Archives for category: For-Profit

Charters kill unions. Ninety percent of charters are nonunion. Their sponsors want it that way..

Personally, I am completely opposed to for-profit charter schools. I think they are an abomination. I believe that every cent paid by taxpayers should be dedicated to the needs of children and their teachers, and not a single cent should be paid to investors.

Q. What are your views on private school vouchers, tuition tax credits, and charter school accountability and transparency?

BS: I am strongly opposed to any voucher system that would re-direct public education dollars to private schools, including through the use of tax credits. In addition, I believe charter schools should be held to the same standards of transparency as public schools, and that these standards should also apply to the non-profit and for-profit entities that organize charter schools.

This is what was on her blog from our questionnaire for HRC:
Q. What are your views on private school vouchers, tuition tax credits, and charter school
accountability and transparency?

HRC: I strongly oppose voucher schemes because they divert precious resources away from financially
strapped public schools to private schools that are not subject to the same accountability
standards or teacher quality standards. It would be harmful to our democracy if we dismantled
our public school system through vouchers, and there is no evidence that doing so would
improve outcomes for children.

Charters should be held to the same standards, and to the same level of accountability and
transparency to which traditional public schools are held. This includes the requirements of civil
rights laws. They can innovate and help improve educational practices. But I also believe that
we must go back to the original purpose of charter schools. Where charters are succeeding, we
should be doing more to ensure that their innovations can be widely disseminated throughout
our traditional public school system. Where they are failing, they should be closed.

People often wonder why hedge fund managers and entrepreneurs are so devoted to the proliferation of charter schools and so hostile to public schools. If you survey the research, it is clear that they get about the same results overall as public schools. There are some that get high scores, but they usually get them by cherry picking the most motivated and able students. Some are fly-by-night operations.

What’s the lure? I believe that some number of the 1% who love charters are motivated by a desire to do good. Others think the free-market of choice and competition will work wonders. Still others are motivated by profit. None are at all concerned that they are inflicting grievous harm on a basic public institution that is central to our democracy. Or they they are experimenting on other people’s children.

Laura H. Chapman reminds us of the power and allure of profits.

She writes:

In Forbes magazine, 2013, by Allison Wiggin.

“About the only thing charters do well is limit the influence of teachers’ unions. And fatten their investors’ portfolios.

In part, it’s the tax code that makes charter schools so lucrative: Under the federal “New Markets Tax Credit” program that became law toward the end of the Clinton presidency, firms that invest in charters and other projects located in “underserved” areas can collect a generous tax credit — up to 39% — to offset their costs.

So attractive is the math, according to a 2010 article by Juan Gonzalez in the New York Daily News, “that a lender who uses it can almost double his money in seven years.”

It’s not only wealthy Americans making a killing on charter schools. So are foreigners, under a program critics call “green card via red carpet.”

“Wealthy individuals from as far away as China, Nigeria, Russia and Australia are spending tens of millions of dollars to build classrooms, libraries, basketball courts and science labs for American charter schools,” says a 2012 Reuters report.

The formal name of the program is EB-5, and it’s not only for charter schools. Foreigners who pony up $1 million in a wide variety of development projects — or as little as $500,000 in “targeted employment areas” — are entitled to buy immigration visas for themselves and family members.

“In the past two decades,” Reuters reports, “much of the investment has gone into commercial real estate projects, like luxury hotels, ski resorts and even gas stations. Lately, however, enterprising brokers have seen a golden opportunity to match cash-starved charter schools with cash-flush foreigners in investment deals that benefit both.”

More at.

Governor Brown has until October 11 to sign or veto legislation that would ban for-profit charter schools in California. it is outrageous to squander taxpayer dollars on profits for investors and outrageous executive salaries. This bill should be a slam dunk for Governor Brown, a man with a keen sense of justice. Now I hope the legislature tightens oversight of nonprofit charter schools and reviews their executive salaries to be sure that they really are nonprofit. And while they are at it, they should ban charter schools in affluent communities, which violate the spirit if the charter movement, which wassupposedto help the neediest kids, not to enable rich parents to create a publicly-funded private school for their children.

Here is the legislation awaiting Governor Brown’s signature:

“For-profit charter schools: Charter schools run by for-profit corporations would not be allowed in California under the terms of AB 787, authored by Assemblyman Roger Hernández, D-West Covina, which passed the Legislature. Six for-profit charter schools operate in the state, and California Virtual Academies, managed by the for-profit K12 Inc., is the largest. The bill’s author noted that K12 paid its top six executives a total of nearly $11 million in 2011-12, while the average California Virtual Academies teacher’s salary was $36,150, about half of the average teacher pay in the state. The author raised the question of whether a for-profit corporation would try to limit services to students to increase profits.”

Governor Nathan Deal likes to point out that both his parents taught school, but it’s not clear what kind of school they taught. Clearly he doesn’t like public schools. He has proposed legislation based on Tennessee’s failing “Achievement School District.”

Jack Hassard, a Professor Emeritus of Science Education at Georgia State University, explains that Governor Deal’s plan will set in motion “the infrastructure to tear Georgia’s public schools apart.”

The author of the plan was a young reformer with three years of teaching experience. Her name is Erin Haimes. She has now set up a consulting firm and is being paid to help districts figure out how to avoid the consequences of the law she wrote.

Hassard writes:

“Where does this path take public education in Georgia? It’s a path that is based on fear. It’s a path that is based on competition. It’s a path that is based on greed. It’s a path that is based on opinion and not knowledge.

“As others have said, the plan that will be voted on in the 2016 election, and will be supported by a group that Hames will lead, and will be targeted by organizations and families outside of Georgia who stand to make a financial killing in the state.”

This article explains the financial shenanigans of unscrupulous charter operators. Not every charter founder rips off taxpayers, but the public needs to know when charter schools are set up to benefit greedy investors, not children.

“Eileen Appelbaum, co-author of the important book Private Equity at Work, flagged an important article in on how a secretive consulting firm that was previously investigated for corruption and a local law firm are engaged in complex, high cost bond deals to implement an asset stripping strategy that Appelbaum and her co-author Rosemary Batt have called out as a private equity enrichment scheme that impairs operating businesses. It’s bad enough to see this sort of thing take place in the dog-eat-dog world of Corporate America. It’s even worse to see it take place in charter schools, where the losers are students, by virtue of unjustifiably large portions of charter fees go to unproductive rental payments and financing fees, as opposed to education, and to taxpayers, who over time face inflated costs to fund profiteering masquerading as education.”

The article then refers to the scandalous real estate deal to finance a luxurious building for the String Theory charter school in Philadelphia.

“The nub of the looting strategy is the acquisition and leaseback of lavish buildings to house charter schools. Because charters are correctly perceived to be risky tenants, bond financings for these purchases are at junk bond rates, meaning high financing costs are heaped on top of what would already be unjustifiably high rental charges, by virtue of putting schools in educationally unproductive glamorous digs. And of course, in an environment where it’s business as usual to lard up bond deals that could be done on a plain-vanilla basis with far more complicated deals that lower interest rates a smidge in return for allowing consultants to charge hefty fees and the financiers to dump risks worth more than the cost savings on the hapless borrower through derivatives, the financial rent extraction can occur at an even greater scale on a high-cost financing.”

And this is a quote from a story at

“In 2007, Independence Charter School issued a bond for $18 million dollars with help from the PIDC for the purchase and renovation of the vacated Durham Elementary at 16th and Lombard streets. That school had been built in 1907 and maintained by the district with tax dollars for a century. Now, millions in debt and interest from Independence’s charter bonds are also being paid off with tax dollars.
In situations like these, [Rutgers professor Bruce Baker said, taxpayers are paying for the same buildings twice, while relinquishing public ownership of those properties.
“It’s not that anyone is doing anything ‘wrong,’ ” he said, “But rather that public policy permits a bad deal for the public — one that essentially gives away a public asset while charging transaction fees along the way.”

How long will this theft of public property be allowed to continue?

The cases cited in this article are not isolated. There are a growing number of charter schools that buy the property the school will use, using publicly-financed bonds, then pay rent to themselves, at exorbitant rents.

These practices have been perfected by for-profit charter corporations, but some faux-nonprofits do it too.

A new, for-profit charter chain named Pansophic is planning to take over charter chain schools in Ohio. The linked story was published in June, but there have been no follow-ups since then. Either the deal was completed or is pending.

Pansophic is a new company founded by Ron Packard, formerly of McKinsey, Goldman Sachs, and the online giant K12. As CEO of K12, Packard was paid $5 million yearly.

The company also expects to acquire charters run by for-profit Mosaica in Ohio. Pansophic will become the biggest for-profit charter chain in Ohio.

“Akron-based White Hat Management reportedly sold off management of 12 elementary charter schools Friday to an out-of-state, for-profit company that could acquire a third charter school company, an attorney for the charter schools’ public boards said.

“The two deals would make Pansophic Learning the largest for-profit operator of Ohio charter schools, which has become a taxpayer-funded $1 billion private industry.”

White Hat has produced poor academic results for 20 years.

Now, Ohio’s for-profit charter schools will be outsourced to a Virginia corporation that also focuses on the bottom line: profit.

Are these for-profit schools really public schools or are they profit centers that hoodwink parents to enroll their children?

This is what Ohio’s charter law says (thanks to reader Bethree):

“Opening paras of Ohio charter school law: “3314.01 (A) (1) A board of education may permit all or part of any of the schools under its control, upon request of a proposing person or group and provided the person or group meets the requirements of this chapter, to become a community school… (B) A community school created under this chapter is a public school, independent of any school district, and is part of the state’s program of education…”

Is a school owned by a for-profit corporation in Virginia still a “community” school? Is it a “public” school?

How much more of this flimflam will the voters and taxpayers of Ohio tolerate? Do they care about the education of their children?

It is alarming to see private capital and equity investors getting into the business of financing charter schools. And making a handsome profit. Of course, they would not invest unless the profit were there.

If you think the privatization of public education represents “positive social change,” this may be the fund for you.

Turner Capital, in partnership with tennis star (and high school dropout) Andre Agassi, predict returns of 12%. In these days of low interest rates, that is a handsome return.

“LOS ANGELES—Turner Impact Capital has launched the Turner-Agassi Charter School Facilities Fund II to invest up to $1 billion in charter school development nationwide. The fund plans to build 130 charter schools for best-in-class operators by 2020. This is an evolution in Turner’s social-impact investment model, which simultaneously produces investor returns—as much as 12%—while promoting and motivating positive social change.

“Bobby Turner, CEO of Turner Impact Capital, expects the fund to hit $400 million in commitments by late November 2015. The remaining $600 million of the $1 billion fund will be secured through construction debt. “We’ve already had our first closing with more than $150 million, and we expect to close out the fund by the end of November,” Turner tells “We are also incredibly excited to announce that we have partnered with Merrill Lynch to offer up to $100 million of the fund to clients of their private banking platform. It is exciting for us because it is an opportunity to enable individual investors, not just institutional investors, and high net worth individuals to be a socially impactful investor.”

“In addition to Merrill Lynch, the investors in the fund include the University of Michigan endowment, the Texas Permanent School Fund and Citibank. The fund has a $5 million investment minimum and will focus on developing the facilities in dense and distressed neighborhoods nationwide. The schools will be net-leased to charter school operators. “We build environmentally friendly and learning-friendly educational facilities for best-in-class charter school operators,” says Turner. “In essence, we are a build-to-suit private equity fund with the caveat that we provide a bridge to ownership.”

What would you rather be? A mid-level bureaucrat monitoring fiscal matters in the school district or a millionaire?

Find the answer to this question in this article about Philadelphia.

“MANY OF the recent charter bond deals have been helped by Santilli & Thomson, a New Jersey-based firm that has made millions off consulting contracts and bond fees.

“The firm, run by ex-School District of Philadelphia finance officials Gerald Santilli and Michael Thomson, touts on its website “more than 50 years of combined experience in municipal school management.”

“There is no way to know exactly how much Santilli & Thomson has earned in taxpayer-funded contracts from charter schools, according to a district spokesman. The firm did not respond to numerous requests for comment.

“However, a analysis of financial documents for several charter schools that received municipal bonds found that Santilli & Thomson has billed at least $5 million since 2010….

“After working for 14 years as executive director of fiscal management for the school district, Santilli moved into charter consulting full time in 1999, shortly before String Theory was founded.

“Santilli personally helped found several other schools, like First Philadelphia Charter and its sister school, Tacony Academy, before starting his own consulting firm with Thomson.

“After a while, it appears [Santilli] realized that this could be a lucrative and growing business, and that he could make more money doing the work on his own,” said former school district chief financial officer Michael Masch.

“Santilli & Thomson was subpoenaed as part of a federal investigation into charter corruption in 2010, but no one there was ever charged with a crime and the firm’s contracts have continued to grow. The charters that Santilli helped found have become some of his biggest clients and secured some of the biggest bond deals in city history.

“What Santilli does to facilitate these arrangements is unclear. Consultants like Santilli & Thomson face little scrutiny from the Pennsylvania Department of Education.”

Other firms have also reaped the benefits of charter consulting. The best pay-off comes when the company that owns the charter owns the space used by the school and pays itself large leasing fees. Sweet.

“Reimbursements rose 79 percent – to $6.8 million annually – while the number of charter schools increased by just 20 percent, state records show. Only a fraction goes to schools that rent their buildings from unrelated owners.

“The issue isn’t limited to Philadelphia, according to state Auditor General Eugene DePasquale, who is conducting a statewide review of charter leases.

“About half the charter schools we’ve audited basically have this circular arrangement where there’s an entity that owns the building and an entity that leases the building, and they’re connected,” he said.”


The Ohio Supreme Court ruled that property purchased by the for-profit charter management corporation White Hat using public funds belongs to White Hat, not the public.

I’m no lawyer, but this decision says to me that the schools’ stuff does not belong to the public, but to a private entrepreneur. I take that to be an acknowledgement that White Hat privatized the assets of the school. More evidence that charter schools are not public schools. If they were, their stuff purchased with public funds would belong to the public.

White Hat was sued by the boards of 10 of its charter schools, all of which have closed for poor performance.

“A charter school operator – not the schools themselves – own the classroom desks, computers and other equipment purchased with state-provided tax dollars, the Ohio Supreme Court ruled today.

“The ruling represented a victory for the charter-school operator, White Hat Management Co., and a defeat for 10 now-closed schools in Northeast Ohio that claimed they owned the property since it was bought with public funds.

“Justice Judith Ann Lanzinger wrote in the majority opinion that charter school operators perform a governmental function and establish a fiduciary relationship with the schools they manage in purchasing school equipment, contrary to the position taken by White Hat.

“That finding should allow the public to obtain charter-school operator financial records that long have been withheld, said Karen Hockstad, a Columbus lawyer who represented the ex-White Hat charter schools.

“Current law largely does not address the duties of school operators and does not restrict the provisions of contracts between operators and charter schools, Lanzinger wrote.

“Therefore, a provision in White Hat’s contract allowing it to title property in its name and later require the schools to buy back any property they wanted to keep is enforceable, the opinion stated.

“Unless there is fraud, courts cannot save “a competent person from the effects of his own voluntary agreement,” the opinion said.

“The schools were represented by their own legal counsel and they agreed to the provisions in the contracts. They may not rewrite terms simply because they now seem unfair….”.

“The funds were paid by the state to the seven Hope Academies and three Life Skills Centers in the Cleveland and Akron areas that hired White Hat in 2005 to handle operations. White Hat received 95 percent of each school’s state funding to pay teacher salaries, building rentals, utilities and other expenses.

“The schools’ lawyer had argued the funds remained public despite their payment to White Hat and that classroom equipment belonged to the schools.

“About $100 million was paid by the state to the seven Hope Academies and three Life Skills Centers in the Cleveland and Akron areas that hired White Hat in 2005 to handle operations. White Hat received 95 percent of each school’s state funding to pay teacher salaries, building rentals, utilities and other expenses.

“White Hat Management is owned by David L. Brennan, of Akron, one of the early proponents of the publicly funded and privately operated charter schools and a major donor to Ohio Republicans…. ”

Two judges dissented. Their dissents were well-reasoned and common sense:

“There has been no quality education, there has been no safeguarding of public funds, and there most certainly has been no benefit to the children,” Justice William M. O’Neill wrote.

“He concluded that the contracts are not enforceable because they “permit an operator who is providing a substandard education to squander public money and then, upon termination for poor performance, reap a bonus, paid for by public money.”

“Justice Paul E. Pfeifer wrote that the court should have overturned the contract.

“The contracts require that after the public pays to buy those materials for a public use, the public must then pay the companies if it wants to retain ownership of the materials,” he wrote.

“This contract term is not merely unwise as the opinion would have us believe; it is extremely unfair, so unfair, in fact, as to be unconscionable. … The contract term is so one-sided that we should refuse to enforce it.”

Angelo Gavrielatos of Education International insists that we must continue to fight for the right of every child to have access to a free, high-quality public education. EI represents teachers around the world. Please open his article to find the links.

He writes:

As teachers, we know that the realisation of high quality public education for every child remains a work in progress.

Our long-held commitment to achieving it is informed by the fact that a public school, in every community, is a precondition to fulfilling our responsibility as members of an international community to ensure that every child gains access to education.

We also know that if we are serious about achieving excellence and equity for all, public schools must set the standard for high quality education as equity in the provision of education can only be realised if public schools, free and universally accessible, set that standard.

It is not only disappointing, but it is also disturbing that the ideal of quality public education for all is under greater threat today than it has ever been.
This threat has been on public display in recently in the form of articles, or in some cases advertorials by anonymous writers, in publications such as the Economist, which support and promote the emergence and expansion of low fee for-profit private schools in developing countries as the means of providing access to schooling for the children of the poorest of the poor referred to as “clients”. They may as well just refer to children as economic units.

So biased and unsubstantiated was the “journalism” that it provoked an immediate response from highly recognised and respected international agencies like OXFAM and Action Aid to name two, who along with others wrote letters to the editor. Similarly, leading academics also responded condemning the bias.

Dr. Prachi Srivastava, a tenured Associate Professor at the School of International Development and Global Studies specialising in the area of education and international development at the University of Ottawa, who was so “dismayed and surprised” by her name being used to legitimise and endorse low fee for-profit private schools, in addition to a letter to the editor, produced an opinion piece in The Guardian based on her detailed academic research demolishing the claims made in one of the articles.

Whilst not entirely surprised by these advertorials in the Economist – after all , at the time of its publication, the Economist was still 50 percent owned by the world’s largest education corporation, Pearson, which has interests in low fee for-profit private school chains such as Bridge international Academies and Omega in Kenya, Ghana and a number of other countries – as a teacher I was deeply offended by the unwarranted gratuitous attack on teachers and our unions in campaigning for the very best opportunities for every child in every classroom.

As teachers we take our responsibility to our students very seriously. All we ask for, indeed we demand, is that governments fulfil their obligation to their most vulnerable citizens, namely children.

Beyond a legislative guarantee to fulfil their primary obligation to adequately fund and resource public schools, governments must legislate against non-state actors operating schools for profit, particularly when they are in receipt, directly or indirectly, domestically or extraterritorially, of any tax payers dollars intended for the educational well-being of students.(Surely, taxpayers dollars intended for the educational well-being of students shouldn’t be siphoned away to line the pockets of billionaires and global corporations.)

Furthermore, governments must introduce, where non-existent, and enforce legislated regulatory frameworks to ensure high standards in teacher qualifications, curriculum and teaching environments. A social contract, if you like, providing guarantees for students.
In attacking regulation of facilities and teacher qualifications, the Economist makes the outrageous statement, contrary to reams of research and evidence, that: “the quality of facilities, or teachers’ qualifications and pay, have been shown by research in several countries to have no bearing on a school’s effectiveness.”

This astonishing attack on teacher qualifications bells the cat for the prophets of profit. Employing unqualified “teachers” is driven by their business plan to maximise profit. It is no wonder that in a recent article in the Independent that Pearson-supported low fee for-profit chain, Bridge International academies, operating in Kenya and elsewhere, protested a possible government requirement that half, not all, “half of all teachers in any one school should have a recognised teaching qualification and be paid accordingly.”

In all of my professional life, I’ve yet to meet a parent who would prefer their child to be taught by an unqualified teacher. I very much doubt whether the anonymous author of the advertorial or senior figures at Pearson would volunteer their own children to be taught by unqualified ‘teachers’ reading from a script.

If standing up for the right of every child to have access to a rigorous, rich curriculum, taught by well supported qualified teachers in safe environments conducive to good teaching and learning is a crime, we are guilty as charged.

Written by Angelo Gavrielatos
Project Director, The Global Response to
Privatisation and Commercialisation in and of Education


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