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GARY: I think it's safe to say that it is pretty difficult these days to get a lot of people to agree on much of anything. But one thing virtually everybody seems to agree on is that the schools in this country need to do a better job of educating our children. And over the years, a wide range of experiments have been tried to improve education.

Today, we're going to spend the hour talking about one such approach, an approach that's generating lots of controversy, namely the use of private companies by the public schools. The idea is that such companies can teach children as much or more, and save taxpayers some money in the process. The FM News Station's Kate Smith recently received a fellowship grant from the Education Writers Association to travel around the country, researching what's called the privatization of education.

And this week, we're running reports on what she found out. She's also stopped by today to discuss the issue with some folks who have spent a lot of time thinking about this question. Len Burnett is the Minneapolis school board member, who was one of the leaders in the effort to hire Peter Hutchinson and the Twin-Cities-based public strategies group to run the Minneapolis schools.

Alex Molnar joins us from Milwaukee. He is an education instructor at the University of Wisconsin and is coordinating a statewide education reform task force in Wisconsin, also finishing work on a new book on privatization. And here in the studio is Ted Kolderie, an education policy expert and former senior fellow at the University of Minnesota's Humphrey Institute, who has focused on the development of charter schools and private education alternatives.

I'd like to thank all of you for coming by, and Mr. Molnar, for joining us from Milwaukee. Appreciate it.

ALEX MOLNAR: Thanks, Gary.

GARY: Kate, why don't we start with you? Can you give us an overview of what you've been up to and what you've learned? About 30 seconds.

KATE SMITH: Yeah, I can certainly try, Gary. Maybe it would be instructive if we started-- I hate to make it sound like school, but if we started with a little bit of definition here because the word privatization means so many different things to so many different people. In fact, I've had a lot of people say to me, oh, privatization of public schools? You mean private schools?

The fact is, when we talk about privatization in public education, what we're talking about is a larger issue, anytime a public agency or public institution seeks an outside contractor, a private, in most cases, for-profit contractor to provide services. So we aren't talking about private schools specifically in this conversation.

What's intrigued me along the way in my research and reporting is that the reasoning behind a lot of this seems to be based in an educational arena, but it starts on the business level. It starts with school districts with their backs to the wall, with budgets being stretched, finding themselves less and less capable of finding the dollars to provide the services that kids need.

And in some cases, saying to themselves, if we choose to privatize some of our instruction or management, there is a theory that we allow competition in a very free market sort of sense, in a very business sort of sense, to come into what has been a closed system. So we can say if we privatize some of our specifically academic instruction, if we let a company like Berlitz come into our school to teach foreign language, we conceivably get a better service or a service, at least as good as what we've been getting, for less.

And there are lots of different reasons for that because some of these vendors, some of these companies, hire part-time instructors that are not provided with benefits. The other side of the efficiency argument is accountability. And a lot of people talk about accountability in this scenario. They say if we bring in an outsider, if we bring in somebody under contract, we've got a sure thing here because we know we can always say bye-bye if we don't like the service.

Can't do that in the public sector. Can't do that the way the schools are currently constructed. It seems to me that the folks who talk about this with concern in their voice generally have two things that they're thinking about. One is oversight or monitoring and the other is equity.

In the area of oversight, we can think of privatizing a public institution like education in a little bit the same light as deregulating an industry. And people I've talked to will say, when you deregulate an industry, one thing you have to make sure of is that you're monitoring it, is that somebody is watching what's happening.

So there's a real concern about oversight here, is it Len Burnett, the school board member, who's responsible for the oversight? Is it the superintendent or the administrator who's responsible for making sure the schools and the kids in the classrooms are getting what that contract says they're getting?

The equity issue, which our guest, Alex Molnar, I think, will speak eloquently to, is one that I think surfaces because of a lot of the places this is happening. Generally, poorer schools, that is to say, schools that are spending perhaps less than the average per-pupil allotment, and poor kids. And there is a concern that some will make money off of the education of poorer students in urban areas. And what does that mean to the community?

In the stories that we're airing this week, it's been amazing to me to find that the array of these arrangements goes way beyond the private management companies that we've heard so much about. There's public strategies here in Minneapolis. There's education alternatives. And Len Burnett is cringing as I, once again, put everyone in the same pool. But there's the Edison project that has been much written about.

But way beyond the private management companies are what I'll call niche providers, companies like Berlitz for language, Sylvan for remedial instruction. In some instances, teachers are independent contractors with school districts. We should get Ted Kolderie talking during our hour about how charter schools really play into this in Minnesota. We've heard a lot about charter schools.

So the array is astounding, really, once you start scratching the surface. And that's not 30 seconds, but I did my best.

GARY: Mr. Burnett, you're on the Minneapolis school board. What is it that you've-- I think the situation in Minneapolis is one that most people have heard about, know a little something about, but what, specifically, have you contracted with Public Strategies Group to do in Minneapolis?

LEN BURNETT: I think that's where there is the confusion and misunderstanding because I really don't see our arrangement as being privatization at all. What we have done is contracted out with Public Strategies Group, and in particular, with Peter Hutchinson, to perform superintendent services for the district. This is compared to the traditional privatization, where, in essence, the entire management of the district is turned over to a private firm. The firm runs it and tries to squeeze out a profit from whatever is saved.

And I think in that kind of arrangement, education suffers. But our arrangement, I think, is totally different. What we did is took the positions we already had in our budget, and we have turned these positions over to an outside consulting group, with Peter listed as superintendent, the person who's going to be in charge. And the school board really being in a position to have a contractual relationship with Peter and to also set up the parameters of our relationship.

So the school board is really running the schools. It's not going to be a situation where we are defaulting on our responsibility and turning it over to an outside group.

GARY: Why did you do that? Why did you go this direction, though, rather than the more traditional school superintendent?

LEN BURNETT: We were in the traditional system for a long time, and if you recall the financial problems that the Minneapolis had a couple of years ago, that was under the traditional model. So I think what when we started our superintendency search, what we were looking for, in particular, was somebody with a great deal of experience in business and finance because the old model really created a lot of different problems for us.

Peter Hutchinson was working for the district, running our finance department, and he emerged as a leader, as an individual. But later, he made the proposal to turn the entire superintendency over to his group. And after much debate, much agony, and looking at the pros and cons, the Minneapolis School Board decided to go to that arrangement.

And what we did, I think, is very, very different than most districts. Usually, you hire a person, a superintendent, you probably wait a few months for that person to learn. That person will tinker with the organization, that person will make some management changes, and then within a year or two, that person is gone, and it starts all over again.

What we called Peter to do is to change the entire bureaucracy, to change the focal point, and to restructure it from top to top to bottom. And I think the thing that really makes our situation, I think, different and perhaps more workable, is the fact that although Peter came in as the candidate representing change, most of the Union supported him. Most of the people who usually are the barriers to change decided, it's time for us to take a look at how we are doing business, and let's give this a chance.

So I think we got a great deal of unity behind Peter and this group to see if we can make the changes that would affect the children directly, and I think we're doing that.

GARY: Ted Kolderie, do you like the concept of farming out at least some options, public education to private companies?

TED KOLDERIE: Well, I think it's a reasonable thing to try. I mean, I think the country is, I guess you said at the beginning in the introduction, production pretty well convinced that it needs to be better, and it can be better. And we aren't real sure what to do. The stuff we've tried up to now doesn't generally thrill everybody as the ultimate answer.

And so we're trying some things. This is one of a number of things that we're trying. Trying a bunch of different things in Milwaukee. It's a considered decision on the part of Minneapolis board or anybody other board, and it seems to me like it's a trying things when you don't know for sure what to do and see how they work in an arrangement where you can cut it if it doesn't work. Reasonable thing to do.

GARY: Mr. Molnar, it sounds reasonable enough.

ALEX MOLNAR: Yeah, it sounds reasonable enough. And I suppose that's one of its primary appeals. Let me, first of all, challenge an assumption that I think was built into your opening comment, Gary, and that is that everyone agrees that American schools are failing. This has been the conventional wisdom among, particularly, I think, business leaders and political leaders since the publication of A Nation at Risk.

Let me just say flat out that the data, which are available to most folks who study this seriously, in my judgment, don't support that conclusion. What they do support is that the United States is doing a terrible job of educating our poorest children, children living in poverty, and particularly children who are members of ethnic minorities and living in poverty in cities.

The data do not support the generalization that the American school system is failing. But the data also point out is that in no other industrial country are the schools asked to do so much with regard to the provision of what in other countries are social services in relation to children. As an example, in Great Britain, which is the only industrial country, really, that has a higher child poverty rate than the United States, it's up around 23%, 24% after government intervention, that rate is down around 8%.

In the United States, the child poverty rate is somewhere around 22%. After government intervention, it's around 20%. So that's number one. Number two, I would also suggest that we do indeed know a good deal of what to do. I know that there's some controversy in Minnesota over the legislation to reduce class size.

Let me suggest to you that the research supports dramatic reductions in class size, providing that you start in the earliest grades and treat class size reduction as a preventive, rather than a remedial measure. We know that small schools help students achieve better than large schools that are typically found in urban districts.

We know that a developmental approach to organizing and conducting the instructional program of a school, particularly at the early grades, is going to increase student achievement over time in a long-- of over time, and it will increase it durably. So we do know what to do.

And my concern is that this latest discussion with regard to privatization, although it's billed as a radical kind of reform, often rests on a faulty assumption, that is, that the system is so bad, let's just do anything. And the second thing is it isn't radical at all. It's absolutely timid. And it goes right by the real problems of American Public education, in my judgment.

GARY: What if it works, though? I mean, if student X is not getting a good education today, be he, or she, poor, or rich, or whatever, and they're not getting a good education today, tomorrow they are. Seems to me that would be deemed a success.

ALEX MOLNAR: Well, it certainly would. The only problem is that the data run the other direction. We had a wave of privatization in the early 1970s, most of it under the direction of the old office of economic opportunity, once again, aimed primarily at children living in poverty. Heck, there was a firm headed up by Fran Tarkenton, as a matter of some local interest there in Minneapolis. There was--

GARY: We've always turned to Fran for our educational leadership.

ALEX MOLNAR: Well, in contracting out, things like this happen. Westinghouse, as well. The long and short of it was is that there was not only no increase in achievement, there were cost overruns and numerous examples of fraud with educational alternatives incorporated experience in Baltimore.

You're seeing the same thing all over again. That is, the latest achievement data show that the schools run by EAI not only cost more, but the children are performing less well in comparison to the Baltimore public schools, and that they have a higher incidence of children being truant or that is not attending school.

So my point here is that although this is billed as bringing a whiff of marketplace discipline into a stodgy, old, recalcitrant education system, what, in fact, seems to happen is this stodgy old education system is viewed as a stable source of revenue by a collection of private companies who have, in the past and are continuing, not to produce the results, which they said that they would produce.

GARY: Ted Kolderie.

TED KOLDERIE: Well, nevertheless, hearing all this from all kinds of people who go around the country telling us that the schools are working fine, and there are several fellows who make a nice living on the lecture circuit doing this. A number of school boards around the country, elected school boards, are deciding they want to give it a try. And I would guess it's maybe because the data really don't tell you anything about whether it's failing or not.

Failure is a question that has to do with expectations. If your expectations are low enough, you don't have any failures. I think people just basically don't believe this and really are going to have a try and see if we can get some people to make it work. The kind of assumption of the traditional system that the one organization can do everything better than anybody else can do anything doesn't just come up to most people as making basic sense.

LEN BURNETT: If I could pick up on what Alex said, because I think I agree with much of what he said about this whole system. First of all, there's not a lot of profit in education, so I think any group that comes in to try to manage a school system is going to have to make some radical cuts to make any kind of profitability. It's just not there.

Secondly, most of the efforts, really, have been focusing in on the real urban districts with the most significant problems. And I think, to a large extent, this movement toward privatization is, to some extent, a protection of the status quo because it is just tinkering. It doesn't reach the fundamental premises on which a reform should be based.

We still operate our urban system the same as we operate on the suburban districts. And agricultural model, 170 to 175 days a year. That's just not enough for these kids at all. The state tries to fund the schools somewhat equally. Poor kids need a lot more. So to me it's the poverty issue that needs to be addressed more than anything else, and I don't think privatization is going to change.

I think we do need resources, a lot more resources, for these kids because I think these statistics are quite clear. The schools do work well on a national level for a lot of kids. They don't work well for the poor children.

ALEX MOLNAR: Yeah, I want to say something, too, about the question of money. I don't really know who Mr. Kolderie is talking about with regard to the so-called lecture circuit, and I'll leave that aside. But it has struck me as odd that a person such, for example, as Mr. Goalie of EAI in 1993, would take home about $650,000, and Mr. Bennett, close to a $500,000.

Benno Schmidt, CEO of the Edison project, rumored to be earning between $800,000 and $1 million to design systems to educate some of the most desperately poor children in this country. Now, on its face, I have to tell you that strikes me as obscene.

GARY: Why?

ALEX MOLNAR: Because I believe that the resources that need to be spent in education need to be spent directly on providing education to children. And I will say flat out that I don't believe either Mr. Goalie, or Mr. Schmidt, or Mr. Bennett, have, in any way, demonstrated any knowledge superior to-- nor any ability to provide that education for those children. And the whole question of accountability here, as it's talked about by advocates of privatization, is a kind of simplistic marketplace accountability, which draws upon a logic that goes like this.

Look, you're an investor. You bought stocks, the stocks went South. The market has disciplined you for your foolish decision. When you translate that into an educational sphere, you get different results. For example, Los Angeles school board has recently revoked the charter of a school called Edutrain.

Now, to some people, perhaps Mr. Kolderie, that might seem a good example that the charter system works. There's accountability. The school board revoked its charter. However, when you examine what happened a little more closely, what you see is that the school is nearly $1 million in debt, and that it owes the Los Angeles school district approximately $240,000 for students that it claimed that it was providing educational services for that it turns out it didn't.

Now, where did that $240,000 come from? It came from, almost literally, out of the pockets of the taxpayers of the city of Los Angeles and the state of California. And it is money that is no longer available to educate the other children in that state. So who is paying the consequence for this accountability? Is it the board of directors of Edutrain? I don't think so. I think it's the children who, because of this failure, have been harmed.

GARY: We're talking about the privatization of education, a subject that has generated lots of conversation around this nation. Kate Smith, our education reporter, has been traveling around on a fellowship, doing some research, some reporting on this issue, and she joins us here in the studio. Joining us from Wisconsin via-- well, I guess it's not satellite. Fancy phone lines, actually-- Alex Molnar.

ALEX MOLNAR: Fancy phone lines.

GARY: Who is education instructor at the University of Wisconsin. Here in our studio is Len Burnett, who is a member of the Minneapolis school board, and Ted Kolderie, who has been studying the issue of education privatization. Kate, from what you've been able to tell from your research and so on, it seems to be some dispute about whether or not kids are learning more in these private programs. Are people saving money? Do we know?

KATE SMITH: Well, the claim going in certainly is that for there to exist profit for a company, the money has to come from somewhere. The interesting thing in school district budgets, and Len Burnett, you correct me if I get the figure wrong, about 80%, maybe even a little more, of a school, public school, district's budget is generally personnel, salaries.

LEN BURNETT: 90%.

KATE SMITH: 90%, OK. My figures are dated. So it strikes me as interesting that what a lot of people have said to me makes them wince a little bit about this is where that profit for the company comes from because it has to come from somewhere, and presumably, it would come from salaries, from personnel, from cuts in that sort of arena.

What we've seen with the Baltimore situation, with educational alternatives incorporated, is some concern about where the money is coming from. They are, in fact, as Alex Molnar pointed out, spending more money per pupil in the EAI schools in Baltimore than in other schools. That wasn't supposed to be part of the agreement, but it's reality.

The fact of the matter is, too, that in some instances, there has been a reduction in salary for some of the school district personnel. So I think when you talk about where the difference of opinion exists in this issue, it becomes apparent to me that when we talk about public schools as profit centers, that's when people start getting just a little crazy because there is a worry that it comes at someone's expense, that the profit comes at the expense of someone, and who's that going to be?

And I think when we start talking about school kids or, in some cases, specifically urban poor school students, that it is a real concern on the part of a lot of people that one person is going to line their pockets at the expense of someone else. The other interesting thing, and I would be curious about--

LEN BURNETT: As if that weren't going on today.

KATE SMITH: Public sector employees making their salaries, making profit.

LEN BURNETT: The whole system rips off kids today in urban districts.

ALEX MOLNAR: If I may offer a perspective on this, on the money and where the money comes from. I've had conversations with David Bennett, for example, and he's made the point very clearly that the purpose of schools is not to be an employment agency when I've had the discussion about the reductions in salaries associated with food service workers or custodial help or teachers aides or so on.

But it seems to me what's missing in this whole discussion and, in fact, in a general discussion about the way in which we organize ourselves in this country, is anything that might be called a social perspective. Recently, I read an essay by Edward Lutwak, who is, by no one's stretch of the imagination, a liberal. Let me apply his thinking to the school system.

When you have a for-profit firm that is controlled by investors and for the benefit of investors by law, if it's a publicly-traded corporation, and the money has to go to these folks who live outside the community, and the money comes from folks, such as custodians, food service workers, secretaries, teachers aides, and so on.

You might on the one hand say to the taxpayers, we've done a wonderful job for you. We have not only provided profits to ourselves, but we're providing educational services at a lower cost. What that misses is that ultimately, the community in which the school is located is going to bear those costs. It's going to bear those costs when people who formerly had health insurance no longer have it.

It's going to bear those costs when folks who could afford to live in their own homes now need subsidies for housing. And it's going to bear those costs when families who are lower middle class, at very best, and in many urban communities, the bedrock of any stability that exists in those communities lose their financial base. And you pay this tremendous social cost in not only that pressure on those families, but the subsequent behavior of the children in those communities.

GARY: In terms of the people who are working at the school or?

ALEX MOLNAR: Oh, absolutely. I mean, you look in urban districts, and what you're going to see in all the job classifications that I've mentioned is you're going to see an awful lot of people of color in most urban districts. And these are folks whose nephews and nieces, whose grandchildren, and whose children attend the public schools. And these are the folks who provide the stability, such as it is in the communities in which they live.

And so it seems to me that one of the things that we certainly have to talk about in this discussion is a much fuller accounting of the costs of privatization and a much fuller accounting of what it exactly means to increase efficiency. I think all of us are for increased student learning.

TED KOLDERIE: I don't think this affects my point at all that in the current public system, we have the kids in big cities, particularly, are getting, put it gently, not put first. It's a terrible system. It's outrageous for somebody to say that the system is performing.

And I guess professor Molnar doesn't, with respect to urban kids, but we got a terrible situation in the big cities of this country. It's a deeply inequitable system. It's operated almost entirely in the interests of adults. And these kinds of considerations he's just bringing up are just a part of that discussion.

I was in Newark recently. You can't shut your eyes to the fact that there isn't a lot of ways to make a living for people in Newark. And if Newark School District is an employment machine, which I gather it is, the kinds of-- I mean, you have to think about that. But the kids in Newark have been disadvantaged by that system for a long time, and I think you take your stand, one or the other.

You either say, we're going to put the kids first or we're going to put somebody else's interests first. And I think some of the people who are advocating some of these, trying something, are basically looking for ways to put kids' interests first. And it ain't easy. I mean, there's a lot of resistance to putting kids first.

GARY: Let's broaden the conversation here a little bit and get some callers on. Al's on the line from Minneapolis. Go ahead, sir.

SPEAKER 1: Thank you. I want to thank Mr. Molnar for clearing up something for me. One of the things that's always troubled me was that it's been kind of unclear to me what exactly the goal of the education system is, but I just found out from him now that it's to provide housing for janitors and healthcare for janitors. That makes things much simpler to know that that's what we're trying to do.

He also kind of sanctimoniously told us about the $240,000 deficit in LA and questioned how anyone is going to be accountable for that. Could you explain to me how the current public educational establishment is accountable for the 20, 30, 40 unknown percentage dropout rate? And if the market system is so simplistic that it can't deliver education, how is it that system somehow miraculously provides food, housing, computers, every other aspect of our life quite successfully? Maybe we should just try that simplistic system in education, and maybe it will work.

GARY: Mr. Molnar?

ALEX MOLNAR: Well, I think those are good questions. First of all, I don't think I said that the goal of education was to provide housing for custodians. I think what I pointed out is that children are raised by adults, and that there is no such thing as a free lunch. And to have a kind of simple-minded idea of economic efficiency without some understanding of the social costs of that efficiency is the kind of thing that has led, I believe, to some of the disastrous circumstances which exist in our largest cities.

Now, the caller talks about the market system. I would point out that we have a market system in health insurance and $37 million going toward 39 million people without any insurance. I would also point out that the market system does indeed provide all of those things for many people in our society. It does not provide those things for the millions of people who are working and still living below the poverty level and their children.

And one of the things that we have to keep a focus on here is not whether or not we need to do a better job of educating our poorest children. We certainly must do that. The question is, what are the assumptions that we use to guide us as we do it?

My concern about privatization is it will line the pockets of a relatively few folks. It will do absolutely nothing to improve the quality of education to poor children. If you ask me what I think that we need is that we've got an enormously inequitable system of providing financing for our public schools. It's almost as if we've turned the Christian dictum, the last shall be first, on its head and said, the first shall be first, and the last shall be really last.

GARY: Let me ask you this, Mr. Molnar, and then I want to go to some other questions. But if 10 years from down the road, one of these outfits comes up with some legitimate research indicating that, by golly, they really have improved the academic performance of kids in some poor urban districts, made a ton of money doing it, would you support that idea?

ALEX MOLNAR: I would be shocked. That's what I would do. I mean--

GARY: But would you support it? Yeah, I understand that.

ALEX MOLNAR: No, first of all, no, I don't think you should turn our children into profit centers simply as-- that's a statement of value and ethics. Well, it seems to me that if what you require--

TED KOLDERIE: I know you predict it can't.

ALEX MOLNAR: Well, I do predict it can't, but let me just step inside to that logic and respond to it this way. It seems to me that a society which says that the only way to provide a decent education to children is to turn them into a profit center is a society that has a worm at the core of its ethical apple. And I would suggest to you that if we know how to educate children well, we ought to get about the business of doing it and not worry about the profit, not worry about lining the pockets of some wealthy investors.

GARY: Howard's on the line from Rochester with some thoughts, question. Go ahead, sir.

HOWARD: Yes, good afternoon. I just wanted to make a quick comment and then see if I could get another comment from your guest speakers there. But it deals with the fact that until you are able to get school board members and parents and legislators who stand up to the National Education Association on a national level and the Minnesota education on the state level, you're not going to have a snowball's chance in hell of reforming or improving education.

These two organizations are the most oppressive organizations there are, I think, in America today. Their only concern is to line their own pockets at the expense of the taxpayers. And I think if you look at the state platform and the national platform of these organizations, you will see it mentions nothing about education.

It might mention about the oppression of the people in Nicaragua. It might talk about birth control. It might talk about anything you can imagine, but it never once mentions education. And until you get people that are willing to throw off these organizations and stand up to them, you're not going to have improvement in public education.

GARY: Len Burnett on the Minneapolis school board, what is your relationship with the unions?

LEN BURNETT: I think we've got a very positive relationship with the unions. I think we have to realize that we're all in it together. At the same time, a union contract is really a contract to protect the rights of individual members. And so clearly, the organization may be interested in dealing with those personal issues. But at the same time, I think there's a lot of professional teachers within the entire organization who work closely with us to try to develop this team concept, to get the real business of education.

It happens in the schools where the teachers are, and I think the organizations that we've found, do not stand in the way of the kind of progress at least we're trying to have in Minneapolis.

GARY: No problems at all.

LEN BURNETT: Well, I wouldn't say no problems at all. I've had some great disagreements with teachers, especially over things like release days, length of school day, length of the school year, but those are all resource questions, that we just don't have enough money. I think clearly, it's a question of in the poorer districts, like Minneapolis, we get no additional state aid to educate children.

I should take that back. The state gives us 11.5%. Our children get some additional state aid for being in poverty, and I just think that's outrageous. But I think what we have to recognize it's a funding issue. When we talk about these profit firms, when we talk about individual employees, obviously, there are a lot of people who are making money off of education, book companies and a lot of contractors. I don't think individual employees are.

They may certainly get their livelihood from it, but there's no big profit. There's no profit made by principles. I think we have to look at those as professionals, but the money is very, very limited. The money in Minnesota the last four years, as you're probably aware, has been frozen, since 1991, the basic of pay, the basic school formula.

And we're becoming very, very property-tax-dependent. And somehow, that's got to change to get more resources to the poor kids who really need it.

ALEX MOLNAR: I read in the Wall Street Journal just a week or so ago, comparative data with regard to the work of American teachers. And this comes back to the kinds of benefits I would like to see accrue to our kids. If you take a look at teachers in China, Japan, Germany, they spend fewer hours in direct instruction. They have more time to prepare and more time to give children individual attention.

At the same time, for example, teachers in this country are among the lowest paid professional occupational groups, perhaps the lowest paid professional occupation. I don't want to get into an argument about whether or not this has to do with teachers unions or so on. I think what we're facing here is that the fundamental problems that we have, many things are true about a complex system like education.

Are there teachers that aren't doing as well as they should? Sure there are. Are there recalcitrant and perhaps even ignorant bureaucrats? Sure there are. Can we do better? We darn well can. The difficulty is to transform those true things into the fundamental problems.

I don't think they are the fundamental systemic problems. I think the fundamental systemic problems have to do with the way in which we provide education for children, and I think it has to do with the way in which we fund education and the expectations that we have for education in relation to everything else. I mean, kids spend only about, what, 8% to 10% of their student lives in schools. You got all of this other stuff out there that we're not attending to.

GARY: Kate, do you want to--

KATE SMITH: Yeah, on the issue of unions, just to throw this in, while I was doing my research in interviewing Keith Geiger, who's the president of the NEA, it intrigued me greatly to find that they really have taken no official policy on anything other than the private management companies. They certainly are vitriolic in there--

GARY: These are the ones that run the whole school district, as opposed to the little niche vendors, I think you called it?

KATE SMITH: In terms of any sort of teachers and private practice, the Sylvan and Berlitz model. To a certain extent, I think the unions are even still feeling their way around the charter school issue, although some locals certainly have made their position evident. But on a national level, they're still feeling their way around some of the niche providers. So I thought that was interesting.

GARY: Byron is on the line. Go ahead.

BYRON: Thank you. I would like to know from one of your members, panelists, excuse me, why is it that all of the discussions on educational reform these days seem to center upon urban schoolchildren, when the entire country is replete with educational bad points, or places where the educational system is failing? It's not only failing for urban city kids. It's failing for middle class kids out in rural areas and in some suburbs. So why?

And I don't believe it's because people care so much for urban city kids. Why are the arguments and the debates always focused upon urban children? Why?

GARY: Any theories, Mr. Kolderie?

TED KOLDERIE: Well, I mean, there's an interesting disagreement here between the caller and Professor Molnar about whether it's failing. I don't know that it is, particularly. I think people feel in small towns, and this part of the country out there probably feel closer, more in control of the schools and their community, closer to their board members.

It's hard to say, but it's conceivable that some of the sense of what kids ought to be learning, some of the expectations, maybe, aren't as high. People with kids in school tend to feel pretty good about their kids and their schools. I don't think anybody-- I don't know what the implication is. I don't think anybody's picking on urban schools or the kinds of people in them, but they really are very troubled places in this country and in some other countries.

GARY: What's your thought, Mr. Molnar? Obviously, you have a disagreement with the caller there about the big picture, I guess.

ALEX MOLNAR: Well, I think the-- I'm not sure so sure that we do. I think the subtext to read into your caller's comments is, does this have to do with racism and race? And my belief is that it certainly does. If you take a look at urban centers, the majority of the student population in virtually every American urban center of any size has students of color as a majority.

I believe that privatization is one of a whole series of reforms you might think of that is, in a way, the smiling face of disinvestment. The unwillingness of the non-African-American, non-Hispanic, non-Hmong majority to invest in the children of these minority groups, many of whom are living in poverty in urban areas.

And so you focus on a reform like privatization, and it kind of lets you get away with saying, it's not the systemic failure to provide justice for these children. What it is, is it's really the bureaucracy. It's really the unions. It's really anything else, except our refusal to provide justice for these children.

LEN BURNETT: You mean that, do you, to characterize the motives of your superintendent in Milwaukee, say?

ALEX MOLNAR: I have given up trying to characterize the motives of the superintendent in Milwaukee. In fact, some time ago, I have given up trying to characterize anyone's motives and try and just stick to what's apparent on the surface.

LEN BURNETT: If we consider education as a whole, though, I think even in the inner Cities, mixed reviews, mixed performance. This year, we produced a Rhodes scholar from one of our schools. We always do have a high percentage of national honors society students coming through.

It's a matter, to me, of poverty and not race, and I think we keep using that race issue. If we look in Minneapolis, almost half of the students in the gifted and talented program are children of color. And to me, as a director of a large urban city, it's a matter of poverty. And the poverty rate in Minneapolis has increased dramatically in the past six or seven years, and it's the poorest students who are higher, harder to educate.

And so when we talk about race, we talk about middle class children of color, they do very well.

ALEX MOLNAR: I think you're right, but I think it's also important to point out that in the United States, poverty and race are closely associated.

LEN BURNETT: Absolutely.

ALEX MOLNAR: I mean, I share your concern about that, and I think you're right. It's just that disproportionately, the hand of poverty falls onto children of color.

GARY: Ted Kolderie.

TED KOLDERIE: Well, I take a caller.

GARY: Oh, all right. Janet's on the line now.

JANET: Hello. I appreciate your remarks, Mr. Molnar. I believe that it's very suspicious that the business world is so anxious to get their hooks into the education. My son attended a charter school last year, excuse me, and what I noticed was that the people involved, which was the private sector, were very eager to load computers into this school, which could have used a lot more volunteers and a lot more other things, like human contact with the children.

And I really believe that all the emphasis on education, like today, they're trying to take away more and more money from the poor. I mean, in every respect in the government, that's what the contract on America is all about. And I think that it is very quizzical, to say the least, that at this moment, the business sector wants to jump into education. And I don't like it because I don't want to have to answer to other people for my children's education.

And I believe that parents are the ones who need to be the decision-makers, along with the teachers, and that they need to take a long, hard look at their curriculum and what they're doing in school. And when they have children sitting at computers instead of learning to read, and that is what I've seen happen, and my son could read when he was five because we didn't get into that stuff.

GARY: Janet, can I interrupt you? Do you feel like you've been more in control of your child's education when it was run in a traditional public school way than when they brought in some private outside help? I mean, it seems like you would still have that control, or lack thereof, in both instances, would you not?

JANET: Well, I think that when it is more public, I can go and say, no, I don't want him sitting at a computer. I'm sorry, that's not what I'm sending him to school for. But when you start getting into the business world and what is their motivation? Why are they so eager to get involved? Business people are involved for money, period.

GARY: What's wrong with that?

JANET: There's nothing wrong with it, but that's not the point of educating our children. My child is to be educated, as well as all the children in America ought to be educated because they deserve it, because they are worthy. Just the same reason that you would feed them.

GARY: Right. But if you can get a better education by giving somebody some extra money in terms of getting your child a better education, would you be in favor of that, or do you think it's still so foul that you wouldn't support that approach?

JANET: Well, what are the results of children-- I volunteered for two years. I was there every week, and I saw children who were whizzes at computers, they didn't know their alphabets. And I'm talking first, second, third grade. Now, why is that? I mean, because they're not read to, because they're not given enough personal attention.

The focus is totally wrong, as far as I'm concerned. They need to think about families, building up families, giving the parents back some of their dignity, in some cases, because when you talk about poverty, you're talking about a lack of dignity.

GARY: OK.

ALEX MOLNAR: Gary, I would point out to you, too, that a lot of the things that I believe really would make a difference, like reducing class size, having smaller schools, providing this developmental curriculum that allows for a lot of individual instruction, and extending the K-12 system to make it a 3-year-old through 12th grade system, to think about it in those terms, those are things that cost money.

Privatization allows you to say, we're going to do better with less money, which inevitably means we're going to reduce wages, which makes the profession of teaching, and the people who work with children, they're going to be less inclined to go into that profession. And it also turns schools into a profit center because, how do you try and increase the efficiency? We do exactly what the caller has just said, which is we try and rely on technology when perhaps, we really ought to be talking about human-to-human contact.

GARY: Mike's on the line from Duluth. Go ahead, sir.

MIKE: Hi.

GARY: Yes, go ahead.

MIKE: OK. I was on the school board here in Duluth for four years, and I was chairman of the school board for the year that we brought educational alternatives into Duluth. And this was the first place that I had come into. Before I get into that, I wanted to mention some things about that experience that we had with the privatization.

I want to mention two things. One is that school systems in this country have always done a fairly poor job of educating probably 20% to 40% of our students. If you look back into the '40s, and the '30s, and in the early '50s, there were a lot of students that just plain didn't go on and didn't even finish high school. It's only recently that we've intended to educate them, and I think this skews part of our data on how well we're doing.

But I wanted to mention this, that the degree of social programs that we have in our school systems now is so great that I was continually getting complaints from teachers that it is interfering with their educational processes. We're constantly adding more and expanding the programs we already, have things like K-12 AIDS education, and deaf education, relaxation education, multicultural education, sexual harassment education, homophobia education, gender-free education.

And the big one that I see causing a lot of problems in our school system in Duluth is the disability awareness education, which leads to this total immersion of students. Now, all of these things are great ideas, but the amount of time that it takes, takes away from the amount of time that you teach basic education. That's one issue that nobody seems to be dealing with because we continue to add these programs in spite of the changes.

One of the results of this is that these changes, and what teachers look on these as fads, leaves teachers and parents bewildered, angry, and resistant to other changes that come along. Now, I don't have a lot of time, so I want to--

GARY: Oh, we're just about out of time, as a matter of fact, so wrap it up here.

MIKE: One of the problems that I saw was the EAI. And it's not a problem with the EAI in itself. It was good that we brought them in. I think that we ended up in the end having a good-- having had the experience. It didn't hurt us any. But there's some problems that I'd like somebody to address that I see innate in turning your educational system over to a private company.

And by the way, I said I was the one who brought them in. I'm still in favor of trying this. But there were three problems we run ran into. One was the open meeting law.

GARY: OK, open meeting.

MIKE: The second one was who the superintendent works for, the company or does he work for the school district? And the other one is, how much decisions are made that are based on the corporate bottom line? That is, the stock price and the amount of money they're going to make when the crunch comes, as compared to what's best for the students.

GARY: OK.

ALEX MOLNAR: The last one is easy. By law, the stockholders come first.

GARY: And in terms of the accountability for these other things, open meeting law and the rest, how is that?

ALEX MOLNAR: Well, it's the same. You run into the same kind of problem. The public education system is a public education system, and it's very different than the corporate culture, which treats information as, oftentimes, proprietary and seeks to prevent full disclosure. It's a problem they're going through in Baltimore right now.

The Baltimore City schools are going to be sued by the Baltimore Sun under the Open Meetings Legislation in Baltimore because they cannot get, from the system, financial information necessary to understand even where the money is coming from to pay EAI. So these things are inherent. I mean, people glibly say that, well, if the children are served well, then the stockholders are served well, then the community is served well. But the fact is, at the end of the day, for a company like EAI, by law, the group that will have its interests served first is the stockholders.

GARY: We have a minute left. Are we going to see more of these kinds of efforts around the country, less? What's the trend now?

TED KOLDERIE: Yeah, I think despite all this, elected school boards are going to try some things. And I think basically, if people understand that contracting is not privatization, if it's a decision by an elected public board, if it's under public objectives and specs and standards, if it's accountable to the public and can be terminated by the public, if it follows public education rules about no charging tuition, and no teaching religion, and no picking nice kids, and if it's public revenues involved, it's public education. A contract school is a public school.

There is a privatization threat around, which nobody is talking about. And that is what's going to happen when the commercials come in through the home school movement, marketing direct to families and going around public education entirely.

GARY: I'm sorry, we're out of time here. Ted Kolderie, you get the last word on this. Thanks so much to all of you. Ted Kolderie, our guest here in the studio, Alex Molnar joining us from Milwaukee, Len Burnett, Minneapolis school board, member here in the studio, and, of course, Kate Smith, FM news Station education reporter, who is reporting all week on this subject of privatization. Thanks so much to those of you who have been listening through the hour, especially those of you who tried to call in.