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The Invisible Hand: Big Business and Chicago School Reform

by Dorothy Shipps - 1997

Business influence in public school policymaking has been much noticed but little studied at the local level where policy is implemented. This article examines Chicago’s governance reforms of the past decade as one case of corporate influence, clarifying how local political institutions and corporate organizational resources facilitated and shaped that involvement and the resulting school governance reforms. A wider variety of corporate influence patterns than is typically acknowledged is suggested by this case where corporate associations were involved in both policymaking and policy implementation. When corporate activism is accounted for, Chicago governance reform is seen primarily as replacing professional control with modern management techniques and structures, and only secondarily as the revitalization of democratic governance.

Business influence in public school policymaking has been much noticed but little studied at the local level where policy is implemented. This article examines Chicago’s governance reforms of the past decade as one case of corporate influence, clarifying how local political institutions and corporate organizational resources facilitated and shaped that involvement and the resulting school governance reforms. A wider variety of corporate influence patterns than is typically acknowledged is suggested by this case where corporate associations were involved in both policymaking and policy implementation. When corporate activism is accounted for, Chicago governance reform is seen primarily as replacing professional control with modern management techniques and structures, and only secondarily as the revitalization of democratic governance.

In June 1995, the state legislature of Illinois enacted a reform law for the Chicago Public Schools that gave sweeping new powers to a school district management team whose titles read more like those of a Fortune 500 Corporation than an urban public school system. Replacing the General Superintendent are a Chief Executive Officer, a Chief Financial Officer, a Chief Operations Officer, a Chief Purchasing Officer, and a Chief Education Officer. This team, directly appointed by the mayor of Chicago, works with a new, five-member board of trustees, also mayoral appointees. Together they have authority to determine which schools require intervention; to dismiss, lay off, or reassign any and all personnel in them; and to dissolve elected Local School Councils (LSCs). They are also empowered to cut costs, privatize work usually performed by employees, and abrogate many collective bargaining agreements.1 (Law Department, 1995; Lawyer’s School Reform Advisory Project, 1995).

Seven years earlier, another school reform law had legitimated a governing strategy that appeared quite different. The Chicago School Reform Act of 1988 has been referred to by observers and analysts as an experiment in social activism (Kyle & Kantowitz, 1992; O’Connell, 1991), “people power” (Moore, 1992), community-based “egalitarian pluralism” (Hess, 1993), or democratic localism (Rollow & Bryk, 1993). Historians and policy analysts agreed that it was an example of “radical” decentralization in school governance (Finn & Clements, 1990; Katz, 1992; Kirst, 1990). It had taken community control further than any previous urban experiment by making parents and community members the statutory majority on each of about 550 Local School Councils, giving them power to hire and fire the school principal, determine the school’s educational priorities, and approve the spending of state Chapter 1 funds eventually amounting to about $500,000 per elementary school and $850,000 per high school.2 (Hess, 1994a, pp. 209-210).

Striking differences in the allocation and use of power seem to distinguish these two laws. To some, their successive enactment has suggested a case of one governing strategy—decentralization—being cast off for another more “integrated” form of governance (Wong, Dreeben, Lynn, & Sunderman, 1997). To others the 1995 law signifies a political betrayal of grass-roots and foundation initiatives (Bradley, April 30, 1997). This article clarifies how Chicago’s 1995 school law is linked to the 1988 law through the corporate business community’s involvement in both.

Corporate business associations have been key actors in Chicago education politics for much of the last century, and continue to be a potent force in recent reforms. The latest reform laws can be traced to a resurgence of corporate activism that began shortly after the death of Mayor Richard J. Daley, when local bankers and other corporate business association leaders sought to restructure financial control of the system. This led them to an intensive, unilateral effort to rationalize and decentralize central office operations between 1980 and 1984. Discomfited by central office resistance to their advice and support, in 1987 they invited other civic and community groups to form a cross-sector coalition to restructure the school governance system. The unlikely coalition ultimately wrote, lobbied for, and helped implement and interpret the resulting law. Leaders and staff of these same business associations eventually developed a critique of the 1988 law, which in turn informed their participation in drafting the 1995 law. When the transition between laws is viewed in this light, it reflects a refinement of long-standing corporate concerns rather than a pendular reaction from one reform strategy to the next (Downs, 1972).

This article discusses the governance consequences of corporate business involvement; others have documented the consequences of these reforms for the people who work in schools (see for instance, Bryk, Easton, Kerbow, Rollow, & Sebring, 1993; Sebring et al., 1995, 1996). The new governing system forged in these two laws links business to the fate of system wide bureaucrats and political agents, while it simultaneously links parents to the fate of principals and teachers in schools. Chicago school reform of the last fifteen years is misconstrued without an understanding of how corporate business has influenced school politics to help create these new alignments. And in turn, the Chicago case sheds light on the broader national resurgence of corporate activism in the policy arena of education.

School reform activism by Chicago’s community-based advocacy organizations and their loose and temporary allies, neighborhood and church-based groups, has been analyzed at length (Hess, 1991, 1993; Katz, 1992; Kyle & Kantowitz, 1992; Moore, 1992; O’Connell, 1991; Rollow & Bryk, 1993). This frequently recounted popular mobilization prior to the 1988 law is significant because it differentiates Chicago’s reform experience from the politics of reform in other urban school systems. The community advocates who made common cause with organized business in 1988 got powerful allies and achieved substantial benefits. Their constituency, parents and community groups, became school-level policymakers. But the price was high. The reform of 1988 empowered parents and community members as the dominant voice on each school’s LSC, but simultaneously weakened their influence as citizens with interests in the system of schools serving all of Chicago’s children. Instead, that voice was left to corporate business in 1988, formally guiding systemwide policy through its influence on an oversight authority, and helping to shape it informally with its extraordinary resources. The view of the two reforms that emerges when the business role is understood focuses less on the growth of parent power and democratic revitalization than on the replacement of centralized professional control with decentralized business management.

Explaining how all this came about shows how the reform of urban school governance is shaped by the history-dependent institutions of city government. It also demonstrates how corporate interests in public education are shaped by business association rules and roles. While it has been frequently noted that corporate influence is often manifest through school board membership and adopt-a-school and other special programs, these forms of influence are increasingly overshadowed by the systemwide restructuring strategies of organized corporate groups. The Chicago case demonstrates that this seemingly new form of corporate influence in education has a long and vibrant history.


Business mobilization in Chicago during the last two decades is important because it reflects a common (and recurrent) national theme: remaking the structure of the school system into the reflection of an up-to-date corporation (Tyack, 1993). As they did in the early years of this century, corporate associations across the United States have once again focused their managerial resources and political clout on school policymaking, influencing the debate about alternatives to the current system while developing agendas for systemwide change, even though they have only marginally increased their financial contributions to public schooling (Mazzoni, 1995; McGuire, 1990; Shipps, 1995).

In 1990, Carol Ray and Roslyn Mickelson estimated that the publication of A Nation at Risk had already been followed by more than 300 state and national business reports and commissions assessing—and usually flunking—the public schools. In 1989 the National Business Roundtable (NBR) began a campaign to encourage its state and local affiliates to work with state governors in an effort to radically restructure the nation’s public schools, warning them to expect no less than ten years of sustained effort (NBR, 1990). The National Alliance of Business (NAB, 1989), the Education Commission of the States (Newman & Whitacre, 1990), and the National Business Roundtable (1988, 1989, 1990) have all written and disseminated “how-to” pamphlets for chief executive officers (CEOs) and business groups interested in influencing school policy in the direction of corporate restructuring. By 1996, the Roundtable, the NAB, and the U.S. Chamber of Commerce had agreed to a common agenda of standards-based reform, urging their members to donate only to school programs that raise standards and increase student achievement (Lawton, 1996).

Such reports persistently draw parallels between good business practice and good schools and their prescriptions are widely repeated. In 1985, Albert Shanker wrote about their growing influence in his weekly New York Times column:

If history repeats itself, professors of educational administration will embrace the new philosophies of [business] management. Students now preparing to become principals and superintendents will be given a totally new outlook on how schools should be organized. Soon we’ll be looking at current school practices in the same way that “scientific” industrial managers looked at the old-fashioned practices described by Dickens.

Mr. Shanker was hardly alone in supporting a corporate model of public school management. A 1995 survey of the forty-seven largest school systems revealed that district leaders rated business the most helpful source of support their systems received, more helpful than colleges or advocacy groups, government agencies or elected officials, the press or foundations (Casserly & Root, 1996).

This policy influence, coupled with federal encouragement and local privatization agreements, has generated a new group of corporate entrepreneurs intent on providing core instructional services to restructured public schools. The White House initiated the New American School Development Corporation in the late 1980s to raise private money for design teams expected to “reconceptualize” education. More recently, the Clinton administration’s controversial National Goals 2000 plan, and its accompanying National Skills Standards Board, was significantly shaped and supported by corporate allies who helped to overcome conservative objections to “big government” interference. The Roundtable’s 1995 recommendation to refund Goals 2000 underscored their support (Martin, 1996, pp. 47-51). Such arrangements have encouraged the growth of private corporations like the Edison Project of Whittle Communications, Educational Alternatives, Inc., and Public Strategies, Inc. They all demonstrate how corporate entrepreneurship has called on its special access to capital and political connections to blur the boundaries of public and private management of schooling (Edison Project, 1993; Schmidt, 1994; Walsh, 1993, 1996).

Broad national trends and changes in expectations for schools drive much of the corporate effort to restructure public schooling. The list of changes is currently headed by concern for U.S. economic competitiveness, but also includes the discrediting of desegregation, affirmative action, and compensatory programs that have been the public policy response to the problems of urban education for the past twenty-five years. Only in the last decade and a half has a renewed interest in economic investment begun to replace the focus on compensating for inequities that once justified school reform plans. Now corporate executives and national politicians routinely describe the public schools as potential engines of economic development (Shipps & Menefee-Libey, 1997). For their part, corporate entrepreneurs are poised to take advantage of the market for instructional and management services that is expanding as a result of these conceptual changes.

Yet public schooling in the United States is subordinate to state law and under local control. To understand how corporations influence public schooling, it seems sensible to examine that influence locally. Moreover, studying urban corporate activism can clarify how political institutions of cities might mediate the larger forces of global competition and federal or state mandates (Ferman, 1996). As in other U.S. cities (e.g., Los Angeles, Pittsburgh, Charlotte-Mecklenberg, Milwaukee), Chicago’s corporate power structure has used its political and organizational resources to demand and envision, even to help implement, comprehensive governance changes in public schooling (Jones, Portz, & Stein, 1995; Menefee-Libey, 1995; Rigdon, 1995; Smith, 1995). Whether that local corporate influence on urban school policy differs from expectations based on national trends is an empirical question.

The Chicago case presents an opportunity to examine how this local corporate involvement occurs. What resources did business bring to school policy formation? How have Chicago’s history and political institutions encouraged and constrained corporate activism? How has corporate mobilization influenced the recent course of system change? As it turns out, institutional strengths—the extraordinary organizational resources of Chicago’s corporate business groups, their long legacy of intervention in the governance and organization of the city’s schools, and the reliance of the city’s mayors on corporate support—help to explain the role of corporate business in Chicago, and suggest lines of similar research on the phenomenon elsewhere.


In analyzing Chicago’s business involvement between 1979 and 1995, I acknowledge that a city’s elected officials together with its business, labor, nonprofit, and advocacy groups must provide the collective resources necessary to sustain large-scale reform in schooling, accepting that wholesale change is unlikely to be initiated or sustained from within a school system. I borrow broadly from institutional analysis (March & Olsen, 1989) and specifically from corporatism (Streeck & Schmitter, 1985) but begin with some sturdy pluralist observations about corporate business influence (Lindblom, 1977). I aim to illuminate the business role in building and maintaining the political capacity for urban school reform, clarify how it came about in Chicago, and explore the extraordinary leverage organized business can have in school policymaking.

Basic assumptions about the influence of business interests in pluralist democracies that were forcefully articulated by Charles E. Lindblom (1977) undergird my analysis. His assumptions are that corporate business enjoys advantages over all other interest groups because it is organized before an issue calls up the need, it has access to the financial wealth of corporations, and it has easy access to political decision makers (Redner, 1993). Accepting his observations about the extraordinary resources of organized corporate business and its potential for policy influence suggests that when business becomes involved in school policymaking, we are wise to study its role in the outcomes.

Yet Lindblom’s assumptions are an insufficient guide to research because they provide no encouragement to study the variations of corporate involvement in different political cultures at different times (Head, 1993). As David Vogel (1989) and others have clarified, corporate influence is neither monolithic nor invariant; instead it fluctuates over time and has different manifestations in divergent issue areas. Because they embrace variation and history-dependency, institutional perspectives observe what pluralist perspectives ignore. Organizations that embody political resources also create the motives and will to use them; institutions create rules and obligations that govern political action; and history itself has many possibilities for maladaptation (March & Olsen, 1989). These observations suggest ways to augment the resource and opportunity approach of pluralism with queries that seek to understand how extraordinary resources affect corporate business as a school policy actor, and how its actions are influenced by changing political institutions.

To address these issues, I adopted some (liberal or neo) corporatist arguments about “private interest” government made by Wolfgang Streeck and Philippe Schmitter (1985). Their version of corporatism asks two kinds of questions about the variation of private interests in public policymaking. Reworded for education analysis they are: How do local political institutions affect business access and willingness to engage in school policymaking, and what are the organizing properties of business groups that enter the public school policy arena and remain involved through implementation? By taking seriously the act of organizing, this version of corporatism focuses attention on the institutional and organizational structures and procedures that shape involvement rather than on the motives of individual business leaders or the deterministic effects of economic relationships. It encourages thinking of business associations as creatures of time and history that slowly develop their legitimacy in social policy over a relatively long period of negotiation, activism, and even failure. Corporatism also attends to the business role in policy implementation.

Integrating these elements into a synthetic framework for analysis meant documenting the organizational and political resources that corporate business brought to education policy influence, including their access to policymakers, their cohesiveness, their capacity for credibly engaging school policy debates, and the legacy of educational engagement inherited by current business groups. It also meant discovering how these structures and resources were shaped by local political institutions. Finally, it meant clarifying the extent to which state agencies, or politicians in Chicago or Springfield, actively negotiated school policy with business groups and whether they created an ongoing role for corporate business in the interpretation and implementation of policy.

As it turns out, weaknesses that have been found in corporate cohesion and influence at the national level (Martin, 1995, 1996) are among the strengths of Chicago’s corporate businesses. In social policy, Chicago’s corporate businesses have long had an elite business association with sufficient status and political influence to garner the support of nearly all others. By 1986, that overarching association had decision-making processes designed to support internal dissent while maintaining a unified public voice, and it had developed internal cohesion and member loyalty sufficient to commit to collective action despite the reservations of individual corporate leaders. Chicago’s corporate leaders also have a long history of collaboration with the local Democratic machine and its successor mayors, in addition to enjoying the support of Republican politicians statewide. The mayor of Chicago has always had a strong influence on school policy (he or she has long appointed the school board, for instance), and organized business has been a crucial part of the mayor’s governing coalition. Business’s recent role in city politics has been shaped by nearly fifty years of highly centralized government and of racial segregation that is among the most persistent in the nation. Each of these structural and institutional factors has reinforced the public policy advantages that Chicago’s corporate business associations share with all others, and serves to make the Chicago story a cautionary tale.


Primary data used for this analysis are interviews and documents collected between 1991 and 1993 for a case study of business involvement in the 1988 reform (Shipps, 1995). Lengthy, semi-structured interviews of twentyfour prominent executives (chief executive officers, chairmen, occasionally their designates), fourteen business association staff and consultants, ten community leaders, and eight school leaders are core data. Informants were chosen only when their involvement in the 1988 reform or its antecedents could be corroborated by two or more sources. Fifty-nine percent were white, 30 percent were African-American, and 11 percent were Hispanic; 81 percent were male.

Queries focused on understanding the political, organizational, and financial resources of the organizations through which corporate executives spoke on school issues. I sought to map the development of their interests in public schooling, and the alliances and disputes among business groups and between business associations and other groups. Informant testimony was augmented by a review of newspaper and other documentary sources between the years 1968 and 1996, and further clarified by archival research that included business association meeting minutes, correspondence, and internal reports obtained from the Urban League Archives at the University of Illinois at Chicago. The voluminous secondary historical and political literature on Chicago schools has been used to corroborate and collocate primary data.

My analysis cannot assess the ultimate effectiveness of corporate influence. Instead, I aim for an understanding of how business sought influence on school reform between 1979 and 1995 and whether the city’s most recent reform laws reflect the interests and activities of elite business association representatives. I begin by describing the organizational strengths of Chicago’s corporate business associations and legacy of school activism inherited by current business association members. Next, I show how their solution for the troubles of the school system evolved over the last decade and a half in the context of a transition from machine governance to a black-led reform movement, and back to control of the school system by city hall. I then raise questions about the impact of this kind of business involvement on democratic governance in Chicago’s public schools. Finally, I offer some observations on studying the current wave of business activism in urban public schooling.


Chicago’s recent reforms are simultaneously a response to chronic concerns about poor performance and the most recent manifestation of a long struggle for control of the city’s public schools. The basic facts include decades of declining enrollments accompanied by rising proportions of poor, bilingual, and handicapped students and a crumbling stock of buildings with attendant increases in the costs of education. In the 1970s and 1980s widespread dissatisfaction with Chicago schools was solidified by a financial crisis, encouraged by educators who appeared indifferent to calls for change, and spurred by documentation of poor academic performance (Moore, 1985), high dropout rates (Hess & Lauber, 1985), violations of state regulations (Chicago Panel on Public School Policy and Finance, 1988), and a decline in low-skill manufacturing jobs in the city (Commercial Club, 1984). The struggle over how best to control and shape the city’s schools has engaged many organizations over the last century, and business associations have been among them as soon as they were formed.


The business side of the coalitions that negotiated the 1988 and 1995 school reform laws included a family of four related associations. Each of the three younger associations was founded and is largely funded by the Commercial Club of Chicago, one of the city’s oldest business clubs. The Club began in 1877 and it remains, an elite institution. By the early 1990’s, it had grown to include 275 leaders of the city’s top industrial, commercial, and financial institutions (e.g., Commonwealth Edison, First National Bank of Chicago, Helene Curtis, Inland Steel, Sears, Baxter Healthcare, United Airlines) as well as the heads of the city’s main philanthropic and civic institutions (e.g., MacArthur Foundation, Chicago Urban League). In addition, the mayor of Chicago and the governor of Illinois have been ex-officio members of the Commercial Club for about twenty years.

Almost as soon as it was founded, the Club became an important venue through which its members pooled their resources to develop and influence legislation on the organization and control of the nascent public school system (Cooley, 1912; Johnson, 1977). By its fifth year, it had founded one of the city’s first vocational education schools; within a decade it was co-sponsoring legislation to centralize, bureaucratize, and hierarchically manage all the public schools; and by the middle of the Depression it controlled the budget and financing of the school system (Herrick, 1971; London, 1968; Wrigley, 1982).

In much of this activity, the Club formed temporary alliances with rival business associations and sometimes with professional associations or civic groups, but its consistent adversaries were the many teachers’ associations, chief among them the Chicago Teachers Federation (CFT) (Herrick, 1971; Peterson, 1985; Wrigley, 1982). Eventually, the Club was to absorb many of its rival business associations; later still, it would miss the active resistance of the teachers’ union. But in the early years, its school policy making activities were hotly contested.

The cumulative effects of mayoral corruption and unpaid taxes had plunged the school system into bankruptcy in the years leading up to the Depression. As conditions worsened, Club member Fred Sargent of the Chicago and Northwest Railroad led his fellow members in forming a large group of business supporters to demand cutbacks in every aspect of schooling, from kindergarten to vocational schools (Herrick, 1971; London, 1968; Tyack, Lowe, & Hansot, 1984; Wrigley, 1982). The Sargent Committee disbanded in 1937, after Chicago’s political culture had changed. By that time Democratic machine mayors were already providing the centralized power and social stability necessary for business influence to flourish behind the scenes. As the members themselves acknowledged, their advantage in that political context depended on two key elements: the threat of a fiscal crisis severe enough to put their “private” money in charge of the school’s finances, and a mayor who had “complete political power to see that his orders were carried out” (Commercial Club, 1939, cited in London, 1968, pp. 115-116).

The Commercial Club’s first half century of activism and the close relationships it formed with the emerging Democratic machine were to form the basis of a sustained corporate interest in the schools even though business influence was manifest through the mayor for the next half century. The Club had become a key member of the governing coalition supporting the Democratic machine, its leaders having direct access to the mayor, who was sympathetic to their requests (Ayers Interview; Peterson, 1985). In turn, the Club provided technical expertise, private support, and independent resources for city projects—including school projects—that the mayor sought (Erie, 1988; Gosnell 1937; Shefter, 1976). A business voice reemerged publicly only after the death of the last machine mayor, Richard J. Daley, in 1976. In the intervening years, corporate business encouraged mayoral control of the school system and kept a low profile.


The three younger members of the Commercial Club family—Chicago United, the Civic Committee of the Commercial Club, and Leadership for Quality Education (LQE)—were all founded by Club leaders well after the Depression-era public activism described above had become history. Yet each inherited the Club’s legacy of concern about the organization, control, and financing of the public schools.

Chicago United grew out of a group formed by three Commercial Club leaders. In early 1969, they determined that race riots and racial discord over segregated housing and schools demanded they learn to talk to black Chicago. The civil rights movement had already begun to challenge Daley’s regime. As part of his governing coalition, the Commercial Club responded, albeit secretly at first. Club leaders gathered about ten other sympathetic members and found an equal number of their “counterparts” among the local African-American leadership to begin a private dialogue, meeting regularly for early breakfasts in one or another of the hotels of the city (Rottenberg, nd). The group addressed the volatile racial issues the mayor publicly eschewed.

In 1972 they incorporated as Chicago United and developed the structure retained through the early 1990s. Half of the approximately sixty members had to be leaders of Chicago’s “minority” communities, preferably business leaders. Chicago United itself, as well as each of its six Task Forces, was to be co-chaired by one African-American member and one white member. Early on, its African-American members insisted that unequal schooling was a root cause of the glaring economic, political, and social inequality in the city, and education became a key topic of discussion and planning. The Chicago United Education Task Force that led the business side of the 1988 school reform coalition had its beginnings in these racially charged times (Garay, 1982; London, 1968; Rottenberg, nd).

Throughout the 1970s, Chicago United made recommendations, funded studies, and paid for special programs in the public schools. In 1971, members first backed decentralized management of the school system. Later, they developed and funded career education programs, sponsored management training for superintendents and principals, conducted a survey of business satisfaction with the schools, and privately advised the mayor on school board candidates (Garay, 1982).

Following the death of Mayor Daley in 1976, the school policy arena shifted from the mayor’s office—where it had been captured during the fifty years of machine rule—to Springfield. Private, personal access to the mayor no longer assured policy influence. More public means were once again required. Daley’s successors, Michael Bilandik (1976-1979) and Jane Byrne (1979-1983), were unable to recentralize power, and Byrne, in particular, sought advice from Chicago United and a few of the Club’s officers.

At the same time, a national recession was forming that would create “rust belt” ghost towns throughout the industrial Midwest, hitting the Chicago school system hard. Recession revealed another financial crisis, providing a new opportunity for the bankers of the Commercial Club to control school finances. It also provided an impetus for creating the Civic Committee of the Commercial Club, which was intended to be the Club’s first public policy arm since the 1930s. The brainchild of Club president Donald Perkins, it was formed wholly from the elite corporate membership of the Club and nomination was intended as a special honor. The Civic Committee concentrated and centralized the Club’s resources and voice. The committee’s avowed concern was the decline of jobs in metropolitan Chicago (Commercial Club, 1984) but members quickly related jobs to workplace skills and made the link to public schooling (Civic Committee of the Commercial Club, 1987). By the time the 1988 reform law was being hammered out in mass meetings of a reform summit, the Civic Committee was heavily involved in guiding and supporting the school reform plans of Chicago United, and both were attributing local economic prospects to the human capital produced by schools (Howe, Perkins Interviews).

The populist African-American mayor, Harold Washington (1983-1987), sought advice from both the Civic Committee and Chicago United. He faced the aftermath of recession without the power of a machine or the Club’s electoral backing, and wanted corporate business in his governing coalition (Hollander, 1991). One of these outreach efforts was to seek a business-school district partnership to stem the flow of unemployable high school dropouts. The partnership never materialized, but the initiative eventually led to the 1988 reform law.

In the spring of 1989, about two months after the 1988 reform act was signed, the Civic Committee and Chicago United gave birth to Leadership for Quality Education to help implement the new law. Mayor Washington had died in office and his successors Eugene Sawyer (1987-1988) and Richard M. Daley (1988-present) were at first disinterested in a school reform that would require legislative action and dilute mayoral discretion. But negotiations that enabled the 1988 law had developed their own momentum. As Mayor Daley came to realize, systemwide school reform remained on the public and corporate agendas. Gradually, he too embraced reform.

LQE inherited the “spokesman” status from Chicago United on issues of public schooling. It was largely responsible for supporting the community organizing effort that made the first Local School Council elections a success. LQE also provided professional staff to the Interim Board of Education during the transition period after enactment, offered budgetary “solutions,” commissioned surveys of school council members, underwrote the Citywide Coalition for School Reform, and helped found the Lawyers Advisory Project, the Community and Management Assistance Program, and the Cross-City Campaign for Urban School Reform (Catalyst, 1993; Javorsky, 1990; Klonsky, 1992; LQE, 1993; Poinsett, 1991).

By creating three subsidiary associations to address different aspects of social policy, Commercial Club leaders were responding to successive changes in the local political culture. First was the threat to the Democratic machine posed by civil rights struggles in the 1960s. It spurred the creation of Chicago United. Then, after Daley’s death and the collapse of the machine left his successors unable to respond to the recession of the late 1970s, the Civic Committee was created to focus on economic revitalization. Next came Harold Washington’s inclusionary regime. It highlighted Chicago United’s role as a bridge between the business and black communities, and generated business interest in forming a coalition with community groups on school issues. Ultimately, it helped produce LQE with its mixed board of business and community leaders.


The relationship among these four organizations goes beyond their being members of the same family, founded by the same patriarch association. Not only is each of these organizations funded by the Commercial Club, but there is a high proportion of membership overlap among the white members of all four groups. To understand how these organizations relate to one another and how they act in concert on school policy, it is useful to know something about how they are organized, because it is through common structures and processes that the motivations and goals of individual members were shaped.

All four associations share induction processes and membership rules that bind them to a common vision of civic life in Chicago, operating procedures that stress member discipline and control, and decision-making patterns that encourage cohesion. These characteristics were passed on with only minor modifications: The younger members of the family are isomorphic to the Commercial Club (DiMaggio & Powell, 1983). The organizing principles outlined below also help to clarify how these associations achieved the capacity for policy negotiation. Their structural commonalities underscore the strong historical ties between them, provide a framework within which the motives of individual members are turned into action, and make more comprehensible the thesis that they have a collective and cumulative role in Chicago school reform.


Members of these associations are a highly selective group of elite businessmen and a few nonbusiness civic leaders. A new member may be nominated only if he or she is the principal of his or her organization and has a résumé of civic service in Chicago. This means that only chief executive officers, presidents, and directors are eligible for regular membership. Because each principal member must have full authority to deliberate and act on behalf of his or her organization, binding decisions can be reached despite competing organizational interests. The requirement of civic service ensures that members of all four associations have similar experiences with Chicago’s elected policymakers and appointed bureaucrats; they learn to speak about local policy problems in a shared language. The public service rule has meant that each succeeding generation of members builds on the local policy network established by its predecessors.


Another important property of these organizations is that they are led by members. That is, CEOs, presidents, and directors do most of the work and sit on the committees. Corporate members deliberate on and decide all internal organizational matters as well as determine the public policy stands each association will take. New members often begin their tenure with an assignment to work on a citywide task force, or to co-chair a committee alongside more experienced members. Committee assignments serve as a kind of policy apprenticeship for members; they learn about the salient issues in a policy arena, come to know key government policymakers, and learn how to interact with them on behalf of the business community.

Member control has also worked to centralize authority in each of the associations. Lead officers in each association and executive committee members act as the primary decision makers, and small staffs reinforce their authority. While a professional staff has its own benefits—the small staffs of Chicago United, the Civic Committee, and LQE are all highly respected for their expertise among other professional, community, and government organizations—stability and clout remain linked to the active involvement of principal members. Larger staffs might relieve some burden on businessmen, but they would also dilute the association’s central political resources: direct access to the wealth of big business through CEO-initiated dues and donations, and their active engagement in the policymaking activities of the city.


These associations also operate under the principle of consensus decision making. Votes are rare, usually called only when it is known beforehand that they will be unanimous. The often spirited debate that precedes decision making is safeguarded by confidentiality. Conflict takes place within the associations; publicly, members usually speak with one voice. For instance, widely differing opinions among members meant that no consensus could be formed to support vouchers during Chicago United’s internal debates over school reform in the mid-1980s, hence, no public position was taken on the issue. Indeed, one staff member who publicly advocated vouchers was asked to leave because he appeared to be opposing the consensus of the group. The Commercial Club family wanted no cloud of dissension over their activities that might dilute the effectiveness of their advocacy.

Membership criteria, organizational structure, and decision-making processes are elements of the Commercial Club family’s cohesion. These organizing principles encourage corporate members to become actively engaged in local policymaking despite their personal histories of activism. They also mitigate the long-recognized tendency of multinational corporate leaders to be focused on national and international concerns to the exclusion of local interests (Banfield, 1961; Merton, 1957; Ray & Mickelson, 1990). Consensus decision making creates the useful appearance that members have similar opinions despite sometimes sharp disagreements, and facilitates disciplined, concerted action.

The reemergence of business as a social policy actor was possible because Chicago business had uncommon institutional strengths. It had a legacy of social-policy innovation and advocacy dating from the turn of the century. It had internal organizational structures and processes that facilitated cohesion and the ability to act in concert. Its own staff were trained in policy work and helped to define issues and alternative solutions, all the while supported by the activism of powerful corporate members. By creating subsidiary organizations that formed different coalitions—Chicago United with Chicago’s African-American leadership, LQE with community-based school reform advocacy groups—corporate business was able to mobilize other constituencies (and antagonisms) that might have remained dormant. The rules of membership, induction, and apprenticeship within this family of business associations prepared corporate business to take on the role of school policy kingmaker with what otherwise might seem to have been astonishing speed. But this capacity to act is inseparable from a history that led to two of the most radical governance reforms of urban education in fifty years.


What began as a corporate bailout in 1979 was to become by 1995 a wholesale appropriation of modern management rhetoric and governance forms within the public school system. In the intervening years, business leaders took command by detailing required administrative changes, selecting school board members, and overseeing the system’s finances and systemwide restructuring, while drafting and promotion successive reform laws.


Just as Sargent Committee control over school finances had been the last of the Club’s public efforts to reorganize schooling in the early years of this century, so a second financial crisis fifty years later became its rationale for a new wave of public activism. The financial crisis of 1979 also set the stage for the reform of 1988. Club leaders had restructured their own businesses in response to changing markets. Insolvency, they reasoned, was strong evidence that the centralized and bureaucratic school system their predecessors had helped create was also in need of restructuring.

The crisis of 1979 was actually a delayed reaction to long-festering problems. Mayor Daley had managed to keep the schools open throughout the 1970s by settling teachers’ strikes with promises of money the system did not have, convincing legislators to make minor changes in state aid, and asking Club bankers to ignore the unusual accounting and financial procedures used to keep the district’s bond ratings high. One result was that Mayor Byrne faced employee strikes and the financial collapse of the $1.2 billion dollar school system. But she washed her hands of an impending $85 million shortfall in operating fund debt payments (Byrne, 1992; Granger & Granger, 1980). Club members, concerned about the negotiability of debt notes, went to the governor. Over a New Year’s weekend meeting they assembled a bailout plan. The plan gave an emergency loan to the school system, forced the entire board of education to resign (Superintendent Hannon and his business manager had already resigned), launched a legislative investigation, and created the five-person Chicago School Finance Authority (SFA), giving it the statutory power to oversee school finances and approve all major budgetary decisions (Joint House and Senate Chicago Board of Education Investigation Committee, 1981).

The first SFA members were all businessmen and attorneys, appointed for fixed terms by the mayor and the governor. Commercial Club member (and CEO of Transunion Corporation) Gerald Van Gorkum took early retirement to become the Authority Chairman (School Finance Authority, 1993; nd-a; nd-b; nd-c). The SFA was accountable to no single group or officeholder since it reported only once yearly to the governor and the legislature, and the mayor and the city council. Its legitimacy was based on the putative financial and management expertise of corporate business.

As in the Depression, the governor and the legislature had legitimized a corporate role in school governance by creating a financial oversight group. The SFA was scheduled to wither away after six years of balanced budgets; instead it was to be strengthened in 1988. Thus, within three years of Richard J. Daley’s death, the state was sharing its financial oversight with corporate business, ensuring that the city’s business associations would influence any further school reform efforts.

The Club’s influence was not limited to financial matters. Despite protests from African-American groups, Mayor Byrne also asked Chicago United to select the new school board. Once appointed, this racially mixed board appointed the district’s first African-American superintendent, outsider Ruth Love, passing over the African-American inside candidate, Manfred Byrd. Love understood what she owed Chicago’s business leaders; she even kept her office in the downtown business district rather than use the new Pershing Road central administration offices.

Building on a new administration and fiscal control, Chicago United and the Commercial Club then partnered a widely publicized attempt to restructure the central office. They garnered eighty-two loaned executives to conduct a fourteen-week analysis of the management of the school system (Bacon, 1984; Chicago United, 1981). According to Thomas Ayres one of three signatories to the ensuing report, it was a “management audit . . . so [Love] would know what she was getting into.”3 Administrative decentralization—devolving authority from the general superintendent to district superintendents, but not to principals—was primary among the 253 recommendations in the Special Education Task Force report. One anonymous task force staff member remarked that businessmen did not recommend devolving authority to schools because

our view in 1980 and ‘81 was that the Chicago school principals were not ready to take on the actual formal responsibility of being in charge of their schools because they were in a bureaucratic system in which they were rewarded for not taking responsibility on. . . . We didn’t think that the principals had the tools to do the job. It would take some time to first decentralize the district superintendents, who would then train the principals so that they could then be in a position that if they were given the authority; they could have a chance to succeed.

Peter Henderson, executive director of Chicago United, recalled that implementing the Special Task Force recommendations was

clearly part of my marching orders. . . . [Despite the other five Chicago United Task Forces] education was going to be a lot more than one sixth of the agenda. The blueprint was in place, and it had the attention of not only Chicago United and the business community, but it had the attention of the Chicago Public Schools as well.

Two years later, Chicago United was still dedicating significant resources to implementing its recommendations, even funding the Office of Systemwide Reorganization (OSR), but with only superficial success (Chicago United, 1987). The man Ruth Love selected to run the OSR was her rival for the superintendency, Manfred Byrd. He was eventually blamed for the lack of change in the central administration. According to Peter Willmott, co-chair of the Education Task Force and CEO of Carson, Pirie Scot t and Company, Byrd had frequently “stonewalled” them, although Byrd described his own job as “being put in charge of looking out the window” (Franczyk, 1988). Club members were later to describe Byrd’s recalcitrance as an example of the general principle that change could not be initiated from within an organization.

Despite Club members’ concerns, Byrd was finally appointed Superintendent of Public Instruction in 1983. Mayor Harold Washington was under some pressure from his black supporters to replace the unpopular Love, as was the board. African-American community advocates—including Jesse Jackson and PUSH—were angered. They had many reasons: the combination of a financial “overseer” and a school board selected by businessmen, central office downsizing that had accompanied financial oversight, Byrd’s having been passed over for an outsider, and Mayor Byrne’s replacement of two African-American board members with two white women. Their anger set in motion a grass-roots electoral campaign that some identify as the impetus for Harold Washington’s election as Chicago’s first African-American mayor (Kleppner, 1985; Kyle & Kantowitz, 1992; Mirel, 1993).

At the same time, Mayor Washington reached out to the Civic Committee, asking them to study the city’s finances. White Club members claimed to be surprised by his election, but seized the opportunity to build a closer relationship with this new mayor. As they had done for the Special Education Task Force, the committee put together a group of financial and management experts from among their membership and dubbed it the Financial Resources Advisory Committee (FRAC). FRAC was charged with conducting a city audit and then serving as the mayor’s financial advisor.

Despite the failure to decentralize and restructure the school system central office in the early 1980s, Chicago United kept trying. Every two years between 1981 and 1987, it sponsored another report on the public schools. Its 1987 report was an explicit “reassessment” of its 1981 conclusions, this time recommending decentralization of authority to school principals. The reassessment made a strong impact on members because it judged the 1981 effort a failure, laying blame on the central administration and characterizing it as having “swelled to an intolerable degree” (Chicago United, 1987, p. 10). In one particularly telling passage, readers were asked to compare the twenty-three administrative staff on the Catholic Archdiocese schools with the 2,950 administrators assigned to Pershing Road. This waste and inefficiency not only caused financial problems, it made clear lines of accountability difficult to find. Five years later, several businessmen recalled that comparison when they described why a decentralized management structure with clear lines of central authority was more urgently needed than pedagogical reform.

Business was not alone in this assessment. Community advocates had begun to complain about the administration of the public schools by the early 1980’s (Hess, 1991; Kyle & Kantowitz, 1992; Moore, 1992; O’Connell, 1991). Despite some shared terminology, advocates’ analyses of the problem were quite different from businessmen’s. Community advocates began by documenting high dropout rates and poor performance among high school graduates, and faulty implementation of previous mandates for change. Most went on to argue, in terms similar to those of business, that the problem with school performance lay in a bloated, entrenched central bureaucracy indifferent to the needs of Chicago’s students. They judged the central actors of the system to be out of touch with these realities and unable to fix the system (Hess, 1991). Yet, by their reckoning, the system needed more, rather than fewer, decision makers. They sought an infusion of grass-roots democracy powered by parents, who could be trusted to hold the interests of students above others. Their version of decentralization had intellectual roots in the community control movements of the 1960s. A few also recognized elements of the “effective schools” and restructuring literature in these calls to strengthen school autonomy and discretionary resources (Hess, 1991, pp. 79-106). Together they argued passionately for the potential of local neighborhoods and parents to improve schools.


Mayor Washington first responded to combined business and community dissatisfaction in 1986 by asking members of the Civic Committee to help him put together a summit to address their common concerns over the poor skills of many high school graduates. Larry Howe, executive director of the Civic Committee, put the mayor’s request to a newly formed business consortium, the Chicago Partnership, created to coordinate business positions on public policy issues. The Partnership represented eight of the city’s largest business groups (including the Commercial Club family) and 4,000 Chicago area businesses. Its member associations agreed that Chicago United should be asked to represent Chicago business on school issues. Thus began a further centralization of the already highly cohesive business “voice” on schools.

Mayor Washington sought a Chicago version of the “Boston Compact” in Chicago, which he dubbed the “Learn-Earn Connection.”4 In addition to staff from the mayor’s office and some civic leaders, the forty-person summit included Superintendent Manfred Byrd, the teachers’ union, and Chicago United’s business representatives. Little came of the Learn-Earn idea because, as Peter Willmott put it,

we would propose a deal and [Manfred Byrd] would say no. See, we were trying to get him to accept higher standards of performance. He would give us 400 reasons why performance couldn’t be improved and why he couldn’t be held to a higher standard. It was ridiculous.

Another Commercial Club leader, Ronald Gidwitz, chairman and CEO of Helene Curtis, saw a “latent problem”: The union’s hitherto unopposed demands were draining school resources and a weak administration was no match for them. The problem erupted in the fall of 1987, only a few months after the Learn-Earn Summit had been determined a failure by Chicago United, and its reassessment report had been released. The Chicago Teachers Union held a month-long strike—the ninth and longest since collective bargaining had been granted—enraging parents and providing the catalyst for a coalition between community groups and Chicago United that was forged in the ensuing year (Hess, 1991; Moore, 1992; O’Connell, 1991). Once again, the mayor responded. At a public meeting on October 11, 1987, he reinvigorated the summit by adding fifty-four parents and community advocates known collectively as the Parent Community Council (PCC). Mayor Washington also gave the summit a renewed charge: to reform the entire public school system and bring him a consensus plan by the end of the year (Bendarek, 1988; Lenz, 1987).

Neither the PCC nor businessmen were prepared for face-to-face negotiations with the other. But an unlikely coalition eventually coalesced around a common enemy: the central administration of the public schools. Civic Committee leader and summit participant B. Kenneth West, CEO of Harris Bank, was clear about the binding force:

In the summit when we all got thrown together to go over to city hall chambers, you sit around and here’s [an African-American community organizer] and [a white community advocate] and the Chairman of AMOCO and the Chairman of First Chicago [First National Bank] and me. And we’re all lookin’ at each other . . . and I’m sure they said [to themselves] “What are these rich guys from Winnetka doing here?” Well, it turned out that we found out who the enemy was: the administration. So the coalition of rich folks and poor folks came together.

“No one trusts the administration,” added Leon Jackson, African-American member of Chicago United, “because the administration does not respond to anyone from the outside” (Franczyk, 1988).

By the middle of the spring of 1988, Chicago United leaders had decided that nothing they could support was likely to come from the summit process. Harold Washington died shortly after reviving the summit and his immediate successor was much less interested in school reform. Nor was Superintendent Byrd or the board in support of the decentralization plans being floated (Hess, 1991, pp. 69-72). Moreover, three summit subgroups were preparing legislation for state enactment: two research and advocacy groups, Designs for Change and the Chicago Panel on Public School Policy and Finance (now the Chicago Panel on School Policy), and the PCC. This assured that any further reform would be negotiated in Springfield. Chicago United’s response was to form a business/community advocacy coalition. The Alliance For Better Chicago Schools (ABCs Coalition) met in its offices for the purpose of drafting a consensus reform bill for the 1988 legislative session (Chicago United, nd; Hess, 1991; Moore, 1992).


At a strategy meeting of the Chicago Partnership it was agreed that business could not support any reform in which implementation was left to the central board and the district administration. David Paulus remembered someone saying:

You know we need something simple. Let’s establish in the hierarchy, above the board, an entity like the Finance Authority. But to really insist that the board do things to reform itself. Because it can’t do it on its own. We all agreed that no one from within a bureaucracy had been able to reform it.

A new reform oversight authority became the one nonnegotiable demand of Chicago business, even though it could be expected to engender as much opposition as the SFA. When Chicago United representatives announced it to the full summit, “all hell broke loose” (Willmott Interview). African Americans who held the key posts in the district had never been reconciled to the SFA’s control over the district budget. Now they were being asked to accept a management “overseer” who could determine how they responded to impending decentralization legislation. James Deanes, an African-American parent and leader of the PCC, feared that “a powerful oversight panel to enforce reform was an attempt to rob Blacks of power they have achieved in city government and on the school board.” After all, he reasoned, “this system was messed up by them for a long period of time” (Lenz, 1988).

As it turned out none of the bills submitted in the spring of 1988 received sufficient votes to pass. During the last days of the 1988 session, the ABCs Coalition became the core group that redrafted a successful reform bill. Besides Chicago United, ABCs Coalition included the best organized of the reform advocacy groups. One of them, Designs for Change, was widely credited by businessmen as being the architect of the law’s powerful school site councils. Don Perkins described it this way: “Don Moore’s idea of decentralization [was] micro-management. He sold us on it in exchange for him accepting some kind of power in some place that would force it to happen.” Working in coalition to write and then pass a reform law had forced both community activists and Club leaders to compromise, although their fundamental differences resurfaced later. To businessmen, Moore’s careful delineation of the powers, obligations, election procedures, and training of 550 school councils risked over specifying local school governance. Their objective in decentralization was quite different: a lean, systemwide management structure to hold principals accountable for the performance of teachers and students while also ensuring that principals had the authority to implement change.

Bound by Speaker of the House Michael Madigan’s constraint that no new money could be appropriated for reform, the management and governance changes negotiated between Chicago United, DFC, and other advocates became the core of the new legislation. Madigan’s second constraint, that any bill must meet with the approval of the legislative Black Caucus, at first put roadblocks in the way of the oversight group demanded by Chicago United. But a compromise was worked out; the existing SFA would be given the new reform oversight authority and no additional body would be created (Hess, 1991; Kyle & Kantowitz, 1992; O’Connell, 1991).

The Commercial Club family and their community allies had a new school law in December of 1988, and all were determined that it should be implemented. The SFA notwithstanding, LQE was also created for just that purpose. For six years LQE remained a strong advocate of the 1988 reform. But in 1993, Club members decided that LQE’s support for community organizing and voter turnout campaigns was not producing better schools, resurfacing their initial skepticism about political decentralization as a reform strategy. Moreover, they determined that the role of outside agitator might suit community groups, but was ill suited to corporate leadership. It was creating a rift between Club leaders and the central administrators whom they hoped to influence. Club leaders were increasingly convinced that central office accountability was a necessary component of their vision of decentralization, and a requirement for any substantive results. As the fundamental divisions between the business view of administrative decentralization and the political version held by community activists reemerged, activists felt betrayed. They protested the “pullback” loudly, but succeeded only in becoming less central actors in future reform efforts.


It is often remarked that the 1988 reform created several new governance structures in the Chicago Public Schools: the LSC, Subdistrict Councils, and the Nominating Committee. Less commented on but as important was the strengthening of the SFA. When its statutory powers are compared with those of the three new structures, the authority’s role as policy arbiter becomes clear. Moreover, while the relationship between the three new bodies and the central board remained unclear throughout six years of implementation, the relationship between the SFA and the board was legally quite explicit (see Figure 1).

The scope of formal authority given to the SFA and the LSCs differed radically, and points out how community advocates’ focus on school-level governance missed much of the reform picture. Elected LSCs were given school-level decision-making authority in a few crucial areas. But their decisions were to remain bound by the resources in schools and neighborhoods and those they were able to attract from a cottage industry of foundation-supported advisors. They were simultaneously constrained by central office administrators who were formally accountable to a very different constituency. On the other hand, the SFA was charged with fiscal, personnel, and administrative oversight for the district as a whole. It too had constraints, including mixed political authority and insufficient control over top administrators. But the limitations on the SFA’s effectiveness were quickly noticed by corporate executives and were eliminated as soon as an opportunity arose.


In addition to overseeing a balanced budget and reallocating funds to schools, the SFA was authorized by the 1988 act to approve the board’s reform implementation plan, or reject it and mandate its own. Until 1993, the SFA rejected every plan the board presented without mandating another. In 1992, the SFA’s second chairman, Martin Koldyke, Commercial Club member and venture capitalist founder of the Golden Apple Foundation (for recognition of excellence in teaching), determined that the district had no intention of presenting a plan that met SFA requirements. The 1993-1995 decentralization implementation plan was commissioned by the SFA directly and adopted by them over the board’s objections. It was a detailed document that described a strategy for turning the central district into a service center, in competition with private service providers (Board of Education, 1992). Yet the plan remained unimplemented; central office restructuring along business lines was once again “stonewalled.” For all its formal authority, business remained unable to command decentralized management in the central office.

For some, there were signs of weakness in the business strategy. In 1991 Larry Howe signaled the Club’s worries about the limited expertise and resources of the SFA:

Originally established to oversee the financial operations of the public school system, the SFA in a last-minute legislative maneuver in 1988, was handed an ill-defined oversight authority for reform. Under the current legislation, the SFA is badly handicapped and lacks staff to fulfill its dual responsibilities: it should have additional cooperative assistance from the private reform infrastructure. (Howe, 1991)

The SFA’s “ill-defined” reform oversight authority and its lack of resources turned out to be only two of many flaws Club members would find in the 1988 law over the next six years. The SFA’s financial oversight remained hamstrung by federal and state budgetary categories, and shortfalls that continued to plague the system were exacerbated by a generous three-year teachers’ contract negotiated by the transitional Interim Board. The Interim Board (on which Joan Slay of Designs for Change, Urban League president James Compton, and LQE president Joe Reed all sat) chose superintendent Ted Kimbrough to succeed the ousted Manfred Byrd. Despite their participation in his selection, Club leaders quickly dubbed him “a centrist” and “a mistake,” blaming him for a lack of leadership, just as they had once blamed Byrd (Gidwist & West Interviews; Robinson, 1990).

Club members had a litany of other concerns. The new community based school board nominating commission unacceptably diffused central authority, and LSCs diffused hierarchial accountability. Principals still lacked sufficient authority to discipline building staff, and the pool of experienced principals was rapidly diminishing. Joseph Reed again recalled their original skepticism when he argued that too much attention had been paid to school councils in the 1988 law and not enough to system wide accountability:

It’s the councils that are specifically empowered, and everything else is left to the central administration. More mischief, more damage has been done to school reform in Chicago because of that than any other single thing.

Nor were there enough signs of success in the schools to mollify corporate concerns. Only about one third of the LSCs in low-performing elementary schools seemed to be operating democratically as community advocates had envisioned; the others were in worsening conflict, or seemed stuck in old patterns (Bryk et al., 1993). Although community advocates saw hope in these numbers, they did not signal the immediate improvements business leaders sought. Surveys of teachers suggested that many remained unaware of how little had actually improved, and mistrustful of parents and community members (Consortium on Chicago School Research, 1991). Meanwhile test scores, attendance patterns, and graduation rates were mixed with no clear evidence of gains (Catalyst, 1995, pp. 27-35). None of these results demonstrated that the ambitious goals written into the reform law were likely to be met. This absence of obvious improvements, combined with the structural and implementation problems Club leaders had identified, led them to the conclusion that yet more drastic change was needed.

Events gave them the opportunity. A Republican landslide in 1994 unseated the Democrats, who had dominated the Illinois House of Representatives for decades, removing much of CTU’s state-level influence and decreasing the influence of the Black Caucus. Both Mary Lou Cowlishaw, the new Republican Chair of the House Education Committee, and Republican Governor James Edgar held invitation-only meetings to gather ideas for a new reform law. Large portions of the new law were strongly influenced by the Civic Committee, which supported the governor and legislature in this effort. Advice from FRAC was one important consideration, as were lists of concerns and remedies from several business groups, including each of the three younger organizations in the Commercial Club family.

Richard M. Daley, the next elected mayor after Harold Washington, had won with the strong support of business. He did not govern using Washington’s inclusionary policy processes. Instead, he favored advice from a handful of business and civic elites. Although he had not campaigned on school issues, he quickly asked FRAC to perform an audit on the school system. Two months after his reelection in March 1995, again with strong corporate support, he inherited the powers of the new school law. Daley had played little role in drafting it, campaigning instead on a different version of school accountability that included a small school board, principal performance contracts, peer review of teachers, and parent “partnership” contracts (Speilman,1995; Struasberg, 1995; Time for Optimism about Schools, 1995). Yet, given the power to select the entire management team as well as a corporate-style board, Daley chose individuals with strong business credentials, many of whom had worked in his office. Only one, the Chief Education Officer, was an educator. By virtue of these new powers Daley was soon being described as the nation’s “education mayor,” and became a national symbol of mayoral prerogatives in public schooling. Daley eventually came to argue that having a good school system was the only way to keep the middle class in the city, and hence the tax base and social capital needed for viable economic development:

I believe that nothing is more important to the future of our cities than the quality of our public schools. . . . To keep and attract middle class families to our cities, it is essential for mayors to assume leadership and responsibility for this critical issue. (U.S. Conference of Mayors, 1996)

The 1995 school law resolved most of the concerns Civic Committee leaders had identified. Accountability of schools to the district was strengthened; the powers of central office leaders were clarified; the SFA’s reform and budgetary oversight was temporarily suspended to give the business management team full control; and the relationship between the mayor and the system was tightened. Principals also gained near complete authority over building staff. Executives had given up on holding superintendents accountable for the schools; they preferred to deal with the mayor, with whom they had closer ties. They sought for him the direct chain of command they enjoyed in their firms. Categorical budget categories that had hampered the SFA’s discretion were combined into two block grants, and the requirement of a balanced budget was suspended to encourage an orderly transition in the absence of increased funding. For good measure, executives helped to ensure that the teachers’ union would be weakened; strikes were outlawed for eighteen months following enactment, and all but bread-and-butter concerns were eliminated from contract negotiations.

In the 1995 effort, the Commercial Club family was joined by statewide business organizations more accustomed to working with “downstate” Republicans. The 1995 business coalition included the Illinois Manufacturers Association, the Illinois Business Roundtable (formed in 1991), the State Chamber of Commerce, and the Illinois Retail Merchants’ Association as well as the Chicago Civic Federation and the Chicagoland Chamber of Commerce, both of which had supported Chicago United’s leadership in 1988. This coalition of statewide and local business groups is narrower than the cross-sector coalition that enacted the 1988 reform. The Commercial Club family disagreed with downstate business groups over some specifics, but the combined influence of all these business groups swayed Republicans, who passed the law with almost no Democrats’ votes.

The formidable influence wielded by corporate business does not make elite capture of the Chicago Public School reform process a foregone conclusion, but it does challenge some common wisdom about the 1988 act, and raises questions about the claims of democratic governance made about Chicago school reform.


Chicago reforms highlight a classic—and unbalanced—tension between two visions of decentralization: populist democratic governance on the one hand, and devolution of authority by managerial discretion on the other.


The democracy-invoking labels that have been attached to the 1988 reform—social activism and “people power,” “egalitarian pluralism” and democratic localism—all rest on arguments about the effectiveness of LSCs. They stress the fact that a few ordinary parents and community members were invited to make important fiscal, personnel, and policy decisions that govern individual schools. Those responsibilities came unfettered by the stifling effects of educators whose familiarity with school routines and procedures has been known to overwhelm token parent and community participation. The change has been instrumentally justified by arguments about substantial lay participation stimulating innovation. Innovation, in turn, is expected to improve school effectiveness (Hess, 1991, 1993). It has also been argued for on its own merit, as an extension of popular democracy (Rollow & Bryk, 1993).

But school councils elsewhere have a mixed record. When examining this theory of reform at work in school systems that had adopted councils, Betty Malen, Rodney Ogawa, and Jennifer Kranz (1990) discovered that very little innovation and experimentation was taking place. Instead of freeing schools for innovation, principals in other communities seemed to use local councils as a supportive buffer. Although the councils Malen and colleagues studied did not have the authority or purchasing power delegated to Chicago’s LSCs, in Chicago too, a 1992 survey revealed that two-thirds of principals claimed to get their way with LSCs (Bennett et al., 1992).

Other evidence from Chicago’s experiment thus far is mixed. Elected LSCs appear to be well-accepted features of Chicago school governance: They were not annulled in 1995, as some had feared. But the process of rebuilding relationships between communities and schools has too often taken a back seat to ritualized implementation requirements. For example, LSC training in “school budgets,” “educational theory” (particularly that which relates to “development of the school improvement plan and the principal’s performance contract”), and “personnel selection” (Sec. 34.2.3) were mandated in 1988. These necessary, but uneven, training programs became a cottage industry in Chicago, absorbing much of the time of reform groups and LQE in the early years, and much of the foundation and business funding (LQE, 1993; McKersie, 1993). The 1995 law provides no relief from this massive adult education effort; it mandates a minimum of three days unspecified training for every LSC member within six months of taking office (Sec. 34.2.36).

It has been argued that LSC training provides some of the capacity-building required for democratic and collaborative school-site governance that might go beyond interest-group wrangling (Rollow & Bryk, 1993). Yet relatively few parents and community members at each school participate on its LSC, and their elected status is properly conceived as representative. The vast majority of parents and community members remain spectators most of the time, becoming consumers every two years when they vote for LSC members. Moreover, mistrust among teachers and between teachers and parents remains high despite all the activity. Extensive survey data show that six years into reform Chicago’s elementary teachers do not perceive they have parents’ support, and too many do not collaborate with their colleagues (Sebring et al., 1995, pp. 60-61). Teachers, expected to form a Professional Personnel Advisory Committee (PPAC) to advise each LSC, were found to have “cordial, but weak” relations with them (Bennett et al., 1992, p. 7). In addition, the legacy of Chicago’s machine has left too many school councils with an image of decision making that means “taking care of your own” (Bryk & Rollow, 1992, p. 6).

Absent effective means of shaping parents, community members, and school professionals into empathic and trusting deliberative bodies, parents and community members are demonstrating their decreasing interest in the LSC form of school participation. With elections for about 4,300 parent and community LSC members held every other year since 1989, as many as 12,900 of Chicago’s citizens might have already experienced the role of school-level decision maker. However, each year until 1996 fewer have nominated themselves as candidates, while parent and community voters have declined precipitously, from 192,771 in 1989 to 60,169 in 1993.5 Elections scheduled for 1995 were moved to report card pick-up day in the spring of 1996 in the hopes of increasing turnout, and a few more candidates came forward (Gardner, 1996). It remains to be seen whether these measures can enliven the moribund election process.

At their best, councils with the authority and purchasing power of LSCs can help rebuild trust in individual schools, and examples of such schools have been identified in Chicago. But to do so they must balance the discredited authority of professional educators with the populist credibility of parents and neighbors, stimulate and use an external support system of local school services, and find ways to adapt schooling to the social needs of often poor, racially isolated communities. At their worst, it is clear that LSCs, like other site councils, can be ineffective, and provide unintended political cover for a system that does not improve (Malen, 1994).


Entwined throughout the century-long saga of Chicago school reform is a constant tension between populist democratic governance and professional management. The 1988 and 1995 reforms represent the most recent manifestations of that tension. It first took shape in the Progressive era, when unions were attempting to “democratize” Chicago’s schools while the city’s businessmen linked arms with new administrators and academics to support their bureaucratization, centralization, and standardization. Responding to the next fifty years of machine politics, both business associations and unions consolidated, stabilized, and secured their place as unchallenged representatives of their members’ interests. These political and organizational adaptations changed the goals of the two groups as well. Unions lost interest in democratizing the schools in favor of securing their members’ tenure and working conditions. Beginning with the community control experiments of the 1960s, the teachers union ceded its Progressive era role as agent of democracy to Chicago’s community organizations. For their part, the city’s business associations became increasingly influenced by a new wave of “scientific management” that stressed accountability enhanced by new technology and performance contracting. Adapting corporate practices of the late twentieth century to public schooling, they advocated administrative decentralization, the devolution of authority; and accountability within a centrally controlled organizational structure.

The substance of the 1988 reform was concocted from a temporary alliance of business associations and the city’s community activist organizations. In a desperate effort to improve the depressing state of Chicago’s public schools, the two groups agreed to compromise or ignore their differences. But those differences nevertheless remained, repeatedly resurfacing. Moreover, those differences have been enshrined into law, ensuring that these long-standing tensions have ongoing political consequences.

The 1988 and 1995 reforms taken together have created a new set of rules governing the public schools and new divisions of labor. Where there were once board members and citizens directing the schools, now there are business trustees and managers on the one hand and parents and neighbors on the other. The mayor’s board once selected a professional superintendent, and school-level professional administrators were accountable to him or her through a complex and fragmented bureaucracy. Now the CEO and his management team are direct political appointments by the mayor, and principals are the political appointees of elected parents and neighbors. Schools are increasingly vulnerable to the competing demands of parents and managers, unbuffered by a bureaucracy, and systemwide leaders are explicit political agents of the mayor and his governing coalition rather than professional educators. A school system originally designed to encourage professional and hierarchical accountability has been redesigned to favor political accountability. In Chicago’s centralized political culture and highly segregated neighborhoods, this is not a recipe for participatory democracy in the schools.

The democratic aspects of Chicago reform rest on a peculiarly local vision of representation and voice. LSCs offer thousands of parent and community members access to a legitimate platform on which to speak their minds about the schools. But the same reform that created LSCs also diminishes their voices as citizens who wish to say something about the pattern of resource inequities across schools. Nor do LSC members address the needs of all children: common standards for teaching and learning, basic guarantees of school adequacy, and appropriate citywide assessment systems, or the policies that govern system-level accountability and small, dispersed student populations. Focusing on the role of parent (or neighbor) rather than the role of citizen as the common criterion for “voice” in individual school governance presupposes what the correct stance toward schooling should be among the residents of the city. It suggests that a parent’s role in schooling is best kept parochial, focused on gains that might benefit one’s own children.

Many of the hoped-for benefits of enhanced democracy are actually hampered by this narrowly geographic view of community, especially in a city with housing patterns as segregated as Chicago’s. The combination encourages and justifies inequities and divisions between schools. If an LSC functions well in representing the interests of a neighborhood and its parents, it is necessarily in competition with other LSCs for scarce resources (e.g., good teachers and principals, private funding, proprietary improvement programs, and other external support and expertise). Resources and attributes of schools and their surrounding neighborhoods are highlighted. Councils with sophisticated, politically well connected, and/or relatively advantaged parents and community members do better at such competition. Councils in poor neighborhoods—primarily black and Hispanic neighborhoods in Chicago—are at a disadvantage. If their LSCs do not function well, the political premise of reform suggests they will be denounced as inept or corrupt, and further isolated from the resources most needed to turn their schools around.

In contrast, corporate business is given a systemwide voice—perhaps even a veto—regardless of whether LSCs work. Together, the formal and informal sources of corporate influence allow it to take advantage of political openings to negotiate the terms of debate within which individual schools must survive. The committed corporate executives interviewed for this study relied on a model of reform that suited their managerial expertise. In so doing they helped to define the relationship between schools and public officials, limit the amount of local (and state) tax dollars spent on education, and specify the objectives and measures of good schooling. Each of these systemwide decisions has far-reaching equity implications across schools, and each constrains the decision latitude of LSCs. The SFA was established by corporate business to veto budgets and contracts, set district priorities and long-term goals, and unilaterally determine whether the district’s plans for restructuring were adequate. Following the same model of corporate decision making, the new management structure has been given enhanced powers to privatize public school functions, abrogate prior law and precedent in collective bargaining, determine which schools and employees are failing, and even disband LSCs and reconstitute schools.

Greater business-like management at the central office has also produced rapid racial shifts in employment. Decentralized management inevitably means downsizing the central administration, and Chicago has been no exception. As a result of centrally directed desegregation efforts prior to 1987, African Americans made up the largest segment of teachers, principals, and administrators in the system (49, 34, and 48 percent respectively). Downsizing and central office cost-cutting began in 1980 in response to SFA mandates. By the time the first reform law was enacted, downsizing had already cut the numbers of whites by half and African Americans by nearly a third, while increasing substantially the numbers of Hispanics and Asians. After 1988, continued downsizing further facilitated a transfer of central office jobs from one ethnic group to another. By 1994, whites held only one-quarter and African Americans only one-third of the positions they held in 1987, while Hispanic central office employees held on to half their jobs. At the same time, the numbers of Hispanic principals grew by 152 percent (from 17 to 43) in the first year of reform as parent and community leaders selected new school leaders.6 Since 1995, all but one of the top management team have been white males, after a decade of African-American superintendents. These employment changes are occurring even as students within the system remain primarily African- American, and increasingly poor. They suggest that the hierarchy of managerial positions in the system is being restratified, with whites at the top, and African Americans and Hispanics in the middle and bottom.

Such demographic shifts do not signal capacity changes in themselves, although they do raise concerns about the loss of institutional memory within the system. When coupled with the expansion of privatization and outsourcing that has taken place since 1995, the loss of experience within the system raises concerns about accountability. The new management team uses outside contractors to provide academic remediation and probation services, and training for new and continuing principals, as well as for food, distribution and facilities services (Wong et al., 1997). While it encourages new ideas and saves the costs of maintaining services internally, such outsourcing also discourages accountability.

David Cohen (1978) clarified the dilemma some time ago: Individual schools have always had a great deal of accountability. Nearly everyone scrutinizes what goes on in public schools and student test scores are a public demonstration of performance. On the other hand, unaccountable quasi-private agencies like unions, testing services, and textbook publishers receive relatively little scrutiny, save contract and budget review. As unprecedented decisions are made by new managers unsocialized in educational disciplines, and outsourcing becomes the preferred mode of management, it is increasingly difficult to link managerial and policy decisions to school performance. In Chicago, corporate entrepreneurs and private educational service providers are rapidly increasing the numbers of unaccountable private groups in control of school decisions.

Procedurally, both the SFA and the 1995 reform amount to controls on parent and educator discretion that were negotiated in private conversations. Unlike the inclusive summit process that created the 1988 reform, the values behind its successor envision public schooling almost exclusively as an economic investment in “human capital” (Dantowitz, 1994). There was no public debate to determine whether business values were best suited to systemwide issues, and business representatives have no public accountability. Arguably, a great number of public decisions have been privatized, rather than democratized, in the current Chicago reform strategy.

A different vision of democratic governance than the one now embedded in Chicago’s laws might argue for systemwide decision-making that includes every interested person’s voice, elevating educative processes over managerial ones. There are such embodiments of parent and citizen governance that do not rest on the parochial vision of democracy energizing Chicago’s reform advocates. For instance, in his support of parents’ political participation in schools, Seymour Sarason (1995) resurrects governance by an “Education Assembly,” first suggested in 1972 by Martin and Harrison. A large district-wide elected group intended to serve as a legislative body, such an assembly would have both the staff and structure of one. This alternative vision of democracy rests on citizenship and stewardship even as it builds on the private interests and knowledge of concerned parents and neighbors. As an example of a different form of democratic governance, it serves to remind ordinary Chicagoans that they now have no systemwide forum through which to debate broad issues of equity, standards, and accountability.

Instead, Chicago’s decentralization model has given business the clearest voice in systemwide reform. Corporate leaders hope to direct a school governance change in Chicago that can build on the best of what they know about managing large organizations. Yet for all their genuine concern, management expertise, and prior efforts to work in coalition with “poor folks” and community activists, they are private actors, unaccountable elites.

Chicago’s reforms have burst open the once sealed and taken-for granted governance structure of urban public schooling. Chicago demonstrates that with a combination of external, private political resources and big ideas, urban school systems can be radically changed, altering the basic relationships between communities and public schooling. While the Chicago case may establish the current limits of school governance change, organized business in other cities is also advancing governance reform. Two fundamental questions that remain for Chicago are object lessons for all engaged in this process: Can we find a way to keep the public schools “public” even as private groups set the agenda? Can corporate influence be reconciled with professional expertise and democratic decision making?


The pattern of negotiation between government and business groups (and sometimes others) sketched above reveals some readily identifiable characteristics of (liberal) corporatist intermediation: long-standing and stable business associations negotiating policy agreements that the state then sanctioned (e.g., the 1979 bankruptcy bailout pact, the 1988 school reform act), the sharing of formal state authority (e.g., through the School Finance Authority, Mayor Byrne’s request that Chicago United select a school board, Mayor Daley’s invitation to FRAC), and policy implementation responsibilities taken on by negotiating associations (e.g., Commercial Club’s 1981 restructuring effort, formation and activities of LQE, ongoing LSC election support). Collectively, Chicago’s corporate executives had inherited the capacity to influence school policy informally as they have been doing for over a century. Through their associations they also developed a distilled vision of reform drawn from shared experience, and since 1980, formal avenues of influence on school governance.

Sharing formal authority for school policy did not mean that business gave up using its informal influence, however. Their informal influence proved crucial to the effectiveness of oversight. When the formal procedures for oversight proved inadequate, corporate business representatives were able to seize an opportunity to refashion them to their liking. Ongoing informal influence helped to ensure that changes initiated through legislation and mandate were implemented (or redrafted) as business leaders had imagined. Moreover, their informal influence is amplified because they are organized in stable, disciplined associations, and because they work hard to speak with one voice. In spite of many potential differences among them (i.e., voucher supporters vs. racial integrationists, anti-unionist industries vs. service sector employers), business groups have repeatedly come together in coalition.

Corporate influence has not turned Chicago’s schools into models of high performance, but it has helped legitimate a new corporate role in school system policymaking. Chicago’s corporate involvement is not only to be found in school board meetings and vocational education or adopt-aschool programs. It is also in providing a template of solutions for the system’s manifest problems. Those solutions are drawn from contexts unrelated to schooling that executives know well: modern corporate management and restructuring. The 1995 law itself was an attempt to reorganize the school system on the model of a corporation in the hopes that restructuring would then follow patterns more familiar to business.

While it is far from certain that corporatist intermediation will remain the primary method by which school policy is negotiated in Chicago, or that it will be found in other cities where business appears to be influencing school policy, the case reinforces the value of local research on business influence. It argues against using state- and national-level observations to understand the business role in school policymaking, a common strategy employed by educational analysts examining the current wave of business influence (see, for instance, Borman, Castenell, & Gallagher, 1993). First, it demonstrates how corporate business influence on school policy is dependent on local organizational resources and institutional contexts. Business organizations are not vertically linked in the United States and there is typically no municipal equivalent of, say, the National Business Roundtable. Nor would an examination focusing on the influence of Illinois state business associations have revealed the significance or extent of business influence in Chicago. Second, it is quite difficult to identify any business role in school policy implementation by scanning the national horizon, or even by examining business influence at the state level, since nearly all implementation of school policy is local. The Chicago case suggests that reliance on macro-level analyses will probably mischaracterize the ways in which business influence is manifest and perhaps underestimate the level of business influence.

Nor can generalizing from this or a few other urban case studies provide sufficient guidance for understanding business influence in urban education, despite the rich literature of community power studies that have included education policy as one area of concern (Dahl, 1961; Peterson, 1981; Stone, 1989). Chicago’s basic institution of school governance has always been relatively uncommon even among big cities in the United States. Only seven of the forty-seven largest urban school systems have mayoral or council-appointed school boards and one of those has been appointed only since 1992. Chicago’s appointed board coupled with fifty years of a highly centralized and personalistic machine government encouraged its corporate elite to see school policy as a social policy domain appropriate for their intervention. Instrumental (and tendentious) reasoning about the importance of schooling to local economic development came after corporate business had already gained significant authority over school decision making in the form of financial oversight. The economic-development rationale for corporate activism has further legitimated a business role, but the relationship was established in response to earlier fiscal crises.

At the same time, the account provided here would have been difficult to uncover had this research not focused on the role of business associations, rather than on the role of individual corporate leaders. Without an organizational lens framing research questions, guiding archival research, and suggesting interview informants, this story would have not been told. It is likely too that alternative conclusions could be drawn. For instance, business representation on the school board, at mayoral summits, or on school councils might have been the focus of study. If so, I might have concluded, as have others before me, that business has little independent influence on Chicago school politics (e.g., Peterson, 1976).

The Chicago case is a reminder that not all local politics are contested in the same way, nor are any static. Some are more pluralist, made up of loose coalitions of interests that make fleeting and opportunistic alliances to achieve immediate benefits or to pursue access to power in the hopes of future benefit. Some local political regimes are statist or personalistic, as was Mayor Richard J. Daley’s machine. Others may be more integrative, with political institutions designed as much to build community feeling and mutual trust as to allocate scarce resources—not unlike the ambition of Harold Washington’s brief tenure. Still others, like Chicago’s today, will resemble associative or corporatist regimes in which a few well-organized associations negotiate pacts with government representatives and assume an obligation to help implement those agreements.

Other scholars of corporate influence on the schools have identified types of activity into which current business initiatives can be placed in order to clarify how influence is being wielded. For instance, Michael Timpane’s four stages of corporate involvement (1982, pp. 23-26), Milbrey McLaughlin’s “three general forms” of corporate giving and related involvement (1988, p. 66), and Kent McGuire’s “qualitatively distinct” forms of business influence (1990, p. 115) all have in common an attempt to generalize about corporate influence on public schooling absent the specific governmental and policy contexts in which they arise. Timpane focuses on cities, while the others draw indiscriminately on local, state, and national examples, but underlying each typology are implicit questions: Which (narrow or enlightened) self-interest motivates business involvement in public schooling? How can educators increase some forms of business influence?

The political analysis provided here has demonstrated that corporate organizational forms, specific legacies of involvement, and local political institutions are at least as important as business’ motivations in understanding their influence. Business associations and the legacy of involvement they embody shaped the views of Chicago’s business executives as much as or more than they reflected them. At the same time, Chicago’s institutions of local government have mediated and shaped corporate forms of organization as well as business opportunities for involvement in school policymaking. Whatever the individual motivations of a Club member—civic pride, strategic self-interest, or simply the prestige of membership—it is through the Club that his or her motivations are shaped into initiatives, and it is within the local political culture and institutions of the city that the Club’s initiatives are realized.

All this suggests that deep understanding of the recent corporate business role in urban school policymaking will depend on research that is conducted locally, on analysis that examines how local political institutions and regimes impede or facilitate business influence over time, and on making explicit comparisons between urban districts based on their governing characteristics. This will require augmenting the pluralist approach to business influence—which seeks to explain motivations, goals, and strategic interests in market terms and describes equilibrium or change as the aggregation of individual preferences—with some of the queries that arise from institutionally sensitive conceptual frameworks. Like corporatist analysis, such frameworks take into account how local interests are actually organized, how their strategic resources and policy legacies condition their influence, and how political institutions structure the ways that interests can play a role.

Doubtless other cities in the United States with little or no experience of machine rule, and/or with less well organized business groups, will reveal different accounts of business. Even so, it seems reasonable to expect that we can better grasp what that influence might mean for the future of public education and our notions of democratic governance if we study business influence where and when it is happening. At a time when urban school systems are under intense pressure to change, and when new definitions of equity are being sought, powerful corporate actors are once again becoming an important force shaping the future of public education.

I am grateful to David Tyack, Larry Cuban, Jeff Mirel, Betty Malen, and several anonymous reviewers for their encouragement and helpful comments on earlier versions of this article.


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Cite This Article as: Teachers College Record Volume 99 Number 1, 1997, p. 73-116
https://www.tcrecord.org ID Number: 10253, Date Accessed: 5/22/2022 11:13:59 PM

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