With a Friday deadline looming, Philadelphia Mayor John Street and Pennsylvania Gov. Mark Schweiker worked overtime Thursday to hash out a proposed state takeover of the crumbling city school system.

Negotiations went into overdrive after two tense weeks of contentious political maneuvers by the Democratic mayor and the Republican governor in the months-long fight. Meanwhile, demonstrators took to the streets outside City Hall to fiercely protest the plan.

The last-minute negotiations followed the leak last week of a confidential report commissioned by Street and authored by his legal advisors on how to "cripple" a state-run school district if the city didn't get its way. The 67-page document circulated quickly, generating widespread outrage and media attention.

The incident followed news Schweiker had met in secret with executives from Edison Co., the for-profit school-management firm he wants to pay to run the school system. Philadelphia — the nation's seventh-largest district — has 215,000 students.

Both Republicans and Democrats decried the clandestine meeting and the proposed $101 million dollar Edison deal, saying the decision should go through a bidding process like any other government contract.

"None of the political players are exactly poster children for democracy in action," said Timothy Potts, director of the Pennsylvania School Reform Network, a group advocating improvements in public education. "This is truly a bipartisan scandal."

The debate escalated this fall after Schweiker succeeded former Gov. Tom Ridge, who resigned to become the nation's director of homeland security. Deadlines to hammer out a compromise have since come and gone, picket demonstrations outside City Hall have grown angrier and lawsuits have been filed or threatened.

Through it all, however, the city's citizens have had little voice. "They've been pretty effectively shut out of this," Potts said.

Not many dispute that the Philadelphia school system, which operates on an annual budget of $1.7 billion, is badly in need of reform. In addition to a $216 million budget deficit, the district is plagued by decrepit buildings; low academic achievement levels; a lack of supplies and security; inexperienced, underpaid teachers; and a preponderance of students from broken homes.

Some charge that the problems stem from the teacher union's reluctance to undergo reform, the city's misuse of existing monies and a gaping hole in state funding.

"This has to be a genuine partnership, in which the focus is on the kids — not on what's good for teachers' unions and patronage," said Dr. Ted Hershberg, who heads the Center for Greater Philadelphia at the University of Pennsylvania. "That's going to take resources and accountability."

Hershberg is working on a grant-funded study on overhauling the city's school system. He believes an entirely new model is in order, one with "more money, a different state formula and a new set of rules."

"The entire state has a deplorable system of financing its schools," he said. "But money is not sufficient. Money alone wins an equity battle but loses the school reform war."

Some call the state's education reform plan the most daring ever attempted — one that would give the administration of the district and 45 of its 60 worst-performing schools over to Edison.

State-run public education isn't a new concept — currently 18 states in the country have seized control of 40 districts, a handful have tried private management and another six have laws allowing them to take charge.

But results have been mixed. While states have largely been successful at shrinking budget deficits and renovating buildings, improving the quality of education has been much harder. A school district as large and complex as Philadelphia's could pose the greatest challenge to date.

"The use of a profit-making private company is unprecedented for this scale and scope of effort," said Michael Kirst, a Stanford University education professor who specializes in school reform.

Herschberg doesn't see a problem with having Edison try its hand at some of the worst schools, as long as it's set up as a pilot, trial-based program.

"If that's what it's going to take to bring in more state money, then let's try it," he said.

Schweiker press secretary Steve Aaron, state Education Secretary Charles Zogby and Street communications director Luz Cardenas did not return calls from Fox News seeking comment.

The Associated Press contributed to this report.