This article examines contract schools and their influence on U.S. education. Schools that are contracted out may be viewed as a privatization development that both parallels and builds upon the charter-school movement. They can be defined as publicly funded schools operated by an independent group of teachers and administrators under a contract with a public agency. This paper focuses on trends in education businesses over the past several years and discusses pioneering education management ventures, such as the Edison Project and TesseracT Group Inc. Education management organizations (EMOs) have found that the fast-growing charter movement creates a hospitable environment for entrepreneurial efforts. Although private-management efforts have generated intense scrutiny, it is difficult to judge their success or failure. The article describes the mixed results with these schools in Massachusetts, Michigan, and Arizona. Other issues that are examined include contract schools' profitability, efficiency, and the competition they face. Research has shown that many contract schools attempt to make a profit by eliminating extracurricular activities and by streamlining curricula. They also have a tendency to weed out at-risk students to boost test scores, particularly in those states that do not fund special-education students at higher levels than mainstream students. (Contains 34 references.) (RJM)