Edison meets document deadline

Despite recent financial difficulties, Edison Schools, Inc. has the go-ahead to open the 20 Philadelphia public schools under its control as planned today.

Edison turned over a majority of its financial documents Tuesday to school system officials, allaying some concerns about the company's stability and meeting the condition that allows it to manage its schools according to contract.

That condition was set last Friday when Paul Vallas, the newly-appointed chief executive officer of the school system, issued a demand to Edison for its financial statements, including an assurance that the company had the $40 million necessary for the schools' opening.

Last May, Edison faced an uncertain financial future when an anticipated $40 million loan fell through. The company was aided when investment firms Merrill Lynch and Chase Capital replaced the missing funds.

Vallas demanded the confirmation of the loans in addition to the fiscal year's audits and other financial documentation.

Edison spokesman Adam Tucker said that the company was not concerned about the demand and had complied willingly.

"We knew about this all along," Tucker said. "It was certainly not a problem."

Although Edison did not supply all the documents required, including the missing audits, Tucker said that the reports would come "as soon as they become available."

Maureen Garrity, spokeswoman for the school district regarding Edison, said that the compliance, though still incomplete, had allayed many qualms about the management company.

"Vallas is satisfied with the reports," Garrity said, adding that the reports "are currently being analyzed."

While the city has not set a deadline for the remaining financial documents, Garrity said that Edison has "agreed to provide the reports in a timely manner."

Even without the missing reports, Garrity said that Vallas had received "enough information to be unconcerned over [Edison's] stability."

"We're comfortable where we are," Garrity added.

Edison was contracted to manage the schools in April as a part of the Philadelphia School Reform Commission's plan to aid the city's ailing public schools. The move created the largest school redevelopment program in the country and included the privatization of 45 of the city's 264 public schools.

While contracts were not finalized until the end of July, Tucker said that Edison had prepared for the school year well in advance.

As a part of that preparation, the company had ordered several million dollars' worth of supplies they would need based on the Edison school model.

However, when the contract was finalized, the money promised from the city and state was far less than Edison had expected. They requested an additional $20 million -- $1,500 per student in the Edison schools -- for the school year, but in the end received only $880 per student.

Last week, the company cancelled its orders for a few million dollars in supplies.

"The supplies were supplemental," Tucker said. "They're materials we'd like to have, but they're not necessary, and [the lack of the supplies] won't affect the curriculum at all."

While Tucker mentioned that the retrieval of supplies had concerned Vallas, Tucker did not feel that the problem will hinder the city's relationship with the company.

"I think our error was in not informing [Vallas] of the retrieval," Tucker said. "I don't think it will affect us in the long run."

In yet another financial trial for the company, Edison stock value has been dropping since the April decision to grant Edison only 20 of the 45 total privatized schools. While the value had reached almost $22 in January, it plummeted to 22 cents per share earlier this summer.

At the close of the stock market yesterday, Edison stock had climbed to 73 cents per share.

The Philadelphia Inquirer also reported on Saturday that Edison has received warning that it could be removed from the Nasdaq stock exchange if its shares trade below $1 for 30 continuous business days.

Edison has 90 days from the time the warning was issued to pull its stock back up before being removed from the exchange.

Please note All comments are eligible for publication in The Daily Pennsylvanian.