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11/4/2010
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NOVEMBER 8-14, 2010
CRAIN’S CLEVELAND BUSINESS
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Business community waits to back school plan financially Transformation would take $12M from private sector, but aid is slow to come By TIMOTHY MAGAW tmagaw@crain.com
Eugene Sanders needs cash, and a lot of it — but a big chunk of the money isn’t going to come without some heavy-duty convincing of the business community. The CEO of the Cleveland Metropolitan School District is counting on as much as $12 million from the business community to help finance his five-year, $72 million transformation plan to remake the struggling district. But business leaders, while supportive of the concept, are holding back on putting their money behind an ambitious initiative that may lack the financial legs to be carried out over the long haul. Dr. Sanders said he has met regularly with business leaders over the last several months through the Greater Cleveland Partnership, the city’s chamber of commerce, to drum up support for his transformation plan, which he introduced in January. The organization endorsed the plan in June, but stopped short of encouraging its members to open their checkbooks. “There’s hesitancy to make sure the plan can be a sustainable one,” said Joseph Roman, president of the Greater Cleveland Partnership. “We’re excited about the plan itself. We’re now looking to see how it can be sustained over the next five, seven or 10 years.” Dr. Sanders said the district counted on support from the private sector when it initially looked at how to pay for the bold reform effort, and he hopes to lock down the rest of the money by the end of the current school year. Dr. Sanders wouldn’t go as far as saying a lack of financial support from area businesses would scuttle the transformation plan, but he noted that “we cannot achieve our goals completely” without that aid.
Evaluating the long term The district’s projected budget deficit for its next fiscal year, which begins in July 2011, is roughly $58 million. It’s an amount Mr. Roman characterized as a “challenging number,” and it’s indicative of the budget pressures the district is likely to feel going forward. Mr. Roman noted that the district hasn’t passed a new operating levy
in 15 years, which, in addition to dwindling property values and a loss of population, have contributed to the district’s financial woes. So, determining how the district is going to implement and pay for an expensive overhaul plan over the next several years is paramount. “These issues not only have to be addressed for the private sector and foundations, but they have to be addressed for the citizenry,” Mr. Roman said. Mr. Roman said his group is seeking volunteers from the private sector to pair up with the district’s financial team to offer ideas on how to better manage the school system’s finances. Mr. Roman said the Greater Cleveland Partnership also is counting on its members to help fund a $250,000 study to evaluate the financial sustainability of the district, which he noted was the organization’s “sole goal” in deciding whether to encourage its members to financially back the reform effort. Dr. Sanders agreed with Mr. Roman that, considering the economic climate, it makes sense for the business community to be somewhat timid before investing millions of dollars. “This is the most comprehensive reform initiative placed before the business leaders in a generation,” Dr. Sanders said. “It rightfully requires careful and reflective thought.” So far, the district has about $60.4 million committed toward the transformation plan from a variety of sources, but nothing from the business community. Considering the district had nothing on hand when it announced the plan earlier this year, Dr. Sanders said that’s a good start. The money thus far comes from federal grants and nonprofits, such as the Cleveland and Gund foundations. Much of the government money, however, relies on the district over the next few years meeting a combination of objectives, which include improving student graduation and attendance rates and boosting proficiency in math or reading. Under the terms of the state’s school improvement grant program, the objectives are set by the district and a failure to meet them could put continued financial support in jeopardy.
Here comes the pitch … Besides working through the
Software specialist Easy2 taps interim CEO Ethan Cohen has He lauded ON THE WEB Story from been named interim www.CrainsCleveland.com. Easy2’s product CEO of software lineup as well as developer Easy2 Technologies Inc. technologies it’s developing, including in Cleveland. a way to automate the process of Mr. Cohen fills a position that has creating online product demos. He been vacant since former CEO John also noted that Easy2 works with Bukovnik Jr. died in July, after big names such as Amazon and Dell. collapsing at the company’s down“It’s a very cool company,” he town headquarters. The company said. “It’s great to have a company sells products and services for like this in Cleveland.” online retailers, including software Mr. Cohen most recently was that allows them to create their own president of medical transcription online product demonstrations. services provider SPi Healthcare, Mr. Cohen will help Easy2 develop based in Tinley Park, Ill. He also has a strategic plan and will stay on held top positions at two local telafterward if the company’s board eradiology firms: Franklin & Seideldecides he is the best fit to execute mann and Telerad Express. — Chuck Soder that plan, he said.
Sanders
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Greater Cleveland Partnership, Dr. Sanders has made direct pitches to various area businesses. For instance, Dan Davis, a spokesman for KeyCorp, said the banking company is in talks with the school district about a possible contribution but has yet to sign on to support the transformation plan financially. Mr. Davis noted that KeyCorp already is in the final year of a three-year, $600,000 commitment to provide money for the city’s “STEM” schools, which stress science, technology, engineering and math coursework. Like KeyCorp, Lubrizol Corp. in Wickliffe also has voiced its support for the plan through the Greater Cleveland Partnership. However, Lubrizol spokeswoman Julie Young said the only financial support the maker of lubricant additives and specialty chemicals has extended to the district to date is by funneling an
undisclosed amount of money through the Greater Cleveland Partnership for the financial sustainability study. It isn’t that local companies loathe putting their money behind urban education. Cliffs Natural Resources Inc. recently pledged $1 million to E Prep Schools, a charter school operator, to help fund the expansion of its elementary school building on East 36th Street in Cleveland. Cliffs spokeswoman Patricia Persico said the Cleveland-based iron ore and coal producer donated to the charter school, which is affiliated with the Cleveland school district, because it was “impressed with the high standards and disciplined environment the school has.” Cliffs, however, would not comment whether the foundation has considered contributing to the district’s reform efforts.
Unusual bedfellows? It isn’t unusual for school districts to tap businesses for money because at the end of the day, “money is money,” said Ned Hill, an economist and dean of the Maxine Goodman Levin College of Urban Affairs at Cleveland State University. For instance, Dr. Hill noted that
the Harlem Children’s Zone in New York, which runs three public charter schools, is financed largely by Wall Street firms. But Dr. Hill was quick to say Cleveland is no Wall Street. “Most companies can only really contribute time and personnel and sometimes internship experiences,” Dr. Hill said. “You can’t look at private businesses as a major revenue source for public schooling. That is a public responsibility.” Dr. Sanders, however, cited the recent $100 million donation to the Newark, N.J., schools by Facebook CEO Mark Zuckerberg as an example of the private sector supporting a financially troubled public school system. Like Dr. Sanders, Newark Mayor Cory Booker had looked for support from business. Mr. Roman said businesses already are supporting the city’s public schools through property taxes and agreed with the notion that it shouldn’t be the private sector’s responsibility to continually finance public education. However, a one-time investment could make sense in the long run. “It’s a matter of understanding the value of the plan and the value of a competitive school system to our economy,” Mr. Roman said. ■