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Big Business in Schools

Ohanian comment: Get a load of the salaries--and the experience--and lack thereof--these people bring to their new jobs of operating schools.

When a corporate management firm from New York took over St. Louis Public Schools this summer, it promised a quick infusion of private-sector practices to restructure the struggling district.

The turnaround specialists, with expensive suits and cell phones constantly buzzing, were different in both appearance and attitude than the district's existing staff. They used terms like "liquidity" and "deliverables" instead of education jargon. While the expensive management consultants have begun departing, they are leaving a legacy that could create a permanent corporate culture in the city schools.

In the past several months, the district has installed a front office full of expatriates from large companies. The new hires, and their six-figure salaries, have riled some rank-and-file school employees, who have been threatened with layoffs and told repeatedly about the district's budget problems.

District officials, however, say they want a school system that runs more like a business - and the only way to do that is to hire veterans of the boardroom.

The new hires are:

Glynn Young, a former Monsanto and Solutia spokesman, who will make $85,000 as the executive director of communications.

Jim Flanagan, a former manager at PricewaterhouseCoopers and Ernst & Young, who will make $150,000 heading technology services. Flanagan also served three years on the Chicago Board of Education.

Harry E. Rich, a former senior vice president and chief financial operator at Brown Shoe Co., who will make $175,000 as the chief financial officer.

Michael F. Harrington, former vice president of human resources for Smurfit-Stone Container Corp., who has a $75,000 contract to run the district's human resources department for six months. The contract can be renewed for up to a year.

Manny Silva, a pharmaceuticals executive formerly based in Europe, who will make $200,000, with the opportunity for $30,000 worth of incentives, as the chief operating officer.

"There is indeed a theme here," noted Young. That theme, he said, is turning over functions that do not relate directly to education - everything from transportation to finance - to experts who do not necessarily have school experience.

The notion of applying business principles to school districts is taking hold across the nation, with more districts replacing superintendents with chief executive officers. In St. Louis, the School Board hired the turnaround firm of Alvarez & Marsal in May for $5 million to run the district for a year.

Many continue to have sticker shock over the salary of the consultants and corporate defectors, but the School Board that hired them maintains a you-get-what-you-pay-for philosophy.

Take Silva, who is the highest-paid of the new directors. Not only would Silva's salary - with or without the bonuses - be higher than the superintendent in any other school district in the state, but he will also make more this year than St. Louis Mayor Francis Slay or Missouri Gov. Bob Holden.

A graduate of the U.S. Military Academy at West Point with a master's degree in business administration from Duke University, Silva worked in London for GlaxoSmithKline, helping to restructure the pharmaceutical giant's global manufacturing center.

Silva says his friends in the private sector told him not to take the job. Not only are politics involved, they told him, but also the pay is about a third of what he was accustomed to receiving. But Silva, whose wife is a St. Louis-area native, took the job in part because he thinks the "key to driving the economy" in the city is a better school system. He hopes to use some principles he picked up as a consultant to create a leaner, more cost-effective school system.

"What you are running here is a large, complex organization," Silva said, who started last week. "The fact that it is a school district does not mean it's not like a large business."

For instance, one goal is getting district personnel to use e-mail, already widely done in the business world. A report by the district's management team found that, although almost every district employee has an e-mail account, less than 20 percent regularly use it. The report says that employees "still demand phone calls and faxes."

"The excuses abound, such as - 'I need training,' 'I am afraid,' 'I don't have the time,' etc.," the report stated. "Unfortunately, district leadership at all levels has accepted the excuses."

Silva also will try to install an online inventory system, allowing schools to order supplies from the Internet. Other moves meant to decrease costs and increase efficiency include outsourcing much of the payroll department and assigning codes for employees to make long-distance calls.

U.S. Secretary of Education Rod Paige, in St. Louis last week, encouraged more school districts to take ideas from the private sector. He pointed to people like Paul Vallas, a former city of Chicago budget director who ran schools there and is now at the helm of the Philadelphia School District. There's also Roy Romer, the former governor of Colorado who heads the Los Angeles Unified School District.

"Business, because they have to produce, say, 'We are going to go to the research and get the best practices,'" Paige said. "Because there has been no consequence for failure in public schools, we didn't have to do that. So, then, we just sailed along. I think we are closing into a time where the citizens of this country are not going to tolerate that."

Paige's comments came on a trip promoting the federal No Child Left Behind Act, which requires each school to meet annual academic goals. It allows students to transfer from schools that don't meet standards.

Not everyone, however, agrees that a business-oriented approach is better. Some feel the St. Louis district is making costly new hires at the expense of its lowest-paid employees.

Mary F. Liner, 44, has been a secretary at Roosevelt High School since 1999. At the start of the school year she was told she would be "bumped" to a lower position because an employee with more seniority whose job had been eliminated wanted hers. Liner took a pay cut, putting her salary at about $18,000 - and making Silva's salary 11 times more than hers. Then, this month, Liner learned she was going to be laid off.

"These are people's livelihoods here," Liner said. "They are used to dealing with a corporation. Well, this is a not a corporation. We're dealing with the public school system."

Liner's layoff was set for Dec. 5, but the district postponed the move after the teachers union, American Federation of Teachers Local 420, called a news conference. There, union president Mary Armstrong criticized district officials for trying to eliminate two dozen clerical positions, making less than $20,000, while hiring managers making several times more. Armstrong said the discrepancy is part of the "excrement" the management team has piled on school employees since the summer.

"This summer we got a chance to smell it. It's a different thing to walk in it," Armstrong said at the news conference. "If the employees don't want to wallow in it, they need to stand up."

— Jake Wagman
Corporate influence abides in schools





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