school system through use of sound educational and business practices.”

Education Alternatives also has contracts to operate a South Miami Beach elementary school and to manage, as a pilot project, the entire school system in Duluth. A member of the Education Alternatives board of directors will serve as Duluth school superintendent during the experiment.

In North Carolina, school officials have subcontracted with a foreign language instruction firm to provide schoolteachers fluent in French, German, Italian, Spanish, Chinese and Japanese. Officials took the step because the state adopted a law in 1985 requiring foreign language instruction for every child in the state’s kindergarten and elementary schools by the 1994-95 school year, but failed to appropriate money to hire teachers.

Ultimate authority over the schools in each case remains with public school officials, who have the power to terminate the arrangements if they are not working. That is not so with a more controversial plan to create a network of for-profit private schools wholly divorced from taxpayer-supported districts.

A high-profile venture, proposed by Whittle Communications of Knoxville, Tenn., would construct 1,000 private schools across the nation by the year 2000 that would operate independent of and compete with public schools.

To that end, Whittle has recruited a galaxy of education stars, including Yale University President Benno C. Schmidt Jr. and John E. Chubb, a senior fellow at the Brookings Institution and co-author of a controversial book advocating privatizing public schools.

Some vocal critics complain that if competing schools like Whittle’s build upon the public’s frustration with government-run schools, taxpayer support for public education could erode.

Opponents also predict that private schools would pick off the best students to achieve promised results. Thus, children of affluent parents would become the target market for privately run schools, and poor children would be warehoused in under-funded public schools.

Despite the concerns, few education experts argue that America’s public schools should be left alone. Parents and taxpayers are exerting tremendous pressure on local school officials, pinching them between demands for better results and opposition to raising taxes for school improvements.

“It is parents’ dissatisfaction with government schools that is fueling a growing search for alternatives,” says David Boaz, author of “Liberating Schools: Education in the Inner City,” and the executive vice president of the Cato Institute, a libertarian think tank.

John Golle, chairman of Education Alternatives, says his company can “pierce the bureaucracy” to do what local school boards apparently cannot. “We have proven that you can make significant education gains year after year for every single student without spending more money, but, in fact, you need to spend the money differently,” he says.

The key to success is the ability of private firms to trim wasteful spending, Golle says. He points to statistics showing that American schools spent about 71 cents of every dollar in the classroom in 1970, and only 50 cents in the classroom currently. In particular, he says, Education Alternatives has found that many large city school systems could save “tens of thousands of dollars” annually by making their schools more energy efficient, but fail to do so for a variety of bureaucratic reasons.

David at the Reason Foundation says privatizing schools is a logical extension of the trend of governments divesting themselves of operations better suited to entrepreneurs, including garbage collection, toll-road operation and fire and security protection.

“There is universal agreement that education has got to improve,” she says. “Entrepreneurs in the private sector are looking at the situation now and trying to determine how they can profit and benefit from this situation.”

Golle says entrepreneurs, like himself, are leading the “cutting edge” for the way U.S. schoolchildren will be educated in the future. He predicts that many local school systems will want private firms to complement public schools, not to replace them altogether.

“Private businesses working cooperatively with public education have the best chance of consistently improving the education system in this country,” he says. “Of course, this is going to catch on. It has to catch on. Our country is dependent on companies like us to fix things, and education in this nation has got to be fixed.”