In 1992 the Baltimore City Public School District (Maryland) entered into a 5-year contract with Education Alternatives, Incorporated (EAI), to manage 9 of its schools. Baltimore's private-management model differed significantly from that of Dade County, Florida, in that EAI was given overall management responsibility. Data were gathered through a review of the contract, a site visit, reviews of school operating expenses and student-outcome data before and after private management, and interviews with stakeholders. Baltimore contracted with EAI to produce dramatic improvement in student outcomes, to save the school system money in noninstructional services and redirect the savings into the classrooms, and to implement its Tesseract instructional approach. EAI brought three corporate partners into the arrangement--KPMG Peat Marwick, Computer Curriculum Corporation, and Johnson Controls World Services, Inc.--under the group name Alliance for Schools That Work. The district terminated the contract in March 1996. The teachers union strongly opposed EAI's requirement that teaching assistants have at least 90 college credits. EAI transferred less-credited teaching assistants, many of whom were experienced and from neighboring communities, to other schools. EAI's special-education inclusion model and the manner in which it was implemented also created conflict. The primary reason for termination of the contract, however, was disagreement about financial terms; the district wanted to reduce the amount paid to EAI. EAI brought about individualized instruction, greater access to technology, and improved building maintenance and repair; and it served as a catalyst for improved efficiency. Despite these benefits, students' scores on standardized achievement tests did not improve, and there was no difference, compared with other schools, in test scores and attendance rates. (LMI)