Chicago Opts For MBA-Run School System

SHOUTING in Polish, Lucy Niewiadomski tries to stave off chaos. Forty first-graders are sloshing dirty water around a packed bilingual class at the Frank W. Reilly Elementary School. Ostensibly, they are cleaning desks.

Frazzled teachers and overtaxed facilities are emblematic of Chicago's public schools - branded the "worst in America."

"It's very frustrating. I wish I could spend more time with them," Ms. Niewiadomski says as pupils wave crayon drawings and wet rags.

Acknowledging the disarray, the nation's third-largest urban school system is implementing a radical, top-down plan with two elements: using state block grants with few strings attached, and gutting the big bureaucracy, replacing it with a corporate-style management team.

The four-year restructuring plan essentially overhauls the troubled system now charged with more than 400,000 students at 553 public schools.

More than 40 percent of students drop out, and about 70 percent score below the national norm on math and reading tests. Exacerbating the challenge, 80 percent of students come from low-income homes, and 14 percent speak only limited English.

Signed into law two weeks ago by Republican Gov. Jim Edgar, the plan sweeps away the school system's governing bodies, abolishing the Chicago Board of Education and School Finance Authority. It replaces them with a five-member board of trustees appointed by Mayor Richard Daley and headed by a chief executive officer.

The controversial law, crafted by the GOP-dominated state legislature, makes Illinois the first state to use "block grants" in education, eliminating many restrictions on the use of state funds.

Meanwhile, it encourages privatization of some school services, while quashing union opposition by banning strikes by the Chicago Teachers' Union (CTU) for 18 months and sharply limiting collective bargaining.

This latest reform, by concentrating power in the hands of Mayor Daley, is an attempt to bring financial solvency and political accountability to a system that Republican lawmakers in Springfield have attacked as a "sewer" of waste and corruption.

Experts agree that greater financial order is essential.

An investigation by Chicago's Better Government Association (BGA) alleged conflicts of interest involving the private business dealings of top school board officials, including president Sharon Grant. It also highlighted the system's tendency to pay exorbitant prices for supplies, such as an 80 cent electrical plate bought for $75.

The mismanagement and fraud have caused "a deep-seated contempt and distrust for the system" among honest employees, the Office of Inspector General concluded in 1994.

Backers of the new law say a team of professional managers focused on the bottom line will help alleviate the school system's budget crises, such as one in 1993 that nearly stopped schools from opening. With an annual budget of nearly $3 billion, the system faces an estimated budget shortfall of $150 million next school year and $300 million for 1997-98.

Critics, however, fault the latest reforms on financial as well as educational grounds.

While Daley supports most of the changes, he says the law fails to provide any extra state money to close the budget gap. Short-term savings through greater spending flexibility and tightened accounting will avert a budget crunch next year. But deep cuts in programs and teaching positions are likely in 1996-97.

"The funding system as presently structured will sink Chicago no matter what," says G. Alan Hickrod, an expert on educational finance at Illinois State University. State general aid for Chicago's schools fell from $564 million in 1988 to $484 million in 1995, and GOP state lawmakers are unlikely to reverse the trend, he says.

From an educational standpoint, experts worry that the latest restructuring could undermine an earlier, widely praised wave of school reform in Chicago.

Launched in late 1988, the first wave of reform was a grass-roots, school-based movement to improve education by devolving control over money and programs to parents, teachers, and principals.

The reform set up local school councils as the chief agents of innovation, granting them power to approve school budgets, hire and fire principals, and decide how to spend 'Chapter 1' discretionary state funds - $400,000 on average per school each year.

Although the six-year-old reforms have not yet markedly raised test scores, they have helped cut the dropout rate from 51 percent in 1991 to 42 percent last year. And they have curbed violence and increased parent participation.

"The Chicago experiment is the most thorough-going attempt to change an urban education system that I know of," says Michael Katz, of the University of Pennsylvania.

But education experts now worry that the new law, by imposing a more centralized management from above, could undercut the bottom-up initiatives sparked by the earlier reform. Ironically, GOP legislators may be taking power out of local hands.

The 32,000-strong CTU also fears that the union-busting measures of the GOP law will demoralize its ranks and dampen enthusiasm for school-based reform. The CTU is challenging the law in court for prohibiting union bargaining over key issues such as class size, length of school day, and privatization. "This is absolutely dictatorial and undemocratic," says Jackie Gallagher, a CTU spokeswoman.

Meanwhile, Chicago's Association of Local School Councils met with Daley last week to voice concern that the new plan would stifle achievements of the old reforms. "We're very nervous that local school councils will be pushed aside and education will be sacrificed to management efficiencies by the central office," says Beth Katsaros of the association.

Already, the new law threatens to halt the growth of state Chapter 1 funds for the local councils by guaranteeing total allocations only at this year's level of $261 million. Previously, the funds rose with the number of low-income students. The money is vital to enable schools to make basic improvements such as training teachers and lowering class size.

At the Reilly school, where an influx of low-income Polish and Hispanic immigrants has nearly doubled enrollment to 1,430 in five years, a freeze on new state funds could mean larger classes and longer days.

"You're just going to have sleepier children and more burned-out teachers," says Reilly Principal Rosemary Culverwell. "It does reflect in what they learn," she says.