Trying a new model for an old program

On a recent morning at St. Elizabeth's Head Start in North Philadelphia, Ashley Post, a first-year teacher freshly graduated from the University of Pennsylvania, clicked on her "listening ears" and patted her "thinking cap" as a room of 15 preschoolers imitated her every move.

Many of the children had been there last year, but most of the adults - including Post, the center director, the curriculum manager, and a Teach for America mentor - are new, along with many of the toys, books, furniture, and even the paint on the walls.

The changes are part of an initiative by Acelero Learning Inc., a New York City company that took over St. Elizabeth's this school year with a two-pronged goal: making money and providing quality education.

Though Head Start is best known as a federally funded child-care program for the poor, changes are afoot that worry some early-childhood advocates. In 1998, Congress passed a law that opened the door to for-profit operators; other changes last year could attract even more companies.

Acelero is the nation's first and so far only large-scale for-profit Head Start operator. Its chief executive officer, Aaron Lieberman, a Yale University graduate interested in the market-based education changes that have fueled the charter-school movement, says he believes he can turn a profit from one of the country's oldest antipoverty programs.

Since opening its first center in Camden in 2005, Acelero has expanded quickly. It now operates more than a dozen centers, in New Jersey, Nevada, and Pennsylvania.

Acelero entered Pennsylvania in the fall, taking over two centers in North Philadelphia, including St. Elizabeth's, after the YMCA lost its grant because of "recurring fiscal issues," according to the federal Administration for Children and Families, which runs Head Start.

The company also runs the education program at Frankie's World on Poplar Street, a center for children with medical needs.

Lieberman, who started Acelero to "do well" financially "and do good at the same time," has supporters. "They're trying to be very smart about delivering good services to children and families," said Yasmina Vinci, director of the National Head Start Association, an advocacy group.

Acelero has encountered problems, however, including a federal audit that accused it of overcharging the federal Head Start agency and inspections in New Jersey that found a worker had slapped a child and another had left children alone.

"It seems someone would have to look closely at how they're making money to make sure they're not shortchanging children or ripping off the taxpayers," said Janet Currie, a Columbia University economist who has studied Head Start.

Acelero is expanding as Head Start faces pressure to become more academically focused and competitive. A study last year found that achievement gains made by children in Head Start fade after they reach elementary school. That fanned criticism that Head Start is broken and should be cut.

In the fall, the federal government announced it was shaking up the 45-year-old federal program by putting 25 percent of Head Start grants up for bid every year.

"We want to send this message out that this is free and open competition," said Yvette Sanchez Fuentes, director of Head Start. A $7 billion program, Head Start enrolls 904,153 children in centers run by 1,591 operators. There are 35,253 children enrolled in Pennsylvania and 14,848 in New Jersey.

Lieberman, who grew up in Arizona, began working with Head Start as a senior at Yale majoring in English. He had spent summers working at a camp for disadvantaged children from New York City, where, he said, "you just saw kids make unbelievable gains and progress." In 1994, he taught in a Boston Head Start center while launching a nonprofit called Jumpstart, which hired college students to work as tutors in Head Start programs. In 2000, Lieberman left Jumpstart to pursue a goal of running Head Start centers.

Though they can't profit from the federal funding, operators can make a profit from states that pay for programs scheduled before and after the 31/2-hour Head Start program.

But Acelero hasn't yet proved it can turn a profit; it has lost $4 million so far. Lieberman said he hoped for an eventual profit of around 2 percent.

He said the money would come from "making things run more efficiently," such as by using voice mail.

Ellen Frede, codirector of the National Institute for Early Education Research at Rutgers University, consults with Acelero and said she was impressed with the quality of its centers.

"They improve the qualifications, and they improve the pay and the facilities," she said. "So given that, where are they cutting corners that actually matter to children?"

Kara Schultheis, a former Acelero administrator who left in 2007, said managers were paid well while line staff were paid market salaries. The pace was "unbelievably fast," leading to high staff turnover, she added.

A federal audit that Acelero has contested accused a Nevada subsidiary of inappropriately charging Head Start more than $430,000 for services, including nearly $20,000 for travel. Those costs should have been charged to the state-funded programs, the auditors said, which would have cut into Acelero's budget.

"Head Start is a very complex program," Lieberman said. "Many of the services we provide are Head Start-specific and don't have any relevance" to state child-care programs.

A review of the audit is pending. Lieberman said he expected Acelero to be exonerated.

State inspectors at two New Jersey centers reported finding children left unsupervised, skimping on food, and a teacher who had slapped a child.

Acelero retrained its staff after each incident, resolving the state's complaints, according to reports.

Sufficient food is always served at Acelero centers, said Rosa Thorpe, director of Acelero programs in Monmouth and Middlesex Counties in New Jersey. "When a child-safety issue is identified, staff is either terminated or suspended," she said.

In Pennsylvania, Acelero has a clean record, according to a spokesman for the state Department of Public Welfare.

Joel Ryan, director of Washington state's Head Start, said that although the violations were unacceptable, Acelero was not "an outlier."

If he were grading them, he said, "I would give them an 'incomplete.' "

Acelero is trying to take over several centers in Camden that would give it a monopoly over that city's Head Start services.

When Acelero arrived in Camden, the Rev. Mark Merrill, a local pastor and education activist, was skeptical: "Companies come in to take advantage of the city, to get the grants and the salaries," he said.

He ended up liking Acelero's plans so much, Merrill said, he now serves on its board. "Our goal is to get kids when they get out of Acelero right into a charter school," he said.

In addition to trying to make a profit, Acelero's leaders are intent on introducing education initiatives like those in primary and secondary schools. The NewSchools Venture Fund, which invests mainly in charter school networks, has also invested in Acelero, and one of its administrators is on Acelero's board.

Like his counterparts in the charter school movement, Lieberman wants to turn his Head Start program into one that measures outcomes, including assessments of literacy and math skills.

He has introduced a system of merit pay. Teachers who qualify get a token amount - $500 a year - based on performance reviews and whether their centers reached certain goals, such as enrolling more students. Eventually, teachers will also be rewarded for improving results on kindergarten-readiness tests, Lieberman said.

Nicolette Wilson, a single mother whose 4-year-old son, Christian, is in Post's class at St. Elizabeth's Head Start on North 23d Street, said she was pleased with what she had seen. Christian attended the center when the YMCA ran it, but Wilson said she had pulled him out because "it was depressing."

"The place looked abandoned. The lights didn't work. The teachers were unprofessional," Wilson said. This year, she reenrolled her son after seeing Acelero's changes.