| School of Hard Knocks |
| Why should Standard & Poor's enter the fray of public school spending evaluation? Because that's where the money is? | |
| By RiShawn Biddle |
|
Perhaps it was bored
with crunching numbers in all those eye-glazing bond documents. Or maybe
Standard & Poor's was just looking for a little excitement. But if it's
controversy S&P was courting, it sure couldn't have picked a better
business than evaluating school spending. Started quietly last
year, S&P's School Evaluation Services unit purports to tell taxpayers what
kind of return they're getting for their investment in public education
spending. By culling academic and
financial data, the McGraw-Hill unit claims it can show how much it is costing
for school districts to get students to pass statewide tests, meet specific SAT
scores or graduate on time. One satisfied customer
is Harold Guthrie, superintendent of the 32,000-student Spring Branch school
district in Houston. He hired S&P last year to perform a "school
performance analysis" that looked at what the district got in return for
its $240 million budget. In one area, bilingual education, S&P concluded
that the district was trailing its peers in every performance category, but
outspending them. So Guthrie revamped the program. "Most people come
in and just tell you to make cuts, not the dollar return on a particular
program. Now we can do that," says Guthrie, who paid S&P $60,000 for
the service. Fools rushing in where
angels fear to tread? Hell hath no fury like superintendents, school board
members or teachers whose spending priorities are questioned. "Some programs are
very popular and people don't want a serious evaluation," says Dominic
Brewer, head of the education program of Rand Corp., the think tank that found
itself embroiled in a controversy over its own school evaluations during the
presidential campaign. "Often evaluations are perceived as threats.
Anybody external and independent isn't going to always say good things." In Michigan, where
S&P was hired by the state's pro-charter-school Governor John Engler, the
National Education Association affiliate is apoplectic over S&P's
involvement. "We were skeptical
as to how this data will be used," huffs Margaret Trimer-Hartley, director
of communications at the Michigan Education Association. She claims the union
did not learn about the contract until after it was approved. "Initially
S&P didn't give us any sense of security that this would not become another
tool for journalists who just want to rank the schools in the state in a
convenient way that only exacerbates some of the problems we are dealing
with." The union wheedled its way onto a panel advising S&P on its
Michigan evaluation. Jewell Gould, research
director in the Washington, D.C. office of the American Federation of Teachers
(the nation's second-largest teachers' union), accuses S&P of being a prop
for the governor's conservative schemes. "I cannot believe that Engler
would request a report from Standard & Poor's not expecting a certain
result," he says. William Cox, the S&P
managing director in charge of the service, bristles at the union accusations.
"We're not going to be a tool of governors' offices or teachers' unions.
But there are some people who are not interested in good information, who might
feel that it will make their lives too difficult." Just to be safe, Cox is
keeping a low profile. Though S&P has signed more than $20 million in
contracts with Michigan and Pennsylvania, covering 1,200 school districts and
charter schools, Cox has limited his marketing efforts to state school officials.
Perhaps as an indication of the company's sensitivity to its public image,
S&P officials called around to several of FORBES' sources after they'd been
interviewed for details about this story. "Eventually, we
hope it comes in reviewing our work versus making a splash," demurs Cox,
who used to evaluate the creditworthiness of municipal utilities. He has his work cut out
for him. On Wall Street, the S&P name is like the Good Housekeeping seal of
approval. But in the politically charged atmosphere of school spending, S&P
and other evaluation services are mostly viewed with suspicion. Privately held
SchoolMatch in Columbus, Ohio also conducts school audits. But the service
makes up less than 10% of revenue and is usually commissioned by newspapers, corporations
and outfits such as the Heinz Endowment. It pays its bills mostly by selling
data to Microsoft and other companies for their relocation services. (Do you
want to make your own judgment about where to live? You can get data on school
district performance from www.schoolmatch.com, but statistics are also
available from newspapers and state education departments.) SchoolMatch has hit
roadblocks erected by entrenched superintendents who resent the outside
scrutiny. "When we conduct some audits, superintendents will tell us that
the SAT data aren't available, or the state test scores are lost," says M.
Donald Thomas, chairman of SchoolMatch and a former education adviser to three
governors. (One of those governors was South Carolina's Richard Riley, who is
now U.S. Secretary of Education.) "If the results are bad, they might say
the test was given on a rainy day, or some adverse condition. The historical
record usually shows otherwise." Another evaluation firm,
Davis, Calif.-based Management Analysis & Planning, has found itself making
ends meet by providing expert testimony in lawsuits in between advising school
districts. James Smith, president of the firm and a former deputy
superintendent of the California State Education Department, says education
spending is often more a creature of local and state politics than of
necessity. Even if S&P can
figure out a way to appease the politicians and unions, the knives are out for
the company. William L. Bainbridge, president of SchoolMatch, is dubious that S&P
can overcome its inherent conflict of interest as the unit of a company that
also sells textbooks and other school supplies. "How can
McGraw-Hill be a vendor on the one hand and an evaluator on the other?"
Bainbridge scoffs. This fight is going to get uglier before it is over. |