Jake Jacobs is a middle school art teacher in New York. He is the co-administrator of the New York BadAss Teachers Association, an organization of militant activist teachers.
He writes:
Joe Biden’s recent nomination of Miguel Cardona as a relatively lesser-known, less controversial selection for Secretary of Education was telling. It shows the incoming administration’s reticence to take a side in the ongoing battle over school choice and standardized testing, just like most members of Congress and the major U.S. media.
On the campaign trail, Biden drew cheers from teachers for his promise to end standardized testing, but he noticeably never added any such policy to his website. As was well known by teachers in those audiences, federally mandated tests provide no educational benefit but are the fuel in the engine driving charter school expansion.
President-Elect Biden did vow to cut federal funding to for-profit charter schools, however this affects only about 12% of charters (who could easily change their model while still enriching their for-profit management arms). Biden has acknowledged charter schools siphon money away from public schools, agreeing to new language in the (non-binding) DNC platform to discourage charters from discriminating against high-need students but as we know well, Democrats for many years have bent to pressure from deep-pocketed industrialists seeking ever more charter schools.
Not much has changed since the same billionaires threatened to fund other candidates if Hillary Clinton didn’t continue to signal support for charters. Remember Eli Broad’s explicit ultimatum to withhold campaign cash if Hillary sided with teachers against charter schools? We do.
But Broad also donated money to then-senator Kamala Harris, and like many ultra-wealthy education reformers, Broad made good use of the “revolving door”, hiring Biden’s former chief of staff Bruce Reed (2011-2013) to run his foundation.
AS THE DOOR REVOLVES: The same day he revealed Cardona as his education nominee, it was announcedBiden rehired Reed as deputy chief of staff, despite pre-emptive protest from progressives like Alexandria Ocasio-Cortez and the Squad who objected to Reed’s past hostility to safety net programs like Social Security. A former top advisor to President Bill Clinton, Reed’s own bio touts his oversight of the 1996 welfare reform law, the 1994 crime bill, and the Clinton education agenda.
Starting in 2015, Reed was a senior advisor for Emerson Collective, the “social change” LLC founded by billionaire Laurene Powell Jobs who is also close to Vice President-Elect Harris. Though it’s not clear how Reed might influence Biden’s decision-making on K-12 education, he is expected to have a “major role” as Biden’s Deputy Chief of Staff particularly shaping technology and data privacy policy. And echoing Trump, Reed calls for the elimination of Section 230 which protects internet companies from lawsuits over user postings.
In 2014, while serving as CEO of the Broad Foundation, Reed made worrisome comments to Hillary’s education advisors, suggesting in private that whole cities could be mass-charterized in the wake of natural disasters, calling New Orleans an “amazing story”. Reed also voiced support for personalized digital learning using the Summit Charters model.
TAX BREAKS LINKED TO CHARTERS: It’s great to see watchdog groups expose significant waste and fraud in the charter school industry, but because U.S. media is so silent about the political influence of pro-charter billionaires, hardly any attention is paid to the generous federal tax credits enriching investors through “nonprofit” charter school construction and financing as public schools struggle for resources. One such program, the New Markets Tax Credit (NMTC), did make it onto Biden’s web page, showing he wants to expand the credit to $5 billion per year and make it permanent.
It might not be controversial to use a seven year, 39% tax refund to incentivize wealthy investors to start caring about economically disadvantaged neighborhoods in dire need of manufacturing plants and low-income housing, but why does the NMTC favor charter schools over traditional public schools which are literally crumbling on our heads?
I tried to find whose idea it was to include charter school construction, financing and leasing deals in the NMTC.
The program itself traces back to 1998 when a “membership organization” called NMTC Coalition, comprised mostly of banks, investment funds, developers, LLPs and LLCs came together under the management of Rapoza Associates, a large DC lobbying and government relations firm who supplies policy briefs and “comprehensive legislative and support services to community development organizations, associations and public agencies”. Sound a lot like ALEC?
Legislation was championed by then-Speaker Denny Hastert and Texas Rep. William Archer, both Republicans. The program was signed into law by President Clinton and went live as past of the Community Renewal Tax Relief Act of 2000, but it appears charter schools weren’t included until 2004. The California charter nonprofit ExEd claims to have “pioneered” NMTC charter financing deals, boasting of dozens under their belt. By 2017, more than $2.2 billion in NMTC allocations were deployed to expand charter schools nationally.
The contention was that although charter schools receive operational funding for enrolled students, they must procure and finance their own space, thus they needed a helping hand from Uncle Sam. Today however, 27 states have enacted legislation granting some level of access to district facilities, suggesting some re-examination is in order.
Operators also contended that their charter renewal terms, usually five years, are shorter than typical mortgage terms which range from 10 to 30 years. Thus the need for charters to quickly show results introduced a perverse incentive, driving all-out obsession for good scores on standardized tests so the school can not only guarantee their charter renewal, but demonstrate to lenders they are a safe bet (or attract even more expansion capital).
STAKES RAISED FOR TEST SCORES: Because the NMTC tax credit and a host of other federal programs give charters significant fundraising advantages over public schools, it provides financial impetus to target nearby public schools for closure. Anything that can be done to raise scores – or lower the competition’s scores – will help their chances. This not only gives rise to round-the-clock test prep, but the notorious practice of cherrypicking students.
The shiny new facilities help attract the best test-takers, while rigid “zero tolerance” discipline policies are employed to dump “troublesome” kids back on the public schools. Even though the deck is stacked, superior test scores create the “secret sauce” narrative used to sell politicians on charters and drum up support for more tax breaks.
Over the decades, poverty-stricken areas have been repeatedly carved up and designated as “Enterprise Communities”, “Empowerment Zones”, “Renewal Communities” or “Promise Neighborhoods”. In 2004, President Bush announced the “Opportunity Zones” program which Donald Trump renewed in his 2017 tax reform law, with support from Democrats like Cory Booker. This program could potentially dwarf the NMTC because it allows tax credits and deferments for trillions in untapped capital gains income.
Although Opportunity Zone deals are available to public schools, they would need to first sign over their property to investors. But it’s not clear these programs even work. Besides being rife with cases of abuse like the Steven Mnuchin or Rick Scott front-page patronage scandals, a University of Iowa study of 75 enterprise zones in 13 states found little to no economic benefit and noted other harmful impacts such as displacement, gentrification, or giveaways for development in up-and-coming areas that would have happened anyway.
As chronicled by Network for Public Education and noted by Congress, the array of creative charter school flim-flams has been incalculable – from exorbitant CEO salaries, predatory leases and consulting fees to management firms charging taxpayers to buy out a school’s name and logo. Even school districts got into the act, authorizing charters schools so as to generate oversight fees that help plug budget gaps. But there’s a marked difference between sketchy charter operators and multi-billion dollar programs designed to help charters replace existing schools.
SWEETENING THE POT: The tax credits, designed by the rich for the rich, are only the first layer of the subsidy onion for charter schools though. Linked to the tax breaks are tax-exempt charter school financing bonds traded in investment markets, and then even more inducement via a secondary tranche of bonds leveraged by government subsidies to backstop the first set of bonds against default. One such program, administered through the infamous No Child Left Behind Act is the Credit Enhancement for Charter School Facilities Program, which not only assumes downside risk, it artificially buoys bond ratings and lowers interest rates for the borrower.
These credit enhancements can be backed by federal or state funds, banks or private investors but again, the guarantees may be tied to academic performance benchmarks which precipitate discrimination against high-need students.
To lure developers into distressed neighborhoods, enormous bond guarantee and credit enhancement funds (starting at $100 million) were created under the Community Development Financial Institutions (CDFI) program, enacted as part of the 2010 Small Business Jobs Act. Charter school developers were among those offered access to long-term credit at below-market rates. In 2012, twelve of these CDFI fund management groups came together to form the Charter School Lenders Coalition, underwritten by usual suspects the Gates and Walton Foundations. The collaborative melded together ALL of the aforementioned programs with a stated goal of lobbying congressional reps to support more charters.
Earlier this year, high-profile Democrats including Senators Sanders, Warren and Van Hollen co-sponsored legislation that would automatically deploy CDFIs in areas impacted by natural disasters or economic crises.
If all these financial instruments are starting to sound complicated, it’s no accident – I’ve spared readers most of the dizzying acronyms like CDEs, CMOs, UDAGs and QALICBs, but the less everyday people understand, the greater the chance this all flies under the radar. Even the developers – be they charter operators or wealthy financial backers – require a lot of hand-holding by intermediaries to guide them through the maze of policy intricacies and applications.
This is where yet another funding stream comes in, namely the federal Charter Schools Program, or CSP, which since 1994 has grown to into a $440 million annual slush fund for discretionary grants found to be so wasteful a third of 2006-2014 grantees never opened or quickly folded. Other recipients were found to be buying skyboxes or private jets, or unscrupulously charging themselves rent in cities and towns where local authorities are ill-equipped for oversight.
PULLING OUT THE STOPS: By the time Betsy DeVos took the helm, the U.S. Dept. of Education wasn’t just awarding start-up money to school-level charter developers but to all manner of other financial intermediaries including charter associations, nonprofits, state educational agencies, charter authorizers, and credit enhancement funds. The DeVoses know well that raining money on these entities will enrich real estate and banking interests, trickling down onto pro-charter candidates, local PACs and friendly media outlets. A week before the 2020 election, DeVos shamelessly announced the Trump Administration will start ignoring the crystal-clear prohibition on federal funds for charters affiliated with religious organizations, rupturing the separation of church and state.
The NMTC technically expires on Dec. 31, 2020 but proposals for renewal have been very popular – the 2019 bill in the Senate had 37 bipartisan co-sponsors including Minority Leader Schumer, Amy Klobuchar and center-left Senators Jeff Merkeley and Sherrod Brown. The House version had 130 co-sponsors including Karen Bass and 22 other members of the Progressive Caucus.
If there was an amendment to remove the exclusive carve-out for charter schools from the NMTC, it would allow the community investment to continue (for better or worse) but take the finger off the scale in the competition for educational resources.
Such an amendment may not deter anti-union oligarchs like the Koch family bent on undermining public education. It may not deter data-mining tech billionaires seeking lucrative contracts or access to captive student audiences. It may not deter neoliberal social engineers who think their wealth ordains them to rejigger education as they see fit. It may not deter Betsy DeVos and her ilk from crusading for taxpayer-funding of religious schools.
But it could deter the garden-variety investor just looking to turn a buck, and it could bring attention to the little-understood giveaways to charter school investors. Also, it will flush out members of Congress afraid to go on record either for-or-against charters. As the battles over public education funding rage on, we hope incoming House members will infuse new energy into the fight, showing Biden, Harris and other policymakers the real-world harms and inequity built into charter school tax credits.
Diane Ravitch's blog 
Speaking of Biden’s revolving door: https://www.dailyposter.com/p/bidens-revolving-door
The struggle for equitable, democratically-governed public schools continues.
Yes!
Entirely unrelated:
Today in Hillsborough County in Flor-uh-duh was the day when seniors 65 and over were supposed to be able to schedule appointments for Covid-19 vaccinations. The county provided a telephone number and a website for doing this. The telephone number returns only busy signals. The website returns only error messages. Plus, they have a total of 4,000 vaccinations and 200,000 county residents 65 and over, but the county’s vaccination website doesn’t even mention this discrepancy.
Yesterday in Broward County, seniors waited ALL DAY in line in their cars, without access to bathrooms, waiting to be vaccinated. Poor seniors without cars? Well, they were out of luck. But that’s OK, I guess, because this is the United States, where the poor and elderly don’t matter. But it gets even better. Most of the seniors who waited in line all day were turned away at the end of the line because they ran out of vaccines.
This is like something out of a Kafka novel.
The US has become a Kafka novel. Life imitating fiction. The bizarre becomes normalized.
Our country is simply incapable of a competent response on anything any more.
It’s nitwits wherever you look.
I was reading about the herculean effort of 1947 in which nearly 6 million people in NY City were vaccinated in just a few weeks to prevent a smallpox outbreak.
It was largey due to a single person (and a lot iofvolunteers) : city health commissioner Israel Weinstein
Can you imagine that happening now? I can’t.
And it ain’t just Trump by a long shot.
Our country has lost the ability to make things happen, except wars, of course. And the latter are just FUBAR.
If anyone needs any proof that both parties are responsible for the decline, they need look no further than what was done to schools over the last two decades under both Republican and Democratic administration’s.
That was just a total train wreck.
This is so discouraging that these “reformers” (destroyers) have so much money to throw around to get their way and gain access to the halls of power. They can buy politicians, they can influence school board elections in Lumpa-Lumpa (made up name), Iowa and they can influence educational policy for the whole nation. All that being said, at least Miguel Cardona is not another Betsy D. Incremental progress, one hopes.
We will never be able to have equitable well resourced public schools if the government continues to work for financiers from Wall St on neo-liberal schemes to enrich the already wealthy. If the only way to repair public schools is to transfer ownership to private companies, public schools will never be repaired unless they become privately owned charter schools. Public-private “partnerships” in which the public holds the bag and socializes the risk while investors gain the real estate, numerous tax breaks and profit are not opportunities for those living in so-called opportunity zones. These manipulations are financial products designed by Wall St for the benefit of the wealthy members of the Wall St. club. The poor get displaced from the opportunity zones, and the newly gentrified community moves into the area. Cities are happy to go along with the scheme because they can collect a lot more property tax from the gentrified area.
All of this manipulation occurs behind the scenes, and the public is largely unaware. It is so sad that so many Democrats are riding in Wall St.’s opportunity wagon. Those of us that voted for Biden need to hold him to account. The only way for public schools to get fair treatment is to fight against privatization, protest loudly and try to get the attention of the media. Privatization breeds corruption.
This scheme gives preferential treatment to charter schools. Why is the federal government playing favorite to private companies? Nobody ever voted to approve this scheme. It is doubtful that voters would approve any plan that treats public education like a poor step-child. Any plan that invests in construction of private schools while public schools are forgotten diminishes the common good. Since there is no evidence that charter schools are more effective than public schools, we should be asking those that back this scheme why they are voting to give preferential treatment to charter schools?
“diminishing the common good” — years of neoliberal policy “trickling down” from Reagan thorough every President, no matter political affiliation
The NAACP should be asking Democrats why they are supporting a plan that funnels mostly black and brown students into separate and unequal schools. Most of the urban “opportunity zones” are in areas where poor black and brown students live. Does the Biden administration think that the federal government should be promoting apartheid schools in America’s cities?
Ed reform has a new gimmick, “microschools”
Anyone can open a microschool and get public funding.
And this is what they pay “guides” – guides are untrained low wage employees who watch the kids while the kids go thru the canned online program:
“Yes! We compensate guides according to the number of students that enroll in their class. Guiding is a part time job (between 16-20 hours/week). You need 5 students to start a microschool and the student cap is set at 10. If you have a full class, you can make between $23,000-$26,000 for a 10 month school year. More details on this when you download the guide overview resource!”
Education for low and middle income students on the cheap. Ed reformers are creating low wage, no benefit jobs to replace teachers.
Ed reformer’s own children will still get certified and vetted teachers at the private schools they use- they just want to stick the rest of us with the 11 dollar an hour “guide” instead of a teacher.
How can the tenured university professors and three figure education pundits support paying people so little? I mean, this is obviously intended to be a cheap replacement for a public school.
https://prendaschool.com/become-a-guide
Companies will do anything to make money. Monetization of public education is a huge mistake. Companies will always lean toward investing the least and gaining the most profit. Schools without human teachers are the cheapest option. They don’t care if students learn or not. They make money regardless. Caveat emptor!
Chiara “Ed reformers are creating low wage, no benefit jobs to replace teachers.”
(snark alert) Don’t you know? COMPUTER PROGRAMMING is the new teacher. CBK
How much do ed reformers make? All of these people make three figure salaries yet they promote policy that pays teachers 23k a year?
“David Osborne
Author Reinventing America’s Schools, Reinventing Government & others. Dir. of Progressive Policy Institute Project on Reinventing America’s Schools”
I bet David Osborne makes a heck of a lot more than 23k a year lobbying for privatization. Why is he pushing to create more low wage jobs to replace higher wage jobs?
Privatization benefits the super rich. The public generally winds up paying more for a worse service. All the money stays at the top, and those that do the work are paid poorly, or they become part-time gig workers like Uber gigs. Privatization is also responsible in part for declining union membership and our massive inequality. Privatization is also prone to corruption. Biden needs to do more than give lip service to unions if his economic team undermines middle class jobs. https://thehill.com/blogs/congress-blog/economy-budget/304993-how-privatization-is-fueling-historic-inequality
retired My guess is that, out there in the universe somewhere, there is a nice little link between privatization and narcissism? CBK
There is a direct relationship between privatization and profit for the 1% and Wall St.
According to California Fair Political Practce Commission (FPPC) webpage, in Oakland in 2018, Jerry Brown’s Oakland Military Academy (OMI) privately managed charter school received, from the ultra-rich inventor and real estate investor, Mr. Maurice Kanbar, a million dollar behesting donation to his charter school.
Behesting donation is a contribution to a California office holder’s designated charity and tax deductible whereas political contributions are not.
Mr. Kanbar’s behesting million dollar contribution to Jerry Brown’s charter school was tax deductible.
In 2018, I think Governor Brown set the record for state governors behesting donations by exceeding $10 million dollars in behesting donations..
Mr. Kanbar single individual contribution was a record too greater than all corporations donating behesting contributions. And his contribution was surpassed by only the Government of Norway that provided a $3 million behesting donation for Governor Brown’s conference on global warming.
Governor Brown attracted in 2018 $567,500 for his Oakland School for the Arts (OSA) privately managed charter school and $1,662,500 for Governor Brown’s Oakland Military Academy (OMI).
However the millions in “behested” payments showered on Jerry Brown’s two Oakland privately managed charter schools during his tenure as governor does not compare to the 20-year, over $100 million dollar Promise of billboard corporation CBS Outdoor made to fund his privately managed charter schoo,l Oakland School for the Arts, a signed Promise that was made when Jerry Brown was Mayor of Oakland.
That’s a good word: behested.
Maybe Jerry Brown should be behested.
I’m trying to tag him behested charter school funding star without ever having been President.
$10 million in behested payments to Jerry’s designated charities was only for the year 2018 and I didn’t add up all the behested payments there may have been made during his 4-years as California Governor.
Total of all his 4-years as Governor in behested payments may have surpassed his 20-year $100 million plus Promise to fund his privately managed charter he secured as Oakland Mayor. A billboard corporation that wanted to place billboards on public Oakland Port Authority land near Oakland/San Francisco Bay Bridge tollgates signed a side agreement promise to share a percentage of the ad revenue from the billboards.
I estimate that after 20-years the privately managed charter school Oakland School for the Arts that Oakland Mayor Jerry Brown founded will have received over $100 million dollars generated by the billboard company’s signed promise.
Jerry Brown funded his charters using both behested payments as Governor and signed side agreement promise of a billboard corporation to fund his privately managed charter Oakland School for the Arts as Mayor of Oakland.
Jake Jacobs, Thanks for the original post, a wonderfully comprehensive rollout of flawed education policies, not just in New York.
Here in Cincinnati, the opportunity zones for development prevent homeowners from receiving grants for roof repair, rebuilding steps, and other major expenses to maintain the value of their property. This stipulation is designed to hurt people on the first step out of poverty and enhanced civic pride via homeownership. Here, these zones are designed to build out the property values in zip codes that do not require subsidies but take them anyway.
Hi Laura, thanks but it actually wasn’t that comprehensive, if anything it was highly abbreviated. I started to research this piece a long time ago but within minutes had 50 tabs open and was overwhelmed. I only got through it this time by focusing narrowly on the New Markets Tax Credit in light of Biden’s promise to expand it.
Like everybody else, I originally heard of the NMTC from the Juan Gonzales piece 10 years ago, but in talking to Cynthia Liu, I learned it was merely the tip of the iceberg, a subject that is almost never covered in news or education media.
This is not only because it is a labyrinthine tangle of programs and complex financial instruments, but also because the same rich investors are also the biggest influencers in politics and the media.
There are a lot of blurry lines, loopholes and unintended consequences in the Opportunity Zones program too, but besides favoring charter schools over public schools, the big problem with these programs is that they were designed by the rich in the first place and hold investment in poor neighborhoods hostage for tax credits.
UPDATE: Turns out the NMTC program was already renewed through 2025, as well as the Empowerment Zone program, as part of H.R. 133, the Consolidated Appropriations Act of 2021.
In addition, the legislation quietly passed by Congress on Dec. 21 and signed into law by President Trump on Dec. 27 includes an unprecedented $12 billion set-aside for Community Development Financial Institutions (CDFIs)
https://www.novoco.com/news/trump-signs-bills-including-4-lihtc-floor-nmtc-extension-emergency-rental-assistance