In a radical, and nationally unprecedented, change to its 120-year-old education system, the Archdiocese of Philadelphia is handing over management of its secondary and special education schools to an independent foundation.
The recently-incorporated Faith in the Future Foundation aims to not only maintain but also grow a Catholic school system hit hard by declining enrollments, deficits and closings. It will manage 17 high schools and four special education schools, according to the terms of a five-year contract recently signed by Archbishop Charles J. Chaput.
It will be the first independently-managed Catholic school system in the country.
The blockbuster decision, which affects 16,000 students, is being announced by church leaders this morning at St. Hubert Catholic High School for Girls in Northeast Philadelphia.
“Certainly, on the enrollment side and the cost side, our schools have been shrinking for years, and we have to find new ways to partner,” said Bishop Michael Fitzgerald, who oversees education for the archdiocese. “We’ve done a good job for years on the educational side. We still do. It doesn’t mean that we can’t do that in more creative ways, through some other entrepreneurial partnerships.”
Catholic grade schools will continue to be managed by the individual parishes or groups of parishes, with curriculum support from the archdiocese's Office of Catholic Education, although that department will now report to the foundation. An executive board of education — including Fitzgerald and other archdiocesan appointees — will help govern the foundation.
H. Edward Hanway will serve as board chairman and interim CEO of Faith in the Future. The former CEO of CIGNA, Hanway sat on the recent blue-ribbon commission that helped guide a large-scale restructuring of area Catholic schools, including a number of parish school closures and mergers.
Earlier this year, the blue-ribbon panel recommended creating a foundation to further the cause of Catholic education; Hanway was put in charge. 
Faith in the Future has a goal of raising $100 million in five years, and it is well on its way, officials said.
The decision to move to a new kind of Catholic school system came together over the last few months, after lay leaders proposed it, Fitzgerald said in an interview.
“It was the archbishop who said, ‘Why don’t we talk about entering into a contract with the foundation? Let’s give this a try.’ And we’ve worked out an agreement in principal to proceed,” said Fitzgerald.
After an initial five-year contract, subsequent management agreements will run for three years. Both sides will have out clauses, officials said.
Although the archdiocese will still own the schools and their assets, the foundation will cover their operating deficits. 
The archdiocese has spent more than $11 million during the past 16 months responding to a 2011 Philadelphia grand jury report on clergy sex abuse, and projects a $6 million deficit in its operating budget for the 2012-2013 fiscal year. However, Hanway said those difficulties did not drive the decision to privatize management of these schools.
“The motivation behind this agreement is truly to take the archdiocesan school system, which from an educational standpoint functioned very well, and bring a more metrics-driven management structure to it,” he said.
“If they had come to me and said, ‘Hey, Ed, we can’t afford to run these schools,’ it would have been a very short conversation. I’d be out playing golf right now instead.”
Faith in the Future will focus on building enrollment, development and marketing. It will also help push some educational initiatives — for example, partnerships with colleges and universities, sophisticated technology education, and new language programs.
Some of that work has already begun. Hanway said that area Catholic schools’ enrollment is up over projections, and that new language programs, including Mandarin classes, will be in place in some schools in September.
The schools’ identity, mission and curriculum will still be overseen by the Office of Catholic Education, Fitzgerald said.
“Anything that has to do with the Catholic identity of the schools — faith, morals, doctrine — will be completely the purview of the archdiocese as determined by the archbishop,” said Fitzgerald.
Catholic high school teachers are unionized, and those union contracts will not be affected. Teachers will remain employees of the archdiocese; when their current contract expires, they will negotiate with the archdiocese.
The move to independent management will position the Catholic school system to take advantage of the new voucher laws, the “Opportunity Scholarship Tax Credit” passed in the recent state budget. Foundation leaders, Fitzgerald said, will help schools develop strategies to attract students now attending schools deemed “failing” — most of them Philadelphia public schools.
“On the city side, we hear that there’s a lot of kids who need seats in better-performing schools, and we want to help,” Fitzgerald said. “There are many people — Catholic and non-Catholic — who would like to send their kids to Catholic schools, but can’t afford it.”
Hanway said he did not expect the foundation to increase tuition, which now averages about $6,000 a year, in order to raise revenue. “If anything,” he said, “we’d like to bring it down.”
He stressed that this is not a tearing down of the existing Catholic school system.
“We have some great people who have devoted their entire lives to this system,” he said. “We’re not saying to them, ‘What you’ve done hasn’t worked.’ Just the opposite. Catholic education in Philadelphia has a proud tradition, and our whole mission in life with this new arrangement is to see if we can’t create the environment where more kids can take advantage of it.”
--Kristen Graham and David O'Reilly