The firm created by Andre Agassi with investors plans to an additional $1 billion to build new charters in urban districts.
Investors say the offer is appealing because of the returns.
Agassi formed a new investment partnership with capital investor Bobby Turner called Turner-Agassi.
It has already built 39 charters.
“Among the Turner-Agassi fund’s investors is the Ewing Marion Kauffman Foundation, which is focused on education and entrepreneurship and has about $2 billion under management. The Kansas City, Missouri-based foundation’s main reason for backing the fund was its “potential for future investment returns,” Chief Investment Officer Mary McLean said in an e-mail.”
Read the story and see if you can find a single reference to education in any context other than a chance to make money.
Say it ain’t so, Joe❢
District schools have bond-funded buildings constructed using taxpayer dollars. Charter schools generally don’t have access to these “free” buildings. As a result, the ability to get a building is an obstacle for opening new charter schools.
This fund, and others like it, are able to enable new charters to construct buildings, which they otherwise might have a lot of trouble doing. For example, my state has a 5 year charter period. If a school doesn’t get its charter renewed (many haven’t), the legal entity that it is simply ceases to exist. Also, since revenue is dependent on attracting students, a charter that parents don’t choose can’t pay the rent. Banks aren’t crazy about loaning money given those risks.
These funds are first and foremost investments for the people who participate in them. But, they serve a social function as well, enabling the opening of schools that parents choose when they might not otherwise be able to. But, I think the reason they don’t talk about education is because they just facilitate opening buildings. I guess if they did talk about education, they’d be criticized for speaking about something they are not experts at.
I’m sure there is plenty of money to be made in school construction, whether for districts or charters. The lack of building funding or state underwriting for charters creates risks, which creates more opportunity for investors. If you don’t care of this, perhaps you’ll support building equity for charters, which would remove the need for alternative financing mechanisms like this.
“Charter schools generally don’t have access to these “free” buildings.”
Are you kidding me?!?! In nearly every urban area, district schools are puttering along in hundred year old buildings that have major roof leaks, mold, faulty boilers, no air conditioning, electrical systems that can’t support modern technology, etc. Then charters come along and the government hands them hundreds of millions to build brand new state of the art facilities that would make a Fortune 500 company jealous.
How about donating money (yes, yes, I know, no profit in doing that!) to fix the public schools that already exist…or better yet, build new ones for the students that are already there? Charters have had almost 2 decades to prove they are improving education for all, and except for a VERY few, they just have NOT.
Dienne: what you said.
Put another way: when the leading charterites/privatizers don’t have decisive advantages over the “competition” (aka public schools) they secure them any way they can, all the while claiming that they are the truly disadvantaged.
They have a business plan as opposed to an education model.
To riff off a famous quote, for them, “$tudent $ucce$$ isn’t everything, it’s the only thing.” But a “better education for all”—that’s way way down their list of priorities.
😎
Dienne,
If it were true that “the government hands them hundreds of millions to build brand new… facilities”, then charters wouldn’t need to borrow from entities like Agassi.
As for many other comments, as pointed out, underwriters make a fortune doing bond issues for district schools too. You, or your retirement plan, may even own some of those bonds.
Also, I think a lot of people are thinking that these folks and charter folks are the same people; they are not. Charter schools have a fiscal obligation to seek out the best financing they can get, and these organizations do not offer the least expensive option. They exists because charters are frequently excluded from the cheaper options by nature of their riskiness.
What happens when these charter ‘simply’ cease to exist? Do the students ‘simply’ attend another school? Usually they will simply attend local public schools. Ask the school where these students attend (on short notice) if that is a simple solution.
That is BS. In my city, when the state hasn’t given charters mega millions to build brand new schools, public schools have been shut down and handed over to charters for ONE DOLLAR in rent.
I teach in a rural school for Clark County, Nevada. Our school was flooded two years ago, the carpet, walls and ceiling were found to have mold in them. Our replacement, an old air force behlen type building that has still not had electricity or plumbing hooked up yet. Our bond fund ran out a long time ago, The business community of course would rather take advantage of the new market tax than support any kind of tax to support public schools.
How despicable.
I looked into the options for the New Market Tax and I did not see one thing preventing corporate “reform” billionaires from taking advantage of that tax break to invest in low income neighborhood public schools. I’m guessing the reason they don’t do it is because if public schools close, they remain part of the public school system, whereas if charters close, they belong to the private charter management organization –so financially it’s win/win for them, whether the school succeeds or fails.
You only use your own state. Mine has $1 purchases for charters to claim closed public school buildings. While some states may have challenges, most Republican legislatures have created tons of mechanisms for charters to own buildings that were already built, then to rent the buildings to an affiliated “management” organization and thereby earn profit through the lease.
Agassi and Turner see it as profit. It has nothing to do with education.
“Agassi and Turner see it as profit. It has nothing to do with education.”
Yes, they are not at all concerned with the impact on public schools. The socially responsible investment is just feel good rhetoric. They make it obvious that the investment return is the critical factor.
Obviously an education corporatist.
double fault
“The biggest challenge is the ongoing education of capital,”…what does that even mean? “Public-impact investing, which dedicates funds to issues such as education, community development, the environment and health care”…How do you “dedicate funds to issues”? And how does building schools and hospitals in order to make a profit help with the issues of healthcare and community development? smh
Reblogged this on Dolphin and commented:
Charter proponents like to play the victim–“we’re sooo disadvantaged” –while envisioning the $$ they’ll make off of building charters….as this story illustrates. These aren’t people concerned with education. These are people concerned with profit.
Who owns the asset after they build it? How much property is going under private ownership with the continuing revenue stream as public money?
How do they divide investment that generates value in the asset into public and private, going forward? Can they take 20% of the per pupil funding and plow it back into the privately owned building, and if so, how does that reduce the total public wealth in poor neighborhoods? How does that benefit the neighborhood as a whole? if it’s tax exempt property and they don’t own the asset they’re investing in what do they get other than a chance to purchase a service?
Would Andre Agassi accept a business deal where he invested but had no ongoing, tangible ownership interest? He’s a dope if he would. Is it a good deal for poor neighborhoods to accept a lesser role as people who invest in a long-term asset and then merely purchase a service and lose any accrued value rather than investing in an asset as owners?
I love this idea that the public isn’t on the title of these privately-funded assets that are then funded with public money but we’re somehow “owners”. Baloney.
The real estate bust of the 2020 (maybe sooner) will be charter schools so eventually tax payers will shoulder the total costs of these buildings and own them (until they are sold at a significant discount),
I’d love to take a map of a place and assign colors to “privately owned” and “publicly owned” assets in some of these charter-heavy cities. Which color is growing?
In Ohio, we are mandated to offer what is actually a right of first refusal when we close a public school. We built and paid for the property, but charter lobbyists have essentially put a lien on it.
We are closing two public schools here because we’re building a new one. That public property will have to be offered FIRST to a charter school company before the people in this community can make any decisions regarding what they might like to do with the property THEY OWN.
If we want to demolish the building and put a public park there, well, tough luck. Charter operator gets first dibs. Once Mosaica or whomever decides NOT to exercise their option and buy our school only then are we free to proceed. That’s the power of the charter lobby in this state.
In AZ the charter operator walks off with any assets if the school fails.
Ed reform is so great. It just gets better and better. How long before we’re all ordered to go raise rustle up some investors to build a “public” school? They’ll generously contribute a voucher per student! What are you-all complaining about? That’s like “funding a public school system”, right? Never mind that we’ll be wholly dependent on private interests to dictate what that “public school” should look like and what it should offer. It’s so much less complicated and burdensome when you eliminate the “public” from public schools, don’t you think?
We’re simply the people that fund the payment system to the private contractor, and then our brave “lawmakers” process those payments! I have no earthly idea what our lawmakers will do all day long once they completely “relinquish” any responsibility or accountabilty for “public schools” so that’ll cut out a layer of Big Government right there.
We just need someone (that would be us, the public) to deposit the funds and another person to cut the payment checks to the contractor for the service. It’ll be super-lean and very efficient.
“If you want to cure — really cure — a problem in society, you need to come up with a sustainable solution, and that means making money,” said Turner, who left Canyon Capital Realty Advisors LLC, where he was a partner for 20 years, in November to start the new firm. “Social-impact investing can generate better risk-adjusted returns than traditional opportunistic funds because of the following reason: we’re not trying to create demand.”
Yeah, right. Just ignore the huge lobbying and PR arms of charter chains. Creating demand? School reformers? Never!
What happened to the idea that charter schools were supposed to be local drivers of innovations, BTW? Just a bunch of teachers and parents meeting across a table to improve their schools? Who are we kidding with this? These are national chains. They’ll knock out anyone smaller, including local public schools, because public schools can’t generate revenue by expanding to state after state and standardizing everything.
How is my local public school supposed to compete with a national charter chain? Open an outlet in Pennsylvania? Fire everyone who works there and replace them with the same staffing contractors the national chains will eventually use?
I mean, I guess public schools could get creative and market on “locally owned and operated” but I’m not sure that’s going to be much help since they rely on public funding.
Chiara,
These organizations are frequently used by smaller, independent charter schools because they don’t have the access to capital that school associated with a charter network might have.
Yup. No financial interests at all plugging charter school expansion through politicians through PACs to protect their investments that they pretend are charity. Nothing to see, folks. Move along.
Mother Crusader found a pathway for the the charter industry to guarantee investment growth via Charter School Growth Funds (CSGF)
http://mothercrusader.blogspot.com/2014/05/charter-school-growth-fund-creating-new.html
CSGF is going after the small, independent charters by killing off little mom & pop or church run charters. In true Walmart fashion, they are rigging the game. Taxpayers pay their management fees. Investors reap the rewards.
“This is from the CSGF website, under “Why Invest?”.
CMOs have demonstrated the ability to scale effective school models in a way that is unprecedented in U.S. education. During the scale-up phase, however, philanthropic investment in CMOs addresses a critical financing need. It addresses the central operating deficit between when a CMO staffs up to undertake an expansion campaign and when the central office breaks even on management fees from schools in the network. This philanthropic contribution is temporary, however, because management fees come out of public revenues — an income stream that should sustain network operations at full scale.
Who funds CSGF? check out the usual suspects & some unusual suspects:
http://chartergrowthfund.org/invest-with-us/our-funders/
It’s a disaster for public education funding. It is hard enough to get people who don’t rely on public schools to see the value of public education. Once charter schools take it from “investing in a public asset” to “purchasing a service” traditional public schools are screwed. Any public support for funding will plummet, which the funders of this venture will be thrilled about, because they then move in and take over the whole market.
This is how our children are being turned into modern day slaves to be sold to the highest profit motivated bidder. It’s all about money and not about educating children. Thank you, President Obama, for such a bleak Machiavellian future.
Yep. That’s right. There’s no such word as “education” in the context of their investment. Oh well, it’s from the Bloomberg. What would you like to call their grand scheme? Agassinomics?
Where does Ms Ravitch think that school districts who bond for repair or new construction get their money? [Hint: It is not a local bank.]
Do you ever read what Diane actually writes?
“Investors say the offer is appealing because of the returns.
Agassi formed a new investment partnership with capital investor Bobby Turner called Turner-Agassi.
It has already built 39 charters.
“Among the Turner-Agassi fund’s investors is the Ewing Marion Kauffman Foundation, which is focused on education and entrepreneurship and has about $2 billion under management. The Kansas City, Missouri-based foundation’s main reason for backing the fund was its “potential for future investment returns,” Chief Investment Officer Mary McLean said in an e-mail.””
Where have you ever heard of investors forming partnerships to invest in public schools because of the “future investment returns”?
There are many different investment groups and mutual funds who invest in municipal bonds that are issued by school districts. Not only that the Wall Street firms that issue and underwrite the bonds make millions off of school districts for performing these services.
How is this any different than described here?
For example…
Investors Head Back to Classroom
http://online.wsj.com/news/articles/SB10000872396390444772804577623971597116372
Dienne, big bond houses and attorneys made huge profits from selling bonds for new district public schools. Profits are available for those who invest in bonds both for new district public schools or from charter public schools.
I agree that there are many sub-standard district public school buildings. There has been an under-investment in many districts for their buildings. This is the result of decisions made at state legislatures and local school boards.
Here’s another aspect of this problem.
http://www.startribune.com/opinion/editorials/260340291.html
The Bureau of Indian Affairs schools are another part of the US public education system. As the editorial cited above notes, there also has been a major underinvestment in these buildings.
Dienne,
Again, how is this any different than described here?
They have to put it to the community for a vote. And where I live (Michigan) those bond votes have failed about half of the time. We do NOT get money from the state. We must ask our community for the money and they choose democratically.
And what is your point?
As noted, my state allows charters to purchase (not lease or rent, but purchase) closed school buildings for a buck. Then the charter creates a management organization to charge rent for the building that just cost a buck. It’s a massive, self-generated profit.
But keep trying to discredit Ms. Ravitch. A person with a far greater background than yourself. Of course, snark is not a winning strategy.
The community is only paying off the principal, interest, and fees for the bond, not fronting the cash to the school district.
“The fund, whose investors include the Pershing Square Foundation, co-founded by hedge-fund manager Bill Ackman, will have completed 39 schools for 17,500 students by around August. Plans call for the creation of 60 schools with 30,000 seats when all of the fund’s capital is deployed, Turner said. The fund has a nine-year lifespan.”
Hopefully Agassi can replace more human beings with screens and create a whole new segment of low wage labor in these communities; the people who work at his schools.
Which do you think will be the first completely privatized public school state? My money’s on Florida, where they seem to be actively destroying public schools, but maybe I should ask my investment advisor.
Thanks, Democrats. Good job! You managed to take the one universal publicly-owned system we had in this country and privatize it. What a great, great legacy you’re leaving. Weaker existing public schools and a whole new industry of edu-franchises.
Now that “public schools” are just another commercial contract service provider, I don’t have to fund them when my last kid graduates, right? What do I do if investors decide not to build in my area? Start a public school system to replace the system we recklessly and idiotically replaced with “free markets”?
Remember back in the heady early days of “ed reform” when this was sold as “improving public schools”? It was important to sell it that way because most people use and like their local public school. It never would have flown if it had been sold as “replace public schools”.
What an absolute crock. It’s the biggest bait and switch I have ever seen. They don’t even bother mentioning public schools anymore. It’s as if they’re already gone.
I heard the general consensus at the California charter schools conference was to leave “10%” public, or that’s what the celebrity speaker advocates. I’m curious about that, such a specific number. Is that so we can continue to claim we have a public school system, sot of a like a backup if markets fail?
The remaining 10% of public schools will be dumping grounds for young people whom the charter schools refuse to even try to educate, and scapegoats for an ill-informed public to demonize.
Eventually, those will be turned into workhouses, prisons or hybrids of the two, and rest assured there will be edu-preneurs seeking to make a profit on those young people’s misery, as well.
Right. Those mediocre local schools that ed reformers disdain. Do you know some of the women working at those places are older than 40? They’re practically crones, and the health insurance costs!
Hopefully we can replace them all with hard-driving 25 year olds who attended Broad U and haven’t been infected with icky labor union cooties.
1981 Project on Alternatives in Education
http://www.4shared.com/web/preview/doc/23VCaDs
The Left has been planning the takeover of public Education for years.Names such as Goodlad and Tyler plus the complicity of the NEA (page34) are contained in this report..
Worth reading if there is any doubt in your mind that Charters and Choice are the real threat to Public Education.
Investment dollars from corporations, hedge funds, foundations and Philanthropic entities , take control out of the hands of ELECTED local and State boards and place it with unregulated Charter operators who’s motive is profit.
Vast electronic data collection now enables this plan to advance at a very rapid pace.
Chickens coming home to roost. Had those who warned about the hazards of the CONCEPT of charter schools and attendant muddling of public/private interest arrangements been heeded, these issues would not exist. Unless and until the issue of the contradiction inherent in the CONCEPT of publicly funded charter schools, is acknowledged and acted upon, expect more of the financial interests milking the Charter School Cow.