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1st September

First Published in The New York Sun,  September 1, 2006

By Andrew Wolf

Special education is one of those areas of education that has been particularly vexing to those running school systems, here and throughout the nation. How do you provide educational services to the increasing number of children who have been found to have disabilities of many types, these services mandated by law, affirmed by the courts, and protected not only by advocacy groups but by parents protecting their own children? And how do you achieve this without bankrupting the system?

This topic has been studied, restudied, picked apart by all sorts of experts. Educators, psychologists, medical doctors, social workers, journalists and, regretfully, lawyers and judges have all weighed in, producing enough articles, studies, reports, recommendations, and legal documents to fill a library. Yet there is still no consensus on how best to provide these mandated services within a reasonable budget.

I am pleased to report that the city’s Department of Education has discovered the path to a solution to this problem. It seems that we have been asking the wrong people for advice. Rather than depend on the knowledge and experience of teachers, psychologists, doctors, et al, we should have been turning to certified public accountants. How did we all miss this for so long?

Last month I wrote about the Department of Education’s $17-million no bid contract with the consulting firm of Alvarez & Marsal, specialists in turning around bankrupt corporations. This story has since taken on a life of its own, picked up by other papers, New York’s politicians, and even the Reverend Al Sharpton.

One of the mandates of this contract is to provide “continuous improvement of special education” to “create new structure, processes, and metrics to support the special education needs of the Empowerment Schools that can be scaled up to support all schools.” But it is hard to see what Alvarez & Marsal brings to inspire confidence that it can succeed when so many others have failed.

It isn’t outrageous for the Department of Education to turn to outside consultants for advice, acknowledged experts, paying a reasonable fee after an open process to screen prospective bidders. But this isn’t what happened here. Alvarez & Marsal has a thin and controversial record with public school systems. Its first and only completed public school turnaround was in the tiny, troubled St. Louis school district. Public Advocate Betsy Gotbaum stated that “even a cursory check of Alvarez & Marsal’s track record would be enough to set off alarm bells.”

Ms. Gotbaum quotes the St. Louis Post-Dispatch, “The turnaround firm was going to put the district on a solid financial and organizational footing … Instead, there is vague talk of a plan … The financial mess the turnaround firm was going to fix? It’s still with us… several other school systems have expressed interest in the turnaround firm … For [the firm's] sake, let’s hope they don’t ask for references.”

Disclosures in the Daily News this past weekend have put a human face on the contract. After all, the $17-million is a drop in bucket considering that the Department of Education budget is well on its way to an annual $20-billion. What the News disclosed was the individual salaries of the consultants, figures that are mind-boggling.

Sam Mehta, the “chief restructuring officer for finance,” is a CPA with, according to the Alvarez & Marsal website, “more than 10 years of operational and advisory experience.” One of his previous assignments, with a firm called Bridge Information Systems, was acting head of the Benelux and Nordic regions. He also had an “advisory assignment” with the now defunct accounting firm, Arthur Andersen. Before coming to Alvarez & Marsal, Mr. Mehta was “director of finance and head of strategic planning for the merchandise division of”

Mr. Mehta must be a quite an accountant, since he is being paid $1.6 million for the 17 and 1/2 month term of the contract. That’s a cool million a year, four times what Chancellor Klein makes. He has been referred to within the Department of Education using the title “chief financial officer,” a practice away from which the department has since backed. That title was formerly used by the recently retired Bruce Feig, who was paid $178,156 a year.

To Gotham’s school principals, laboring without a contract for three years, none of whom earn even a sixth of Mr. Mehta’s salary, despite years of real experience in our schools, news of this largesse must be galling.

Ms. Gotbaum called for the suspension of the contract, while City Council education committee chairman, Robert Jackson, promises public hearings. As for the Rev. Sharpton, he objects to the firm’s track record in St. Louis, where the firm closed schools, increased class sizes, and slashed educational services. Mr. Sharpton has stumbled on something here.

The St. Louis school system was bankrupt and painful decisions had to be made. Rather than make the tough decisions themselves, the local school board and politicians hid behind the independent turnaround specialists to do the dirty work they themselves weren’t willing to do.

In New York, where the businessman-turned mayor has completed his fourth year running the schools, it is hard to see what Alvarez & Marsal can do for the schools what he and his hand-picked team cannot.

© 2006 The New York Sun, One, SL, LLC. All rights reserved.

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