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The older woman wore gloves as she stooped to pick up trash outside Steel Elementary School, tucked into a quiet block of black working-class homes in Philadelphia’s Nicetown section. Apparently, the volunteer had made an impromptu decision to stop by and tidy the place up on her way to wherever she was going.

“This is a community school,” boasts Steel School Advisory Council president Kendra Brooks, a parent of two Steel students, standing next to banners proclaiming We Are Family and We Love Our School. “We have generations and generations of families who have been through Steel School. We have teachers who have been here eighteen, twenty-eight years. So we’ve built a community.”

The school’s tenor—what educators call “climate”—seems positive. Inside, first-grade students are engaged in a reading exercise, while third graders prepare to paint cutouts of butterflies after learning about their life cycle. But the end-of-year calm belies a bruising conflict.

In April, parents and teachers launched a high-profile fight to block a takeover of Steel by a charter-school network after the district, citing the school’s low test scores, declared it in need of an overhaul. Brooks believes that her school—which, like others, has reeled under the budget cuts implemented by Pennsylvania’s Republican governor, Tom Corbett—had been set up to fail. Last spring, apart from the principal and a secretary, she says, Steel had “a teacher for each class” and almost “nothing extra.”

The designation of neighborhood schools as “failing” under the federal No Child Left Behind Act, passed in the early years of the George W. Bush administration, has enabled the rapid growth in Philadelphia of networks like Mastery Charter Schools, which had been tapped to take over Steel. Founded in 2001 with 100 ninth graders, Mastery now educates its own district-within-a-district of nearly 10,000 students in fifteen schools and boasts high test scores and a culture of determined optimism. Ten of these schools are “turnarounds”—in recent years dubbed “Renaissance schools”—that were taken over from the district. Charter-school advocates cite Mastery as a golden model of “no excuses” education within a local charter sector that often suffers from mixed test scores and financial corruption. “Give me the opportunity to break myths and assumptions that folks will have about poor communities that turn out to be completely false,” says Mastery CEO Scott Gordon. He likes to say that the district is a “house on fire” and that poor children are trapped inside. Many parents and students love Mastery, crediting its turnarounds with calming chaotic hallways, improving learning and directing children’s attention toward college.

But Mastery has its critics, who accuse the network of practicing rote teach-to-the-test instruction and burning through young teachers. Even Michael Masch, the school district’s former chief financial officer and a progressive fan of Mastery’s work, makes a point of noting that the charter network engages in prodigious outside fundraising. Mastery is “not doing more with less,” Masch says. “They’re doing more with more.”

In fact, the basic structure of school financing in Philadelphia is rigged to benefit these privately managed companies. Public-school money follows students when they move to charter schools, but the public schools’ costs do not fall by the same amount. For example, if 100 students leave a district-run school at a cost of $8,596 per head (the district’s per-pupil expenditure minus certain administrative costs), that school’s cost for paying teachers, staff and building expenses doesn’t actually decline by that amount. It has been estimated that partly because of these costs, each student who enrolls in a charter school costs the district as much as $7,000.

There are outright subsidies too, including a loophole that provides charters with an extra “double-dip” pension payment. Charters also appear to game the state’s special-education payment system to secure a larger share of district funds. In 2013, according to the Philadelphia Public School Notebook, city charters obtained nearly $100 million more than they spent on special education.

At Steel, Parents United for Public Education, the Philadelphia Federation of Teachers and Concerned Neighbors of Nicetown organized to block the Mastery takeover, as allegations circulated that the district would provide the charter with an additional $2 million in annual funding. Gordon disputes this figure and says that Mastery invests just $1.5 million of its own privately raised dollars in turnaround schools—and then only for the first year.

Steel parents voted 121–55 to oppose the Mastery takeover, while the School Advisory Council, in a decision rife with allegations of misconduct on both sides, narrowly backed it by a vote of 9 to 8. Mastery withdrew. Weeks later, the parents and advisory council at another school slated for takeover—in this case, by the Puerto Rican–led ASPIRA network—voted overwhelmingly in opposition.

These votes were among the few successful coordinated efforts by parents and teachers to block charter expansion in Philadelphia. They constituted a pivotal moment in a struggle involving Corbett, well-funded education reformers bent on privatizing public schools, a battered teachers union, and students and parents attempting to navigate a school system in which fiscal crisis has become the only constant.

Gordon, Brooks notes, “said his job was ‘to help poor people.’ Well, no one asked for your help…. Every couple years, they come up with a new philosophy about what’s best—instead of funding the schools.”

* * *

Former Philadelphia Mayor Richardson Dilworth, a patrician reformer who helped end the city’s rule by a Republican political machine in the 1950s, bluntly described Philadelphia as choked by the “white noose” of the suburbs. Those suburbs are a product of America’s postwar period, when the federal government subsidized the mortgages of white families deserting the city. As the urban industrial base vanished, Philadelphia was left with a rapidly declining middle class. Relatively affluent whites funded separate school districts, while poorer urbanites were left to fund the impoverished schools left behind. Dilworth insisted that a unified metropolitan school system was the only path to true desegregation.

But since his time, the noose has tightened. The effects of segregation were so ugly that in 1998, then–Schools Superintendent David Hornbeck filed a federal civil-rights lawsuit contending that state funding discriminated against nonwhite students. Hornbeck also issued a stark ultimatum, declaring that he would make no more cuts—instead, the schools would run with the necessary resources and be shut down early if the money ran out.

During a speech, Hornbeck referred to a picture of a young man whose hands had been cut off during Sierra Leone’s civil war. It was, he said, a “good metaphor” for how the United States treated poor children. “This notion of our engaging in the equivalent of chopping off our children’s hands is not theoretical,” he stated, according to The Philadelphia Inquirer. “In many cities, including my own, we kill or maim as many as 75 percent or more of our children between the time they are born and the time they should have graduated from high school.”

In response, furious legislators passed a law authorizing a state takeover of Philadelphia’s schools and barring its teachers from striking. In the end, Hornbeck resigned in the face of further cuts. What followed was likely the largest state takeover—and, at the time, the largest experiment in privatization—in the history of US public education. The message was clear: public management, not underfunding and segregation, was the problem. The takeover went into effect on December 21, 2001, with advocates and city politicians filing lawsuits and students walking out of class and staging large protests, wearing stickers that read: “I am not for sale. Say no to privatization.”

The state contracted the for-profit Edison Schools to devise an overhaul. Edison’s report to the governor painted a picture of the district that few would dispute, including abysmal test scores, unsafe schools and a 50 percent dropout rate. Edison called for a private manager to take over the central office and dozens of city schools. The state agreed and, in a move that provoked widespread controversy, signaled that it would hire Edison for the job.

“Most people that look at us don’t understand one thing: the great, great bulk of all our schools are profitable and they are generating cash, some of which comes back here,” said Edison CEO Chris Whittle, according to PBS’s Frontline. “We just don’t have enough of them yet.” Even so, the planned overhaul triggered mass protests, forcing the governor to compromise: Edison received only twenty schools (its stock took a nosedive after this announcement), with competing private contractors brought in to take over others.

By 2007, it had become clear that the initial experiment with private providers had failed. A study by the RAND Corporation and Research for Action found that “despite additional per-pupil resources,” privately managed schools like Edison’s “did not produce average increases in student achievement that were any larger than those seen in the rest of the district,” while “district-managed restructured schools outpaced the gains of the rest of the district in math.” Edison’s contract for its last four schools quietly expired a few years later.

In 2010, State Attorney General Tom Corbett was elected as governor, his political network heavily populated by advocates for private-sector education reform. Backed by a conservative state legislature, Corbett cut about $860 million from public education in his first budget rather than tax the state’s booming natural-gas industry. He also expanded Pennsylvania’s “voucher lite” programs, popular among conservatives, which provide corporations with major tax credits in exchange for donations for private-school tuition.

“This budget sorts the must-haves from the nice-to-haves,” Corbett told the Legislature during his March 2011 budget address. “I am here to say that education cannot be the only industry exempt from recession.” Philadelphia was forced to eliminate more than 3,500 teacher and staff positions. The crisis also set off the most aggressive privatization campaign since the state takeover, embodied by the so-called “Blueprint for Transformation” plan.

The plan was drafted by the Boston Consulting Group, an elite corporate consulting firm with a record of contract assignments for public-school districts. The proposal called for closing sixty-four schools, gutting the central office staff, privatizing blue-collar jobs if the unions didn’t offer major concessions, and carving up the remaining schools into “achievement networks” potentially managed by private third parties. Public displeasure caused the plan for achievement networks to be shelved, but twenty-four schools were closed.

For privatization-minded reformers, the creative destruction unleashed by Corbett’s budget cuts presented an opportunity to implement a new round of privately managed restructuring. In May 2013, just before the School Reform Commission approved what Philadelphians called the “doomsday budget,” Teach for America founder Wendy Kopp—an icon of the self-described reform movement—tweeted: “In Philadelphia today, so much more to be done, but I can’t get over the progress in this city’s schools in the last decade!”

Wealthy donors and local and national foundations poured funding into a new reform-movement infrastructure to back the growth of nonprofit charters, which had continued their rapid expansion even as the for-profit experiment collapsed. The Philadelphia School Partnership (PSP), founded in 2010, quickly grew into the city’s most powerful pro-charter and anti-union organization, thanks to a $15 million grant from the local William Penn Foundation—the same entity that had funded the “Blueprint for Transformation” plan.

“Change is the only option,” declared Mark Gleason, the PSP’s chief executive, in testimony before state legislators in 2013. “We may not fully know which changes will make the most difference, which will transform outcomes for poor and minority students. But we have some good clues—we even have some proof points right here in Philadelphia—and we know the status quo is most definitely not working for disadvantaged students. The debate we should be having is about which changes are worth trying—not about saving a failed system.”

The new reform groups built ties with a pre-existing conservative network in the state, including pro-school- voucher groups like the Students First PAC, a wealthy political-action committee funded by the libertarian managers of a suburban Philadelphia investment firm.

StudentsFirst, a separate group led at the time by former Washington, DC, schools superintendent Michelle Rhee, also founded a state chapter. PennCAN, the state affiliate of the national group 50CAN, was launched in the PSP’s office. The Gates Foundation, a major backer of reform projects nationwide, funded the creation of a quasi-governmental body staffed by the PSP, the Great Schools Compact, dedicated to promoting its vision for change. It is, Gleason said earlier this year, a matter of “dumping the losers” to “create a higher bar for what we expect of our schools.” But the process of judging winners and losers amid wrenching austerity cuts has proved highly controversial. The Renaissance schools run by Mastery have demonstrated strong test-score gains. Even so, the district-run Promise Academies showed the same encouraging results—until their budgets were gutted.

* * *

At Bartram High School, Richie Meeler had made a rough school into his refuge from a difficult home life, forming a group of friends dedicated to their studies and art. But the music program had been cut back, and one friend was assaulted in the hallway and robbed. A photo of the young man lying in a pool of blood circulated on social media. Meeler says his friend never returned to class. “This year’s been very messed up,” he told me a few weeks before his graduation.

The year had begun in chaos after the latest huge budget gap led Schools Superintendent William Hite to preside over another round of deep cuts. The Obama administration released $45 million in aid. But after education reformers called for that funding to be made conditional on concessions from the teachers union, Corbett held the federal dollars hostage. Then, in September, a sixth-grade student died of an apparent asthma attack after falling sick at a school with no nurse on duty. Corbett released the funds.

In 2013–14, the School District of Philadelphia had 6,321 fewer staff than it did at the end of 2011, according to district figures—a decrease of nearly 27 percent. The reduction included 2,723 fewer teachers, fifty-eight nurses, 406 counselors, 286 secretaries and 411 noon-time aides. The year began with a single counselor assigned to nearly 3,000 students (some counselors were rehired mid-year). The insufficient staffing made big headlines when, on March 21, a student threw a Bartram staff member named Alphonso Stevenson against a wall and knocked him unconscious. A photo circulated on Twitter of Stevenson crumpled on the floor. His job was to mediate conflicts.

Students, parents and teachers at many schools have organized militant protests, but Bartram—which once had a strong student organization—has been broken under the weight of staffing cuts and churn. “Parents aren’t really empowered to do much,” says Bartram parent Pat McDaniels. “So I feel like a super-interested spectator.”

“We need more of everything,” Antoinette Calimag, a science teacher and the Philadelphia Federation of Teachers building representative, told me this spring.

Bartram’s new principal left a few days into the school year after her cellphone was stolen, staff members say (her replacement was herself replaced for the current year), and the school, operating with a skeleton staff, slipped into total disarray. “It’s supposed to be high school,” says Chris Palmer, an art teacher who has been spending his own money to purchase classroom supplies. (He adds that he doesn’t know how much because he’s afraid to check his bank statement.) “I just feel so bad in general that these kids are denied so much.”

Last year, Palmer took Meeler and another student to a battle of the bands in suburban Abington. For Meeler, it was an eye-opening encounter with the opposite end of the state’s separate and unequal public-education system. “They had programs there that I haven’t even heard of…that I didn’t know existed since I’ve been going to Bartram,” he says.

It’s what scholars have bluntly called an apartheid system: wealthy districts spend more on wealthy students, and poor districts struggle to spend less on the poor students who need the most. According to state data from 2012–13, Philadelphia spent $13,077 per pupil, while Abington spent $15,148—on students in much less need of intensive services and support. Wealthy Lower Merion spent $22,962 per pupil.

Meanwhile, at Bartram, two police officers—including one who had been acquitted in a high-profile case after he appeared to sucker-punch a woman on video after the 2012 Puerto Rican Day Parade—presented photos of gruesome crime scenes in the school’s dimly lit auditorium: men splayed on the floor in a pool of blood, scarred by torture or a sadistic beating. The cops regaled the few dozen students in the auditorium with statistics about the large number of young black men killed by gun violence, then admonished them against cursing in the presence of adults.

Two teachers standing by the door told me that they had been laid off, placed at another school and then transferred to Bartram in late fall. The school’s sole nurse complained that she was often called to respond to two simultaneous emergencies. An English-as-a-second-language teacher told me about subjecting the school’s large population of African immigrants to days of grueling standardized tests that they often did not understand. The obsession with standardized tests in Philadelphia has distorted classroom teaching. It has also led to what appears to have been widespread cheating, according to a once-secret state analysis exposed by local journalists.

As for Palmer, he doesn’t know what to do if he’s caught up in a future round of layoffs. Teaching used to be a dependable day job for a fine artist, but “nobody wants to pay for experienced teachers anymore.”

The mood in the school is sour. Some students blame the teachers. One complained that teachers “just don’t care” whether students learn. Another student explained the problem to me this way: bad kids are rude to nice teachers, which makes the nice teachers mean to nice kids. They also complained of classes frequently staffed by substitutes. One teacher conceded that absenteeism is high, but said this is because more of the school’s staff are becoming ill, either mentally or physically: “More teachers have started to call out [sick] more because we see that we’re not appreciated.”

But while reformers want to make it easy to fire bad teachers, being able to attract and retain the best teachers is a much bigger problem. In Philadelphia, teachers are often paid less than their suburban counterparts to teach in far more difficult schools.

The woeful state of schools like Bartram is a point upon which public-school advocates and reformers largely agree, though they vehemently dispute its cause. “I think what’s caused the current crisis is a denial of the fact that resources matter,” says Donna Cooper, executive director of Public Citizens for Children and Youth, a Philadelphia-area research and advocacy group.

But Mark Gleason of the Philadelphia School Partnership has declared that “it’s not about funds.” He argues that “Bartram was a dangerous school three years ago, and it’s still a dangerous school with less funding. It’s not a more dangerous school.”

The posture of the teachers union, widely perceived as parochial and hostile to change, has doubtless allowed reformers to paint it as the defender of a status quo that no one can rationally defend. But if the reform movement continues to push a radical plan for dismantling the district, it will turn potential allies into a unified opposition, and all of its proposed innovations will be distrusted rather than embraced.

The reform movement “has been singular in its focus in dismantling previously stable, strong institutions like public education…. What they’ve mostly succeeded in doing is marshaling forces against them,” says Helen Gym, a leader of Parents United for Public Education, whose three children have attended both traditional public schools and the Folk Arts–Cultural Treasures Charter School that she helped found. But this is a lesson that reformers and the movement’s conservative backers have been slow to absorb.

These days, Corbett is among the nation’s most vulnerable incumbent governors and is likely to lose to his Democratic challenger, Tom Wolf, in the 2014 elections. This is in large part because he has been unable to marginalize and blame Philadelphia for its problems. His cuts have hurt middle-class and poor schools across the state, but despite the crisis, the Philadelphia school district has attracted a new generation of middle-class families eschewing the suburbs for city life—a diverse constituency that state politicians will find it far more difficult to ignore, at least in the long term.

In June, Philadelphia’s schools confronted yet another budget crisis. In response, Corbett and Mike Turzai, the Republican majority leader in the State House of Representatives, demanded that the city’s legislative delegation vote to weaken public-employee pensions. The prize in return? Simply allowing the city to raise its cigarette tax in order to boost school funding.

“If Philadelphia Democrats aren’t going to be there for what needs to be done, then nobody’s going to be there for them,” warns Budget Secretary Charles Zogby, who presided as education secretary over the state takeover in 2001. “And they can go home and tell their constituents why they couldn’t get money for the school district.”

As the new school year stretches into its third week, those funds look likely to finally be approved, but the vote will be a tough one for Republicans. Turzai spokesman Stephen Miskin explains that Republican members view every dollar earmarked for Philadelphia as a dollar they can’t spend on their own schools. “What makes those kids more important than our kids?” Miskin asks rhetorically.

It’s a question that Philadelphia parents have been asking in earnest for years.

Read more from our special education issue

The Editors: “Our Public Education System Needs Transformation, Not ‘Reform’”

Kenzo Shibata: “5 Books to Build a Movement for Education Justice”

Dana Goldstein: “The Tough Lessons of the 1968 Teacher Strikes”

Michelle Fine and Michael Fabricant: “What It Takes to Unite Teachers Unions and Communities of Color”

Pedro Noguera: “Why Don’t We Have Real Data on Charter Schools?”

Diane Ravitch: “The Secret to Eva Moskowitz’s ‘Success’”

Gordon Lafer: “What Happens When Your Teacher Is a Robot?”

Lee Fang: “Venture Capitalists Are Poised to ‘Disrupt’ Everything About the Education Market” (web-only)