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Edison, light fantastic?;Briefing;Analysis

As the Government shows increased interest in the Edison Project, Mike Baker asks whether the American for-profit educational company is working.

"Schools are the last of the cottage industries," according to Benno C Schmidt junior, chief executive of the Edison Project, a for-profit company that runs state schools in the USA and wants to do the same in Britain.

According to Mr Schmidt, the small scale of individual schools means that teachers are denied access to research and development, have no systems support and their schools are starved of long-term investment.

The Edison Project runs 25 schools in the USA. Each school is part of the public (state) school system and is free to pupils. Although Edison has not yet made a profit from running schools, that is its aim. It plans to open another 15 to 20 schools in the near future and believes it will be profitable with 50 schools.

So how will Edison make a profit? It negotiates with the local school district (the equivalent of our local education authorities) for a contract to run one or more of its schools. In most cases its contract is worth the same amount per pupil as the school district spends in its own schools.

Edison believes it can spend that money more efficiently than the district. The profits will come from these efficiency savings and, says the company, they will increase as economies of scale kick in once it gets above 50 schools.

In Wichita, Kansas, for example, Edison now has three schools. The first to open, three years ago, was Dodge-Edison elementary school. It is a former district school in a low-income, mainly-white neighbourhood of pre-fabricated houses built for the influx of aircraft factory workers in the 1940s.

The previous school was not a success and the school district decided to experiment with Edison, believing that if it could make a success there it could do so almost anywhere. Dodge-Edison receives around $3,600 (pound;2,250) per pupil, based on what it costs the district to educate its own pupils.

The key point for Edison is that its school receives all of that $3,600, whereas the district's schools get only 20-25 per cent. Local management of schools has not moved as far in the USA as here, and school districts still control most of the budget.

Yet many cast doubt on whether Edison can ever make a profit. Jean Schodorf, Wichita's school board president, is very pleased with what Edison has achieved so far. So much so that she is encouraging the district's schools to copy many of its curriculum ideas. But, citing Edison's start-up costs, she says: "I don't know how they can possibly make a profit - but that's their problem. I just know that there is a waiting-list of parents who love the Edison approach."

The start-up costs are indeed steep. The Edison Project spent a reportedpound;25 million on researching and developing the ideal curriculum before opening a single school.

It spends up to pound;1m on refurbishing and equipping each school it takes over. Altogether more than pound;100m has been invested in Edison (the most recent big investors were JP Morgan Capital Corporation and Investor AB, a Swedish holding company) without any returns so far.

With that level of initial investment, some fear there will be huge pressures on Edison to provide an early return to backers, and that could mean putting profits ahead of educational needs. Benno Schmidt insists that will not happen as "there is no profit for us unless we do a good job for the children".

Edison cannot risk losing the support of parents or being seen to cut corners, as its contract can be terminated by the district with just 90 days' notice. If that happened it would lose most of its start-up costs at the school. As Benno Schmidt puts it, "that's a very unusual degree of accountability in the American public schools system and one which tends to generate a better performance".

There must remain some doubts about Edison, not least because it is involved in a major gamble. A previous attempt by private companies to run state schools for profit failed in the 1970s. Edison itself has had to scale back severely from its original prediction that it would have 200 schools by 1996.

But the big question is whether Edison is raising standards. Only three years after opening its first school only tentative conclusions are possible. There is also a tendency for new educational initiatives to do well simply because of the energy and sense of mission in the early years. But that does not guarantee it will continue for five or 10 years.

The company's claims seem impressive. Only two years of standardised test scores are available for comparison with other schools. At Dodge-Edison in Wichita, 49 per cent of the pupils who entered as third-graders in 1995 were in the lowest quartile in national reading performance. After two years, just 8 per cent of the same group of pupils were in the lowest quartile. In mathematics, the fall was from 42 per cent to 16 per cent.

Wichita is one of Edison's showcases and its schools elsewhere have not been so successful; one or two had very bad starts which Edison says it has now rectified. Taking all its schools together, the company claims that across a battery of tests it has improved against national andor local norms in 70 per cent of cases.

However a report compiled for the union, the American Federation of Teachers, says Edison "often overstate their schools' success and actual results are, at best, modest". It says, for example, that on reading scores the Wichita success has not been matched elsewhere.

Instead of comparing Edison's reading performance with national norms, it compares them with pupils from some of the 500 or so other schools which use the same reading programme (Success For All, devised by Johns Hopkins University in Baltimore). On this comparison, AFT says Edison's results are "generally not as good as the results for an average, fully-implemented Success For All programme".

The AFT report also compares Dodge-Edison with similar neighbourhood schools (see graphic) and argues that some of Edison's advantage seems to disappear. The Caldwell, Colvin, Jefferson and Payne schools all have similar intakes, and three of these also achieved substantial improvements. Washington, Ingalls and Edison are all neighbourhood "magnet" schools and show mixed results (Ingalls has now become an Edison school). However the AFT comparison is hardly damning of Edison-Dodge, which achieves the largest improvement of all.

Both Edison and AFT appear to be scrabbling to draw conclusions from very thin evidence. The simple truth is that it is too early to tell. But since AFT's lengthy report admits that Edison has had some successes, and that these are often in areas where pupils were previously struggling, it is hard to deny that Edison is, at the very least, a worthwhile experiment.

It is certainly one the Labour Government is actively pursuing as one solution to "failing" schools in Britain.

Mike Baker is the BBC's education correspondent.

What EDISON can offer * Longer school day and year

* Up to pound;1 million investment in each school

* Laptop computer for each teacher

* Computer for each child to take home

* Profits from more efficient use of per capita funding

* Pupils stay with same team of teachers for three years

Scroll up: Benno C Schmidt at an Edison school graduation ceremony 'Their schools' success is often overstated' according to a teacher union report

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