Boston Consulting Group: Private dollars vs. public responsibility

UPDATE: Read our newest blog post on this issue: “The new philanthropy: Private agendas vs. public interest”

Last spring, the District unveiled a controversial restructuring plan that generated huge outcry and protest from Philadelphians, many of whom deemed the plan an all-out assault on public education.  The proposal?

• 64 school closures within five years;
• 40 school closures by Sept. 2013;
• massive charter school expansion to 40% of total student population;
• major union concessions; and
• all schools divided into “networks” run by third-party operators.

The plan contrasted sharply with a months-long process involving community members and District staff to map out a strategy for addressing serious budget problems while attempting to preserve the District’s educational mission. The restructuring plan had little resemblance to the District’s community/staff plan. In a press conference praising the restructuring proposal, Chief Recovery Officer Tom Knudsen boasted of an “intimate, hand-in-glove relationship” with the District’s consultant on the plan, the Boston Consulting Group, a Massachusetts-based multinational corporation with an educational department that had hocked restructuring plans in New Orleans, Cleveland and Memphis, TN.

What Knudsen barely mentioned was that the plan was paid for with millions of dollars in private donations and a contract that was executed not with the School District of Philadelphia but with the William Penn Foundation, which had solicited the  private donors. Among those donors were a real estate developer with family also in the real estate business and groups and individuals backing religious and charter schools.

From February to the end of September, Boston Consulting Group (BCG) had unprecedented access to non-public District financial data, building conditions, and labor contracts.  They also had seemingly unlimited access to information from District insiders about their top priorities, information not available to the public. According to the Notebook, BCG officials spent so much time at 440 they inquired about shower facilities. Their contract with the William Penn Foundation had them identifying 60 top candidates for school closure, devising a new office for transforming the district, reviewing vendor proposals for facilities management firms, and proposing a massive charter expansion effort.

The contract with the William Penn Foundation also came with the hiring of two public communications firms to facilitate the public unveiling of the restructuring plan. The communications firms, which worked for the William Penn Foundation, were present at many public meetings but never identified themselves as representatives of outside interests.

Meanwhile, the public was kept in the dark. Members of the District’s maintenance workers union, SEIU 32BJ endured a difficult summer of tense labor negotiations during which time they received layoff notices for each one of their employees. Parents and media were refused any information about potential school closings or even the criteria on which school closings might be based. When the District released its five year plan, it provided only one page of basic financial data to explain why it voted to issue over $300 million in borrowing through municipal bonds. The bonds would indebt the District for the next 26 years for only one year’s worth of debt.

Had BCG gone through the appropriate channels and contracted with the School District, the public would have been entitled to more data and research about its restructuring proposals – especially school closings, charter expansions and the controversial “achievement networks” idea. We might have had more information about BCG’s qualifications and their scope of work in other cities. There might be less suspicion about whose interests the restructuring plan represents – those of private donors or those of the families and staff within the School District of Philadelphia.

It’s worth remembering that a decade ago Edison Schools, Inc. was  once paid $2.7 million to “study” the Philadelphia public schools. The result? A plan to turn over the entire management of the District to, imagine!, Edison Schools Inc.

Today, BCG – funded by private interests – has engineered its own role behind closed doors to restructure the District in secretive ways that have polarized important public dialogue on our schools. The SRC risks losing the public trust when it appears that outside interests can so easily gain influence within a public process.

That’s why Parents United for Public Education has called for full transparency on the BCG contract including:

1. Full disclosure of its contract, funding, and scope of work with the Willliam Penn Foundation from April through the end of September (the foundation has only released contracts covering BCG’s work up through June 11, 2012).
2. Full disclosure of all meetings BCG held with District officials, the topic of the meetings, who was present at those meetings, and the role BCG and other non-District attendees played.
3. A list of the data provided to BCG with assurances that such data will be now considered public documents available on request.
4. The name of all individual donors contributing to the BCG fund.
5. The list of 60 schools identified by BCG as their “top candidates” for school closure, including rubrics,etc.
6. A review and change in conflict of interest and ethics policies by the District to prevent similar situations from happening.