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The Boston Consulting Group has identified up to 60 Philadelphia school buildings as potential candidates for closure and helped the district use the threat of outsourcing to extract $100 million in concessions from its unionized bus drivers, custodians, and other low-wage employees.

Those steps are just part of the far-ranging behind-the-scenes effort to help the beleaguered 146,000-student school system rethink how it does business.

The broad scope of the group鈥檚 work this spring are detailed in previously unreleased 鈥渟tatements of work鈥� obtained under Pennsylvania鈥檚 Right to Know law. The district later released a report with the firm鈥檚 sometimes-controversial analyses and recommendations.

The Philadelphia School Reform Commission the Boston Consulting Group in February as part of an effort to radically overhaul the district, which was plagued by poor student performance and teetering on financial collapse. The agency鈥檚 work has helped shape the district鈥檚 for the coming school year, its five-year financial plan, and a controversial 鈥渢ransformation blueprint鈥� unveiled by the commission in April.

In a recent interview, the district鈥檚 chief recovery officer, Thomas Knudsen, said that Boston Consulting Group to date had identified at least $122 million in savings for the district. 鈥淲e wouldn鈥檛 have gotten anywhere near that number without their help,鈥� he said.

Nevertheless, officials revealed July 6 that the district鈥檚 shortfall for the coming school year has to as much as $282 million鈥攎uch of which is expected to be closed through borrowing鈥攐ut of a total budget of $2.7 billion.

Documents and interviews make clear that the consulting group has been deeply involved in nearly every hot-button issue faced by the district, including expansion of charter schools.

But Mr. Knudsen, who is serving as acting superintendent, insisted that the consultants have been taking directions, not giving them.

鈥淚 don鈥檛 want this to be construed as if management took its foot off the brake and just gave the wheel to Boston Consulting Group,鈥� he said.

To date, the firm has been paid $4.4 million, all of which has come from outside donors.

In addition to the statements of work and summary report, another set of documents obtained July 6 by the Notebook/NewsWorks outlines the connecting Boston Consulting Group with the William Penn Foundation and the United Way of Southeastern Pennsylvania. The foundation has directly contributed $1.5 million and helped raise at least $1.2 million more to fund the work, and the United Way has served as a fiscal conduit for those funds.

In separate interviews, top leaders from William Penn, based in Philadelphia, and the United Way lauded the group鈥檚 work and dismissed the that the firm and the philanthropists supporting its work are part of a coordinated effort to privatize the city鈥檚 public education system.

鈥淭his was about getting the foundation laid for the next superintendent,鈥� said Jill Michal, the president and chief executive officer of the United Way of Southeastern Pennsylvania.

That new superintendent will be , who has headed up the Prince George鈥檚 County, Md., school district for more than three years.

The school reform commission, the district鈥檚 appointed school board, has put on hold a controversial Boston Consulting Group proposal to transfer management of schools to independent 鈥渁chievement networks.鈥�

For now, the group has a limited presence in the district; a scaled back team of consultants will continue to work in the district pending the formal start of Mr. Hite on Oct. 1.

Boston Consulting Group officials declined to be interviewed for this story, citing company policy.

鈥�40-Facility Problem鈥�

The Philadelphia School Reform Commission鈥檚 transformation blueprint proposes closing one-fourth of the district鈥檚 schools while dramatically expanding the number of students enrolled in charter schools.

Mr. Knudsen said the district must proceed with the next major step in that plan: closing 40 school buildings by September 2013. Behind the scenes, the consultants have been supporting that effort.

During May and June, the group was asked to develop new criteria for school closure decisions and to identify an initial set of 鈥�60 top candidates for closure,鈥� according to the firm鈥檚 Phase III statement of work.

Mr. Knudsen stressed that any criteria or potential targets are subject to revision based on public forums tentatively scheduled to begin this summer.

Boston Consulting Group, he said, 鈥渂egan the conversation that continued inside [district headquarters] that has now taken us to a public position.鈥�

The report on the firm鈥檚 findings and recommendations, released Aug. 1, contains detailed scenarios under which different configurations of schools might be closed in order to realize about $30 million or more in annual savings.

This past spring, the school reform commission voted to based on a 鈥溾�� developed under the guidance of a different consulting firm, United Research Services, based in San Francisco.

But district officials turned to Boston Consulting Group to get a 鈥渕uch more nuanced and sophisticated understanding of what is involved in closures,鈥� Mr. Knudsen said.

The statement of work asked the consultants to provide a 鈥渃lean, validated baseline of facilities, utilization, financial, and student-performance data.鈥�

That work led to a list of up to 60 schools to be considered for closure.

A final list of schools recommended for closure is expected to be made public this fall, he said.

鈥楾he Charter Question鈥�

The real value of the group鈥檚 鈥渉orsepower,鈥� said Mr. Knudsen, is the firm鈥檚 capacity to take a holistic look at how big issues like school closings and what he called 鈥渢he charter question鈥� are interrelated.

One major driver of the district鈥檚 facilities planning is a projection that as many as 40 percent of public school students in the city could attend charters by 2017.

If the charter-enrollment projection holds true, Mr. Knudsen said, 24 additional buildings will likely have to be closed between 2014 and 2017 to keep the district鈥檚 five-year financial plan in balance.

Critics say that shows the district plans to expand charters at the expense of traditional schools, and that the consultants are pushing that agenda.

But Mr. Knudsen said the group did not set the 40 percent target for charter enrollment.

鈥淲e had to make a set of assumptions for modeling purposes, and that鈥檚 what we did,鈥� he said, stressing that the group is just informing the district鈥檚 decisionmaking.

In the report, the firm recommended expanding the city鈥檚 program for converting low-performing district schools to charters as a cost-effective alternative to issuing new charters or adding seats to existing charters. The consultants also suggested that the district launch its own virtual high school to reduce parents鈥� reliance on Pennsylvania鈥檚 cyber charters, the quality of which they described as 鈥渘otoriously low.鈥�

The firm also examined whether charters up for this spring were merely drawing students from successful schools instead of furthering the commission鈥檚 goal of moving students from 鈥渓ow-performing seats鈥� to 鈥渉igh-performing seats.鈥�

鈥淧upil-level data show that charters often serve students who could have gone to district-operated schools in their neighborhoods that have similar academic performance levels,鈥� the consultants found.

Boston Consulting Group has also helped forecast what might happen if the district鈥檚 budget situation or commission policy were to change.

鈥淚f there are fewer [charter] conversions or expansions, then we will not close as many [district] schools,鈥� Mr. Knudsen said.

Option to Privatize

Despite the group鈥檚 intensive effort, the district is still facing a massive budget shortfall for fiscal 2013 remains, and the cumulative five-year deficit facing the district is still around $1 billion.

To bring the district鈥檚 books into balance, Mr. Knudsen and the commission will seek deep concessions from labor unions.

The first in that effort has been with the district鈥檚 2,700 bus drivers, mechanics, maintenance workers, and other unionized blue-collar employees, all of whom were facing layoffs last month.

But last month the School District of Philadelphia and SEIU Local 32BJ District 1201 reached a that averted the layoffs but resulted in significant concessions and work rule changes.

According to the documents obtained by the Notebook/NewsWorks, Boston Consulting Group provided a powerful sword to hold over workers鈥� heads: private vendors willing to provide and services for $50 million less than the district鈥檚 unionized workforce, plus a transition plan to make the shift to outside contractors for the coming school year if necessary.

鈥淲hat was necessary for us to do was develop the alternative to the current business model,鈥� Mr. Knudsen said. 鈥淚f we are going to end up privatizing, we needed an ironclad case that it was the logical conclusion to reach.鈥�