One of the few remaining Edison charter schools went broke, leaving teachers without a pay check. No one knows if the teachers will ever be paid. Most of Edison’s business now is online, not direct management of schools.
Derrick Thomas Academy charter school in Kansas City, which opened in 2002 with great promise, lost its charter and left behind a massive financial mess, with Edison demanding payment by the state, and financial backers crying about their losses.
According to the local story:
“The money that might have covered teacher salaries is tied up in court over a dispute among the school, the company contracted to manage it and the company that issued bonds for the school’s launch.
“The University of Missouri-Kansas City, which had sponsored the charter school at 201 E. Armour Blvd. since it opened in 2001, has no financial responsibility for the school or its debt. The academy announced last fall it would close after UMKC refused to renew its charter, citing poor management and low test scores. The school has since been overseen by an interim board.
“The Missouri Department of Elementary and Secondary Education (DESE) has been named in legal action to garnish more than $2.2 million that the management company, EdisonLearning Inc., says it is owed.
“Derrick Thomas Academy, now locked up behind a heavy black gate, also owes a substantial amount of money to the bondholder for the school, Lord Abbett.
“Jim Sansevero, spokesman for Lord Abbett, said the school has defaulted on bond payments and “$10 million is at risk.” The school used its building to secure the bonds.”
Is this disaster likely to dim the enthusiasm of charter advocates? Will they say that 11years was not a fair trial? What do you think?
He writes: “If ever there was an organization that stands out as one that should never have been granted nonprofit status and doesn’t deserve to continue having it, it’s StudentsFirst. One look at their 2011 tax disclosures reveals a fat, political, ideological organization. StudentsFirst not only crosses the line, they stomp on it and erase it for their own benefit.”
Nonprofits are allowed to do some advocacy, but as I understand the tax law (let me be the first to say that only tax lawyers understand the tax law and even they sometimes need help figuring it out), nonprofits are not supposed to lobby directly for legislation. Or, maybe do it just a little bit. Or maybe pretend they are advocating but not lobbying.
The tax laws and tax code make no sense. if you view the universe of nonprofits actively lobbying for vouchers, charters, tax breaks, or seeking appropriations and earmarks for entrepreneurs, it makes no sense that they are classified as nonprofits. Some nonprofits lobby on behalf of for-profit corporations, which make handsome donations to the nonprofits.
In some quarters, what is called “reform” is driven by big money, not what is best for students. Yes, Virginia, there is an education industry, and it is like any other industry: it wants a return on its investments.
A reader who goes by the name “Democracy” reminds us of the much-hyped report by a task force of the Council on Foreign Relations, whose co-chairs were Joel Klein and Condoleeza Rice. It blamed the public schools for endangering national security and for the nation’s economic problems. I reviewed it here.
This is “Democracy’s” comment:
“Aah, Joel Klein.
Klein was a recent co-author – with Condaleezza Rice – of a Council on Foreign Relations education “report” that consisted mostly of tripe. But what can one reasonably expect from the likes of Klein and Rice?
Joel Klein perpetrates and perpetuates the myth that public education is in “crisis,” and without serious “reform” “the U.S. economy will continue to suffer.”
The “reform” pushed by Klein (and the Council report) is to impose the “business model” on public schools. This is the same “model” that led to big budget deficits, a ballooned national debt and a broken economy. Rather than take responsibility for what they did, the big bankers and hedge funders and politicians who brokered it all point the finger of blame at public schools and teachers.
Klein advocates more testing, merit pay through “value-added” evaluations, more charter schools and vouchers as “innovative” reforms. There is little or no research to support any of them.
Klein blames the current economic quagmire on public education. He writes that we used to “have a successful middle class,” but “that’s changed markedly since 1980.” Klein says “we’re rapidly moving toward two America’s –– a wealthy elite and an increasingly large underclass that lacks the skills to succeed.” His answer to the problem? The market, since “markets impose accountability.” A person would have to be moronic to make – or believe – such a claim.
Klein never makes any mention whatsoever, as he blames schools and teachers, of the supply-side economic policies pushed by conservative presidents, politicians and businessmen that are directly responsible for big budget deficits, millions of job losses, the most severe income stratification in the developed world, and our unsustainable national debt. He calls for “radical reform” of public education (more tests, merit pay, vouchers, etc), but says not one word about reforming the banking, derivatives trading and skewed tax system – coupled with regulatory enforcement –– that are sorely needed.
Condaleezza Rice was George W. Bush’s national security director before 9/11 occurred and during the launching of the war in Iraq, which she favored and supported. Rice helped to sell the American public the big lie of weapons of mass destruction in Iraq, warning infamously that “ we don’t want the smoking gun to be a mushroom cloud.” Journalists who covered her reported that she “made public claims that she knew to be false.”
There’s little doubt but that Rice (and her colleagues) ignored repeated warnings about imminent terrorist threats. After 9/11, she said (repeatedly) that no one could have predicted that planes might be used as weapons, despite the fact that there were at least a dozen documented warnings of it.
Initially, until public pressure forced the Bush administration to relent, Rice refused to testify before the 9/11 Commission. When she did, it wasn’t pretty. She wiggles and squirms, and tries to obfuscate and evade answering questions about the Presidential Daily Briefing (PDB) of August 6, 2001. That PDB was titled “Bin Ladin Determined To Strike in US” and warned that Bin Ladin was “determined…to conduct terrorist attacks in the US,” that he “prepares years in advance and is not deterred by setbacks.” The memo noted “patterns of suspicious activity in this country consistent with preparations for hijackings or other types of attacks,” and it warned that a group of “Bin Ladin’s supporters was in the US planning attacks with explosives.”
Now just imagine that the physical and human dimensions of the Twin Towers and Pentagon and planes were converted into schools and schoolchildren. Would anyone seriously think that there had not been ample warning of an impending disaster? Would anyone think that any of those involved in ignoring the threat should NOT be held accountable? What Rice said in private testimony to the 9/11 Commission has not been declassified (it should be…there are likely some real “whoppers” in there). What she said in public testimony can be seen below. It isn’t pretty.
Responding to another reader, Robert Shepherd challenges the claim that reformers want a free market in schooling:
“We are NOT seeing the emergence of free market alternatives to public schools. We are seeing is crony capitalist alternatives dependent upon federal and state regulation and the public dole that could not possibly survive in truly free markets. It doesn’t matter whether it originates on the right or the left or what rhetoric it uses, tyranny is tyranny. It’s a NewSpeak version of the language of classical liberalism that is being used to defend what is actually happening. It’s incredibly naive to buy into the rhetoric in the face of the realities. Let’s see: Pass a federal law that ensures that almost all public schools will fail. Require states to provide alternatives. Have the Secretary of Education, now a private citizen, found an online virtual school to provide those alternatives, one that depends upon the same taxpayer dollars but siphons off a lot of those into private profits. There are eight million stories in the Naked City, and this has been one of them. The others have much the same general form.
“If that’s what you think of as the creation of free market alternatives, then you have started mainlining the Soma.”
In an earlier post, Karen Francisco (editorial page editor of the Fort Wayne Journal Gazette) lamented that failing charters escape accountability by turning into voucher schools or shopping for an authorizer with low standards. When challenged by a reader, Francisco explained what happened in Fort Wayne.
She wrote:
“In fact, the two failed Imagine Inc. charter schools in Fort Wayne are being converted to voucher schools. The local charter board has been dismissed, loans forgiven and Indiana taxpayers will continue to pay Bakke’s company to operate two underperforming schools. In addition, an out-of-state real estate investment trust — EPT Properties — will continue to collect about $1 million a year for the charter school lease. Instead of through the charter board, the tax dollars now will be funneled through low- and middle-income families to a religious organization and, in turn, to the REIT.”
Karen Francisco, editorial page editor of the Fort Wayne Journal Gazette, writes that she is often asked to explain what a charter school is. She used to say that it was a publicly- funded school that is exempt from many state regulations in exchange for higher accountability.
But now she sees failing charter schools turn into voucher schools or go shopping for an authorizer with low or no standards.
She writes:
“If I’m feeling less charitable, I explain that charter schools are an effort to weaken and destroy teacher unions. Charter operators hire primarily young, inexperienced teachers; work them to death and then decline to renew their contracts when they should be giving them raises.”
But when she read about the bond investors’ conference this week, she realized that the driving force behind charters is not accountability, it’s not just union-busting, it’s profit.
This is a stunning research job by Jersey Jazzman about the money tree that is turning canny businessmen into multimillionaires by investing in charter schools.
They package financing from the U.S. Treasury Department, the U.S. Department of Education, the Walton Family Foundation, and they spin it into gold–for themselves.
The family charter group he describes controls over $100 million in real estate. They have gotten very, very rich.
Here is his conclusion. Please read the whole post. It is jaw-dropping.
“…while we can debate the relative merits of charter schools, one thing is quite certain: any notion that the charter industry is “all about the kids” needs to be dismissed, because there are adults who are clearly making a lot of money off of charter expansion. And it’s not just people like the Zuluetas: Bruno himself, according to Building Hope’s 2011 tax return, earned $388,709 in compensation and another $56,865 in benefits for a year’s work. In contrast, the average Florida teacher salary is $45,723.”
These are the same people who claim that teachers don’t put children first. What do they put first? It is not the children.
It is not news to readers of this blog that public education is under attack in cities across the nation by a politically powerful and heavily funded privatization movement. In some states, this movement has moved into the suburbs as well.
This video pulls away the mask of reform and explains in clear detail the nexus of connections behind the privatization movement in Minneapolis. This district was once the largest in the state. Due to the proliferation of privately managed charters, it is now the third largest in Minnesota.
The video has no production values. It is a simple narration of a complex graphic that displays the web of relationships among powerful foundations, one very powerful family, national organizations, and corporate interests.
All the big players have converged on Minneapolis: 50CAN, DFER, TFA, and many more, abetted by one powerful local family that owned the city’s biggest newspaper, sold it, and now owns the online newspaper Minnpost.
These inconvenient facts do not slow the advance of the privatization movement. They present themselves as idealists, and some are fooled by the rhetoric about “saving minority children from failing schools” and “closing the achievement gap.” They are flush with cash and federal tax credits, and fueled by ambition, a love of power, media adulation, and–for some–tidy profits.
Left to their own devices, they will restore a dual school system, both publicly funded, one free to kick out students, the other a dumping ground for the kids unwanted by the charters.
Left to their own devices, they will destroy public education in America.
Yes! There is money to be made by investing in charter schools! It’s all about the children! It’s the civil rights issue of our time! And a great investment too!!
“Bonds and Blackboards: Investing in Charter Schools (New York, NY)
Symposium – July 10, 2013; 9:30 – 6:30 PM
WHAT: A one-day symposium to help Wall Street – especially the tax-exempt bond market – understand the value of investing in charter schools and best practices for assessing their bond credit.
WHEN: Wed., July 10 – 9:30 a.m. to 6:30 p.m. (Registration and breakfast begin at 8:30 a.m.)
WHERE: The Harvard Club of New York City, 35 West 44th Street, between Fifth and Sixth Avenues.
WHO: Confirmed speakers include Noah Wepman of the Bill & Melinda Gates Foundation; LISC CEO Michael Rubinger; charter school investors Alliance Bernstein, Hamlin Capital and Nuveen; commercial bankers; bond underwriter RBC Capital Markets; and rating agency Standard & Poor’s. The charter school sector will be represented by SUNY, a charter school authorizer; charter support organizations; and charter school operators.
The keynote speaker is Brett Peiser, CEO of Uncommon Schools, a charter school network of 32 schools in the Northeast that has successfully reversed the achievement gap between low-income students and their higher-income counterparts.
Registration for this event is now closed.
If you are interested in attending, please email effc@lisc.org to see if we can accommodate you.
Location: Harvard Club
35 West 44th Street
City: New York
State: New York”
So many opportunities to cash in on the emerging market of education.
There are, as the ad says, lots of needs to address:
“This is a long-overdue shift the public has been clamoring for — measuring quality by what students are able to master, not by time spent in a classroom — and the private sector is offering numerous opportunities to ride this wave.
“Another example is the push to enhance offerings in the K-12 space, potentially opening up more early childhood and supplemental education.
“And many for-profit providers are finding opportunities in partnerships with hospitals and universities and other large employers, so what was once a demand stemming primarily from affluent parents is now trickling downwards.
“These are just some of the excellent reasons why investors who appreciate expanding opportunities in attractively-priced companies belong at The Capital Roundtable’s ENCORE conference — “Private Equity Investing in For-Profit Education Companies,” being held in New York City on Thursday, July 25th.
“Here are even more reasons that new technologies have created among education companies focused on support services —
“Teacher Evaluations — now being put into the hands of third parties.
Enrollment Specialists — outsourcing this key activity to dedicated firms.
Student Services and Job Placement — increasingly being turned over to middle-market providers.
Admissions and Financial Aid IT — with huge interest in software and SAAS providers.
Massive Open Online Courses — helping institutions deliver large-scale MOOCs that are typically free to take and to serve to build an institution’s brand.
Syndicated Content — helping institutions save on course development and faculty costs with pre-packaged curriculums to be delivered online with the institution’s own brand.
No argument, this is an amazing moment for private equity investors to explore for-profit education opportunities. And this encore conference from The Capital Roundtable is particularly valuable if you are new to the education marketplace and need to understand its particular complexities such as the Higher Education Reauthorization Act implications.
“Just consider —
“The education sector represents the second biggest category of GDP, so there’s a lot of need to address.
63% of the deal value last year in the for-profit education sector represented private equity transactions, up from 51% the year earlier.”
Diane Ravitch's blog 