Archives for category: For-Profit

Starting today, the nation’s leading entrepreneurs will gather for their annual conference at the Phoenician Resort in Scottsdale, Arizona, to exchange ideas about the ongoing monetization, privatization, innovation, and profits in the education “industry.” This summit was originally organized by Michael Moe, who has for years predicted that the education sector could be monetized. He was right. His company—GSV stands for Global Silicon Valley–says on its website: “Our founders have spent the past two decades focused on the Megatrends that are disrupting the $4 trillion global education market along with the innovators who are transforming the industry.”

Some of the sponsors: Pearson, the Gates Foundation, Microsoft, McGraw-Hill, Cengage, amazon, Scholastic, etc.

The speakers’ list reads like a who’s who of the privatization movement, which it is.

Penny Pritzker, U.S. Secretary of Commerce, billionaire heiress to the Hyatt fortune, former member of the board of Chicago public schools; Jeb Bush, Chris Cerf, Cami Anderson, Reed Hastings, Margaret Spellings, Tom Vander Ark, Kaya Henderson, James Shelton, Jonathan Hage, and many more in the business of education reform.

Stephanie Simon wrote about this GSV annual conference here for politico.com:

“ED TECH’S ‘DAVOS’ STARTS TODAY: Hundreds of ed tech investors and entrepreneurs will rendezvous in Scottsdale, Ariz., this week for the Education Innovation Summit. The massive meet-and-greet will surely be lively, as business is booming. The ed tech market has been on a sustained boom the past several years, with no signs of a slowdown: Capital flows into companies serving the K-12 and higher education markets jumped to $650 million last year – nearly double the $331 million invested in those spheres in 2009.

–”You’re seeing people who can invest money anywhere” turn to ed tech, said Michael Moe, co-founder of GSV Capital, a sister company to GSV Advisors. The rapid growth of companies such as Coursera, Edmodo and Knewton “attracts the big players,” Moe said, who see an opportunity for big profit. And the Common Core is helping the cause: The standards are making ed tech more attractive because entrepreneurs can now tailor their product to a single set of academic guidelines. Several notable investment deals have closed in the past month alone.

More for Pros, from Stephanie Simon: http://politico.pro/1pmsymu

Advocates for school choice like to say they believe in a free market in education. They say, let the consumer choose, let the market decide. And with this ideology, they merrily seek to undermine public education.

But is there a free market?

I received this comment from a reader:

“There is absolutely nothing “free market competitive” about the charter school movement. The only thing they are competing for is to strip away federal tax subsidies from public schools. I say, terminate all federal tax subsidies. Why should federal taxes subsidize Michael Milken? Public school funding should just stay funded by local taxes.

“The hedge funds are all good businessmen of course, because they smell the free government money. That’s what businessmen always do. Particularly Wall St. They love taxpayer guarantees.

“Free market competition means you are able to sell your product because it is better than the competition with NO government subsidy.”

Sol Stern of the rightwing Manhattan Institute is a fierce advocate for the Common Core Standards. He is a journalist of great rhetorical skill, not a classroom teacher or a scholar or researcher. Stern is a devotee of E.D. Hirsh Jr.’s Core Knowledge curriculum, and he thinks that Common Core will install CK in every school in the nation. He cant accept the reality that CCSS is not the vehicle to impose CK. It must be puzzling to him, if not infuriating, that his arch-enemy Lucy Calkins and her colleagues have written the best-selling book about the Common Core, called “Pathways to the Common Core.” That sort of thing can make a person cranky.

In his piqué, Stern wrote an article excoriating me for abandoning this great national experiment. He didn’t seem to notice that my major objection to the CC was not substantive but procedural–that is, the absence of participation of knowledgable parties in the drafting process, the lack of any effort to include early childhood educators or experts in educating students with disabilities or any classroom teachers, the absence of any means of appealing or revising the standards, the failure to try them out before imposing them nationwide–all of which made their implementation speedy but built distrust. Process matters. Democracy matters. I have consistently maintained that it is better to go slowly and get it right than to move fast and sow dissension and suspicion. Back when I was on the dark side, Sol was a friend, so I decided not to be offended by his unprovoked attack on me.

However Mercedes Schneider, who probably knows more about the Common Core than anyone else, decided to respond to Stern and set him straight. He responded to Schneider, dismissing her, a mere classroom teacher in Louisiana, with disdain. And here, in this new post, Mercedes Schneider–who is not only an experienced classroom teacher but holds a Ph.D. In research methods, again corrects Stern’s fundamental misunderstanding of the Common Core.

Our friend Edward Berger returned from a long period of rest, reading, and reflection, and he is back in fine form.

He wrote a letter to President Obama and the First Lady to warn of the damage their education policies are inflicting on the nation’s children, teachers, and schools.

He writes:

“Prior to your administration, with few exceptions, public schools were not created as sources of investment income or profit. Schools were run by democratically elected boards under state supervision. Schools were accountable for financial management and academic achievement. A proven (if not100%s effective) means of teacher accountability and school effectiveness was in place and functioning well in areas where great poverty and futility were not generated by our failed economic system.

“Prior to your administration, the tax dollars Americans pay for public education could not be accessed by profiteers or religious groups and cults. No taxpayer was forced to support a religion, ideology, or partial school with their education tax dollars.

“Sadly, strengthened by your administration, an unproven and false use of testing replaced the tests used by educators to understand student needs and to teach effectively. Data generated by wrong and unproven means is causing great harm to students and teachers throughout America. The only known beneficiaries of this drive for data are the corporations creating the tests, and the egos of billionaires who use their wealth to force their “hunches” on our schools.

“Your administration supports those who can buy access to schools and thus children’s minds. Your administration accepts the whims of billionaires who have no certification, little or no contact with professional educators, no concept of the history of American education and how education is delivered, and most devastating, they have very little concern for our children. Almost all send their children to separate schools that do not follow the rules your administration is instigating.”

And much more.

One of the most absurd conceits of the “reformers” is that they are leaders of the civil rights movement of our time. They bust unions. They strip teachers of hard-won due process rights. They include in their ranks the titans of Wall Street. How long can they pretend that they have any common ground with Martin Luther King Jr., who died while helping the sanitation workers of Memphis who wanted a union ?

In this post, Julian Vasquez Heilig conducts a mock interview with labor leader and civil rights leader Cesar Chavez. Heilig seeks to show how Chavez would see today’s Status Quo billionaires and their apologists.

A sample:

“Q: How about charter and voucher approaches that help the few at the expense of the many?

A: We cannot seek achievement for ourselves and forget about progress and prosperity for our community… Our ambitions must be broad enough to include the aspirations and needs of others, for their sakes and for our own.”

A teacher describes a new start up–open the link and see if you can find a teacher in the lineup of leaders–funded by Rupert Murdoch and aligned with the Common Core. Thar’s gold in them thar hills!

She writes:

“You probably know about this outfit already, but take a look at the team members of Teach Boost. Quite telling. I am enraged.

(By the way, we are not K-12 educators. We teach at-risk youth between 17-21 with the goal being passing the Test Assessing Secondary Completion (TASC) and college and career readiness. Of course, the test is Common Core-aligned, ensuring significant failure and dropout rates as we go forward.

Note in particular the connections to corporations, particularly Wireless Generation/Amplify:

https://teachboost.com/company/team

The TASC:

http://www.tasctest.com

Paul Rosenberg writes on Salon about the well-honed Fox-News style tactic of “crying wolf,” “the sky is falling,” we are in an “unprecedented crisis” to achieve political ends, in the present case, the privatization and monetization of public education. In urban districts, the privatization is gobbling up public schools and turning them over to private corporations–both for-profit and non-profit. In suburban districts, which are not prepared to relinquish their community public schools to charter chains, the gold rush is on to panic these districts into buying edu-schlock and paying consultants to train teachers to meet the federal government’s latest mandate.

What Rosenberg describes is what I earlier called the deliberate use of FUD–fear, uncertainty, and doubt–by the well-paid PR machine of the Status Quo privatizers.

Here is a small sample of Rosenberg’s comprehensive review of scare tactics and whom they benefit:

“In September 2012, for example, economist Jeff Faux, principal founder of the Economic Policy Institute, wrote an article, “Education Profiteering; Wall Street’s Next Big Thing?” which first noted, “It is well known, although rarely acknowledged in the press, that the [education] reform movement has been financed and led by the corporate class,” but then went on to note a crucial change:

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….

“What’s more, Faux noted, there was less money for Wall Street to play with from the sources they had burned, but the money-making opportunities in education were proliferating like never before:

“You start to see entire ecosystems of investment opportunity lining up,” Rob Lytle, a business consultant, earlier this year told a meeting of private equity investors interested in for-profit education companies….

“This is the context in which Andrew Cuomo hooked up with Wall Street, as the New York Times reported in May 2010. Cuomo’s ticket to Wall Street came courtesy of Joe Williams, executive director of Democrats for Education Reform, a PAC that “advances what has become a favorite cause of many of the wealthy founders of New York hedge funds: charter schools.” Members who met with Cuomo included “the founders of funds like Anchorage Capital Partners, with $8 billion under management; Greenlight Capital, with $6.8 billion; and Pershing Square Capital Management, with $5.5 billion.” But in retrospect, 2010 was nothing. As already noted, Cuomo has raised $800,000 from Wall Street charter school supporters — roughly half that total from Moskowitz supporters alone.

“The Philanthropic Dimension

“Money may be all the motivation Wall Street needs, but there’s more. Philanthropy has always been a means for the wealthy to extend their influence over society beyond the marketplace, to serve a multitude of functions. Northern philanthropists spent an enormous amount of money bringing education to Southern blacks after the Civil War, for example. This brought them into prolonged and complex conflicts with both Southern elites, who resisted virtually all education efforts, and with blacks who resisted the Northern philanthropists’ focus on industrial education (epitomized by the Tuskegee model), as well as their broader pattern of trying to appease Southern white racism. (See, for example,”The Education of Blacks in the South, 1860-1935.”) Although highly conflicted and complicated, these efforts eventually synergized with blacks’ own broader civil rights struggles to bring about the integration of public education in the South — at which time, Southerners’ first response was the policy of massive resistance, including the creation of private academies, and the closing of public schools.

“Amazingly, three decades later, the education panic reform movement began the process of recycling the racist Southern resistance strategies as general solutions for the purported failure of public education. Another three decades further on, those very same anti-civil rights strategies are now being touted as the key to civil rights. The reasons are at least partly psychological. After the financial crises decimated the economy, Wall Street elites and their 1 percenter allies were profoundly defensive, as seen most shockingly in remarks comparing their critics to Nazi Germany. But the “productive” manifestation of this same acute status anxiety was arguably much more destructive — that is, the intense desire to re-create themselves as moral leaders, not lepers, by recasting public education as a locus of evil, and portraying its destruction as “the civil rights struggle of our time” — which they, of course, would be only too happy to lead.”

A few years ago, Michigan governor Rick Snyder decided that the best way to fix the financial problems of districts in deficit was to put them under the control of an emergency manager to straighten out their finances. Some districts, however, are so poor that they don’t have enough money to educate their children. It is the state’s duty to help them.

In 2011, an emergency manager decided to give the Muskegon Heights school district to a for-profit charter chain, called Mosaica. It has not been profitable, and the district’s deficit continues.

Mosaica just received an emergency bailout from the state because it couldn’t meet its payroll. The corporation ended its first year in deficit because of the cost of repairs.

Years of deferred maintenance required expenditures of $750,000 to bring the buildings up to code. Meanwhile revenues have shrunk as enrollment dropped from 1400 to 920.

Lingering question: why did the state allow this impoverished, largely African American school district to fall into such shabby condition? Will for-profits be more cautious in the future about taking over neglected districts? Or will they have a commitment from the state for subsidies that were not available to the school district when it had an elected board?

The mainstream press in Ohio is starting to take a closer look at charter schools, many of which are money pits for big donors to Governor John Kasich and the legislature.

The Akron Beacon-Journal published a remarkable, three-part series on charters, looking closely at the peculiar financial operation of the for-profit White Hat management company.

In this article, the reporter discovered that most charters won’t tell anyone who is in charge.

Journalists learned that most charter schools will not provide basic information. They are neither transparent nor accountable.

“The calls were made as part of a school-choice project by the Akron Beacon Journal and the News­Outlet, a consortium of journalism programs at Youngstown State University, the University of Akron and Cuyahoga Community College.

“In a phone-call blitz that began in early January, students in the journalism lab called 294 of Ohio’s 393 charter schools in operation at the time, seeking basic information:

“• Who runs the building?
• Who is that person’s supervisor?
• Who is the management company in charge?
• How does one contact the school board?
• When does the board meet?

“Public accountability was difficult. Of the 294 called, the results by March 26 were:

“• 114 — more than a third — did not return messages seeking information.
• Eight refused to answer.
• Seven said they would call back but did not.
• 73 provided some of the information.
• 80, or about 1 in 4, provided the information requested.

“By law, Ohio charter schools “must follow health and safety, ethics, public records and privacy laws; and comply with open meetings laws,” states a 2014 position statement by the Ohio Alliance for Public Charter Schools. Citizens are not required to provide reasons for the requests.”

In the second article in the series, a reporter finds that board members of White Hat charters has no idea where the millions of taxpayer dollars go.

“As a board member of four publicly funded charter schools in Akron and Cleveland, Charlotte Burrell will watch this year as $5.3 million in taxpayer money passes through her financial reports.

“She knows most of it will go to White Hat Management ­— a private, for-profit Akron-based company that runs 32 charter schools in Ohio. But unlike an elected school board member who can obtain intimate details about spending, her hands are tied. What White Hat does with the money, she said, is beyond her control.

“She does, however, control “unrestricted net assets.”
She pointed to the line item on a budget at a joint board meeting in February for two of the charter schools — University and Brown Street academies. Of $2.1 million in expected yearly funds, unrestricted dollars for both schools totaled roughly $1,500, or less than 0.1 percent.

“That’s what we concern ourselves with the majority of the time,” she said.
She’s satisfied, so long as a school treasurer — employed by White Hat — says the money spent by White Hat adds up.

“So, who is in charge of the nonprofit, publicly funded Ohio charter schools that 20 years ago did not exist? This school year, more than $900 million in state and local tax dollars — some of it approved by local voters — will be transferred from local schools to charters.

“In Ohio, charter schools are required to satisfy strict federal guidelines as nonprofit organizations under Section 501(c)3 of the Internal Revenue Code, including board autonomy. If the board is not independent of the company, the IRS is supposed to throw up a red flag.
But state law allows private companies to throw out nonprofit boards that challenge them.

“At many White Hat-operated schools, this already has happened. Last summer, boards in Akron and Cleveland expressed dissatisfaction with White Hat, so White Hat forced them out and new boards were formed.
The three unpaid board members who attended the February meeting said they were recruited by White Hat to serve. They turn over 95.5 percent of funding to White Hat, which then hires the staff, pays the bills and gives rent to its for-profit affiliates that own the tax-exempt school properties.”

.

“The IRS’ checklist to qualify for federal tax-exempt status draws a bright line between the charter-school governing board and the management company hired to run the school. The company should not create the board or recruit the members, and any evidence of boilerplate contracts from one school to the next suggests the company may be in control.

“Richard Schmalbeck, a Duke University professor of law and a former tax law attorney, said the description of relationships between private companies and Ohio charter schools may be problematic.

“The charter schools appear to be run by a for-profit organization,” he said.
Because the private company creates and owns the nonprofit school, then recruits a governing board that would give a favorable contract to the private company, “There may be a private benefit problem. Charities are supposed to operate exclusively for charitable purposes, and not for the purpose of advancing for-profit business ventures.”

“Schmalbeck is disappointed but not surprised that the IRS, buried in applications, might carelessly grant tax-exempt status to a nonprofit created or controlled by a private company. “If these facts are accurate and fully disclosed to the IRS, I think the IRS should withhold 501(c)(3) status,” he said.

“Ohio law requires schools to obtain 501(c)(3) status. The federal government allows 27 months to apply. Some charter schools are created and disappear in less than two years.
University and Brown Street were created by a White Hat attorney in September 2011, or 28 months ago. The board for each school, represented by the same attorney, had yet to file as of mid-March.

“Last year, the Ohio Department of Education (ODE) barred the creation of four White Hat schools when the state determined that boilerplate contracts would strip too much power from the boards.

“So directors who owe their position and continued appointment to White Hat are voting a lucrative operator contract to White Hat. Since a community school is a public entity, ODE feels this is not permissible,” ODE’s Mark Michael wrote in an email rejecting White Hat’s applications.
This was a rare event, though, because the legislature has shifted direct regulation of charter schools from the state to school-choice friendly groups known as sponsors — such as Buckeye Community Hope Foundation, a two-time sponsor of the school at 107 S. Arlington St.

“Initially sponsored by ODE and known as Hope Academy University Campus, the state handed over control after State Rep. John Husted — now secretary of state and a recipient of at least $139,033 in campaign contributions from the Brennans — sponsored legislation that effectively stripped ODE oversight.

“Buckeye Community Hope then took over. Peggy Young, director of the group’s Education Division, takes the position that the boards have ultimate authority.

“We’ve seen boards fire management companies, so in that sense they have ultimate control of the school,” Young said.

“However, when 10 school boards attempted to fire White Hat, it didn’t work out so well. Because White Hat had trademarked school names and bought up real estate through affiliate companies, the renegade boards couldn’t force White Hat out of the building.

“All but one has since contracted with another private company, this one a Delaware-based affiliate of a Florida company founded by a former White Hat employee.

Young saw that as the board maintaining control.

“I’ve had boards do that. They move next door. They have the students. The records,” Young said.

The old buildings didn’t stay empty. They have students and teachers, and board members who say they were recruited by White Hat.

And their attorney, Amy Goodson, whose name is on incorporation papers for several White Hat-managed schools, said it’s “pretty typical” that lack of wherewithal forces boards to enter contracts with big name companies.

“What happens is, I can’t say broadly, but in the case of University and Brown Street, those were education models that White Hat creates,” said Goodson, who is paid by the board. “It’s kind of a chicken and an egg thing because you have to have someone start this.”

Burrell is unaware of her predecessors’ disapproval of White Hat. To the contrary, it’s been “fabulous” working with White Hat, she said.

When asked if she could provide some of the financial information that prior boards continue to seek in court, she replied: “That comes under the management company, not the board. So you would have to interview those persons at White Hat.”

A third article describes IRS rules supposedly governing the tax exempt status of charter schools.

Doug Livingston can be reached at 330-996-3792 or dlivingston@thebeaconjournal.com. Contributing to this story were NewsOutlet reporters Matt Hawout and Sara Rodino.

TheNewsOutlet.org is a collaborative effort among the Youngstown State University journalism program, the University of Akron, Cuyahoga Community College and professional media outlets including, WYSU (88.5-FM) and The (Youngstown) Vindicator, The Akron Beacon Journal and Rubber City Radio (Akron).

http://www.ohio.com/news/local/irs-sets-rules-on-how-charter-schools-qualify-for-tax-exempt-status-1.477137

Lets hope that journalists keep asking questions. The public has a right to know who and what they are funding, and where the money goes.

Jon Hage cashed in on the charter industry in a big way. And where else but Florida, where for-profit schools are welcome no matter what their quality.

EduShyster tells the story here of Jon Hage, a non-educator who is one of Florida’s most successful charter entrepreneurs.

“Have you ever encountered a story so sadly tragic that you were forced to break your own rule regarding pre-noon winebox decanting? I have… Hankies at the ready, reader, for we are *going there.* I’m talking about the super sad true tale of Charter Schools USA founder and CEO Jonathan Hage and his wrenching decision to part with his yacht: the aptly named Fishin’ 4 Schools. In other words, onto every teak deck a little salt water must spray. It’s time to don your stripes, reader; we’re goin’ fishin’.”

She says the boat has been listed for sale for $350,000. Just like your typical superintendent’s boat.

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