NCPA - National Center for Policy Analysis

For Edison Schools, the Challenge is Financial

October 22, 2002

The future of public education in the United States, and efforts to reform it, are closely tied to the prospects of the private, for-profit Edison Schools Inc. Founded in 1992, Edison's innovations -- including a well-conceived curriculum, an emphasis on technology, longer school days and increased teacher training -- can only benefit students, its backers say, and its reforms have been praised by many educators.

But Edison has never made a profit for its investors -- and the prospects for doing so are elusive. Its stock has fallen from a 52-week high of $21.68 to close yesterday at 52 cents. It lost $86 million on revenues of $465 million in the fiscal year ended June 30.

Financial failure would severely disappoint advocates of education reform who see private involvement as the last, best hope of salvaging and rebuilding public education in the U.S.

  • Edison has management contracts to operate more than 100 schools enrolling 80,000 students.
  • In recent months, Edison has said it would overhaul its operating strategy, cut unprofitable contracts and rein in its rapid expansion.
  • Its biggest school district customers are Philadelphia, at 20 schools; Chester Upland in Chester, Pa., at nine schools; followed by the Dallas ISD; and Las Vegas' Clark County -- although the Dallas contract is to be cancelled at the end of this school year.

Powerful interests in Philadelphia -- which have been fighting Edison at every step along the way -- would like to see that contract canceled also. Student performance has long been a bone of contention between the company and teachers' unions. Union-funded studies say Edison's performance gains are average at best; the company says 84 percent of its schools show improvement.

Source: Charles Forelle, "Flunked by Investors, Edison Schools Scorns Talk of Failure," Wall Street Journal, October 22, 2002.


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