Who's Getting Rich off ‘No Child Left Behind'? | Jackson Free Press | Jackson, MS

Who's Getting Rich off ‘No Child Left Behind'?

In a fenced-in complex of buildings sandwiched between Capitol and Amite streets, a small tutoring business is making big money. Gray & Associates, an education company owned by Terry Police Chief Juan Gray, made $1.3 million last year for tutoring a little more than 1,000 Jackson middle schoolers. The money came out of a $16 million pot funded by the federal No Child Left Behind Act of 2001, one of former President George W. Bush's most durable domestic legacies.

The landmark education law was a triumph for what some called the "standards and accountability" movement, a group of education reformers hoping to shake up unresponsive school bureaucracies by introducing the no-excuses, competitive attitude of private business. The law requires states to test students regularly and measure students' and schools' progress carefully, paying specific attention to minority groups.

"They shone a very bright light on the data achievement gap, which I think was absolutely necessary," said Susan Womack, executive director of Parents for Public Schools Greater Jackson. "We've not fixed that, yet, but we can't deny it any more."

If schools fail to meet annual academic progress targets, the law gives states the ability to institute significant reforms, like allowing students to transfer to better-performing schools and paying for private tutoring services after school. By requiring regular, high-stakes tests and tutoring at low-performing schools, No Child Left Behind created a bonanza for private companies. Tutoring, especially, became big business after 2001, and it's poised to get bigger. That growth is good for companies, but for students, it's had mixed results.

"There's a lot about No Child Left Behind that's good in theory that's not practical on the ground," Womack said.

Designing Schools

Mike Walters is the president of a multi-million dollar consulting business, but he wears the kind of ties that belie a long career in education—big colorful, blocky patterns of kids holding hands. Walters had already worked his way up the ladder to the superintendent's job in two school districts—Tupelo and Petal—when, in 2000, he founded JBHM Education Group with Gary Bailey.

Bailey is a principal with JBHM Architects, one of the largest architecture firms in the state and one of the state's go-to firms for designing school buildings. Bailey and Walters founded JBHM Education Group with the goal of helping schools plan better and develop more effective curricula.

"It was me and a little office in a closet, and I was supposed to help schools," Walter said during an interview in his corner office at JBHM Education Group's headquarters near LeFleur's Bluff State Park.

While the education consulting company started as a division of the architectural firm, JBHM Education Group left the nest in 2005. The JBHM moniker, with its opaque corporate sound but considerable statewide cachet, stuck out of convenience, Walters explains.

"We've just grown so fast, and ownership has changed somewhat," Walters said. "We still have the name because we were kind of branded with that name. That's who people know you by, and you just keep it."

JBHM's current ownership is barely different from its founding duo, though. Joining Walters as co-owners are Richard McNeel and Joey Henderson, both principals in JBHM Architects.

Walters' closet operation grew quickly. By the end of the 2002-2003 school year, JBHM was working in 11 schools. Last year, it was in 10 different states, from the southeastern U.S. to as far west as New Mexico. JBHM provided consulting to 225 schools in 130 school districts. A principal or superintendent consulting contract with JBHM typically runs about $100,000 per year, though districts often hire more than one consultant. Teacher coaching, another major part of JBHM's business, costs $1,500 per day. JBHM teacher coaches collectively worked roughly 9,000 days last year, Walter says, and those figures stand to double in the next two years thanks to federal stimulus money.

'A Very Limited Market'

When Walters and Bailey founded JBHM, they planned to target low-performing schools. In Mississippi, though, as in the nation, low-performing schools are also low-income schools. For a private company seeking to do business with a school district, these schools are doubly attractive—they need help, and they have money to pay for it.

School districts with high percentages of poor students receive extra federal money through a program called Title I. Federal laws like No Child Left Behind place some restrictions on how districts can spend Title I funds, like requiring that districts reserve 20 percent of their allocation for programs in schools that need improvement.

Last year, Jackson Public Schools received more than $16 million in Title I funds. This year and next year, though, the federal stimulus package will nearly double schools' Title I funding.

When JBHM began its work in low-performing schools, districts paid for JBHM's specially developed curricula, lesson plans, tutoring services and teacher training with Title I funds. But JBHM has expanded its reach to schools with smaller Title I allocations, Walters said.

"What we're finding is that there are kids that are not being very well served by school systems everywhere," Walters said. "So we're working in more and more 'good school districts,' trying to benefit the kids that are not being served well."

As its business has expanded, JBHM's focus has also shifted. This coming school year, the company is jettisoning two services that once made up the bulk of its work: curriculum development and after-school tutoring. Walters still believes in the value of the curriculum materials JBHM developed. In-house experts wrote lesson plans for every day of school, along with tests, homework and other activities.

"It was really powerful stuff, but you couldn't afford to pay that much for that level of service," Walter said. "For example, we spent millions of dollars developing science content. "That was not a good business model. We were customizing that content for each state."

Walters attributes his inability to turn a profit on curriculum to a weakness in No Child Left Behind. The federal law requires every state to establish standards and measure students' scores against those standards. But the law does nothing to coordinate standards between states, which means that curriculum writers must adapt their product to fit every state.

"Science in Mississippi is not science in Texas," Walters said. "Algebra in Arkansas is not algebra in Louisiana. So if you're going to develop these really structured instructional programs, then you have to redevelop them in every state that you're working in. And you have a very limited market."

With the cost of redeveloping lessons for each state, added to JBHM's already significant writing costs and schools' inability to pay a high price, the curriculum business was just not profitable enough, Walters said.

A 'Nightmare' Program

JBHM ran into another flaw in the law with its after-school tutoring services. One of the most significant changes ushered in by No Child Left Behind was its requirement that under-achieving schools provide after-school tutoring to boost students' performance.

Under the law, only private organizations could provide the tutoring, called Supplemental Educational Services. Moreover, every parent would choose a tutoring company for her child from a list of state-approved providers. These stipulations made double sense for Bush-ite education reformers: A school that is underachieving can hardly be expected to provide stellar tutoring, and opening public education to the rigor of the marketplace could only mean better service and more accountability, they argued.

Unfortunately, No Child Left Behind was sometimes vague where it should have been specific, and too narrowly prescriptive when it should have stayed hands-off. Schools that paid for tutoring services were low-performing, but to be eligible for tutoring, students at these schools also had to be low-income, not necessarily just low-performing.

As a result, the tutoring program narrowly targeted students who were unlikely to enroll or attend tutoring, according to Cindy Brown, vice president for education policy at the Center for American Progress.

"A lot of low-income kids who are behind often don't have very good study habits and aren't motivated to do better," Brown said. "They have attendance problems."

Walters said that Supplemental Educational Services became more trouble than it was worth for his company and the districts it served.

"It wouldn't work," Walters said. "The administration of that was a nightmare. Getting kids to attend was almost impossible. It was just such a problem, and we didn't feel like our clients were getting what they needed."

JBHM offered the tutoring program during the last school year, but it will not offer the service again, Walters said. In the future JBHM will focus its efforts on its consulting services: one-on-one coaching of superintendents, principals and teachers. Walters admits that the tutoring program was a mistake, both by his company and by the federal government.

"What it was about was allowing private companies to come in, this whole idea of giving parents more choice," Walters said. "It was chaotic and, quite frankly, I think it was ill-advised and ineffective."

Parental choice, while an admirable goal, is a difficult ideal to rely on, according to Albert Wilson, whose Genesis & Light Center provides tutoring in Jackson Public Schools.

"As far as us as vendors, our hands are kind of tied," Wilson said. "We don't have any direct dealing with the parents."

State and federal regulations forbid tutoring providers from directly soliciting business from parents, except at a yearly vendor fair. Wilson attends the vendor fairs, but he says that they are an ineffective way of reaching parents.

"The parents who need it the most don't show up," Wilson said. "The parents that need Supplemental Services the most are the parents that either are working mostly in the evening time or don't see the importance of it. They don't show up for PTSA meetings; they don't participate in a lot of school events; they're not active in the student's education."

In Jackson, 7,433 students were eligible for tutoring last year, but only 1,455 received services, according to district documents. That 20 percent participation rate is on par with the national average. And according to some policy analysts, even those who do take part in Supplemental Educational Services don't always show significant gains.

"Tutoring is good, but this was an entirely new program that they'd never tried before, to mandate tutoring and mandate that it be provided by private providers," said Gail Sunderman, a researcher at George Washington University's Center for Equity and Excellence in Education. Sunderman, who has published studies of No Child Left Behind and the SES program since the law's inception, believes that the tutoring does not support students' regular classes.

"The idea that (tutors) could improve achievement when the school systems couldn't was just based on fantasy," she said. "Years ago when Title I was first authorized, they had pull-out programs. And then research showed that pull-out programs were so disconnected from the regular curriculum that it became very fragmented for the students that were participating. Well, the same thing happens with Supplemental Educational Services. There's not a lot of coordination."

Cindy Brown at the Center for American Progress cautioned that the problems of SES are not inherent to tutoring.

"I don't like attacking the idea of tutoring," Brown said. "High-quality tutoring gets results for kids who are behind. We don't want to throw the baby out with the bathwater here. But if you have entities who see this just as a money-maker and don't run the program effectively, then that's a deuce."

An Oversight in Oversight?

There's no doubt that tutoring is a moneymaker for some companies. Jackson Public Schools paid $1.8 million for Supplemental Educational Services in 2007-2008, with $1.3 million of that going to Gray & Associates. Under federal law, tutoring companies must bill the school district at an hourly rate for the number of students that they tutor each day. States set a cap on the amount a company can receive for tutoring any one child, though. In JPS, that cap was $1,242 for 2007-2008.

During that school year, JPS paid Gray & Associates more than it legally could—based on enrollment numbers—for services at three middle schools, as revealed in a Jackson Free Press investigation two weeks ago. The discrepancies totaled more than $100,000. In addition, parents received selection forms from some schools with "Gray & Associates" already typed in as a "first choice" tutoring provider, a clear violation of parental choice.

Problems like these are a symptom of a program that does not allocate enough money for oversight, according to Sunderman.

"(SES) was in a sense designed as a way to circumvent districts, but because districts have to administer it, they've retained a major role in how it gets rolled out," Sunderman said. "And they have to pay for those administrative costs themselves. There's no money in the law to cover the administrative costs. Big districts hire additional people to manage the program. It's kind of a costly program."

Juan Gray blamed the apparent discrepancies in his company's billing on a misunderstanding. The state Department of Education only began to enforce regulations on billing for services and parental selection in the middle of the 2007-2008 school year, he said, while it had previously allowed companies to charge districts a flat rate.

"What happened was the state came in, and they changed the rules and regulations of how SES was going to be performed," Gray said. "When SES first started out, there was no real direction from the state on how the school districts were supposed to implement SES."

Quentin Ransburg, who oversees the Department's Office of Innovative Support, challenged Gray's account, though, saying that "fee for services" has always been the practice.

Albert Wilson agreed, saying that Genesis & Light always billed according to the number of hours it tutored each student.

Wilson also credited Royce Smith, the district's coordinator for Supplemental Educational Services since 2007, with enforcing the parental choice process.

"Mr. Smith was the one who actually helped initiate that and made sure that it was taking place, where the parent was driving who was picked, versus any other means," Wilson said.

Smith told the Jackson Free Press that he cannot comment without permission from Superintendent Lonnie Edwards and referred all calls to Edwards.

In spite of Royce Smith's efforts, evaluators from the state cited JPS for the 2007-2008 school year for lax oversight—both in the billing and selection processes. But the state also appeared reluctant to deal too harshly with the district. After reviewing JPS records for the tutoring program in September 2008, evaluators waited until June 2009 before delivering their findings to the district. In early June, Ransburg sent a strongly worded report saying the district had "misappropriated federal funds" and paid Gray & Associates in advance. Days later, though, the state sent out a second version only citing the district for its failure "to ensure that only eligible students received services." This second report also cited the district for the parent selection forms with provider names typed on beforehand, but it did not name a specific tutoring company in any of the citations.

Ransburg told the Jackson Free Press that the earlier document was a "draft" and an "internal work product." After reviewing their records more thoroughly, evaluators found the first document to be inaccurate, he said, without being specific. Ransburg referred further questions to department spokesman Pete Smith.

Pete Smith said that the district's disorganized records made it impossible for state evaluators to determine if JPS had paid Gray & Associates in advance or failed to verify the appropriate fee. Upon request, he provided by e-mail state figures for the tutoring program in JPS. Those state figures have their own discrepancies. District-wide, he said, 1,445 students received tutoring in 2007-2008. In a second e-mail, he gave enrollment numbers for each of the three providers who worked in the district: Gray & Associates, Genesis & Light and Kids Kollege. According to this second set of student numbers, though, a total of 1,578 students received services that year, not 1,445. At the $1,242 maximum charge per pupil, this discrepancy represents a possible difference in billing of up to $165,186.

The Jackson Free Press requested original documents with those figures on July 27 but MDE has not yet responded to the request. On Friday, July 31, the JFP asked Smith to explain the discrepancies, but he has not provided an answer.

Smith has hinted that MDE is understaffed for the substantial task of monitoring tutoring programs across the state.

"We have 152 school districts and many federal programs to monitor and limited staff and resources to perform the duties," Smith said in a July 16 e-mail explaining the department's nine-month delay in delivering its report to JPS.

Gail Sunderman says the burden of evaluating SES programs in every district is too much for most states, leaving room for abuse to go unnoticed.

"There's no quality controls," Sunderman said. "States are supposed to evaluate (providers), and states don't have the capacity to do it. It's a complicated process to evaluate them. If there's been any scrutiny of them it's come from districts, and particularly larger districts."

Indeed, the state normally contracts out its evaluation of private tutoring firms to other private organizations, according to Deputy State Superintendent Kris Kaase.

"We did hire a contractor to help us with that evaluation process," Kaase said.

Juan Gray, Underdog?

Juan Gray often portrays himself as an underdog. He paces the halls of Gray & Associates' Capitol Street headquarters with a hurried air. Showing off the rows of classrooms and introducing his small staff, which includes several long-time education professionals, Gray shows the visible pride of a someone who feels he has beat the odds.

"I'm a small fish in a big frying pan," Gray said. "I'm a small non-profit agency that has pretty much dominated the SES listings. Most of the schools that are in SES have always chosen our agency to come into their school district and make a difference."

Gray, who is also the police chief of Terry, founded Gray & Associates in 1988 to foster rural economic development. The company offered grant-writing services to help Jefferson County communities pull down federal money. In 2002, the firm started offering tutoring services just as No Child Left Behind began pumping millions into the market. Gray & Associates now offers job training and ACT preparation in addition to SES. Gray is building a day-care center next door to his offices, and he rents a back room in another building to a Mary Kay cosmetics entrepreneur.

Despite his dominance in the Jackson tutoring market, Gray has retained his underdog stance. He has sued the state twice, in 2006 and 2007, for removing his company from the list of approved SES providers.

"It was just a game," Gray said. "They'd been after me."

According to Pete Smith, the state regularly asks providers to reapply for approval so that it can review their qualifications.

Gray believes that he is being singled out, however, because the state favors larger providers like JBHM.

"They didn't expect a small black agency to be effective throughout the district," he surmises.

Both of Gray's cases were dismissed in Hinds County Circuit court on the grounds that the reapplication process was a discretionary act, thus making the state legally immune from suits over the process. Gray was not satisfied with the ruling, however.

"What happened was, I guess, because of their connections in state court, they kicked it out of state court," Gray said. Gray said that he is re-filing his suit in federal court. Calls for confirmation to his attorney, John Moore of Jackson, were not returned.

Gray maintains that the state has no reason to make him reapply for approval every year.

"We're the only agency on the approved list that has actually moved schools off the school improvement list," Gray says. "And we've moved a total of seven in five years."

While Gray repeats that claim frequently, other tutoring companies have also worked with schools that managed to shake off their low-performing designation. Mike Walters says that JBHM has helped many schools start meeting their academic progress targets, but he is less confident that tutoring services alone can effect that kind of transformation.

"We did, but it wasn't because of SES," Walters said. "I will never make that claim as a company. I thought that SES, even if done well—and I thought we did it well—was not effective."

Sandra Pryer enrolled her son in Gray & Associates' tutoring program at Siwell Middle School for the 2007-2008 school year. As she remembers it, her son benefitted from the extra help.

"I think it worked very well," Pryer said. "I think it was a very good program. ... Any opportunity I have to put him into an after-school program, I will definitely do that."

The state has not cited Gray & Associates for its work in Jackson Public Schools, Gray says, and JPS has not contacted him about any possible overbilling. JPS Superintendent Lonnie Edwards confirmed that the district has not contacted Gray about repayment. He would not say whether the district would seek repayment in the future.

"It depends on what the state department directs the district to do," Edwards said. "We're following the state's direction."

Gray is looking forward to working with the JPS again this year. "I really feel our program should be a model program for our state," he said.

See Also:
JPS Tutoring Flaws Not Unique July 29, 2009
JPS Cited for Handling of No Child Left Behind Funds July 22, 2009

Previous Comments


Y'all be sure to read Ward Schaefer's latest story about JPS and its No Child Left Behind funds.


Bailey is no longer with JBHM.


All, don't let these stories slip by you because they are complicated. Read them closely. No one else is reporting them, yet, because others don't have the documents that Ward obtained.


Ward's story was featured this week by the Casey Journalism Center. Congratulations!

Brian C Johnson

Architects and Police chiefs? Any educators involved in this business?


Congratulation Ward! Your story was very informative. Wmartin raises an interesting question; however, it wouldn't take long to spend a million dollars if you really developed individualized teaching plans, had small class numbers, state of the art teaching tools and qualified staff to deliver the educational product-good educators.


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