Teachers pay for private buyout

28th November 2003 at 00:00
Anger as public pension fund is used to rescue troubled schools firm Edison. Stephen Phillips reports

Florida's teachers are the dismayed new owners of Edison Schools, the firm most closely identified with efforts to privatise management of the US public education system.

In a bitterly ironic twist, America's largest private operator of state schools was bought last week by Florida's public pension scheme, in a controversial $182 million (pound;107m) deal that could net Edison Schools founder and CEO Chris Whittle $21m.

The decision to use the $95.3bn fund to acquire troubled Edison triggered consternation among Florida teachers whose savings comprise 49 per cent of it, the largest single contribution.

Edison runs 130 US schools and opened a bridgehead in the UK recently as a consultant to three Essex schools.

But it has haemorrhaged money during most of its 12-year existence, and revelations of overstated revenue, and contract losses last year, sent its shares into a tailspin.

"They won't throw money at education, but they are willing to throw money at Whittle," stormed Joan King, a retired Orlando primary teacher, who picketed the Edison shareholder meeting in New York that approved the deal.

Edison is a central player in the Republican "school choice" movement, which aims to increase options for students in America's state school system by opening it up to commercial operators, leading to accusations of political cronyism.

"It is such an horrendous decision to buy such a dog of a company that it leaves us wondering what the real rationale was," said a spokesman for the local union, Florida Education Association.

Key players, including Edison itself, have strong Republican links. Last month, Edison sponsored a "school choice" banquet at which Florida Governor Jeb Bush was honoured.

Meanwhile, the lawyers used to steward the buyout are led by a major donor to President Bush's re-election coffers and former adviser to ex-Pennsylvania Governor Tom Ridge, now US homeland security chief. Ridge planned to outsource all Philadelphia's schools to Edison before the scheme was scaled back.

Governor Bush disavowed any hand in the deal, contending it represented sound business judgment, designed to maximise returns on public employees' savings.

A spokesman for Edison said the company had turned a corner recently, prospering from diversification into after-school tuition services to post its first quarterly profit.

He defended the spoils awarded to Whittle under the deal. "Chris is the founder and CEO of a very important company - the directors felt an adjustment to his salary was fair and appropriate."

Whittle stands to earn more than $600,000 a year plus a potential 250 per cent annual performance bonus.

He also received $4.2m for his shares plus the option to sell his remaining 3.7 per cent stake in Edison for $17m.

Whittle landed himself in hot water last year, by suggesting secondary pupils should be put to work for an hour a day in school offices to cut staff costs.

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