Education: Schools Inc takes charge: Lucy Hodges reports on a US city's radical attempt to place its whole education system in private hands

Schools in Britain are constantly being urged to further their links with business, and to include more industrialists on their governing bodies. Now, in the United States, the relationship between schools and business has been taken a dramatic stage further: the Minneapolis school board (education authority) has hired a private consulting firm to do the chief education officer's job of managing the city's 79 schools.

This most sweeping move so far towards private management of American state schools has been met with banner headlines, enthusiasm, concern and, in some cases, anger.

Public Strategies Group Inc, the firm that will be responsible for the schools, specialises in helping public organisations to improve their services. The company, which has 10 staff, will manage the city's dollars 384m ( pounds 258m) annual education budget, and work with teachers and others to redesign the education of Minneapolis's 44,500 pupils.

'I believe that we are at the front edge of a whole new movement, a whole new wave of reform,' says Babak Armajani, chief executive officer of Public Strategies Group. 'In Minnesota, we call it enterprise management; in other places, they call it reinventing government. This is part of a worldwide movement to make organisations serve the customer.'

Other US cities have hired outside consultants to run schools, but on a smaller scale. Last year Baltimore asked Education Alternatives Inc, another Minnesota-based company, to take over nine decaying schools, and the same firm has been running a primary school in Miami, Florida, also in a blighted inner- city area.

Early results in Baltimore have been encouraging. Test scores and attendance have improved and the schools are free of crack and graffiti.

The signs are of a bandwagon beginning to roll. The Minneapolis arrangement has been popular, because almost everyone involved believes they will benefit. Any money saved through running the system more efficiently will be ploughed back into education, not taken as profit by the consultants, as happens in Baltimore.

Peter Hutchinson, president of Public Strategies Group, will serve as superintendent (chief education officer) if the state, as expected, allows someone without educational credentials to head the school district. He would then be accountable to the publicly elected school board, which will continue to set education policy.

An elaborate process of public consultation is taking place, with the Public Strategies Group sounding out local opinion by riding school buses and talking to dinner ladies and principals. 'Organisations are often created as though the people within them aren't capable,' says Mr Hutchinson. 'I have found that if you assume the opposite - that people are capable - and design systems around those capabilities, you can get amazing results.'

Many are pinning their hopes on the project succeeding. State education in the US, particularly in the cities, is arousing profound disquiet, because of high drop-out rates, falling test scores and children succumbing to lives of drugs and violence. Teachers' unions support the Minneapolis initiative, and the schools and the city's new black woman mayor are enthusiastic. A black civil rights organisation, the Urban League, has protested on the grounds that not enough has been done to find 'non-traditional' candidates to fill the post of superintendent, but it failed to win an injunction against the school board.

In Minneapolis, where more than a third of the school population is black, there is anxiety about the widening gap between the performance of black and white children. 'We have an African-American population that is failing,' said Gary Sudduth, executive director of the Minneapolis Urban League. 'I want to see someone put together a plan to close that gap.'

Why do so many believe that the private sector can succeed where highly trained bureaucrats failed? One reason may be that Minneapolis knows and likes Mr Hutchinson: earlier this year he was brought in by the school board to sort out the system's finances. 'He has built trust and credibility with people over the past eight months,' said Barb Nicol, the board's spokeswoman.

Another reason may be that the company's remuneration will depend on stringent school performance targets being met. These will cover such items as test scores, staff performance and improvements to the curriculum. Mr Hutchinson will be paid only if the targets are met.

The experiment will be carefully observed. 'Mr Hutchinson may bring additional financial and managerial expertise,' said Michael Casserly, executive director of the Council of Great City Schools, based in Washington. 'He will look at the system with a fresh eye and be more willing to question the status quo.'

(Photograph omitted)