Submitted by Elaine Magliaro, Guest Blogger
In a 2010 New York Times article titled Charter Schools’ New Cheerleaders: Financiers, reporters Tripp Gabriel and Jennifer Medina wrote the following about what was going on in the state of New York:
Wall Street has always put its money where its interests and beliefs lie. But it is far less common that so many financial heavyweights would adopt a social cause like charter schools and advance it with a laserlike focus in the political realm…
Although the April 9 breakfast with Mr. Cuomo was not a formal fund-raiser, the hedge fund managers have been wielding their money to influence educational policy in Albany, particularly among Democrats, who control both the Senate and the Assembly but have historically been aligned with the teachers unions.
They[hedge fund managers] have been contributing generously to lawmakers in hopes of creating a friendlier climate for charter schools. More immediately, they have raised a multimillion-dollar war chest to lobby this month for a bill to raise the maximum number of charter schools statewide to 460 from 200.
That same year—2010—Juan Gonzalez believed that he had uncovered one of the reasons why hedge fund managers, some wealthy Americans, and the executives of some Wall Street banks had become such big proponents of charter schools and had gotten involved in their development. Gonzalez said the banks and other wealthy investors had been making “windfall profits” by taking advantage of “a little-known federal tax break to finance new charter-school construction.” That little know tax break, the New Markets Tax Credit, can be so lucrative, Gonzalez said, “that a lender who uses it can almost double his money in seven years.” He added that the tax break “gives an enormous federal tax credit to banks and equity funds that invest in community projects in underserved communities, and it’s been used heavily now for the last several years for charter schools.”
Gonzalez focused his research on the city of Albany—which, he wrote, “boasts the state’s highest percentage of charter school enrollments.” He provided an explanation of how lucrative investments in building new charter schools can be:
What happens is the investors who put up the money to build charter schools get to basically or virtually double their money in seven years through a thirty-nine percent tax credit from the federal government. In addition, this is a tax credit on money that they’re lending, so they’re also collecting interest on the loans as well as getting the thirty-nine percent tax credit. They piggy-back the tax credit on other kinds of federal tax credits like historic preservation or job creation or brownfields credits.
The result is, you can put in ten million dollars and in seven years double your money. The problem is, that the charter schools end up paying in rents, the debt service on these loans and so now, a lot of the charter schools in Albany are straining paying their debt service–their rent has gone up from $170,000 to $500,000 in a year or–huge increases in their rents as they strain to pay off these loans, these construction loans. The rents are eating-up huge portions of their total cost. And, of course, the money is coming from the state.
Brighter Choice Foundation
According to Gonzalez, “a nonprofit called the Brighter Choice Foundation had employed the New Markets Tax Credit to arrange private financing for five of the city’s nine charter schools.” By 2010, many of those charter schools were struggling to pay escalating rents, which were “going toward the debt service that Brighter Choice incurred during construction.”
Gonzalez gave examples of the escalating rents:
The Henry Johnson Charter School saw the rent for its 31,000-square-foot building skyrocket from $170,000 in 2008 to $560,000 in 2009.
The Albany Community School‘s went from from $195,000 to $350,000.
Green Tech High Charter School rent rose from $443,000 to $487,000.
Gonzalez reported that a number of Albany’s charter schools have fallen into debt to the Brighter Choice Foundation. He wondered why the schools’ financial problems hadn’t raised eyebrows with state regulators or caused concern for the charters’ school boards. He noted that the powerful charter school lobby had “so far successfully battled to prevent independent government audits of how its schools spend their state aid.” He added that “key officers of Albany’s charter school boards are themselves board members, employees or former employees of the Brighter Choice Foundation or its affiliates.”
Gonzalez said that the city of Albany is “exhibit A in the web of potential conflicts that keep popping up in the charter school movement.” It appears Gonzalez is correct about Albany being just one example of what’s going on in the movement. Brighter Horizons isn’t the only “foundation” or company making profits off of charter schools.
Imagine Schools Inc.
There is a national charter school company called Imagine Schools Inc., one of the biggest for-profit charter school management companies in the country. Matthew Haag of the Dallas Morning News wrote about Imagine Schools in 2008:
A national charter school company that plans to open new schools in Texas, including one in McKinney, has run afoul of an education official in Nevada and two of its former principals, and they all pose the same question.
Does Imagine Schools Inc. force its charter schools to spend too much money on complex real estate deals and not enough money on teachers and academic programs?
Virginia-based Imagine Schools has emerged as one of the largest for-profit charter school management companies, running several dozen schools in 12 states. It plans to open Imagine International Academy of North Texas in McKinney next year.
Charter schools house their students in Texas in a variety of ways, according to the former Charter Resource Center of Texas, from renting space in a shopping center to doing complex property transactions such as Imagine’s.
Typically, after an Imagine-managed charter school gets approval to open, Schoolhouse Finance, Imagine’s real estate arm, purchases a campus and charges the school rent. After the school begins to pay that rent, Schoolhouse sells the campus to a real estate investment trust, which then leases it back to Schoolhouse.
The charter school eventually sends rent payments – in one case upward of 40 percent of the school’s entire publicly funded budget – to two for-profit companies.
“The arrangement is very lucrative because it’s a direct conduit to public funds. The school [property] is paid off with public funds,” said Gary Horton, who oversees charter school funding for the Nevada Department of Education. Nevada’s charter schools include Imagine’s 100 Academy of Excellence in North Las Vegas.
Haag added that charter schools in Texas are generally exempt from the kind of financial oversight that “state education officials give school districts. The agency annually grades how school districts spend their money, but not yet for charters.”
Haag explained what happened with 100 Academy of Excellence in Nevada:
In Nevada, the state awarded 100 Academy of Excellence in North Las Vegas a charter, and the school hired Imagine to run its educational services. Schoolhouse Finance, the Imagine subsidiary, paid for the school’s property and building construction. Schoolhouse Finance then leased the property to the charter school for $1.4 million a year.
Next, Schoolhouse Finance sold the $8 million property to a real estate investment trust, Kansas City, Mo.,-based Entertainment Properties Trust. The trust then leased the property back to Schoolhouse Finance at a lower rate than the charter school pays.
Money remaining after Schoolhouse Finance pays its lease to the trust goes to Imagine Schools Inc. This tiered lease system has led to 10 percent returns on investment for owners and investors in the two companies, Sharp said.
But 100 Academy of Excellence’s annual rent, which represents 40 percent of its annual state-funded budget, leaves the school struggling to pay for textbooks, according to Nevada Department of Education records.
“My concern is that I have to make payments [to the charter school], and I know the payments aren’t going to the kids,” said Horton, a persistent critic of Imagine’s operations.
Stephanie Strom reported in the New York Times in 2010 that soon after 100 Academy of Excellence opened in 2006, the school board began documenting problems. Its bookkeeping practices were lax and it lacked a sufficient number of licensed teachers. The school had also violated regulations requiring competitive bidding when it paid Imagine “for necessities like furniture and computers.”
Strom added that the school had had three principals in four years. She said that two of the principals had been “pressured to resign after complaining that there was not enough money for essentials like textbooks and a school nurse.”
In addition, Strom reported that regulators in a number of states had found that Imagine Schools had “elbowed the charter holders out of virtually all school decision making — hiring and firing principals and staff members, controlling and profiting from school real estate, and retaining fees under contracts that often guarantee Imagine’s management in perpetuity.”
The regulators claimed that Imagine’s arrangements allowed it to use “public money with little oversight.” Marc Dean Millot, a former president of the National Charter Schools Alliance, said, “Under either charter law or traditional nonprofit law, there really is no way an entity should end up on both sides of business transactions.” He added, “Imagine works to dominate the board of the charter holder, and then it does a deal with the board it dominates — and that cannot be an arm’s length transaction.”
White Hat Management
In a 2011 Pro-Publica article titled Charter Schools Outsource Education to Management Firms, With Mixed Results, Sharona Coutts wrote about charter schools run by White Hat Management in Ohio:
Since 2008, an Ohio-based company, White Hat Management, has collected around $230 million to run charter schools in that state. The company has grown into a national chain and reports that it has about 20,000 students across the country. But now 10 of its own schools and the state of Ohio are suing, complaining that many White Hat students are failing, and that the company has refused to account for how it has spent the money.
The dispute between White Hat and Ohio, which is unfolding in state court in Franklin County, provides a glimpse at a larger trend: the growing role of private management companies in publicly funded charter schools.
Coutt reported that about one third of the charter schools in this country are now run by management companies, which can be either for-profit or non-profit, and not run locally. These companies not only have the right to hire and fire staff—they can also develop curricula and discipline students. She added that while the “shortcomings of traditional public schools” have been under scrutiny in recent years—“a look at the private sector’s efforts to run schools in Ohio, Florida and New York shows that turning things over to a company has created its own set of problems for public schools.” She said that government data on charter schools suggest that those with “for-profit managers have somewhat worse academic results than charters without management companies, and a number of boards have clashed with managers over a lack of transparency in how they are using public funds.”
The Ohio Department of Education joined the lawsuit in the fall of 2010. It asked the court to help the “group of public schools break free from dominance by private interests.” The department argued in a court motion that things had not gone well under White Hat’s management. It said, “Most of the schools have received the equivalent of D’s and F’s on their State report cards and their performance has declined during the term of the agreements.”
James D. Colner, an attorney representing the schools, said, “A big part of the argument here is being able to follow the money. We have no idea whether they’re earning a reasonable profit or not. We have no idea whether the money is being efficiently or effectively spent for our students.” That should be of great concern to citizens of Ohio. Coutt contends that oversight of the industry has lagged. She added that it has resulted “in a patchwork of state and district regulation, which experts say is failing to safeguard the interests of children and taxpayers.”
Closing
Laura Clawson (Daily Kos):
In short, education reform is a good cause. Experimentation is good — and some of the best charter schools today have experimented in what could be valuable ways. But the push, coming from Wall Street and the extremely wealthy, for this specific form of charter schools, for this specific way of funding them, is part of both short-term and long-term drives for profit that will accrue to the wealthiest while weakening the middle class. The question is not whether we should back away from the cause of education, or the cause of education reform. The question is in whose interests it should be done and who should most strongly influence the outcomes.
SOURCES & FURTHER READING
Juan Gonzalez: Big Banks Making a Bundle on New Construction as Schools Bear the Cost (Democracy Now!)
Albany charter cash cow: Big banks making a bundle on new construction as schools bear the cost (New York Daily News)
Show us the money: “Master Class” for private equity investors in public education (Parents across America)
“New market tax credits” and charter schools (Parents across America)
Cashing in on the charters: Petrino DiLeo exposes a new attempt by Wall Street to make money off our schools (Socialist Worker)
Charter school company with plans for McKinney is criticized (Susan Ohanian)
The big business of charter schools (Washington Post)
Evil Ed, inc: the Wall Street-charter school connection (Open Left)
Corporations Advise School Closings, While Private Charters Suck Public Schools Away: As charter proponents aim to cash in on major investment returns, Philly braces for a massive schools shakeup. (AlterNet)
Charter Schools’ New Cheerleaders: Financiers (New York Times)
For School Company, Issues of Money and Control (New York Times)
Charter Schools Outsource Education to Management Firms, With Mixed Results (Pro Publica)
Education: follow the money (Daily Kos)
Wall Street Hearts Charter Schools, Gets Rich Off Them (FireDogLake)
Wall Street Behind Charter School Push (Huffington Post)
Got Dough? How Billionaires Rule Our Schools
By Joanne Barkan – Winter 2011
http://www.dissentmagazine.org/article/got-dough-how-billionaires-rule-our-schools
Excerpt:
The cost of K–12 public schooling in the United States comes to well over $500 billion per year. So, how much influence could anyone in the private sector exert by controlling just a few billion dollars of that immense sum? Decisive influence, it turns out. A few billion dollars in private foundation money, strategically invested every year for a decade, has sufficed to define the national debate on education; sustain a crusade for a set of mostly ill-conceived reforms; and determine public policy at the local, state, and national levels. In the domain of venture philanthropy—where donors decide what social transformation they want to engineer and then design and fund projects to implement their vision—investing in education yields great bang for the buck.
Hundreds of private philanthropies together spend almost $4 billion annually to support or transform K–12 education, most of it directed to schools that serve low-income children (only religious organizations receive more money). But three funders—the Bill and Melinda Gates Foundation, the Eli and Edythe Broad (rhymes with road) Foundation, and the Walton Family Foundation—working in sync, command the field. Whatever nuances differentiate the motivations of the Big Three, their market-based goals for overhauling public education coincide: choice, competition, deregulation, accountability, and data-based decision-making. And they fund the same vehicles to achieve their goals: charter schools, high-stakes standardized testing for students, merit pay for teachers whose students improve their test scores, firing teachers and closing schools when scores don’t rise adequately, and longitudinal data collection on the performance of every student and teacher. Other foundations—Ford, Hewlett, Annenberg, Milken, to name just a few—often join in funding one project or another, but the education reform movement’s success so far has depended on the size and clout of the Gates-Broad-Walton triumvirate.
Every day, dozens of reporters and bloggers cover the Big Three’s reform campaign, but critical in-depth investigations have been scarce (for reasons I’ll explain further on). Meanwhile, evidence is mounting that the reforms are not working. Stanford University’s 2009 study of charter schools—the most comprehensive ever done—concluded that 83 percent of them perform either worse or no better than traditional public schools; a 2010 Vanderbilt University study showed definitively that merit pay for teachers does not produce higher test scores for students; a National Research Council report confirmed multiple studies that show standardized test scores do not measure student learning adequately. Gates and Broad helped to shape and fund two of the nation’s most extensive and aggressive school reform programs—in Chicago and New York City—but neither has produced credible improvement in student performance after years of experimentation.
To justify their campaign, ed reformers repeat, mantra-like, that U.S. students are trailing far behind their peers in other nations, that U.S. public schools are failing. The claims are specious. Two of the three major international tests—the Progress in International Reading Literacy Study and the Trends in International Math and Science Study—break down student scores according to the poverty rate in each school. The tests are given every five years. The most recent results (2006) showed the following: students in U.S. schools where the poverty rate was less than 10 percent ranked first in reading, first in science, and third in math. When the poverty rate was 10 percent to 25 percent, U.S. students still ranked first in reading and science. But as the poverty rate rose still higher, students ranked lower and lower. Twenty percent of all U.S. schools have poverty rates over 75 percent. The average ranking of American students reflects this. The problem is not public schools; it is poverty. And as dozens of studies have shown, the gap in cognitive, physical, and social development between children in poverty and middle-class children is set by age three.
Drilling students on sample questions for weeks before a state test will not improve their education. The truly excellent charter schools depend on foundation money and their prerogative to send low-performing students back to traditional public schools. They cannot be replicated to serve millions of low-income children. Yet the reform movement, led by Gates, Broad, and Walton, has convinced most Americans who have an opinion about education (including most liberals) that their agenda deserves support.
Given all this, I want to explore three questions: How do these foundations operate on the ground? How do they leverage their money into control over public policy? And how do they construct consensus? We know the array of tools used by the foundations for education reform: they fund programs to close down schools, set up charters, and experiment with data-collection software, testing regimes, and teacher evaluation plans; they give grants to research groups and think tanks to study all the programs, to evaluate all the studies, and to conduct surveys; they give grants to TV networks for programming and to news organizations for reporting; they spend hundreds of millions on advocacy outreach to the media, to government at every level, and to voters. Yet we don’t know much at all until we get down to specifics…
No Silver Bullet
The sorry tale of the Gates Foundation’s first major project in education reform has been told often, but it’s key to understanding how Gates functions. I’ll run through it briefly. In 2000 the foundation began pouring money into breaking up large public high schools where test scores and graduation rates were low. The foundation insisted that more individual attention in closer “learning communities” would—presto!—boost achievement. The foundation didn’t base its decision on scientific studies showing school size mattered; such studies didn’t exist. As reported in Bloomberg Businessweek (July 15, 2010), Wharton School statistician Howard Wainer believes Gates probably “misread the numbers” and simply “seized on data showing small schools are overrepresented among the country’s highest achievers….” Gates spent $2 billion between 2000 and 2008 to set up 2,602 schools in 45 states and the District of Columbia, “directly reaching at least 781,000 students,” according to a foundation brochure. Michael Klonsky, professor at DePaul University and national director of the Small Schools Workshop, describes the Gates effect this way:
Gates funding was so large and so widespread, it seemed for a time as if every initiative in the small-schools and charter world was being underwritten by the foundation. If you wanted to start a school, hold a meeting, organize a conference, or write an article in an education journal, you first had to consider Gates (“Power Philanthropy” in The Gates Foundation and the Future of Public Schools, 2010).
In November 2008, Bill and Melinda gathered about one hundred prominent figures in education at their home outside Seattle to announce that the small schools project hadn’t produced strong results. They didn’t mention that, instead, it had produced many gut-wrenching sagas of school disruption, conflict, students and teachers jumping ship en masse, and plummeting attendance, test scores, and graduation rates. No matter, the power couple had a new plan: performance-based teacher pay, data collection, national standards and tests, and school “turnaround” (the term of art for firing the staff of a low-performing school and hiring a new one, replacing the school with a charter, or shutting down the school and sending the kids elsewhere).
To support the new initiatives, the Gates Foundation had already invested almost $2.2 million to create The Turnaround Challenge, the authoritative how-to guide on turnaround. Secretary of Education Arne Duncan has called it “the bible” for school restructuring. He’s incorporated it into federal policy, and reformers around the country use it. Mass Insight Education, the consulting company that produced it, claims the document has been downloaded 200,000 times since 2007. Meanwhile, Gates also invested $90 million in one of the largest implementations of the turnaround strategy—Chicago’s Renaissance 2010. Ren10 gave Chicago public schools CEO Arne Duncan a national name and ticket to Washington; he took along the reform strategy. Shortly after he arrived, studies showing weak results for Ren10 began circulating, but the Chicago Tribune still caused a stir on January 17, 2010, with an article entitled “Daley School Plan Fails to Make Grade.”
Six years after Mayor Richard Daley launched a bold initiative to close down and remake failing schools, Renaissance 2010 has done little to improve the educational performance of the city’s school system, according to a Tribune analysis of 2009 state test data.
…The moribund test scores follow other less than enthusiastic findings about Renaissance 2010—that displaced students ended up mostly in other low performing schools and that mass closings led to youth violence as rival gang members ended up in the same classrooms. Together, they suggest the initiative hasn’t lived up to its promise by this, its target year.
Last fall, Daley announced that he wouldn’t run again for mayor; Ron Huberman, who replaced Duncan as schools CEO, announced that he would leave before Daley; and Rahm Emanuel, preparing to run for Daley’s job, announced that he would promote another privately funded reform campaign for Chicago’s schools. “Let’s raise a ton of money,” he told the Chicago Tribune (October 18, 2010). Eminently doable.
Follow
In theory it’s about better education…. But in reality… Busting unions, benefit dollars, return on investment,…. I’m not a proponent of charter schools for that reason…. They have no accountability except to investors….
Bron,
There are many thousands of schools in this country–some are excellent…some are not. Yet, what we continually hear is that American education is failing our youth. What one has to do first is to take a good look at the failing schools and at the successful schools. We need to discover the reasons why the bad schools are failing and the good schools are successful. (I think many of us already know what some of those reasons are.)
Much of my objection to the current school reform movement is that it is destroying education in the best public schools. Too much reliance has been put on test scores to assess the progress of students and the effectiveness of classroom teachers.
eLAINE:
He has written for them but I dont think he is paid by them [I could be wrong], he is a college prof.
I cant link to the entire article because it is by subscription only, the part I posted is what can be seen publically.
What would be interesting is to have a debate on this blog between you and Dr. Thompson. You know the problems with the public school system and probably have many ideas on how to fix the system and make it more efficient.
The Outrage of the Week
By Diane Ravitch on
May 3, 2011
http://blogs.edweek.org/edweek/Bridging-Differences/2011/05/the_outrage_of_the_week.html
Excerpt:
Dear Deborah,
It is way past time to get mad. Each week, it is hard to know which of the latest outrages against American public education is the worst.
Perhaps it was the agreement between the Gates Foundation and the Pearson Foundation to write the nation’s curriculum. When did we vote to hand over American education to them? Why would we outsource the nation’s curriculum to a for-profit publishing and test-making corporation based in London? Does Bill Gates get to write the national curriculum because he is the richest man in America? We know that his foundation is investing heavily in promoting the Common Core standards. Now his foundation will write a K-12 curriculum that will promote online learning and video gaming. That’s good for the tech sector, but is it good for our nation’s schools? Oh, and one more outrage: The Gates Foundation and the Eli Broad Foundation, both of which maintain the pretense of being Democrats and/or liberals, have given millions to former Florida governor Jeb Bush’s foundation, which is promoting vouchers, charters, online learning, test-based accountability, and the whole panoply of corporate reform strategies intended to weaken public education and remove teachers’ job protections.
Yes, indeed, the education reform business is booming. A recent article in Idaho details the campaign contributions of online learning companies to the state superintendent of instruction, who recently decided—surprise!—to mandate online learning and laptops for every student. This is the new face of corporate reform. It offers entree to the vast riches of the nation’s education industry, a sector that spends about $800 billion of public money at the local, state, and federal levels. Some refer to the No Child Left Behind Act as “no consultant left behind.” It has been and continues to be a bonanza for the testing, test preparation, and tutoring industries. Race to the Top has opened the door to many more consultants, charter operators, and turn-around strategists. The gold rush is on!
The scariest thought is that the Obama administration welcomes the corporatization of public education. Not only welcomes the rise of educational entrepreneurialism, but encourages it. U.S. Education Secretary Arne Duncan’s chief of staff Joanne Weiss, who has experience as an education entrepreneur, wrote the following in a blog for the Harvard Business Review:
“The development of common standards and shared assessments radically alters the market for innovation in curriculum development, professional development, and formative assessments. Previously, these markets operated on a state-by-state basis, and often on a district-by-district basis. But the adoption of common standards and shared assessments means that education entrepreneurs will enjoy national markets where the best products can be taken to scale.”
Yes, indeed, lots of opportunities for new businesses, smart investors, and a national marketplace for entrepreneurs. I would expect to read this sort of thing from the public relations department of Pearson or McGraw-Hill or one of the other industry leaders. But the chief of staff to the U.S. secretary of education?
This is what I don’t understand. The free market nearly collapsed our economy in September 2008. Why would anyone now think that our public schools should be turned over to the privatizers, entrepreneurs, and go-getters who have figured out how to market their wares, brand their products, and turn education into a lucrative business? I don’t mean to cast aspersion on American business. I like free markets, I like the range of goods and services they provide. I have no objection to people making a profit on their goods and services, but I also think that a decent society needs a vibrant public sector. Frankly, the handing over of public education to the free market makes me profoundly uneasy.
Bron,
Is Thompson affiliated with the Ayn Rand Center?
Education Profiteering; Wall Street’s Next Big Thing?
By Jeff Faux, Founder and now Distinguished Fellow at the Economic Policy Institute
Posted: 09/28/2012
http://www.huffingtonpost.com/jeff-faux/education-wall-street_b_1919727.html
Excerpt:
The end of the Chicago teachers’ strike was but a temporary regional truce in the civil war that plagues the nation’s public schools. There is no end in sight, in part because — as often happens in wartime — the conflict is increasingly being driven by profiteers.
The familiar media narrative tells us that this is a fight over how to improve our schools. On the one side are the self-styled reformers, who argue that the central problem with American K-12 education is low-quality teachers protected by their unions. Their solution is privatization, with its most common form being the privately run but publicly financed charter school. Because charter schools are mostly unregulated, nonunion and compete for students, their promoters claim they will, ipso facto, perform better than public schools.
On the other side are teachers and their unions who are cast as villains. The conventional plot line is that they resist change, blame poverty for their schools’ failings and protect their jobs and turf.
It is well known, although rarely acknowledged in the press, that the reform movement has been financed and led by the corporate class. For over twenty years large business oriented foundations, such as Gates (Microsoft), Walton (Wal-Mart) and Broad (Sun Life) have poured billions into charter school start-ups, sympathetic academics and pundits, media campaigns (including Hollywood movies) and sophisticated nurturing of the careers of privatization promoters who now dominate the education policy debate from local school boards to the US Department of Education.
In recent years, hedge fund operators, leverage-buy-out artists and investment bankers have joined the crusade. They finance schools, sit on the boards of their associations and the management companies that run them, and — most important — have made support of charter schools one of the criteria for campaign giving in the post-Citizens United era. Since most Republicans are already on board for privatization, the political pressure has been mostly directed at Democrats.
Thus, for example, when Andrew Cuomo wanted to get the support of hedge fund managers for his run for governor of New York, he was told to talk to Joe Williams, director of Democrats for Education Reform, a group set up to lobby liberals on privatization. Cuomo is now a champion of charter schools. As Joanne Barkan noted in a Dissent Magazine report, privatizers are even targeting school board elections, in one case spending over $630,000 to elect two members in a local school board race last year in Colorado.
Wall Street’s involvement in the charter school movement — when the media acknowledges it — is presented as an act of philanthropy. Perhaps, as critics claim, hedge funders are meddling in an area they know nothing about. But their motives are worthy. Indeed, since they send their own children to the best private schools, their concern for other people’s children seems remarkably altruistic. “Wall Street has always put its money where its interests of beliefs lie,” observed this New York Times article, “But it is far less common that so many financial heavyweights would adopt a social cause like charter schools and advance it with a laser like focus in the political realm.”
Yet, with the wide variety of social causes and charitable needs — poverty, health, housing, global warming, the arts, etc. — why would so many Wall Streeters focus laser-like on this particular issue? The Times suggest two answers. One is that the money managers are hard-nosed, data-driven investors “drawn to the business-like way in which many charter schools are run; their focus on results primarily measured by test scores.”
Twenty years ago, one might have reasonably believed that the private charter schools, which are managed to produce the numbers, would produce better outcomes — as measured by the numbers. But the overwhelming evidence is that they do not. The single most comprehensive study, by researchers at Stanford University, found that 17 percent of charter school students performed better than their public school counterparts, 46 percent no better and 37 percent worse. Stanford’s conclusions have been reinforced by virtually all of the serious research, including those at the University of California, the Economic Policy Institute and the policy research firm Mathematica.
Nor do charter schools seem more efficient. Those promoted as the most successful examples have been heavily subsidized by foundations and Wall Street donors. The film, Waiting for Superman that portrays a heroic charter school organizer fighting a selfish teachers union was widely hyped in the media — including popular TV shows like Oprah Winfrey’s. Yet, as Diane Ravitch, an assistant secretary of education under George H.W. Bush and a former charter school supporter turned critic, noted, the film neglected to report that the hero educator kicked out the entire first class of the school because their test scores were too low, that the school was heavily subsidized by the pro-reform foundations and that the hero took an annual salary of four hundred thousand dollars.
I am not sure I agree with his conclusion but this is what some people are thinking:
“I begin with my conclusion: The “public” school system is the most immoral and corrupt institution in the United States of America today, and it should be abolished. It should be abolished for the same reason that chattel slavery was ended in the 19th century: Although different in purpose and in magnitude of harm to its victims, public education, like slavery, is a form of involuntary servitude. The primary difference is that public schools force children to serve the interests of the state rather than those of an individual master.
These are—to be sure—radical claims, but they are true, and the abolition of public schools is an idea whose time has come. It is time for Americans to reexamine—radically and comprehensively—the nature and purpose of their disastrously failing public school system, and to launch a new abolitionist movement, a movement to liberate tens of millions of children and their parents from this form of bondage.”
C. Bradley Thompson
[music] Celebrate, Celebrate, dance to the music…
-end
Recall that commercial?
How about this one. Compliments of George Wallace et al.
[music] same tune as Celebrate:
Segregate, Segregate, dance to the music…
Charter Schools, Charter Schools,…
Same place different strokes for same folks….
JoeBob can go to the Charter School over in Vanceboro and avoid New Bern and all those Mexicans and blackfolk. Yessir. Why do they need to Mix? Jeso. Next thing ya know they will be in the church on Sunday.
[overheard at the Hess Station in Vanceboro.]
How Charter Schools Fleece Taxpayers
BY TIMOTHY NOAH
11/20/12
http://www.newrepublic.com/blog/plank/110355/its-easy-fleece-charter-schools#
Excerpt:
In government, if I help myself to taxpayer dollars, we call that embezzlement and I go to jail. In the private sector, if I help myself to taxpayer dollars, we call that innovation and I get hailed as a visionary exponent of public-private partnership. That’s the lesson of a Nov. 17 investigation by Anne Ryman of the Arizona Republic into the state’s charter schools.
In her examination of Arizona’s 50 largest nonprofit charter schools and all of Arizona’s nonprofit charter schools with assets exceeding $10 million, Ryman found “at least 17 contracts or arrangements, totaling more than $70 million over five years and involving about 40 school sites, in which money from the non-profit charter school went to for-profit or non-profit companies run by board members, executives or their relatives.” That says to me that in Arizona, at least, charter-school corruption isn’t the exception. It’s the rule. And that’s just in the nonprofit charter schools. Documentation for the for-profit schools is not publicly available. What are the odds that charter-school proprietors operating in the dark are less inclined to enrich themselves at public expense?
The self-dealing is entirely legal. All you have to do is get yourself an exemption from state laws requiring that goods and services be bid competitively. Clearly these exemptions aren’t difficult to acquire, because 90 percent of Arizona’s charter holders—not 90 percent of the charter schools surveyed by the Arizona Republic, but 90 percent of all the state’s charter schools—have acquired permanent exemptions from state competitive bidding requirements. No exemption has ever been withdrawn by the state. If you are a charter-school officer and you stand to benefit personally from some financial transaction with the school, you may not vote on whether to make the purchase. But that’s about the only rule.
The result? “The schools’ purchases from their own officials,” Ryman writes, “range from curriculum and business consulting to land leases and transportation services. A handful of non-profit schools outsource most of their operations to a board member’s for-profit company.” A nonprofit called Great Hearts Academies runs 15 Arizona charter schools. Since 2009, according to Ryman, the schools have purchased $987,995 in books from Educational Sales Co., whose chairman, Daniel Sauer, is a Great Hearts officer. And that doesn’t count additional book purchases made directly by parents. Six of the Great Hearts schools have links on their Web sites for parents who wish to make such purchases. The links are, of course, to Educational Sales Co. Since 2007 Sauer has donated $50,400 to Great Hearts. You can call that philanthropy, or you can call that an investment on which Sauer’s company received a return of more than 1800 percent. I’m not sure even Russian oligarchs typically get that much on the back end.
Profits and Questions at Online Charter Schools
By STEPHANIE SAUL
Published: December 12, 2011
http://www.nytimes.com/2011/12/13/education/online-schools-score-better-on-wall-street-than-in-classrooms.html?pagewanted=all&_r=0
Excerpt:
By almost every educational measure, the Agora Cyber Charter School is failing.
Nearly 60 percent of its students are behind grade level in math. Nearly 50 percent trail in reading. A third do not graduate on time. And hundreds of children, from kindergartners to seniors, withdraw within months after they enroll.
By Wall Street standards, though, Agora is a remarkable success that has helped enrich K12 Inc., the publicly traded company that manages the school. And the entire enterprise is paid for by taxpayers.
Agora is one of the largest in a portfolio of similar public schools across the country run by K12. Eight other for-profit companies also run online public elementary and high schools, enrolling a large chunk of the more than 200,000 full-time cyberpupils in the United States.
The pupils work from their homes, in some cases hundreds of miles from their teachers. There is no cafeteria, no gym and no playground. Teachers communicate with students by phone or in simulated classrooms on the Web. But while the notion of an online school evokes cutting-edge methods, much of the work is completed the old-fashioned way, with a pencil and paper while seated at a desk.
Kids mean money. Agora is expecting income of $72 million this school year, accounting for more than 10 percent of the total anticipated revenues of K12, the biggest player in the online-school business. The second-largest, Connections Education, with revenues estimated at $190 million, was bought this year by the education and publishing giant Pearson for $400 million.
The business taps into a formidable coalition of private groups and officials promoting nontraditional forms of public education. The growth of for-profit online schools, one of the more overtly commercial segments of the school choice movement, is rooted in the theory that corporate efficiencies combined with the Internet can revolutionize public education, offering high quality at reduced cost.
The New York Times has spent several months examining this idea, focusing on K12 Inc. A look at the company’s operations, based on interviews and a review of school finances and performance records, raises serious questions about whether K12 schools — and full-time online schools in general — benefit children or taxpayers, particularly as state education budgets are being slashed.
Instead, a portrait emerges of a company that tries to squeeze profits from public school dollars by raising enrollment, increasing teacher workload and lowering standards.
Current and former staff members of K12 Inc. schools say problems begin with intense recruitment efforts that fail to filter out students who are not suited for the program, which requires strong parental commitment and self-motivated students. Online schools typically are characterized by high rates of withdrawal.
80% of Michigan Charter Schools are For-Profits
9/29/11
http://www.forbes.com/sites/erikkain/2011/09/29/80-of-michigan-charter-schools-are-for-profits/
Excerpt:
The charter school movement began as a grassroots attempt to improve public education. It’s quickly becoming a backdoor for corporate profit. In Michigan, four out of five charter schools are run by for-profit EMO’s…
Four out of five charter schools in Michigan are run by for-profit corporations. Let that sink in a minute. This should be deeply, deeply troubling for anyone thinking about their child’s future education, or the future of this country.
We’ve had years to examine for-profit education results at the higher education level. Companies like University of Phoenix and others cost taxpayers money, provide subpar education, serve as diploma mills, and prey on students who may never be able to pay back the tens of thousands of dollars in student loans they take on. They even prey on military veterans and active-duty service members.
We should be terrified of this happening to our public schools. Yet here it is happening nonetheless, all across the country. The corporate takeover of public education is underway, though its origins may be in the good intentions of people like Dr. Miron and the well-meaning efforts of school reformers to improve the education prospects of our children.
lotta,
Warning: This report will not be good for your ulcers!
*****
Charter Schools: Missing the Grade, Part 2
Deals and debts: Nearly half of Florida’s charters had operating deficits
By Mary Shanklin and Vicki McClure | Sentinel Staff Writers
http://www.orlandosentinel.com/news/education/orl-special-charterschools-part2,0,5980407.htmlpage
Excerpt:
Joseph Littles-Nguzo Saba Charter School has been short on cash since it opened in 1999. One look around the place, and it’s obvious.
One hundred thirty students share seven computers. The science-lab equipment consists of two microscopes and a set of scales. Children cannot take home books. The D-rated school spends less than half the money it gets from taxpayers on instruction.
Yet it’s paying a $2,000-a-month pension and providing several life-insurance policies for the school’s founder, who no longer works at the school. Though traditional schools could never legally borrow money from individuals, the struggling school is in $120,000 debt to its founder.
“You talk about a shoestring budget,” said the new principal, the Rev. Richard Scott. “We don’t even have shoes.”
A decade after Florida launched charter schools to give students more choice in where they attend public school, nearly half of the 300-plus charters have operating deficits.
At the same time, more than $200 million of the $492 million Florida spent on these privately operated schools in 2005 went to charters that had business relationships with school officials: renting buildings to the charters, selling services to them, hiring relatives as employees.
Then there are the odd expenditures.
Palm Beach County’s Survivors Charter Schools had a 10-year, $100,000 contract for eight season tickets to Miami Dolphins games, which it distributed to the principal and others.
One of the two Survivors campuses also gave the principal $600 a month to lease a BMW car and paid him $163,412 a year, according to 2006-07 audits by the Palm Beach County School District.
The Orlando Sentinel found these and other financial details in property records, federal tax reports and hundreds of state-required financial audits filed by charters, which lawmakers exempted from many restrictions on conventional schools. More information turned up in records of school districts that dole out the public money.
Among the findings:
Nearly half of the audited charters had operating deficits in 2005, the latest year of audits released by the state. Total operating losses for these schools exceeded $37 million. Nearly 100 met one of the criteria for being declared in a state of financial emergency under a law passed last year.
More than 140 schools had intertwined business relationships that would raise questions at traditional schools or at charters in several other states. Most were disclosed by charter auditors, who reviewed each school’s finances and reported them as “related-party transactions.”
Nearly one in 10 charters spent more on administration than on the classroom.
Charter schools: cozy relationships, little oversight, taxpayer-paid profits
By Mary Ellen Klas
December 14, 2011
http://www.tampabay.com/blogs/the-buzz-florida-politics/content/charter-schools-cozy-relationships-little-oversight-taxpayer-paid-profits
Excerpt:
Cozy political connections, favorable tax treatment and little public oversight has allowed Miami charter school chain Academica to exploit Florida’s laws, build a successful chain of schools, and profit off taxpayer dollars, a Miami Herald investigation has found.
Charter schools have grown into a $400-million-a-year business in South Florida, receiving about $6,000 in taxpayer dollars for every student enrolled but even when charter schools have been caught violating state laws, school districts have few tools to demand compliance.
With some of the least restrictive laws in the nation, charter schools in Florida have become a parallel school system unto themselves, a system controlled largely by for-profit management companies and private landlords — one and the same, in many cases — and rife with insider deals and potential conflicts of interest.
In many instances, the educational mission of the school clashes with the profit-making mission of the management company, the Miami Herald found. The schools also take a disproportionately lower share of black, poor and disabled children, records show…
* Rep. Erik Fresen, a Miami Republican, is the brother-in-law of Fernando Zulueta, Academica’s CEO and is a former Academica lobbyist. He now earns $150,000 a year as a land-use consultant for Civica, a Doral architectural firm that has built several schools run by Academica — including schools on land controlled by the Zulueta brothers.
Earlier this year, Fresen drafted language in an education bill barring cities from imposing stricter zoning or building regulations on charter schools. At the time, the city of South Miami was considering zoning regulations that could have inhibited expansion of the Somerset Academy at SoMi, an Academica school.
* From 2002 to 2006, Academica also paid $230,000 to then-Rep. Ralph Arza of Hialeah under an undisclosed consulting contract, records show. At the time, Arza also sat on an education committee in the House. Miami-Dade prosecutors investigated Arza’s ties to Academica in 2007 and 2008, records show. While being paid by Academica, Arza authored or backed at least five bills that could have benefited the charter school industry, according to records compiled by prosecutors. However, they could find no evidence that the Academica contract improperly influenced Arza’s votes. More here.
*The different Academica chains all rely on the same company to perform the property appraisals. And many schools have used the same attorney to negotiate the leases with the Zulueta land companies. That attorney, Charles Gibson, also has ties to Academica and is on the board of the Theodore R. and Thelma A. Gibson Charter School in Overtown — an Academica-run school founded by Gibson’s grandparents. The school has received $415,000 in grants and loans from Academica, records show.
Lotta,
Thanks for the links. I’m more than a tad OCD when it comes to certain subjects that I post about.
*****
“It’s like a photo of a tumor with it’s venous system burrowing surrounding tissue and going who knows where to pop up and connect with other tumors both near and far.”
Exactly!
I eventually ended up here:
Erin Project:
http://www.erinproject.org/
Click on “Charter Schools” and it takes you here:
http://www.erinproject.org/topic/Charter+Schools#overview
If you click on ‘Funders’ you go to a page that lists the largest donors to charter school advocates and funders as well as a discrete list of 446 organizations that do (all?) of the funding.
All of these links are hot links and give you a thumbnail sketch of the organization as well as links regarding their funding info (what interests they fund), their officers, contact info and their subset of grants (how much they give to each organization funded). Now the list of grants is time consuming because those links are not hotlinks, you have to do external searches but, boy-o-boy Howdy, they are interesting. Much of the language in those links is opaque too but certain patterns of language emerge across the donor sites and inferences can be readily drawn. It is fascinating reading.
All of the major links (tabs really) on the initial page of “Charter Schools”: Funders, Policy, Research, Organizations and Technology are interesting to say the least.
Also, all of the “TOPICS” links in the left-hand column can be opened and each page contains a list of relevant pages all organized around the same format as above and so on through 13 topics.
But wait! There’s MORE! as the late night TV product-shills say. That’s just under “TOPICS” there are other major breakdowns using even more fine filters for the particular information therein! WooHoo!
So, yea. I’m a tad to the OCD side and just can’t resist spending an entire evening on a website like this. 🙂
I wanted to know how many charter schools were unionized (since wages/benefits is a profit center to be looted) so I found this page below and then I wanted to know who funded them because they are a charter advocacy group and I found the second link after searching around.
Page from National Alliance for Public Schools doc:
http://www.publiccharters.org/editor/files/NAPCS%20Documents/PublicCharterSchoolsandTeachersUnions.pdf
So after reading this last article of yours I started looking for who and which organizations are funding the push for Charter schools and the schools themselves and found an interesting link. I’ve been playing with it for, like four hours. The same people/business interests that benefit from crushing labor as well as looting the countries economy seem to me to be the same interests that benefit from and advocate Charter schools including funding those school management business’. All done through foundations and charities.
Suffice it to say that when I ended up on a page (deeply embedded, requiring an external search and link following for one of the grantee’s) of the Institute for a Competitive Workforce which is a program of the Chamber of Congress Foundation (which has embarked on a nationwide tour to empower parents to become ‘catalysts for change’ including seminars and how-to’s for aspiring school board positions) I just had to stop and eat something, assuming that the queasy feeling in my stomach was hunger.
It’s like a photo of a tumor with it’s venous system burrowing surrounding tissue and going who knows where to pop up and connect with other tumors both near and far.
Curse you Elaine, stop writing provocative articles! I’m going to end up with ulcers.
Long broken-up posting to a couple of links and a vaguely creepy feeling that there is a plot afoot that is more unified that it initially appears.
Great article Elaine and coupled with your last article on the matter and reading many of your links It’s been a real education for me. I’ve been generally opposed to Charter schools and home schooling since St. Louis started their Charter program a couple of decades ago.
I would watch the news coverage of the day’s before ‘sign-up’ day in St. Louis wherein people would stand in line overnight and longer just to be able to get their kids names in the hopper for a drawing to attend a charter school and I would incense me. I did that for the Stones but c’mon, this wasn’t an opportunity for a drug-fueled evening of social abandon- this was enrollment in a SCHOOL! WTF? If this was such a good idea then every child should have access.
The obviously disparit nature of our school system among the kids in well off districts, poor districts and now ‘lucky’ kids was appalling to me and surely a sign of a culture in serious decline.
Over time, the money angle became more apparent to me but also and firstly, the damage to unions popped up on my radar. It was not as pronounced then as now though and the Charter programs were not as hostile to unions (it seemed to me) as they have become. Maybe there just wasn’t as much publicity for it though.
Today, it seems to me that the Charter movement and the emergency manager movement EM for school systems, as well as now cities, seems to be designed to quash unions as an integral part of their equation. Hand in glove. A fundamental realignment of power away from workers and to owners.
Maddow has followed Michigan’s infatuation with emergency managers appointed for cities, which includes their school systems, for over a year. Below is her latest report on the matter and the take-away is pretty direct: in 8 of the nine cities it has been done it did not work, it just disenfranchised the voters and the cities didn’t get ‘better’. The only place it worked was a little city that had a strong tax base and was not impoverished to begin with. It’s a good segment:
http://www.nbcnews.com/id/26315908/ns/msnbc_tv-rachel_maddow_show/vp/51188382#51188382