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 GlobeSt.com. “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.”
Diane Ravitch's blog 
Privateers profit from the fleecing of public funds.
No More Public Funds For Private Schools !!!
Agassi’s schools?
Wasn’t there one in Vegas where one of the female teachers (and also cheerleading coach) was criminally convicted for what she did in a part-time job (in addition to her school job) — working as a pimp who managed a stable of Vegas’ prostitutes?
http://www.reviewjournal.com/news/cheerleading-coach-boasted-girls-clients-report-says
Good job in vetting and doing background checks on your teaching staff, Andre!!!
In education, this is what de-regulation, and being non-transparent, and non-accountable to the public leads to.
Good one Jack!
Oh, it’s much bigger than Andre Agassi. Rocketship has all the big players in ed reform, thru “Dreambox”. Here’s an absolutely fawning and worshipful piece on it:
John Danner “discovers” DreamBox and mentions his discovery to his friend and Rocketship supporter, Netflix founder Reed Hastings. After Hastings sees DreamBox in action at a Rocketship school, he e-mails his friend Dan Kerns, DreamBox’s chief architect (the two worked together several years earlier; in Silicon Valley, all the best software engineers know one another) to say, nice job. Kerns e-mails back saying, funny you should write now; we’re out of money; nobody’s been paid in a while, and we’re going to have to close or get sold. So Hastings buys DreamBox. Just some startup good ole’ boys who know other startup good ole’ boys doing business quickly and cleanly.
That chain of events started with Danner’s search for adaptive software to use in Rocketship schools. “We were looking for a very specific thing, a piece of software that would work for fifty or one hundred kids in a computer lab, so that when they got confused they didn’t have to raise their hands and ask for help from an adult because with that many kids having an adult remediate all the problems just didn’t work.” But Danner couldn’t find that software, anywhere. “The companies just didn’t look at the world that way. They thought you needed an adult, that it was the job of the adult to get the kids back on track.”
It’s great. You can just stick huge groups of kids in front of a screen, pay a low-wage minder 10 bucks an hour, and they learn math! The federal government funded this, too, even though their own study said the kid’s scores weren’t going up with this program. It’s VERY fashionable.
http://digital.hechingerreport.org/content/netflixs-founder-saves-day-one-edcuation-software-startup_1482/
‘After visiting the DreamBox team in Seattle, Danner knew he had found his program. Rocketship started using DreamBox for its math program, which led to Hastings seeing the program, which led to Reed Hastings purchasing the company. Hastings didn’t want to own the company, so he structured the purchase through a gift to the nonprofit Charter School Growth Fund, a transaction worth around $11 million. “I’m still active in California education politics,” said Hastings. “I didn’t want people to think I was doing this to make more money. If it’s financially successful, the rewards don’t go to me.”’
This quote is from your link. So do the rewards go to the Charter School Growth fund? I think my kids use Dreambox in their schools. So public schools are licensing this software and the Charter School Growth fund is getting the profits? I hope I have that wrong, can someone confirm?
Thanks
Chiara:
Terrific addition to this thread.
Quite literally, this makes it clear why the self-styled “education reform” movement targets the vast majority of students and parents and their associated communities. This particular variant of their business plan that masquerades as an education model is quite clear: 50 or 100 kids? Not for the offspring of the movers and shakers and enablers and enforcers of rheephorm. That’s for OTHER PEOPLE’S CHILDREN.
No, for THEIR OWN CHILDREN… Let’s take Lakeside School. Bill Gates. His own two children.
The excerpt from the link below is from 2012 but not much has changed; in fact, I would say, based on the school’s website, it’s gotten obviously/measurably better.
[start]
Lakeside has a lovely campus that looks kind of like a college campus:
– Faculty is nearly equally balanced between men & women (i.e. Lakeside pays well);
– 79% of faculty have advanced degrees;
– 17% are “faculty of color” (half the students are “students of color,” cough, Asian)
– Student/teacher ratio: 9 to 1
– Average class size: 16
– High school library = 20,000 volumes
– 24 varsity sports offered
– New sports facility offers cryotherapy & hydrotherapy spas
– Full arts program with drama, various choruses, various bands including jazz band and a chamber orchestra.
[end]
Notice that little bit about student-teacher ratio and average class size? I guess you don’t need to implement the 50-100 gimmick found in the Rheephorm 99¢ Store when you can actually ensure a world class luxury learning and teaching environment.
Link: https://seattleducation2010.wordpress.com/2012/06/18/bill-gates-tells-us-why-his-high-school-was-a-great-learning-environment/
And go to the Lakeside School website and read about all the “frivolous excesses” [according to rheephorm doctrine] they’re planning for the Gates children and others. Not a word about adaptive software used in the fashion described in your comments.
I guess, a la ANIMAL FARM, some children are more equal than others. Or to paraphrase Bill & Melinda Gates: a few children are worth a lot more than the vast majority.
Rheeally! It’s a fact affirmed in the most Johnsonally sort of ways…
But here on Planet Reality: not really. Not even close.
Again, thank you for the valuable info.
😎
Speaking in a Johnsonally context, have you seen this, Krazy?
http://deadspin.com/whos-funding-kevin-johnsons-secret-government-1731005808
There is a simple solution to this. Support giving charter schools the same facilities funding and access to borrowing as district schools and this will go away. Until that happens, charters will have to pay more to borrow money for facilities.
Meanwhile, investing in a charter building is risky since most face renewal every 5 years and enough get shut down to impact returns. District schools rarely face this problem, so it is no surprise that they can borrow money at lower rates.
No charter school wants to pay more to borrow money than they have to. Those against charters have made that an unfortunate cost borne by charter students.
That would be because public schools are in it for the long haul. Forever, preferably. Charters are in it as long as they feel like it, as long as they get good returns, as long as they don’t get caught with their hands in the cookie jar….
I don’t even mind that Rocketship wants to expand their chain. What I mind is that ed reformers are selling this model to every public school in the country.
I don’t want a Rocketship and I resent ed reform “leaders” at the US Department of Education working to turn every public school in the country into a Rocketship. I’m not really paying these people to market software and screens to public schools.
isn’t that the price charters are willing to pay for no local oversight?
John, here’s my response. If charters want equalization of funds, then equalize everything else. They have to keep students and can’t counsel out. They have to backfill seats when students do leave so they can stop crowing about waitlists. They have to stop blocking attempts to unionize. They have to maintain an elected rather than appointed school board. They have to allow for unfettered access to their financials.
This is my beef, endlessly and constantly: charter schools get all of these advantages that emerge from a lack of oversight and student selectivity. Then they brag about their results versus traditional public schools. The comparisons aren’t valid if the rules aren’t the same.
So, yes, you’re suggestion makes sense. But I think charters should follow all of the same rules as everyone else. They only want “equality” when it’s to their advantage. Otherwise, they want exceptionalism.
Steve K:
TAGO!
😎
As you note, John, charters face many challenges with facilities.
I keep waiting to see an examination of the profits that companies make providing bonds for traditional school buildings. The bond companies make significant profits but that seems to be ok with many who oppose charters.
But you ignored the challenges faced by traditional public schools, Joe. Challenges that charters can sidestep. You seem to have little sympathy there for the traditional publics. I’m just waiting for “Count Day” to pass by here in Michigan so my school’s enrollment can swell when charters dump the insufficient. We’d send ours to them but for some reason, they won’t fill those newly empty seats.
Different rules for different schools. But let’s compare anyway and declare victory. When it comes to crap like this, charters start every inning with a runner on second base but traditional publics start with one out and nobody on.
I’d say that the Charters start out with all three bases loaded and the fourth batter is their heaviest hitter, but he wears a hood with only openings for the eyes so we can’t see who he is. The traditional schools are not allowed to use professional players and every player must be identified before they go up to bat and all they get is one strike and then the Charters are up to bat again.
Well, isn’t this tawdry scene precious?
One who prostitutes others while working for one who prostitutes himself in the name of educating children and protecting their welfare and who never finished high school.
I guess our very equitable tax system has allowed Turner and Agassi to save their money and use it to privatize education. And for using it for charters, lord knows what kind of tax write-offs they might further get.
Personally, I would love to play a round of tennis with Agassi . . . . only if Icould use his shrunken head as the ball.
(WHACK). (SLAM).
“The schools will be net-leased to charter school operators. ”
So the schools will be net-leased to operators who pay with public dollars and then who owns the property? The public or the operator?
it’s a charter school so the information will be impossible to find and no one will ever talk about who owns what and who paid for what at the end of this complex business transaction. If only we had a group of people, “elected representatives”, who could ask questions like this before rubber-stamping any proposal that includes the phrase “charter school”.
You bring up a very good point. In a democratic institution, you know who to hold accountable. With a charter chain owned by a subsidiary of another company that is really a shell company, the maze of anonymity is designed to confuse and misdirect by design. That’s the way the hedge funds want it so nobody is on the hook, but the taxpayers.
Why don’t we see kids lined up sitting in front of screens for hours at adequately-funded public schools or elite private schools?
Just curious why this experiment is being conducted on poor and middle class kids. If it’s so great I would think private schools would snatch it right up. Can they go first and report back to us?
And studies by OECD are showing that students who use computers every day have LOWER test scores than those who don’t:
http://www.bbc.com/news/business-34174796
Great report. Well worth reading, but I don’t think this will slow up Gates, Walton, Broad, the hedge funds, and the Koch brothers. They don’t care about the actual results.
They only care about profits—-after all, greed is good, greed is god.
Charter operators are not taxed for local schools including buildings. Why should they be given a free ride on facilities? There are huge pools of money for charter facilities, including the start up and expansion grants from USDE. A recent report highlights the risky business of funding facilities for charters: about one third are so bad they close within five years.
I think it’s such a shame that the public won’t have any investment in public schools anymore. It really fundamentally changes the relationship- schools will just be contract service providers rather than something we all build and own.
I think we’ll really regret losing that connection.
Chiara, Please keep on fighting against charters. Charters may very well reach a point of diminishing return, or their greed will get the better of them. The public will no longer find them shiny and new, or a new leader may change some laws. Keep hoping for better days.
Did we ever get any independent verification that there’s demand for these schools? Or are we still relying on self-reported numbers from the investors/founders/marketing team?
Forbes magazine lists 1,826 billionaires in the U.S. for 2015, 57 more than last year. The combined wealth of the Walton family is $160.8 billion. Billionaire wealth in the U.S. Is about $7.05 trillion this year. Gates has been in first place for individual wealth for more than a dozen years, currently about $87 billion and Gates will get most of Warren Buffet’s wealth to add to his foundation when Warren dies. Buffet’s wealth is slightly less than that of Gates.
Forbes reports that most billionaires say their wealth is self-made, not inherited, but a majority also say they came from families with middle to high incomes.
In any case, it is improper to call charter schools financed with private funds PUBLIC schools, and that label is even more deceptive when charters are known to cherry-pick students, exclude others for non-compliance with rules, require contracts with parents, and so on.
Charter schools have become an industry with incredible wealth rushing toward return on investments. The “emerging market” is for preschool social impact bonds. The financial products depend on profits gained from public subsidies while cutting all costs for service-delivery to a minimum, hire temps and train them to meet productivity targets, and so on.
The horrific part of the Obama/Duncan legacy has been their aiding and abetting the destruction of public education, in addition to mocking teachers, students, and parents. For a good look at this culture of distain, check in with Politico today, or just join the rest of us in following and contributing to this blog.
Citibank was the major financier of slavery in the U.S.
Moses Taylor, who helped finance the illegal slave trade, had his offices at 55 South Street, now part of the 111 Wall Street complex. His decades-long banking operations evolved into Citibank. He sat on the boards of firms that became Con Edison, Bethlehem Steel and AT&T, according to Alan J. Singer’s New York and Slavery: Time to Teach the Truth. When Taylor died in 1882, at age 76, his estate was worth $40 million to $50 million, or roughly $44 billion in current calculations.
http://www.theroot.com/articles/culture/2013/02/slavery_in_new_york_wall_street_was_built_with_african_help.html
Greed is good, greed is god.
Lloyd, are you opposed to the profits that bond companies make financing traditional district public schools?
Joe,
Would you explain how the bond process works for those of us who know very little about it?
TIA!
Duane
Many traditional school districts hire bond companies that sell bonds to finance the construction of new buildings. If you’ve attended either school board or supt association conferences, you see booths paid for by bond companies and sometimes meals sponsored by bond companies.
They work hard to get the business of traditional school districts because they (bond companies) can earn significant sums selling these bonds.
I have no opinion on bonds, because it would be futile since it is something that usually has to be approved at the ballot box—at least in California it seems all the bonds must be voted on by those who vote.
If the public schools were properly funded, then there would be no need for bonds that are usually used to update or replace worn out buildings, because many of the public schools in the United States were built in the decade after World War II and they, like so much of the US infrastructure that is being ignored (bridges, railroads, sewer systems, airports, etc), are in need of upgrades and/or replacement.
In fact, the high school where I spent the last 16 years of my 30 in the classroom was in serious need of being torn down and replaced because the old buildings had been constructed during the age of formaldehyde being used in building materials and 20% to 25% of the staff suffered from sick building syndrome in addition to many students.
If a bond came out to replace those old buildings that make students and teachers sick, then I’d vote YES. Too bad our elected representatives, and the GOP primarily, are so against raising taxes to do the same thing.
“best-in-class charter school operators,”
Anybody have any idea what that means or can identify those who would qualify for that moniker?
Duane Swacker: ah, there you go again asking questions!
Next thing you know, someone that haunts this blog will accuse you of being metaphysical.
😎
When my ypungest sister was in kindergarten (in the last century when children could color and play in kindergarten), each day she brought home a paper that had a large red blotch on it someplace. Curious, my mother asked her what the red blotch was.
She replied, somewhat annoyed: It’s a gongee.
But what’s a gongee?
Hands on hips, the answer came back: A gongee is whatever you want it to be.
Sicut in prima, ita etiam hic.
Obviously the rich have too much money. They are making mischief with it. Let us tax them more.
Wow! That’s great! But what about students? Nothing is mentioned about any benefit to students. Just profits for the big guys. Isn’t this like pimping the kids? And what about students who live in distressed neighborhoods but are bused 6 miles away in a nicer, middle class neighborhood, but the entire school enrollment is just those kids! No neighborhood kids. That’s my school. Ninety – plus percent from disadvantaged SES; 40+% mobility, chronic absenteeism, and non-English speaking. What about them?
Back in 2000 before teaching, I worked with Boys and Girls Clubs. Agassiz built a beautiful club for those poor kids. Right in the middle of project housing and 5 different gang territories. The building wasn’t going to be ready for the grand opening which was attracting tons of media and recognition. Agassi of course had a tight schedule and couldnt/wouldn’t agree to change the opening date. The building had no hot water, doors were falling off hinges – big, heavy, fire doors – carpet wasn’t glued down in corners; floor molding wasn’t finished; hardly any furniture or recreation equipment was delivered; and instead of finishing the grassy landscape, pebbles were laid down so beautifully. Those pebbles became weapons and broke several windows. But, it had a state of the art tennis court made out of recycled rubber soles from Nike shoes. Pretty!
Hopefully they’ll do better building this time. Students deserve it!
This Turner-Agassi charter school funded by Chinese investors that get EB-5 visas.
Click to access EB-5_Insert_Phase12C_Eng.pdf
So far, 21 charter schools in Florida built or expanded were funded this way.
http://www.mandeville.com.hk/eb-5-charter-school-projects/
Looks like his brother-in-law is in trouble.
http://www.law360.com/articles/697441/sec-case-against-agassi-in-law-highlights-eb-5-investor-risk
“Dargey has now landed in hot water for engaging in fraud and deceit in the EB-5 offering process, as well as for using related Path America companies to siphon investor funds into his own pockets. The SEC has charged him for making false and misleading statements in EB-5 offering documents, alleging that since 2012 Dargey has exploited the EB-5 Program to defraud investors seeking investment returns and a lawful path to U.S. permanent residency. Among the allegations is misappropriation of $17.6 million in investor funds.”