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Box 4
Clinton's Legal Fund
Clintin's legal Fund
Commercialization HRC Column
Correspondence
Counseling
Curator
Delegations
Design Awards
Direct Mail/Letters
District of Columbia
Document Request
Drug Policy
Easter Egg Roll 1995
Economic Package
Education
#
9478
NARA 6847
Box 6
mw copie
Congressional Materials
Consultants
Contract with America
Convention- Move
Copenhagen
Correspondence
Counseling
Curator
LynaCutler
Delegations
Design Awards
Dinners
Direct Mail/Letters
District of Columbia
Dividing Issues
Document Request
Dometic Policy
Drug Policy
Easter Egg Roll 1995
Eastern Europe
Economic Package
Education
Elderly and Aging
Environment
Carring
Betting Cyclesof Cycles on technology
50
de
eform
Ш
=
Clinton Presidential Records
Digital Records Marker
This is not a presidential record. This is used as an administrative
marker by the William J. Clinton Presidential Library Staff.
This marker identifies the place of a publication.
Publications have not been scanned in their entirety for the purpose
of digitization. To see the full publication please search online or
visit the Clinton Presidential Library's Research Room.
Fill Education
THE WHITE HOUSE
WASHINGTON
June 15, 1994
John Golle
Chief Executive Officer
Educational Alternatives, Inc.
7900 Xerxes Avenue South
Minneapolis, MN 55431
Dear Mr. Golle:
The enclosed was sent to our office in a complaint about the unauthorized use of
the First Lady's name, image and words to promote a commercial service.
This advertisement violates a long-standing White House policy against the use of
the President or First Lady's name, likeness, words or activities to suggest an
endorsement or approval of a product or service, regardless of its merits. Your
advertising improperly suggests that the First Lady endorses your educational service.
We therefore ask that you immediately cease and desist from all such
unauthorized uses of the First Lady's name, image and words. Enclosed for your
information is a copy of the White House policy as well as guidelines developed by the
Council of Better Business Bureaus. Thank you for your immediate attention to this
matter.
Sincerely,
Man Kude
Marvin Krislov
Assistant Counsel to the President
Hillary Rodham Clinton and second grader Teresa Douglas worked together on a
computer assignment during the First Lady's visit to Sarah M. Roach Elementary
School in Baltimore on April 18. "We want every school district to try different
things," Mrs. Clinton said at the end of her visit. "We want to learn what works
better for our kids and that's what I see happening here."
Sarah M. Roach Elementary is one of 12 Baltimore City Public Schools that are
being privately managed by Minneapolis-based Education Alternatives, Inc. in
conjunction with the Alliance for Schools That Work.
Editors Note: Color photos are also available. Contact David Hakensen
at 612/871-8877.
Section 2
GENERAL
Management under Executive Order 10927 of March 18,
§ 101-20.310 Photographs for news,
1961, and sponsored or approved by the occupant agencies;
advertising, or commercial purposes
(b) concessions or personal notices posted by employees on
Photographs may be taken in space occupied by a tenant
authorized bulletin boards; (c) solicitation of labor organiza-
agency only with the consent of the occupying agency con-
tion membership or dues authorized by occupant agencies
cerned. Except where security regulations apply or a Federal
under the Civil Service Reform Act of 1978 (Public Law 95-
court order or rule prohibits it, photographs for news purposes
454); and (d) a lessee, or its agents and employees, with respect
may be taken in entrances, lobbies, foyers, corridors or
to space leased for commercial, cultural, educational, or
auditoriums when used for public meetings. Subject to the
recreational use under the Public Buildings Cooperative Use
foregoing prohibitions, photographs for advertising and com-
Act of 1976 (Title 40, U.S. Code 490(a)(16)). Public areas of
mercial purposes may be taken only with written permission
GSA-controlled property may be used for other activities
of an authorized official of the agency occupying the space
permitted in accordance with Subpart 101-20.7.
where the photographs are to be taken. [End of text]
USE OF THE NAME OR LIKENESS
OF THE PRESIDENT OF THE UNITED STATES
236
Use of the President's Name
proposing to make use of the name or likeness of the First
or Likeness
Lady. (See also 2-394.)
President Clinton is adhering to a long-standing policy of
For additional guidance, contact the Office of the Coun-
refusing permission to use the name or likeness of the
sel to the President, the White House, Washington, D.C.
President of the United States, or of the First Lady, in
20500; telephone (202) 456-7900.
advertising or commercial promotion in any way that sug-
gests a connection between the President or First Lady and
Use of the Presidential Seal
236a
such advertising or promotion, notwithstanding the merits
It is not permissible to use the Seal of the President of the
or reasons that accompany the request. The reproduction of
United States in advertising copy. The Presidential Seal
the President's or First Lady's name or likeness for sale as
may be used only as authorized by Federal statute or by the
such, or inclusion in an educational game, book, collection
Counsel to the President. (18 U.S.C. Sect. 713 and Execu-
of portraits and/or biographies shall not be considered
tive Order No. 11649 (1972))
advertising or promotion if there is no indication or sugges-
tion of endorsement or approval by the President or First
Use of the Vice President's Name
236b
Lady of a commercial product, service or enterprise.
or Likeness
The Counsel to the President has advised the Council of
Counsel to Vice President Gore has informed the Council
Better Business Bureaus, Inc. (CBBB) that exceptions to
of Better Business Bureaus that the Vice President and his
this rule, which has been adhered to by all Presidents, can
family would ask that their names and likenesses not be
be granted only after a request in writing has been submitted
used for advertising commercial enterprises. The Vice
to and approved by the Counsel to the President.
President has adopted exactly the same policy on use of his or
The policy applies with equal force to the use of the name
his family's name or likeness as maintained by the President.
or likeness of the President, or of the First Lady, for any
promotion or similar publicity purposes. The only in-
Council of Better Business Bureaus'
236c
stances where permission has been granted have been in
Recommendations
connection with fund-raising campaigns sponsored by the
The Council of Better Business Bureaus recommends to
federal government, or conducted under government aus-
advertisers and advertising agencies that if any use of the
pices, such as those of the American National Red Cross.
President's or Vice President's name or likeness, or those of
Even to such organizations, no overall permission is granted.
Each individual case must be brought to the attention of the
their families, office or staff, or of the Presidential Seal, is
White House for approval and such exceptional cases could
contemplated for advertising or commercial purposes, it be
submitted in advance to the Counsel to the President or
be considered only on their individual merits.
Exception may also be made with respect to advertise-
Vice President for approval.
ments promoting books or articles about the President
CBBB recommends to media that they require all adver-
authored by him or radio-TV programs featuring him, but
tisers offering advertising which uses the name or like-
only if such advertisements are submitted to the Counsel to
nesses of the President, Vice President, their offices, seals
the President for approval in advance. This procedure must
or staff, or members of their families, to submit evidence of
also be followed in connection with similar advertisements
authorization of such use.
February/March
Do's And Don'ts In Advertising
1993
THE WHITE HOUSE
WASHINGTON
MEMORANDUM FOR WHITE HOUSE AND EXECUTIVE BRANCH STAFF
FROM:
Francis Thomas Sobol
Special Counsel To The President
SUBJECT: Policy Guidance on Non-White House Uses of the President's and First
Lady's Likeness, Words, or Activities as well as Images of the White
House and the Presidential Seal
Background
The President receives many requests from individuals, businesses, educational institutions, and
others to use his name, likeness (pictures or video tapel, activities, or words to promote a variety
of endeavors. Businesses, individuals, and communities often propose to use pictures or references
to the President's visits or words to promote their products, services, or potential. Various
companies desire to use I likeness of the President, the First Family, the White House or the
Presidential Seal to capture the attention of the public for their advertising and in the process
create a linkage (intentionally or otherwise) between their products or services and the President.
White House Policy Against Commercial Entanglements for the President
The White House's long-standing policy is to refuse permission to use the name, likeness, words,
or activities of the President, his family, or the White House itself, in advertising or commercial
promotions in any way that suggests a connection between the President, his family, or the White
House, and the advertising or promotion, notwithstanding the merits or reasons that accompany
the request. The Vice President also subscribes to this policy and its implementing procedures.
Exceptions to the Policy
The reproduction of the likeness. words, or activities of the President, his family, the White House,
or the Presidential Seal in educational materials or presentations may be allowed by the White
House on a case by case basis. The test for approval is whether the use avoids creating an
impression of a Presidential endorsement or approval of a commercial product, service, or
enterprise. In addition, permission may be granted to use the President's likeness or that of the
White House in fund raising activities conducted under Government auspices or involving a
worthwhile charitable or philanthropic endeavor after a case by case review of the merits of the
request.
Procedure for Policy Enforcement
Prior written approval must be obtained from the Counsel to the President for all non-White House
uses of the likeness. name, words, or activities of the President, his family, or the White House
itself. The same policy applies to proposed uses of the Presidential Seal; however, uses of the Sea
are also governed by Federal law as codified at 18 U.S.C. I 713.
Violations of these policies will lead to appropriate legal action by the Office of the Counsel to the
President.
All requests should be in writing and sent to the Office of the Counsel to the President, the White
House, Washington, DC 20500.
April 13, 1993
Freeducation
OMay May 2, 1994
MEMORANDUM TO MAGGIE WILIAMS AND BILL GALSTON
FROM:
JOAN BAGGETT
SUBJECT: AFT
FYI- some concerns AFT wanted us to be aware of with EAI. Thanks.
CFRA
COMPANY
REPORT
FINANCIAL STATEMENT ANALYSIS
EDUCATION ALTERNATIVES, INC.
Dr. Howard M. Schilit, C.P.A.
Center for Financial Research and Analysis
October 26, 1993
EXECUTIVE SUMMARY
Education Alternatives, Inc. (EAIN), provides school management and consulting
services and has under development its own line of proprietary educational products, which it
plans to market to both public and private schools. In 1992, EAIN entered into a five-year
contract with The Baltimore City Public Schools, under which The Company assumed full
management responsibility for the operation of eight elementary schools and one middle
school. EAIN is responsible for reimbursing the school district for any expenses beyond the
approved budget, but may retain any surpluses. Our analysis of Education Alternatives
focuses on five major themes: (1) Baltimore contract; (2) profitability; (3) quality and source
of assets; (4) valuation; and (5) corporate culture. Findings in these five areas include the
following:
Baltimore Contract: In fiscal year 1993, EAIN received a disproportionately high
share of its revenue (89%) from the Baltimore contract, leaving it in a somewhat tenuous
position. Furthermore, a significant portion of the Baltimore contract comes from restricted
federal and state funds, subject to further audit.
Profitability: Major concerns include the likely backlash by the public if EAIN
displays success in cutting costs, and the possible threat to Earn profitability from the
potential entry of competitors into the market, which has no significant barriers to entry. In
addition, EAIN has employed several questionable accounting practices that have inflated its
profits and understated it liabilities, such as using the percentage of completion method for
recording quarterly revenue; capitalizing the costs of equipment and building improvements;
and failing to record a June 1993 prepayment of $2.2 million as a current liability on the
balance sheet.
Quality and Source of Assets: EAIN has no real assets of which to speak. As of
June 1993, 94% of its assets were in cash and marketable securities. Most of that amount
derived from a stock offering and from advances paid by Baltimore's school system.
Valuation: Valuation of the Company's stock (at over $250 million) is outrageous,
considering the Company's past revenue, its accumulated deficit, and likely future
competition from Whittle Communications and others.
Corporate Culture: Concerns include outside board members who either are not
independent and/or received fees and special deals from the Company; EAIN's involvement
in several related-party transactions with officers and executives, raising questions about self-
dealing: and recent insider stock sales by EAIN's President and one of its directors.
1993 by the Center for Financial Research and Analysis (CFRA), 10800 Maswood Place, Rockville, MD. 20852;
Phone: (301) 530-8224; Fax: (301) 530-1963. ALL RIGHTS RESERVED. This research report may not be
reproduced. stored in a retrieval system, or transmitted, in whole or is part, in any form or by any means, without
the prior written permission of CFRA. The information is this report was based on sources believed to be reliable
and socurate: but no warrancy can be made. No date or statement is of should be coastrued to be a recommendation
for the purchase. retention, or mic of the securities of the company mestioned.
BACKGROUND
Education Alternatives, Inc.
1300 Xerxes Avenue South
Minneapolis, MN 55431
(612) 832-0092
Exchange: NASDAQ
Ticker Symbol: EAIN
Primary SIC Code: 8741: School Management and Consulting Services
Fiscal Year-End: June 30
Revenue, 1992: $2,944,000
Net Income, 1992: -$1,551,000
Revenue, Nine Months Ended March 31, 1993: $21.8 million
Net Income, Nine Months Ended March 31, 1993: $501,852
Closing Share Price, 10/25/93: $41
Approx. Market Capitalization: $260 million
Trading Range, Prior Month: $35 - $44
Auditor: Arthur Andersen & Company
Education Alternatives, Inc. (EAIN), based in Minneapolis, Minnesota, was
incorporated on July 2, 1986. The Company provides school management and consulting
services and has under development its own line of proprietary educational products, which it
plans to market to both public and private schools.
EAIN was originally organized to design, develop, market, and operate a network of
for-profit private preschool and elementary schools under the trademark "TESSERACT."
The Company began operating a prototype school in Minnesota in 1987, and permanent
schools in Minnesota and Arizona (one in each location) in 1988. In June 1990, EAIN
contracted with the School Board of Dade County, Florida, to develop and assist in the
management of a new elementary school.
In connection with EAIN's change in strategic focus to school management and
consulting services and the development and marketing of proprietary educational products,
the Company entered into agreements in 1991 with the Tesseract Foundation (a non-profit
corporation which has applied for tax-exempt status) and the Teaseract Development
Company (a partnership in EAIN CEO John Golle is & 50% general partner), under which
EAIN would provide management and educational services to the Minnesota and Arizona
schools-but would relinquish its right to operate those two schools.
EDUCATION ALTERNATIVES, INC. (10/26/93)
2
SECTION I: BALTIMORE CONTRACT
In July 1992, EAIN received final approval for a five-year contract with The
Baltimore City Public Schools. Under the agreement, the Company assumed full
management responsibility for the operation of eight elementary schools and one middle
school in Baltimore, whose total operating budget is approximately $133 million over the
five-year period. EAIN is responsible, under the contract, for reimbursing the school district
for any expenses beyond the approved budget; but the Company is entitled to retain any
surpluses over budgeted amounts. The contract is cancelable by The Baltimore City Public
Schools at any time.
TURN-OFFS
Market Base: A company that receives a disproportionately high share of its revenue
from one client is in a tenuous position. For fiscal year 1993, EAIN received 89 percent
of its revenue from the Baltimore contract.
Possible Audit: A significant portion of the Baltimore contract comes from restricted
federal and state funds, subject to further audits by those agencies.
EDUCATION ALTERNATIVES, INC. (10/26/93)
3
SECTION II: PROFITABILITY
TURN-OFFS
Potential Public Backlash: One of our biggest concerns is the likely backlash by the
public (whose taxes are fueling EAIN's growth) if the Company displays success in
cutting costs. Specifically, according to its Baltimore contract, EAIN receives $5900 per
student. If it finds a way to cut costs, so that It spends only $4400 per student, taxpayers
will likely demand that funding per student be cut substantially. Taxpayers rebel when
they become aware of gouging.
Competition: If political pressures from taxpayers don't torpedo EAIN's profit margins,
then competition will certainly do the trick. A company that in two years grows from $3
million in sales to $100 million (as EAIN is projecting) will doubtless attract many new
players into the market. Since the barriers to entry are virtually nil, such factors as
political contacts and low bid will dictate who gets the contract.
Accounting Policy: The Company employed questionable accounting practices that
inflated its profits and understated it liabilities, such as the following:
Use of the percentage of completion method for recording quarterly
revenue is inappropriate for EAIN. The percentage method generally is
appropriate for long-range construction contracts, for which costs can be
reasonably estimated and collection is virtually assured. In this case,
EAIN has no experience in estimating costs; and the Baltimore contract
can be canceled with 90 days notice without cause.
Capitalization of costs of equipment and building improvements, while
generally appropriate, is not suitable in this case. Under the Baltimore
contract, EAIN receives approximately $5,900 for each student, and it
spends whatever it deems necessary and appropriate to operate the schools
for the year. Under this management contract, the computers bought,
telephone lines installed, and other equipment acquired should be
considered operating expenses of the period.
The Baltimore contract calls for EAIN to be paid in advance for the
expected expenditures during the forthcoming months. Based upon that
payment scheme, the prepayment for June 1993 of $2.2 million should
appear as a current liability on the balance sheet.
EDUCATION ALTERNATIVES, INC. (10/26/93)
SECTION III: QUALITY AND SOURCE OF ASSETS
TURN-OFFS
EAIN has no real assets of which to speak. Of the $39.6 million on the balance sheet as
of June 1993, $37.3 million are cash and marketable securities. These assets are not the
result of providing a service; instead, they represent $31.9 million from a stock offering
and over $2 million in advances from Baltimore's school system.
SECTION IV: VALUATION
TURN-OFFS
Valuation of the Company's stock (at over $250 million) is outrageous, considering the
following:
Until fiscal 1993, EAIN had revenue of less than $3 million and an
accumulated deficit of $8.8 million.
Its current stock price is over 200 times earnings and over ten times sales.
Competition from Whittle Communications and others virtually guarantees
that profit margins will shortly disintegrate.
EDUCATION ALTERNATIVES, INC. (10/26/93)
5
SECTION V: CORPORATE CULTURE
TURN-OFFS
Board of Directors: Outside members of the board of directors either are not
independent and/or received fees and special deals from the Company. For example:
Robert Karon is a partner in the Company's outside accounting firm.
Gale Mellum is a partner in the Company's outside law firm.
Richard Burke received 50,000 stock options for consulting services
provided.
John Walton bought 100,000 shares in a private transaction from the
Company at a price less than is sraded on the NASDAQ.
Related-Party Transactions: The Company is involved in several related-party
transactions with officers and executives, raising questions about self-dealing.
Specifically:
The Company leased office space and received other services from GHCE,
an entity 40 percent owned by EAIN chief executive John Golle.
EAIN operated schools in Minnesota and Arizona that were leased to the
Company by Tesseract Development Company (TDC), a partnership 50
percent owned by John Golle.
EAIN had a 1991 agreement with the Tesseract Foundation, transferring
the right to the Foundation to operate a school in Minnesota and Arizona.
Insider Trading: Recent insider stock sales were recorded for David Bennett, President
(15,000 shares) and Gale Mellum, Director (4,000 shares).
EDUCATION ALTERNATIVES, INC. (10/26/93)
6
FINANCIAL SHENANIGANS:
How to Detect Accounting Gimmicks and Fraud in Financial Reports
By Howard M. Schilit
FINANCIAL
SHENANIGANS
Would A company with serious financial problems want to
208 pages
broadcast that fact in its corporate reports? Of course not!
Infustrated
Prospective investors and lenders should understand that
ANDI
0-07-058132-1
$22.96
some companies in hot water try to hide the fact with "cre-
ative accounting" techniques that provide a distorted picture
of their financial health. Other companies, not on the skids,
can be tempted to paint a rosier picture than justified by the
facts. Fortunately, there are equally sophisticated methods
Plus. there are tips on checking the balance of
for spotting the signs of accounting chicanery in virtually any
inventory, sales, and receivables scrutinizing
financial report. Now comes a book that provides investors
statements of cash flows
and much more!
and lenders with 50 powerful tools for uncovering account-
ing gimmicks to get a true reading of a company's financial
ABOUT THE AUTHOR: A noted authority on
condition.
accounting and financial controls, Howard M.
Financial Shenanigans shows investors, lenders, auditors, regu-
Schilit is a specialist in the accuracy of financial
lators, and others how to immediately spot such misleading
statements. in the past six months alone, Schilit's
accounting tricks as:
reactions to creative corporate accounting tech-
Recording revenue prematurely
niques have been quoted on the front page of the
Recording bogus revenues
Wall Street Journal, as well as in the New York Times,
Boosting income artificially with one-time gains
Business Week. and Forbes. He is the co-author of
Shifting current Income to a later period
Blue Chips and Hot Tips, and he is a professor of
Shifting future expenses to the current period
accounting at American University.
"Is there any way an ordinary investor can protect against being torpedoed by financial scams and
gimmicks?
The answer lies in investors, large and small becoming more skeptical and informed
consumers of glowing financial reports, and efforts like Schilit's may help us get there."
-Louis Rukeyser
Wall Street Week
"Indispensable to investors who are so often victimized by 'cooked books,' as well as those attorneys,
forensic accountants and government regulators whose work involves the discovery and pursuit of
financial statement fraud.'
-William S. Lerach
Partner, Milberg Welse Bershad
Specthrie & Lerach
"Howard Schilit clearly explains how to do and interpret earnings quality assessments to improve
investment returns."
-David Hawkins
Professor of Business Administration
Harvard University
To order by credit card,
call toll-free 1-800-2-MCGRAW
F41 Deb
CROSS CITY CAMPAIGN
For Urban School Reform
407 S. Dearborn St.
Suite 1725
Chicago, IL 60605
(312)322-4880
Fax (312)322-4885
June 5, 1995
Dear Maggie:
I thought I'd take this work-related opportunity to drop you a note.
Enclosed is a copy of Cross City's first major publication, Reinventing Central
Office: A Primer for Successful Schools. It is an interesting piece because it
develops of vision of truly decentralized and effective schools based on research and
successful practice currently in place in a number of cities.
As you may have heard, I was temporarily in Washington this past fall. The idea
was David would follow once he found the right job. It was not my favorite three
months. We got married October 29 which was wonderful but within 24 hours we
were back to our respective cities. In the end, we decided to stay in Chicago so I
came back earlier this year.
I am now working with the Cross City Campaign for Urban School Reform on a
contractual basis and will hopefully be offered something more permanent. I was
brought on to develop a communications and marketing plan.
Cross City is an interesting group because the notion is to bring together people
struggling with urban school reform and provide a venue for mutual support of each
city's local work and cross city learning.
How are you doing? From out here in the "sticks" the Administration is looking
good. It's great that the President is standing up to the madness taking place up
on the Hill. I am quite sure I know the answer to this but are you getting any
break? Everyone is so proud of you and know you are doing an amazing job but
worry that you don't have time to take care of yourself. Any luck you'll get some
vacation time over the summer?
Have you seen Ed and Joe lately? I talked to them a bit last fall but haven't heard
from them in awhile. Their new house sounds great.
Speaking of people we know -- did you hear about Shelley? She's pregnant! She's
due in late September -- she's feeling great and looks as thin as ever with the
exception of her tummy -- figures she'd stay thin!
Tell Pam and Melanne I said hi. Please take care and get in touch when you can.
Best Regards,
Pat
EDUCATION WEEK
American Education's Newspaper of Record
Volume XIV, Number 36
May 31, 1995
© 1995 Editorial Projects in Education / $3.00
Report Advocates More Authority For Urban Schools
By Ann Bradley
ried out at schools under the au-
and recruitment of personnel.
would provide "readable budgets
thority of democratically selected
Transportation, food, and pay-
and finance reports," the report
For More Information:
U
rban school systems should give all
The recommendations, based on
school councils. These councils
roll services could be made avail-
says.
Copies of "Reinventing Central
operating funds and the authority to
research and the lessons learned
then would decide whether to pur-
able if schools wanted them and
Schools also would pay for an-
Office: A Primer for Successful
spend that money to individual schools,
in these districts, cover gover-
chase services from the central of-
if the central office could supply
nual audits and report payments
Schools" are available for $6
which would in turn pay taxes to support
nance, budgets, curriculum and
fice, from clusters of cooperating
high-quality services efficiently,
made to vendors and the race
each from the Cross City
a streamlined central office, a new report
instruction, personnel, facilities
schools, or from outside groups.
it says.
and gender of those vendors.
Campaign for Urban School
recommends.
and services, and accountability.
As is now done in Chicago, the
Although it might require a
Reform, 407 South Dearborn
Smaller Schools
The report, released this month, was
School districts in all of the
report calls for the school coun-
change in state law to send oper-
St., Suite 1725, Chicago, III.
prepared by the Cross City Campaign for
cities represented by the Cross
cils to hire and evaluate princi-
ating funds directly to schools,
Under such a system, school
60605; (312) 322-4880.
Urban School Reform, a coalition of reform
City Campaign are pursuing ele-
pals. draw up school-develop-
the report asserts that this strat-
budgets would have to be refor-
leaders who are working in major cities to
ments of this agenda, the report
ment plans, and control the
egy would give schools the tools
matted to be easily readable, the
move authority, resources. and accountabil-
notes, although no district has
school budget.
they need to get the job done.
report says, and funds would
were benefiting, the report says.
ity from the central office to the school level.
embraced every idea.
The change in budget authority
flow to schools based on a
To make urban systems work
The recommendations are drawn from
While "rhetorical pleas for de-
New Authority
should allow schools to use
weighting system that would
for students, the report recom-
the reformers' experiences trying to re-
centralization are commonplace,"
The central office, while pared
money across budget categories
funnel more money to low-in-
mends that no school have more
think the role of school districts in Chicago.
the report says, in practice many
down, should be the site for im-
and across years, the report says,
come students.
than 500 children.
Denver, Los Angeles, New York City,
school districts have given little
portant functions, it says, includ-
rather than requiring them to
Categorical
funds-money
Communities of teachers, prin-
Philadelphia, and Seattle.
real authority to schools.
ing setting goals and standards,
spend all their money each year.
awarded for special purposes
cipals. and parents should make
"For schools to be accountable for re-
insuring equity, assisting failing
In the case of a citywide short-
such as special or bilingual edu-
decisions about what to teach
School Councils
sults," the report says. "schools and their
schools, providing schools with
fall, schools, rather than the cen-
cation-would be pooled when
within a framework of high aca-
communities need authority. They need to
Rather than debating which
money, connecting schools to a
tral office. would determine their
possible, and the equity depart-
demic standards, it says.
be able to decide what and how they will
specific tasks should move to
management-information sys-
own cuts.
ment of the central office would
School-development plans cre-
teach to meet high district standards. who
schools, the report recommends
tem, providing legal assistance,
In exchange for this far-reach-
insure that students who gener-
ated by the school councils would
will be hired, and how they will spend their
that almost all functions be car-
and handling background checks
ing control over money, schools
ated additional special funds
"foster a climate of continuously
funds and use their buildings."
improving curriculum, instruc-
are slow and complex, according to
tion, and professional develop-
the report.
ment," the report says.
It recommends that schools
But to meet the challenges of
carry out all substantive person-
urban schools, teachers would
nel functions.
need the flexibility to design a
Each school district should ne-
schedule that allowed them to
gotiate "master contracts" that
meet regularly for professional
give individual schools a range of
development.
options on operating details. The
Teachers also should devise
report says such details should
methods to assess students in
include class size, the number of
several ways, including portfolios,
teacher-preparation periods, the
journals, observations, and dis-
number and extent of nonteach-
cussions with parents, the report
ing duties, scheduling, and trans-
recommends.
fer policy.
Small schools work best, the re-
Finally, the group's report urges
port says, when they are linked
school systems to create account-
with other schools through net-
ability mechanisms that provide
works that allow them to share
understandable, reliable informa-
resources and ideas.
tion.
"One of the district's major re-
Personnel Decisions
sponsibilities is to collect a wide
To carry out their missions,
range of school data, compile it,
schools should be staffed with
and make it available to every
people who want to be there.
school," it says.
But heavily centralized person-
The district's role in such a sys-
nel systems now "distance staffing
tem would be oversight and sup-
decisions from school needs" and
port for schools.
48
EDUCATION WEEK MAY 31, 1995
COMMENTARY
Public Will, Political Context,
And Public Education
By Norm Fruchter
hen opinion polls re-
improve public education.
W
port increasing loss
The real and supposed fail-
of faith in American
ures of public schooling are in-
public education, the
creasingly defined as one of the
public's perception of the failure
central failures of the public sec-
of city schools is often the pri-
tor and government in general
mary cause. Yet city schools are
by aggressive, confident. and
doing better than at any time
popular right-wing ideologues
since urban public systems were
employing effective media
reorganized on factory models in
strategies to argue for private-
the early 20th century. Most
GROUNDS
sector. market-driven solutions
urban school systems graduate
to education.
at least. half their entering stu-
dents. and significant numbers of
ombating all these
those graduates (perhaps 30 per-
trends requires fighting
cent?) leave with more than 8th-
C
for the principle of pub-
grade basic skills. which means
lie education as a criti-
they can gain admission to col-
cal contributor to the possibility
lege. matriculate without having
of American democracy; fighting
to take remedial courses, and
for the necessity to transform
have a decent shot at graduating
public education to make it. effec-
from college with reasonable em-
tive for all our children: and
ployment prospects within four
fighting for our definitions of re-
or five years.
form as well as the time, space,
It is the great majority of "other"
and resources to carry them out.,
students, the 70 percent of gradu-
Alternatively put. we have to
ates with less than 8th-grade
argue for the democratizing. in-
skills, or the 50 percent who fail to
tegrative, pluralist, and socializ-
graduate at all, whose needs city
ing roles of public education
schools aren't meeting and have
while simultaneously fighting for
never managed to meet. Yet in past
the scale of transformation nec-
decades. when these students
essary to carry out these roles
dropped out or graduated with in-
05
successfully.
adequate skills. there were jobs
It. is a difficult task, requiring
with futures in the industrial
the development of new strate-
economy, the service sector, even
Ken Condon
gies But our practice has pro-
the armed forces. Today those jobs
duced some indications about
are gone, and exiting school without a diploma and skills too often involves a one-way
how urban education, as democratic education, might be improved. (See related story
ticket to the underground economy, early pregnancy, drug dependency, and incarceration.
on page 1.)
In the current debate about the effectiveness of American public education, many
Small schools are safer, more integrative, more pluralist, and more academically
experts point to varieties of evidence, such as the narrowing of the achievement gap
effective.
between African-American and white students, to argue that public schools are im-
Schools whose governance is more participatory build a base of democratic practice
proving. But as reformers we cannot respond to the increasing disenchantment with
and are more academically effective.
public education by defending its achievements because we are SO deeply involved in
Decentralizing authority and resources from central administrations to schools im-
trying to counteract its failures. In the recent past, we were the chief critics of urban
proves local democratic capacity and academic effectiveness.
public education: our research and studies developed much of the data and analyses
Linking schools to their communities integrates home and school cultures and im-
opponents of public education now use to attack it. The difference is that while we
proves academic outcomes.
want the political space, resources, authority. and time to improve public schooling,
Such arguments are only a start, especially when we have only limited examples and
opponents want to destroy it through privatization, vouchers, and other schemes to
even more limited evidence of effectiveness. Yet. given the consistent failure of urban
replace public control with market forces.
school systems with half to three-quarters of their students, such evidence of success
Our difficult task is to fight for the preservation of public education by insisting on the
can be quite powerful, especially for the urban constituencies, primarily constituencies
necessity to transform it. Yet the reforms we're committed to won't produce results
of color, that reformers must engage with to link school reform to the broader strug-
quickly We can point to successful schools but not to successful urban school systems,
gles to revitalize cities.
and the need to transform schools "one at a time" intensifies the difficulties of systemic
improvement. Moreover, we are facing several national trends that complicate our task:
Norm Fruchter is the co-chairman of the Cross City Campaign for Urban School Re-
In an economy hostile to cities, the growing urban tax burden is increasingly re-
form and the program adviser for education at the Aaron Diamond Foundation He is
sisted by the great majority of city taxpayers whose children are not in public
also a co-director of the Institute for Education and Social Policy at New York Uni-
schools, while most state legislatures are dominated by rural-suburban coalitions
versity. This paper was written for a Cross City Campaign discussion on race, class,
that resist adequate funding for city school systems. Unless equity-funding suits or
and public will held in Seattle in February.
other strategies succeed in breaking these stalemates, urban schools will be denied
even minimal resources. In such permanent fiscal crises, sustaining steady reform
becomes exceedingly difficult.
As cities polarize by race and class and more-advantaged families buy out of pub-
lic education, urban schools are increasingly perceived as settings for other people's
children. Levels of racism less acceptable in the recent past are now openly articu-
lated to blame the failures of public education on the limited capacities of other peo-
ple's children, thereby justifying the refusal to adequately fund, hold accountable, or
CROSS CITY CAMPAIGN
- FOR URBAN SCHOOL REFORM -
1-10-95
CROSS CITY: QUESTIONS AND ANSWERS
1. Why and how was Cross City formed?
The original impetus that led to Cross City's formation came when school reformers
from Philadelphia, Chicago, and Denver met each other. They were all committed to urban
youth and making public schools work for them. They were all leaders in radical school
reform initiatives in their cities. People from these three cities recognized immediately the
strategic value of working together, advancing work on community-based autonomous
schools, and creating a national voice for urban school reform. They brought in colleagues
from New York and Seattle who formed an organizing committee. Cross City first convened
a group from these cities and others in January 1993.
2. What is the mission of Cross City?
Dramatic improvement of public education so that all urban youth are well prepared
for continued education, work, and citizenship. Cross City supports the work of reform
leaders within and across cities to create a high quality system of autonomous small schools
that ensure educational success for young people. Cross City works actively to galvanize
public will for public schools.
3. What are the principles of policy and practice to which Cross City subscribes?
We believe that all young people are able to master high level knowledge and skills.
Diverse, small, equitable, and rigorous learning environments should flourish within a district.
Schools are community-based. Schools are locally governed, autonomous, and accountable.
Central office bureaucracies are dismantled. Union contracts support these principles as well
as represent employee interests.
4. What are the goals and objectives of Cross City?
Goal 1. To improve educational success for urban youth
1. Improve quality and equity in the classroom.
2. Advance school site authority and accountability.
3. Connect schools and communities.
Goal 2. To build public will for public schools.
1. Create a strong national network of urban reform leaders.
2. Create a national voice for urban school issues and successes.
3. Build and extend collaboration with other national organizations.
5. What does participation in Cross City mean for participating cities?
a. Shared values. People participating from each city share a belief in the mission,
principles. goals, and the goals of the work with Cross City.
b. Added value to local work. Local participants find Cross City work useful to
them in their own work in their city and the national connections and resources (people,
strategies, policy work, tools) very valuable.
407 South Dearborn Street, Suite 1725 Chicago IL 60605 (312)322-4880 (312)322-4885 fax
b. Board. Participating cities name five local leaders to the board (see below) and
bring larger delegations to national meetings. Financial subsidy is available if needed.
C. Working group participation. Cross City does its work through multi-city
working groups. Current active groups include: Decentralization, School and Community,
Accountability, Data Project, Public Information/Communication A cross city budget project
is in the works.
d. School reform tools. Cross City links people (parents, community leaders,
teachers, principals, union heads, administrators, policy analysts, funders), ideas, and specific
work across sites. Cross City is developing study site visits and leadership development
activities across cities. Cross City is also developing tools to help parents and teachers assess
school improvement and take appropriate action, manage local budgets to ensure improved
learning, create citizen audits, and organize for school change.
e. National work. Cross City is a network of veteran school reform leaders who are
very experienced in both policy and practice. Cross City meetings feature national experts
speaking on issues that are central to urban school reform. In addition to creating links across
cities, Cross City is working with other national organizations who share our concerns about
young people and their education - issues of equity, accountability, and reformed classroom
practice. We are developing strategies for creating a strong national voice for urban public
schools.
What participation does not mean (at least not now): Cross City board members do
not "represent" their city. Participating cities have not created a new local organization, hired
staff, fundraised, nor have delegates taken positions that have committed the school reform
community in their city.
6. What is the board structure?
Each participating city names five people to the Cross City board, representing three
categories: school reformers (broadly defined); community, and union. Two or three of these
five people must be people of color. Board terms are two years. Officers serve one year
terms, with the possibility of three consecutive terms. The criteria for board membership are:
people who share Cross City mission and principles; actively engaged in school reform in
their own city; interested in working nationally as well as locally; leaders in their city (have a
constituency); influential in their city.
7. What are the participating cities, to date?
New York, Philadelphia, Chicago, Denver, and Seattle
8. What foundations, to date, are supporting Cross City?
J. D. and C. T. MacArthur Foundation, Annie E. Casey Foundation, C. S. Mott
Foundation, Woods Fund of Chicago, Joyce Foundation, Driehaus Foundation, Polk Bros
Foundation, Lilly Endowment, Inc., Prince Charitable Trusts. A planning grant from the Ford
Foundation is in the final stages of processing.
CROSS CITY CAMPAIGN
- FOR URBAN SCHOOL REFORM -
Cross City Report
December 1994
Since 1993, school reform leaders from Chicago, Denver, New York, Seattle, and
Philadelphia - all deeply engaged in systemic reforms - have come together as the Cross City
Campaign. The collective mission is dramatic improvement of public education so that all
urban youth are well prepared for post-secondary education, work, and citizenship. Cross
City supports the work of reform leaders within and across large cities to create high quality
schools that ensure educational success for young people. Cross City advocates for policies
and practices that support a radical transformation of schools, moving authority, resources,
and accountability to the school level, reconnecting schools with their community, and
completely rethinking the role of school districts. We believe that urban public schools, thus
reformed, can be restored to the public trust. Cross City works to galvanize public will for
public schools. Since our inception, we have learned:
There is a great deal of interest on all fronts (parents, reformers, advocates,
teachers, principals, university researchers, and funders) in this effort. The interesting mix of
participants (diverse by race, ethnicity, gender, profession, and location) have years of
experience in both practice and policy and are actually working to make community-based
school reform happen.
"Inventors" need a network. The people in each city who are asking fundamental
questions and who are pushing for systemic reforms feel isolated and have responded
immediately to the chance to work together. Reformers from each city are both leaders and
learners.
The practical nature of the work we are doing together is appealing. Cross City is
wrestling with practical school reform policy issues to which local reformers need answers.
There has been clear agreement on the work that we want to do together, as
described below.
Cross City Goals and Objectives.
Goal 1. To improve educational success for urban youth.
A. Improve quality and equity in the classroom
B. Advance school site authority and accountability.
C. Connect schools and communities.
Goal 2. To build public will for public schools.
A. Create a strong national network of urban reform leaders.
B. Create a national voice for urban school issues and successes.
C. Build and extend collaboration with other national organizations.
Cross City Campaign Work in Progress
1. Decentralization Working Group
In order to create a system of successful urban schools, authority and resources must
be moved to the school and large central bureaucracies dismantled.
*
Reinventing Central Office A Decentralization Working Group was formed in
March 1993. They identified key areas which should be decentralized in urban districts to
407 South Dearborn Street, Suite 1725 Chicago IL 60605 (312)322-4880 (312)322-4885 fax
sustain reform: curriculum/instruction; governance; accountability; budget; personnel; and
facilities/ services. They prepared and discussed draft papers that describe which
responsibilities are located at the school to enable reformed teaching and learning and which
ones, few in number, remain at central office. The papers were then edited into one
monograph. The document will be published early 1995. The format will include charts and
a list of resources and sites where decentralized functions are taking place.
*
Reinventing: Next steps. Various chapters of the monograph are being expanded
into separate topics/working groups. The chapter on accountability is being used as the
starting point for the Accountability Working Group. The budget chapter will form the basis
of a cross city budget analysis and local school budget work. In addition, the document will
be widely distributed, used as the basis for presentations, and provide a policy framework for
meetings with policymakers.
*
Restructuring Education Conference, Amsterdam. Anne Hallett was one of ten
invited participants from the United States at this international conference. Reinventing
Central Office was presented.
*
Education Commission of the States. ECS has worked with Cross City since its
inception. Bob Palaich, Director of Policy Studies, serves on the Decentralization Working
Group. The Urban Initiative and Cross City work together. Christine Johnson, director of the
Urban Initiative, sits on the Cross City board. Anne Hallett presented Reinventing Central
Office on a panel on urban reform at the ECS annual meeting.
*
Philadelphia Norm Fruchter, Cross City board member, was a member of the
Court Appointed Educational Panel, stemming from the Philadelphia desegregation suit. He
used the Reinventing document as a vision for a decentralized Philadelphia school system.
Diana Lauber, Cross City senior program director, was retained by the Court Appointed
Educational Panel in Philadelphia in the summer of 1994 as their budget expert.
*
Chicago Chicago has embarked on a major re-engineering effort to rethink central
office functions and organization. Cross City is active in this effort. Reinventing has been
used by those developing the reform. A presentation to the Core Team is scheduled.
*
Seattle Reinventing has been used by the superintendent and the union head as a
guide for their central office redesign,
2. Schools and Community Working Group
Some of the most interesting invention in the past thirty years is reconnecting schools
to the community - culturally, educationally, and physically. This topic has attracted a
wonderful group of urban school pioneers and has sparked a tremendous amount of energy
around this movement.
*
Schools and Community paper. Michele Cahill, president, Youth Development
Institute, and vice president, Fund for the City of New York, is writing a paper defining the
field of interconnections of schools and their communities for Cross City. It will be published
in early 1995.
*
School Reform and Community Organizing. Cate Poe of New York ACORN
has drafted a paper on the topic of leadership development and school reform. It has been
reviewed by the Schools and Community Working Group and will be completed in early
1995.
*
Case studies. National examples of strong school-community practice will be
captured in a series of case studies.
*
Council on Foundations: Schools and Community session Four Cross City
participants presented, and Anne Hallett moderated, at a session at the Council's annual
meeting in May that was organized by the Piton Foundation.
*
Public engagement. In November 1994, Cross City helped board member,
Rochelle Nichols Solomon, director of the North Philadelphia Community Compact, to launch
a series of "public engagement" meetings to enlist large numbers of Philadelphians in
discussion of the Court Appointed Panel's recommendations and Superintendent Hornbeck's
10-point agenda for Philadelphia schools. We prepared materials and assembled a two-city
panel of citizen leaders.
*
Leadership development. Sharing leadership development strategies for parents
and those working in school reform efforts is in the planning stages. Cross site participants
will attend conferences for school site council members in Chicago and in Denver.
*
Cross City study visits. Site visits to learn first-hand from those working on
school and community connections have been carried out in Chicago. A series of cross city
learning experiences are being planned.
3. Accountability Working Group
Centralized districts give the illusion of monitoring equity and assuring accountability,
but they deliver little in this regard. Centralized accountability makes people responsible for
following rules and makes no one responsible for results. Decentralized reformed strategies
posit considerable authority for accountability and assessment at the local school. Cross City
leaders have embarked on work regarding accountability to ensure that young people are
achieving and that schools are improving.
*
Working Group formed. A six-city working group of teachers, principals,
administrators, parents, policy analysts, and others has been formed to develop a rigorous
accountability system for urban schools.
*
Model Practices Grid Each city has filled out an accountability grid in which they
described the present accountability measures in their cities at the school, district, and state
levels. The next step will be to create a description of a model accountability system.
4. Small Schools
Cross City actively promotes small schools as an essential educational strategy for
young people, especially urban youth who need the personal attention, care, and focused
educational environment that small schools provide.
*
Meetings We have co-sponsored or hosted meetings on small schools in both
Philadelphia and Chicago. New Yorkers involved in creating new small schools are active
with Cross City.
*
Monograph With leadership from Michelle Fine, Cross City is developing a
monograph on small schools, pulling together all of the best information and data available.
5. Policy initiatives
A Chicago Cross City group developed principles and positions around the
reauthorization of ESEA. These positions were adopted across cities. The final bill as
reauthorized contains most of the positions supported by Cross City. Work is now underway
to help cities understand the new bill and promising ways to implement schoolwide and other
innovative provisions. Additionally, Cross City is sharing information about other federal
policy initiatives and sources of funds that support the reforms underway in cities.
Public Will
A central organizing principle for the Cross City Campaign is the crisis in public will
around urban public schools. The dimensions are still being shaped, but elements of
addressing this goal include: building the Cross City network, developing and implementing a
active and far-reaching communication plan, developing and communicating valid data on
equity issues in urban education, building collaborations, and broadening the base of those
working on urban school reform.
Participating cities. Cross City currently includes active members from five cities (New
York, Philadelphia, Chicago, Denver, and Seattle). We are actively exploring Los Angeles'
interest in participation. We seek to include active school reform leadership from large cities
who share Cross City's mission and principles and find it useful to work together.
Participants include a diverse and interesting mix of teachers, principals, administrators, union
leaders, parents, funders, policy analysts, and community leaders. We plan to add
representatives from additional cities, geographically diverse, that share the principles and
strategies to which we are committed.
Board of Directors. The board of directors is in formation, with five representatives being
selected from participating cities as well as individuals and representatives from national
organizations. Officers of the board were elected in February 1994. Janis Somerville,
formerly executive director of Philadelphia Schools Collaborative, is 1994 chair. From each
participating city, five people drawn from three categories (school reform, broadly defined;
school/community; and union) are invited onto the board. Board members believe in the
mission of Cross City, are active in school reform in their own city, are recognized and
credible leaders, and are interested and able to work at home and with national colleagues.
Two or three of the five are people of color. Selected individuals and representatives of
national organizations are included.
Staff: Anne Hallett is the executive director of the Campaign; Diana Lauber is senior
program director; Lupe Prieto is the director of administration.
United States General Accounting Office
GAO
Report to the Ranking Minority Member,
Permanent Subcommittee on
Investigations, Committee on
Governmental Affairs, U.S. Senate
July 1995
STUDENT FINANCIAL
AID
Data Not Fully Utilized
to Identify
Inappropriately
Awarded Loans and
Grants
GENERA UNITED ACCOUNT STATES ING DEFICE
GAO/HEHS-95-89
Clinton Presidential Records
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This marker identifies the place of a publication.
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of digitization. To see the full publication please search online or
visit the Clinton Presidential Library's Research Room.
A Primer for
Successful Schools
CROSS CITY CAMPAIGN
For Urban School Reform
Clinton Presidential Records
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marker by the William J. Clinton Presidential Library Staff.
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United States General Accounting Office
GAO
Testimony
Before the Permanent Subcommittee on Investigations
Fileducation
Committee on Governmental Affairs, U.S. Senate
For Release on Delivery
Expected at 9:30 a.m.
STUDENT FINANCIAL AID
Wednesday, July 12,1995
Data Not Fully Utilized to
Identify Inappropriately
Awarded Loans and Grants
Statement of Cornelia Blanchette
Associate Director, Education and Employment Issues
Health, Education, and Human Services Division
UNITED
STATES
ACCOUNTING OFFICE CENERAL
GAO/T-HEHS-95-199
Clinton Presidential Records
Digital Records Marker
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marker by the William J. Clinton Presidential Library Staff.
This marker identifies the place of a publication.
Publications have not been scanned in their entirety for the purpose
of digitization. To see the full publication please search online or
visit the Clinton Presidential Library's Research Room.