Edison Schools makes deal to pay debt

By Emily Richmond (contact)

Wednesday, July 3, 2002 | 11:14 a.m.

Edison Schools Inc. has cut an 11th-hour deal to pay off the more than $2 million it owed in philanthropy funds to the seven Las Vegas Valley schools it manages, Clark County School District officials said Tuesday.

When Edison signed its contract with the school district last year, officials agreed to raise $1.7 million for each of the seven campuses. Edison was short $2.2 million in its payments for the 2001-2002 fiscal year, said Walt Rulffes, deputy superintendent of finance for the school district.

With the clock ticking down Friday, the last day of the 2001-2002 fiscal year, a $1 million check from a California nonprofit foundation arrived on behalf of Edison, Rulffes said. In exchange for the school district not demanding the remaining $1.2 million, Edison officials have agreed to accept that much less in payments for managing the schools, Rulffes said.

For the 2002-2003 fiscal year, which began Monday, Edison will owe the school district another $4 million in philanthropic funds, Rulffes said.

This time around, the school district plans to take a tougher stance with Edison, Rulffes said. The existing contract does not spell out what steps the school district may take if Edison fails to raise the philanthropic funds and also lacks a specific timeline for the donations to be made, Rulffes said.

"If I could go back and rewrite the contract, I would include all of those details," Rulffes said. "What we're proposing now is that the philanthropy funds be due on the same quarterly schedule as our payments to Edison." If a quarterly deadline is missed, the district will withhold $1 million from the money Edison receives to manage the schools, Rulffes said.

Kathy Hamel, an Edison spokeswoman, said this morning the company had not yet talked to Rulffes about his proposal.

"We'll certainly take a close look at any schedule that's proposed," Hamel said. "We remain committed to our schools in Clark County and to our strong working relationship with the district."

Teacher and administrator salaries at the seven schools would not be affected by such a move, because the district, not Edison, cuts those checks, Rulffes said.

The private education management company, which oversees more than 130 schools nationwide, has been plagued by fiscal problems in recent months. Schools in Michigan and Boston have pulled out of their contracts with Edison, and the New York-based company was rebuked in May by the Securities and Exchange Commission for not completing an audit on time. Edison's stock was trading at 90 cents a share this morning, a drop from nearly $100 a year ago.

All Edison schools nationwide follow the same stringent program of instructional tools, curriculum and teaching methods. Critics say such a cookie-cutter approach does not account for the many individual learning styles of children. Supporters say Edison's longer school day and intensive focus on basics such as reading, can turn around struggling campuses.

If Edison went under and could no longer run the six Clark County elementary schools and one middle school, the responsibility will simply revert back to the district, said Agustin Orci, deputy superintendent for instruction. The impact on students would be minimal, he said.

Principals at the seven Edison campuses have steadfastly denied that the management company's financial situation has had any bearing on the day-to-day operations of the schools.

"We're in the business of education," said Doug Wilson, principal of Ronnow-Edison Elementary School in Las Vegas. "I don't worry about money, I worry about teaching my kids."

Emily Heath, co-director of the Center for Commercial-Free Education in Oakland, Calif., said she questioned whether Edison would survive its latest battles. The company has yet to show a profit in its 10-year history, and relies heavily on regular infusions of cash, Heath said.