(FORTUNE Magazine) – ON THE DAY he was leaving for college, Benny (not his real name) had a last- minute crisis. His mother and her boyfriend, both crack addicts, stole his train fare. At a loss about what to do, Benny telephoned his mentor, the man who had guided him through his senior year at H.D. Woodson High School in inner-city Washington, D.C. The mentor, a manager at the Federal National Mortgage Association, jumped in his car, picked Benny up at home, and drove him 500 miles south so he could enroll for his freshman year. Seven years ago, when the government released its scathing indictment of the public school system, A Nation at Risk, corporate America was doing very little to help the elementary- and secondary-school crowd. These days Fannie Mae's mentor program is just one small example of the many ways big business is trying to fix education. Leading the field are such companies as IBM, Exxon, Coca-Cola, RJR Nabisco, and Citicorp, which have mounted a virtual crusade to help save the public schools. Says IBM CEO John Akers: ''We're starting to see a groundswell.'' Of the $2.1 billion that business donated to educational causes in 1988, only about 10% went to the public schools, according to the Council for Aid to Education; the rest was allocated to universities and vocational schools. But that figure is up dramatically. Five years ago, for example, IBM, the biggest corporate contributor to U.S. education, put no money at all toward public schools. In 1989 about 10% of Big Blue's $58 million education budget went to kindergarten through 12th grade. Within the past few months Coca-Cola and RJR announced new educational programs for elementary and secondary schools; Coke will spend a significant portion of its new $50 million, multiyear education budget on precollege students, while RJR, through its foundation, will donate $30 million over five years.

These companies have found that a dual approach to public school reform works best. On the macro level, CEOs like Akers, Roberto Goizueta of Coca- Cola, and Lou Gerstner of RJR are aggressively pursuing long-term programs to foment revolutions in curriculum and school management. As Gerstner puts it, ''We said to ourselves, 'Let's fund radical change. Let's back the risk takers.' '' On the micro level, businesses are trying to make school more rewarding for one student at a time. They are promoting such projects as tuition assistance, tutoring, and mentoring. Small-scale programs can never bring about the total reform the American educational system needs. And some critics dismiss these ''feel good'' efforts for that reason. But the public schools are so desperate for resources that any amount of money, time, or expertise that companies can provide will help. With over 100,000 business-school partnerships formed since 1983, the aid to individual kids can literally be lifesaving. The Fannie Mae program is a textbook example of an idea that works. Two years ago the financial services company allocated $1 million to what it calls the Futures 500 Club, a ten-year mentor program at Woodson High. A seven-story concrete building known as the Tower of Power, Woodson is a typical inner-city minority school. Rather than go after the marginal students in the school's 1,150 population, Fannie Mae decided to focus on those showing promise. Any Woodson student who gets all A's and B's in a single semester is assigned a Fannie Mae mentor, employees who have volunteered to be a big brother or sister to youngsters like Benny. They help with problems at home and at school. In a second phase of the program, the mentors help the Futures 500 members get summer jobs with Fannie Mae and other companies. At Fannie Mae the students take morning courses in writing, goal setting, and career development; in the afternoon they work as clerks and proofreaders, earning $6.20 an hour. The company also awards each participant $500 a semester, which is put into an account earmarked for college tuition. Since its inception 18 months ago, the Futures 500 program has boosted the number of A and B students at the Tower of Power from 33 to 130. As for those kids who need the most help, Fannie Mae hopes its program will act as an incentive to hit the books. Says Lucile Christian, Woodson's principal: ''We're seeing kids who usually get C's being worried and working harder.'' Such hand-holding programs as Fannie Mae's do seem to work. In a recent Louis Harris poll of 400 high school students around the country, the vast majority credited their mentors with helping them improve their grades, stay off drugs, and pick a career. Like Fannie Mae, Coca-Cola is attempting to give students incentives for staying in school. Its innovative $400,000 dropout-prevention program in San Antonio is another success story. About four years ago Coke approached Jose Cardenas, the executive director of the Intercultural Development Research Association -- a nonprofit group dedicated to educational reform -- and asked him to set up programs to help Hispanic students. Cardenas focused on two of San Antonio's school districts, picking a group of high school students and seventh- and eighth-graders who, on the basis of poor performance, had a 95% chance of dropping out. Each week the students tutored kindergarten and first- graders for an hour at a nearby elementary school, helping them learn math and their ABCs. They earned the minimum wage for their work. Everyone has come out ahead. The older students have been forced to polish up their own reading and writing skills, and the younger ones have gotten a jump start with theirs. Most important: The younger children look up to the older ones, who gain a strong sense of self-esteem. Says one of the tutors: ''I have this kid depending on me. I can't let him down.'' Since the start of the program, the dropout rate in this group of 500 high-risk pupils has plummeted to less than 5%. Last month Coke targeted an additional $1.4 million to expand the program into other parts of Texas and in California, Florida, and New York. Such successes have not distracted companies from the larger agenda. The Business Roundtable, an organization of 200 CEOs from the largest American corporations, believes the schools will never really improve unless the states overhaul their antiquated education laws. It is all but impossible, for example, for school systems to fire incompetent teachers; they just shuffle them from one location to the next. IBM's Akers, who chairs the Roundtable's education task force, has persuaded 165 CEOs to adopt a state and to work closely with the governor, legislators, and educators to pass and implement laws for systemic change. The Roundtable plan is no short-term fix: It calls for a ten-year commitment from every company. Akers, who inherited a zeal for education from his late grandfather, a headmaster at Brookline High in Massachusetts, says he would like the CEOs to spend as much as 10% of their time -- admittedly a lot to ask of busy corporate chiefs -- on the public schools. In addition, each chief executive has pledged money and volunteers from his company to help enact changes. With the Roundtable representing some ten million U.S. employees, such help is not inconsequential. Still, Akers has no illusions about how tough the job will be. ''It takes a long time to change people's minds, even in a corporation where you have control,'' he says. ''The public school system is the most dispersed, decentralized, and politicized organization you'll ever see.'' IN MIAMI, CHICAGO, and other cities, big business is backing school-based management, an increasingly popular reform in which principals and teachers, not politicians, set budgets and shape curriculum. Staffs at each school, rather than some centralized state group, determine whether it is better to use the Upanishads or Updike to teach literature, and they decide what budgetary item is more essential -- additional teachers, for instance, or better computers.

As corporate America discovered during its own wrenching restructuring of middle management in the 1980s, pushing authority down the ranks -- the end result of school-based management -- requires new skills. Recognizing this need, IBM, Xerox, and AT&T now offer selected public school teachers, principals, and administrators the same training in finance, leadership, teamwork, and communication that they give their own managers. Big Blue has authorized local managers in all 50 states to make corporate trainers available to school systems that ask for help. Chicago's Corporate/Community School shows school-based management at its best. Two years ago some 16 area corporations, including Sears, Baxter International, and United Airlines, donated $2 million to start a model school that would prove that the public education system could work. The Corporate/ Community School, which runs from preschool to fifth grade, opened its doors a year later. It has selected its 200 minority students by lottery from Chicago's bombed-out Lawndale section. Here the principal and the teachers really run the show. Known around the halls as the CEO, principal Elaine Mosley has the authority to give raises to good teachers and fire the bad ones -- she's already let one go. Says Mosley: ''I'm the jury and the judge.'' She's also on trial herself; if reading and math scores don't go up, she's out at the end of her three-year contract. IT'S OBVIOUS, from the Corporate/ Community School's clean but modest classrooms, the watercolors on the walls, and the clever science projects on the shelves, that this is a happy environment for learning. On the wall of Mosley's office is a plaque that sums up her philosophy: CHILDREN NEED LOVE THE MOST WHEN THEY DESERVE IT THE LEAST. With boundless energy, she spends her day roaming from class to class, getting to know the children and cheerleading with the eight teachers. Says Mosley, who used to run a suburban Chicago elementary school: ''All this is possible and doable in every school. It only requires focus and believing that every child deserves the highest-quality education possible.'' The Corporate/Community School is the brainchild of Joe Kellman, a flamboyant Chicago entrepreneur who built a small windshield replacement business into a $100-million-a-year chain. Now he travels the country like a latter-day circuit rider, delivering to business audiences a sermon called ''The Maddening of America.'' In it he argues that the country's inability to educate vast numbers of citizens is creating a social time bomb and that Americans lack only the moral and political will needed to defuse it. Says he: ''It's so easy. I can't understand why some city or state doesn't want to try the corporate style of management. I don't see why schools can't be run as well as IBM.'' Kellman's critics include Fritz Edelstein, senior policy fellow at the National Alliance of Business, a nonprofit organization that tracks business/ school partnerships. Edelstein, who would like to see Kellman succeed, cautions that his institution is basically a private school that may cost more to run than a public one. What's more, Edelstein points out, it will be a long time before the system makes it easy for principals to fire incompetent teachers. To which Kellman responds that if the states and the unions truly want change, they should give principals more power to fire. He also contends that cutting bureaucratic fat, as Corporate/Community School has done, can save public schools as much as 30% of their annual budget -- which can be used for much needed support staff. In the Chicago public school system, only one nurse ministers to every 3,500 students; at Kellman's school the ratio is 1 to 200, good enough to let nurse Phyllis Pelt keep track of her kids. If a child doesn't show up, the school nurse calls his or her home to ask why. The school found that the major reason for absenteeism was, of all things, dental problems, both real and fabricated. The nurse now arranges to send the kids to the University of Illinois College of Dentistry for treatment. The students also keep toothbrushes in their classrooms and brush vigorously after meals along with their teachers. Radical reform isn't limited to school-based management. Corporate giants like Citicorp, Exxon, and RJR are putting their dollars, and influence, behind curriculum reform. Citicorp has given $3 million and Exxon $1 million to Theodore Sizer, a professor of education at Brown University, who advocates fundamental changes in the classroom. Over the past six years Sizer, a former dean of Harvard's school of education, has been creating his Coalition of Essential Schools, a network of more than 50 reform-minded schools. Sizer's idea is: Get rid of the traditional method of a teacher lecturing in front of rows of students and replace it with personalized, active learning in small classes and teams. Teachers act as coaches, advising and encouraging students; students take fewer courses, concentrating on integrating essential skills rather than covering the academic waterfront. For example, ninth- graders at Thayer High School in Winchester, New Hampshire, worked with their science, English, and social studies teachers to write an 89-page book about their town. In most schools students pass only after showing a mastery of the subjects studied. After several years, says Sizer, ''students are going to school more regularly and pursuing higher education in greater numbers. Plus, they stand tall and look you in the eye.'' At Thayer High, one of his biggest successes so far, the number of students going on to college has risen from 10% to 55%. For the most part, however, Sizer's program has hit roadblocks. Teachers fearful of change, crazy-quilt regulations, wary unions, and a host of other political barriers -- all have stymied him in most places where he has tried reform. Still, as Sizer's backers know, patience is the byword. Says Exxon's Donald Guertin, who heads the company's education foundation: ''We're looking for programs that will have an impact over time.'' THE MOST DIRECT form of corporate involvement may well be a new concept called satellite schools. Two years ago American Bankers Insurance Group, a firm in Miami, Florida, with assets of $1 billion, started the first in the country on a patch of land next to its headquarters. The company-built pink- stucco structure, with a small but well-equipped playground, serves 75 children of its employees. The Dade County public school system provides the teachers and curriculum for the school, which goes from kindergarten through second grade. American Bankers paid $350,000 to build it and allots $60,000 a year for its upkeep. Employees pay no tuition: The school is public. Parents at American Bankers now spend more time with their children -- the family that commutes together communes together. If mom or dad needs a quick conference with the teacher or to comfort a sick, hurt, or scared child, the school is right there. Since the Satellite Learning Center opened, job turnover and absenteeism at the company have decreased, and recruiting employees has become easier. The kids have better attendance than the city average and higher reading scores. Satellite school programs do have limitations. The concept isn't practical beyond second grade -- funds for the gyms, theaters, and stadiums that older children need are hard to raise. Big-city businesses that operate in skyscrapers probably couldn't afford to carve out expensive real estate for a school. Nevertheless, three more satellite schools have already started up in Florida, and Minneapolis will open one in the fall. Magnet schools, which offer special enrichment programs like art, science, or dance in a school system, have been around for some years. In a variation on the theme, such companies as American Express and Burger King have designed career-based academy programs, which offer a combination of classroom training and on-the-job experience. American Express started its first Academy of Finance in 1982; now over 2,000 students participate in 35 academies nationwide. Burger King has an academy designed to prepare youngsters for careers in the restaurant industry that are more challenging than burger flipping. Last year, Ryder, Knight-Ridder, and Coopers & Lybrand helped start an Academy for International Business and Finance at Miami's Jackson High School. Jackson seems like the last place to find tomorrow's business leaders. A dilapidated, Spanish-style complex built in the 1920s and not renovated since, the school is located in one of Miami's most crime-ridden neighborhoods. But principal Freddie Woodson, a former guard for the Miami Dolphins, believes that if his students are ever to break out of the cycle of poverty, they must know how the rest of the world operates. Accordingly, the academy's corporate sponsors helped shape the curriculum -- which, like a mini Wharton School of Business, includes leadership and ethics courses. The companies provide speakers on such topics as how the SEC works. Summer internships are planned at local banks, travel agencies, and accounting firms. Word is out that the program works; about 125 new students have signed on for next year -- more than doubling the current enrollment. To individual students and their families, such programs are a godsend. Make no mistake, however, about the overall prospect. Everyone on the front lines of the education fight knows it will take at least ten years of hard work to see real results. For one thing, business has barely begun to use its muscle in helping state legislatures change the system from within. In addition, corporate America's input has been limited all too often to empty ''adopt a school'' or partnership programs, in which a CEO simply drops off a check with the principal for books, computers, and maybe new band uniforms. What's missing from many of these programs is interaction, commitment, caring. Says former Procter & Gamble chairman Brad Butler, a crusader for public school reform: ''One of the most important things a company can do is serve as a source for volunteers.'' But why should business get so involved in the first place? After all, companies pay taxes, lots of taxes; at the very least shouldn't they get a literate work force and smart consumers for their money? The plain fact: That isn't happening. Until everyone -- politicians, parents, principals, and business leaders alike -- get deeply involved, the education crisis will not be solved. Says RJR's Gerstner: ''Education is too important to be left to the educators. It's everyone's problem.''

BOX: SOURCES OF HELP

Committee for Economic Development 477 Madison Avenue New York, N.Y. 10022 212-688-2063

Coalition of Essential Schools Box 1938 Brown University Providence, R.I. 02912 401-863-3384

Corporate/Community Schools of America 407 South Dearborn Street Suite 1725 Chicago, Ill. 60605 312-427-0468

Satellite Learning Center 11222 Quail Roost Drive Miami, Fla. 33132 305-235-7460

Parents as Teachers University of Missouri-St. Louis 8001 Natural Bridge Road St. Louis, Mo. 63121 314-553-5738

American Society for Training and Development 1630 Duke Street Box 1443 Alexandria, Va. 22313 703-683-8119

BOX: FACTS

A black male child who was born in California in 1988 is three times as likely to be murdered as he is to be admitted to the University of California.

New York Life sends some of its insurance forms to Ireland for processing because it cannot find enough qualified clerks in the U.S.