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His first school opened in September 1987, in an office-warehouse complex in Minneapolis. Symbolic of its unusual approach, the school was called Tesseract, a name derived from a children's tale by Madeleine L'Engle describing a "tesseract" as a fifth-dimensional corridor for traveling to unexplored territories. At this first Tesseract school, as well as those to follow, the principal was called an executive director, with all the authority that title implies. The number of specialist instructors was pared down. No art teacher. No phys-ed teacher. No science teacher. The aim was to push authority, accountability, and resources down to the classroom teacher. Although teachers made an average of $5,000 less than their public-school counterparts, they were encouraged to spend liberally on teaching tools.
If that was one reason Tesseract teachers willingly passed up fatter paychecks, the other came down to basic respect. They were used to being handed textbooks and told how to instruct; but here, teachers were set loose and asked to be the scientists in Tesseract's educational lab. Each was given a desk, a business card, a computer, and a phone. Their task? To take reams of educational studies and mold them for classroom use.
Grades were the first to go. Since studies show that children are primarily either audio, kinesthetic, or visual learners, each Tesseract student is tested and then given a Personal Education Plan (PEP). Parent and teacher huddle before the school year begins to discuss the child's needs, strengths, and weaknesses, and then agree on specific goals, both emotional and academic. They regroup three times during the year, revising goals and reviewing progress.
Textbooks became the exception rather than the rule. Frustrated with dry, lifeless teaching tools, Mike Erdman, a third-and fourth-grade teacher, developed alternatives like "Whole Math." Rather than start with a textbook swimming with fractions, Erdman begins with blocks or other "manipulatives" so his kids can feel and see the difference between a third and a half. Learning-disabled and gifted-and-talented children work side by side. "We start with the concrete, then move to the abstract," he explains. That philosophy also carries into English, where students pick from their favorite literature to learn rules about quotations or dangling phrases.
By September of 1988 EAI's students were outperforming national averages, and although expenses were worrisome, Golle was ready to expand. He opened his next school in Arizona. By late 1989 he had raised nearly $5 million through a series of three private placements. The problem was, he'd chewed through most of that to cover operating losses, and the goal of 30% compounded return to his 42 investors was ever more elusive.
One problem was expenses. Everything from teacher salaries to books was running higher -- 20% higher -- than budgeted. To head those expenses off, Golle raised tuition -- from $3,750 to $4,950. The result? Enrollments dropped 20%. But most damaging of all were the 1986 tax-code changes stripping limited partnerships of their favorable tax status. "It looked as if it were time to fold up the tent," Golle recalls.
But just as Golle readied to call it quits, he spotted an ad in a trade weekly. Dade County, one of the most-watched school districts in the country, was inviting proposals from education innovators eager to run some of its public schools. Golle figured he had an edge -- EAI boasted up-and-running schools, stellar results, and a cost-efficient management structure. For the next year, with the help of three bridge loans that raised $1.2 million, Golle recharted his company's course. Using the Dade County application as a prototype, he molded Tesseract for a public-school system. In June 1990 Dade selected EAI's plan and set the company on a new path. "EAI was the only applicant with a product we could see and touch," explains Frank R. Petruzielo, associate superintendent of Dade County.
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Nevertheless, even if the company succeeds in Dade County, or any public-school district, selling EAI won't be easy. Depending on the district, EAI will have to win over the hearts and pocketbooks of multiple buyers: the school board, the superintendent, as well as politicians, local business leaders, and parents.
"Out of 16,000 districts in the United States, we're betting 100 will try us," says Golle. District budgets range from $2 million to several billion; if Golle is even in the ballpark, he'll have a $250-million business in five years. Now he's talking with half a dozen school districts; a $30-million deal should close by early summer.
Golle is particularly interested in the handful of progressively minded states, such as Maryland, Michigan and Minnesota, where ground-breaking referendums permit the district to contract the management of schools out to vendors like EAI. Of course, he's also targeting customers whose plans might be foggy but whose needs are urgent. So he's packaging his educational product in three ways:
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Management Deals Where possible, EAI would take over the school's entire budget and manage a minimum of five schools to pick up economies of scale. Sticking to the national average, EAI will spend about $5,000 per child per year, but it will spend that money very differently from the average public school.
While the average public school spends 37¢ of every dollar on the student, Golle will spend 80¢. How? Administrative positions are cut almost in half. Stand-alone positions such as librarian, school nurse, and phys-ed instructor are rolled into the job of a classroom teacher. Food, janitorial, and other contracted services are put up for bid. Supplies, from desks to pencils, are bought at local discounters rather than expensive school-supply houses.
Golle hires union teachers, paying whatever the agreement calls for. However, to maintain the Tesseract system, waivers from the union are crucial. At the top of the list: the right to offer three teaching levels in the classroom and to let go of teachers who fail to perform. Having more teachers in the classroom cuts the teacher/ student ratio to 1 to 15, from a norm of 1 to 30. To keep costs in line, a master teacher is teamed up with a teacher's associate and a teacher's aide, most of whom are accredited professionals who are willing to accept less money in exchange for flexible work hours or graduate school credits. As for his right to fire poor teachers, Golle declares, "Like any good business, we need to reward star performers as well as weed out the weaker ones."
