Aspire
Public Schools, a CMO headquartered in San Francisco, establishes and operates
public charter schools in California focused on providing low-income, urban
youth with a high-quality education that will prepare them for college. With a
current total of 10 schools, Aspire’s objective goal was to operate 100 charter
schools in the state while maintaining its credible image of consistent
improvement and delivering quality service. In addition, they also aim at
attaining sustainable self-sufficiency through exclusive revenue from administration
fees for running their Home office’s operations.
Despite
widespread recognition and ardent praise directed towards their model of
imparting education, Aspire’s financial situation and academic performance at
the time were far from optimal. Only two of their schools were barely meeting
the minimum API score requirements and decile rankings set by the state, while
astronomically high and disproportionately distributed facilities expenses
across their existing schools were resulting in an average net loss of 5% of
revenue per school. This was their prime concern and a specific objective was
to operate facilities at an average of 12% of revenues by ensuring that new
school facilities amount to a maximum of 10%. Moreover, the cost of running the
home office was proving to be very expensive, with personnel expenses
accounting for 70% of its budget. However, Aspire envisions increasing its
staff by 50% which would characterize a further increment. Rapid expansion with
a target of opening 35 schools by 2008 or less optimistically, 90 schools by
2013 coupled with philanthropic donations of 11 and 25 million dollars
respectively were seen by COO Gloria Lee as a plan to attain financial
stability by breaking even.
Management
at Aspire is currently poised with the lucrative yet complex prospect presented
by LAUSD to establishing their nascent presence in Los Angeles by opening the
first of their schools in southern California – A project that is estimated to
partially capitalize on an overwhelming demand of 130,000 prospective students.
While entry into LA’s school district is eventually imminent for Aspire to
develop a healthy alliance and stronghold in the state, it simultaneously runs
the risks associated with growing at an uncharacteristically fast rate. These
include the economic burdens of opening a new regional home office, compromising
on quality, sacrificing autonomy and adhering to an array of bureaucratic norms
prevalent in the district along with the volatile political landscape and
legislative issues that comprise of the daunting realities for schools in LA.
The
second alternative that management contemplates is gradual and controlled
growth of Aspire public schools within Northern California, largely influenced
by historical successes in San Francisco and Oakland. With a functional home
office already present in the region, increasing the number of schools under
its jurisdiction seemed to be an economical and operationally efficient model.
Also, owing to its stature and prowess in the region, this option would also
give Aspire the flexibility to independently operate these new schools as it
desired. After few years, once the region becomes saturated and when sourcing
charters becomes a significant challenge, pursuing growth inwards and down the
coast to find new opportunities would be the next step.
Another
option is to stall growth, refine and enhance their current efforts and in few
years when they are better prepared, revisit the prospect of entering Los Angeles. This would presumably entail upgrading the quality standards and
performance ranking of their existing schools by focusing exclusively on the
suggested five year improvement plans that were put in place, prior to
considering any expansion options.
On
evaluating the problems and opportunities that surround these three
alternatives, I have taken the decision to pursue the first option i.e.
accepting LAUSD’s offer to expand into Los Angeles, primarily because it aligns
perfectly with their long term vision. However, I have recommended a slightly
different approach for Aspire’s growth efforts in southern California. To begin
with, the target of opening 35 schools will be met over a suggested period of
10 years by 2013 as opposed to 2008. The reason behind this is to ensure that
they do not expand too fast which in retrospect, can have a detrimental impact
on the quality of their services. With this comparatively conservative growth
plan, Aspire will see an addition of 2 new schools per year till 2008 followed
by an addition of 3 new schools per year till 2013. In this way, the percentage
increase in the number of Aspire’s schools will never exceed 15% barring the
first year (2004) where it will be 20%. Also, these 25 new schools will be
composed of 15 elementary schools that will be opened initially, followed by 10
high schools respectively as the cost to open elementary schools is lower and
Aspire has a history of successfully operating them. This will provide Aspire
with time to further develop and perfect their model for high schools in the
future. This model will yield a projected net profit of $1,435,275 in year 10
(2013) for all the 35 schools cumulatively while the home office will see a net
profit of $266,332 as well in the same year. (Click on the spreadsheet below for forecasted calculations)
Analyzing this decision strictly from a qualitative standpoint, its potential benefits are not difficult to foresee. Firstly and in an obvious sense, it would be duly irrational for Aspire to surpass an ideal premium opportunity like this to make its segway into southern California. With its apparent domination in the north and going to the tune of its vision to expand throughout the state, penetration into Los Angeles is all but eventually inevitable. Moreover, it will provide Aspire with the chance to leverage its unique and highly sought after teaching style to several students from the region that are in dire need of their services. This will serve to enhance their credibility and presence in the community as well. While the several issues that await Aspire as a part of this project cannot be neglected, they will also put aspire in a position Aspire to test themselves on unfamiliar terrain – A challenge that if they overcome, will set them on a perfect course to achieving their much cherished long term vision.
In
addition to this, Los Angeles is expected to spend around $8 million on new
schools in the forthcoming years with about $50 million directed towards the
support of facility costs for charter organizations like Aspire. LAUSD also
seemed to suggest that several utility costs for Aspire-purchased land would be
covered too. As identified by Lee and Shalvey, the location of this project
would serve as a means of attracting a wider, ethnically diverse and greatly
talented pool of prospective recruits for teacher and principal positions. Based
on these possibilities, it is imperative that the decision to venture into Los
Angeles will be a promising and fruitful one for Aspire.
