Business and education: the partnership connection.

In September, thousands of students and teachers will return to the classrooms of the Los Angeles Unified School District, an organization facing a $400 million shortfall and a $600 million backlog in maintenance projects.

Budget-minded suggestions to shorten the school year faced stiff opposition from teachers, who would have faced an 8 percent salary cut on top of last fall's 4 percent reduction. Nor is help from the state likely to materialize -- the State Department of Education faces a $4 billion funding backlog for public school construction and maintenance. The state's school-age population is growing at the rate of 230,000 per year, and California needs new schools at the rate of one a day for the next five years just to keep up with the demand. Other states face similar difficulties as increasing enrollment combines with budget constraints.

In the face of this challenge, a growing number of schools across the nation are forging partnerships with industry.

Although public-private partnerships in education have been occurring for several years, new efforts are increasingly based on accountability -- the promise of lower costs, higher academic achievement or other factors.

Although total government spending per pupil has risen more than 500 percent after inflation since the Great Depression, education leaders began calling for corporate "investment" in public schools about 20 years ago. Many business organizations saw opportunities to influence the quality of future workers in the call for partnerships, and by 1990 more than half of all school districts in the United States had entered into public-private partnerships. These alliances involved approximately 2.6 million volunteers with an estimated value of $225 million -- an increase of 125 percent since 1986.

But as the number of partnerships has increased, their character has changed. A 1990 "Fortune" survey found that 55 percent of corporate leaders who had given money or in-kind donations said their contribution had made little or no difference. Because such contributions were largely born out of the need for educated workers and not out of pure altruism, the business community is increasingly looking for partnerships with built-in accountability.

Many education experts predict that private-sector involvement in curriculum, instruction, infrastructure and management will become crucial to providing needed resources, ideas and incentives for achieving educational excellence. Locally, partnerships could help trim Los Angeles Unified's budget without placing the cost-cutting burden on the backs of instructors.

The agreements, while sometimes unconventional, have saved millions of dollars. One partnership between five Minnesota school districts and a shopping mall will allow up to 500 children to attend fall classes inside the complex. The arrangement arose out of the state's open-enrollment policy, a statewide program that enables parents to send their children (and each child's share of state educational funds) to any public school they choose. Under the partnership agreement, classroom space is provided by the mall while maintenance and utilities are met by the developers, corporations and local businesses.

Although on-site schools offer benefits to working parents and their children, satellite campus programs like the Minnesota mall school have also been hailed by employers, who report substantial declines in employee absenteeism, tardiness and turnover. Last year, the American Bankers' Insurance Group reported an average company-wide absence rate over and above the benefits package of five days; among parent employees, the rate was only 1.3 days. Turnover was down as well -- company-wide it was 12.5 percent; among parent employees, it was 9 percent.

The Minnesota project will initially attract children of the 10,000 mall workers. The school will encourage parental participation and, like other employer-based schools, will remain open longer hours to accommodate parents' work schedules and provide child care, high-school work programs, and adult education. Approximately $8 million-$15 million -- the cost of building a single elementary school -- will be saved by the agreement.

Satellite schools currently exist or are planned for office buildings, an airport, a community college, hospitals and even a park-and-ride transit terminal. In Dade County, FL, officials estimate that $1 million is saved every time a satellite school opens, with an ongoing savings of approximately $50,000 per year at each site.

Other arrangements bring the private sector to a public facility. In Miami, South Pointe Elementary School has forged a partnership with Education Alternatives Inc. to administer and operate the campus. The firm plans to reduce administrative spending by 25 percent, enabling the company to reinvest 20 percent into the classroom and still make a 5 percent profit. Facilities and union staff are provided by the public school system; the curriculum by EAI.

Partnerships are not limited to trouble-free, "model" schools. Aware that many schools spend a disproportionate amount of time and resources on problem students, another private firm, Ombudsman International, contracts with more than 70 school districts to educate drop-outs. Boasting a retention rate of nearly 90 percent, Ombudsman educates students for $3,000 to $4,000 a year--enabling districts to keep up to half of the state funding they receive per student.

In Los Angeles, the potential for partnerships is great indeed. Agreements could enable the district to offer supplementary instruction and curriculum, and satellite schools could provide a major saving to taxpayers faced with the prospect of building hundreds of new schools.

The partnerships sweeping American education are providing some of the most workable solutions available to cash-strapped schools. Now, the time has come to bring these innovations to the Los Angeles Unified School District. By working with leaders in business and the community, officials can ease the district's financial crisis and promote educational excellence.

Anna David is a research associate with the Reason Foundation, a Los Angeles-based policy research organization. This article is adapted from "Public-Private Partnerships: The Private Sector and Innovation in Education," a study on public-private educational partnerships recently released by the Foundation. For a copy of the study or to find out more about the Foundation's work, call [phone].