Big-Name Consultants Greeted With Wariness

By David Nakamura
Washington Post Staff Writer
Sunday, June 24, 2007

Two dozen high-priced consultants have set up shop on three floors of the D.C. public schools' headquarters, wearing pinstripe suits, toting binders and BlackBerrys and using such corporate jargon as "resource mapping" and "identifying metrics."

They come from big-name restructuring firms, and the city is paying $4 million for their services this summer. The findings of the consultants, hired by Mayor Adrian M. Fenty (D), could have a large bearing on whether his plan to overhaul the troubled 55,000-student system is successful.

But to many school employees and activists, there is a depressingly familiar ring to promises from city leaders that the consultants will somehow work magic with their spreadsheets, databases and management-school theory. Over and over, D.C. school boards and superintendents have brought in consultants with consistently disappointing results.

"Lots have been hired, but it never goes anywhere," sighed Mary Levy, a lawyer with the Washington Lawyers' Committee for Civil Rights and Urban Affairs.

Levy should know. Six years ago, she was among a group of residents that helped London-based McKinsey & Co. prepare a five-year strategic reform plan for then-Superintendent Paul L. Vance. The plan was scrapped two years later when Vance retired.

"Making plans is not the problem," Levy said. "It's the follow-through."

Now McKinsey is back, hired this month by the Fenty administration to assess central office operations and develop a "program management office" to track reform initiatives. The firm has been paired with New York-based Alvarez & Marsal, which will examine how the D.C. school system is spending its $1 billion budget to identify savings and reprioritize spending patterns.

Additionally, KPMG, a Swiss cooperative, is helping D.C. Chief Financial Officer Natwar M. Gandhi fix specific problems related to incomplete records, unauthorized overtime pay and inadequate monitoring of federal grant money discovered in February.

As Michelle A. Rhee, whom Fenty nominated as school chancellor, takes over the system, the consultants will provide much-needed expertise during a time of institutional upheaval, mayoral aides said.

"It's a good way to know exactly where things are," said Victor A. Reinoso, Fenty's deputy mayor for education. "They're doing a fair amount of work in a four-month time frame and will provide a level of detail you might not have otherwise."

During their first two weeks on the job, the consultants have tried to immerse themselves into the culture -- and receipts -- of the school system. McKinsey consultants recently held a focus group session with a handful of principals to ask what barriers stand in their way when dealing with the central administration.

Alvarez auditors have scoured financial records and arrived at a few early findings. Among them: The system is failing to receive $7 million to $9 million per year in federal funding it is entitled to because it is not collecting and submitting forms for all of the children who are eligible to receive free or reduced-price school lunches, said Carrie Stewart, a senior director at Alvarez who is leading the D.C. consulting team. That's an amount that could pay for approximately one additional teacher per school, Stewart said.

"We go down to the most granular level," Stewart said. "Most people around the system can easily identify the same problems. But if it was easy to fix and people understood why, it would have been fixed a long time ago. The issues within the system are in so many areas across the system, the only way to actually fix it is to get to the deepest level possible."

Alvarez, which is working with the D.C. schools for the first time, has drawn mixed reactions for its performances in other jurisdictions. Known for turning around the finances of troubled private companies, including Timex, Alvarez first entered the public school arena in St. Louis in 2003, when the firm took complete control of the system. Alvarez employees acted as superintendent and chief operating officer.

The company declared that the St. Louis system was facing bankruptcy, with a deficit of tens of millions of dollars, and it slashed costs by laying off central office staffers -- including the curriculum department -- outsourcing food services, rerouting buses and closing school buildings. Alvarez left a year later, declaring the system on the way to recovery, but the schools were taken over by the state of Missouri this month.

"They took a broad-brush approach, and the cure was worse than disease," said Peter L. Downs, president of the elected St. Louis Board of Education, which has been replaced by the state-appointed board.

Alvarez officials, backed by other St. Louis board members, defended the company's work, saying it laid out a path to financial recovery that was not followed after the firm left town. They point to New Orleans, whose school system Alvarez took over in 2005, just days before Hurricane Katrina struck, as a success story. The system recently had its first "clean" audit in years.

"People may debate what actions we took, but they know we get things done," said Sajan P. George, managing director at Alvarez who is still working with New Orleans and also is involved in the D.C. effort. "Anytime you make this kind of change, you're going to have opposition. You can't move the needle this far or this quickly without having your critics."

McKinsey also has its doubters. The 20-page final report prepared in 2001 for Vance was completed within three months and was backed up by binder after binder of research. Vance hired a McKinsey employee, Adam Porsch, to implement the recommendations. But the plans were scrapped when Vance retired in 2003 and Porsch left for Yale Law School.

Steve Seleznow, Vance's former deputy, who now works for the Bill and Melinda Gates Foundation, said implementation of the McKinsey report got sidetracked by a budget crisis, during which Porsch was transferred to other duties. A McKinsey spokesman declined to comment.

To some in the D.C. system, the problem with consultants is that they use a one-size-fits-all corporate model that does not account for unique challenges in different school districts and clashes with education culture.

"At a certain level, it requires organic solutions and approaches," said Jeff Smith, a former D.C. school board member who was part of a team that considered hiring Alvarez last year but decided not to. "That type of outside-in approach does not allow for that."

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