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NPE Blasts Texas IDEA Charter Scandal!

By dianeravitch
March 15, 2024 //
39

If the biggest charter chain in Texas is under investigation for financial finagling, is it the right time to let that charter chain expand? Well, it’s Texas, so of course!

The Network for Public Education thinks that’s a rotten idea. It’s wrong. It’s unethical. so we issued this press release.

Texas Ed Department Approves Scandal-ridden Charter Chain’s Expansion

 For immediate release:

Within days of appointing conservators to manage the IDEA charter chain, the Texas Education Agency gives it the green light to expand. 

Contact: Carol Burris

cburris@networkforpubliceducation.org

(646) 678-4477

There is a major financial and ethical charter scandal in Texas, and the Network for Public Education is outraged. The same day that the Texas Education Agency (TEA) announced the appointment of a management team for IDEA charter schools following years of inappropriate spending, the charter chain submitted a request for a massive expansion that would add ten new charter campuses in Texas.

On March 6, the TEA announced it appointed two conservators to oversee IDEA charter schools following its investigation into multiple allegations of financial mishandling. Two days later, the TEA approved that expansion without public comment or meaningful notice.

Scandals involving IDEA include the following:

The charter chain obtained nearly $300,000,000 from the U.S. Department of Education to expand to 123 schools. Following an audit, the Department is now demanding that IDEA return $28 million to be paid using Texas taxpayer dollars.

NPE President Diane Ravitch has been following the charter chain’s scandals for years. “The IDEA charter chain has a long-established reputation for spending millions on luxury items for its leaders while paying executives private-sector salaries. The grifting at public expense must stop. When one Houston school received failing grades, TEA took over the entire district. In this case, TEA appointed a conservator from another charter chain and then approved IDEA’s expansion in a shady insider deal.”

According to Network for Public Education Executive Director Carol Burris, “The scandals involving this federal Charter School Program (CSP) recipient are breathtaking. As shocking as seems, it is possible this new expansion of the corrupt IDEA charter chain will be financed through CSP grant money. We all foot the bill.”

The Network for Public Education is a national advocacy group whose mission is to preserve, promote, improve, and strengthen public schools for current and future generations of students.

                                                                   ###

Network For Public Education

Mailing Address:

Network for Public Education
PO Box 227
New York City, NY 10156

Email:
info at networkforpubliceducation.org

Phone:
(646) 678-4477

Categories Accountability, Charter Schools, Corruption, Education Industry, Ethics, For-Profit, Fraud, Funding, Texas

Thom Hartman: How the Monopolists Stole the U.S. Government

By dianeravitch
March 9, 2024 //
24

Thom Hartmann has written a new book titled The Hidden History of Monopolies: How Big Business Destroyed the American Dream. He has decided to offer it for free, a chapter at a time, on his blog.

He writes:

Because the Founders set up America to be resistant to the coercive and corruptive influence of monopoly and vested interest, the monopolists didn’t have any direct means of taking over the American government. So, two processes were necessary.

First, they knew that they’d have to take over the government. A large part of that involved the explicit capture of the third branch of government, the federal judiciary (and particularly the Supreme Court), which meant taking and holding the presidency (because the president appoints judges) at all costs, even if it required breaking the law; colluding with foreign governments, monopolies, and oligarchs; and engaging in massive election fraud, all issues addressed in previous Hidden History books.

Second, they knew that if they were going to succeed for any longer than a short time, they’d need popular support. This required two steps: build a monopoly-friendly intellectual and media infrastructure, and then use it to persuade people to distrust the US government.

Lewis Powell’s 1971 memo kicked off the process.

Just a few months before he was nominated by President Richard Nixon to the US Supreme Court, Powell had written a memo to his good friend Eugene Sydnor Jr., the director of the US Chamber of Commerce at the time.32 Powell’s most indelible mark on the nation was not to be his 15-year tenure as a Supreme Court justice but instead that memo, which served as a declaration of war against both democracy and what he saw as an overgrown middle class. It would be a final war, a bellum omnium contra omnes, against everything FDR’s New Deal and LBJ’s Great Society had accomplished.

It wasn’t until September 1972, 10 months after the Senate confirmed Powell, that the public first found out about the Powell memo (the actual written document had the word “Confidential” at the top—a sign that Powell himself hoped it would never see daylight outside of the rarified circles of his rich friends). By then, however, it had already found its way to the desks of CEOs all across the nation and was, with millions in corporate and billionaire money, already being turned into real actions, policies, and institutions.

During its investigation into Powell as part of the nomination process, the FBI never found the memo, but investigative journalist Jack Anderson did, and he exposed it in a September 28, 1972, column in the Washington Post titled, “Powell’s Lesson to Business Aired.” Anderson wrote, “Shortly before his appointment to the Supreme Court, Justice Lewis F. Powell Jr. urged business leaders in a confidential memo to use the courts as a ‘social, economic, and political’ instrument.”33

Pointing out that the memo hadn’t been discovered until after Powell was confirmed by the Senate, Anderson wrote, “Senators . . . never got a chance to ask Powell whether he might use his position on the Supreme Court to put his ideas into practice and to influence the court in behalf of business interests.”34

This was an explosive charge being leveled at the nation’s rookie Supreme Court justice, a man entrusted with interpreting the nation’s laws with complete impartiality. But Anderson was a true investigative journalist and no stranger to taking on American authority or to the consequences of his journalism. He’d exposed scandals from the Truman, Eisenhower, Johnson, Nixon, and Reagan administrations. In his report on the memo, Anderson wrote, “[Powell] recommended a militant political action program, ranging from the courts to the campuses.”35

Powell’s memo was both a direct response to Franklin Roosevelt’s battle cry decades earlier and a response to the tumult of the 1960s. He wrote, “No thoughtful person can question that the American economic system is under broad attack.”36

When Sydnor and the Chamber received the Powell memo, corporations were growing tired of their second-class status in America. The previous 40 years had been a time of great growth and strength for the American economy and America’s middle-class workers—and a time of sure and steady increases of profits for corporations—but CEOs wanted more.

If only they could find a way to wiggle back into the minds of the people (who were just beginning to forget the monopolists’ previous exploits of the 1920s), then they could get their tax cuts back; they could trash the “burdensome” regulations that were keeping the air we breathe, the water we drink, and the food we eat safe; and the banksters among them could inflate another massive economic bubble to make themselves all mind-bogglingly rich. It could, if done right, be a return to the Roaring Twenties.

But how could they do this? How could they persuade Americans to take another shot at what was widely considered a dangerous “free market” ideology and economic framework that had crashed the economy in 1929?

Lewis Powell had an answer, and he reached out to the Chamber of Commerce—the hub of corporate power in America—with a strategy. As Powell wrote, “Strength lies in organization, in careful long-range planning and implementation, in consistency of action over an indefinite period of years, in the scale of financing available only through joint effort, and in the political power available only through united action and national organizations.” Thus, Powell said, “the role of the National Chamber of Commerce is therefore vital.”37

In the nearly 6,000-word memo, Powell called on corporate leaders to launch an economic and ideological assault on college and high school campuses, the media, the courts, and Capitol Hill. The objective was simple: the revival of the royalist-controlled “free market” system. As Powell put it, “[T]he ultimate issue . . . [is the] survival of what we call the free enterprise system, and all that this means for the strength and prosperity of America and the freedom of our people.”

The first front that Powell encouraged the Chamber to focus on was the education system. “[A] priority task of business—and organizations such as the Chamber—is to address the campus origin of this hostility [to big business],” Powell wrote.38

What worried Powell was the new generation of young Americans growing up to resent corporate culture. He believed colleges were filled with “Marxist professors” and that the pro-business agenda of Harding, Coolidge, and Hoover had fallen into disrepute since the Great Depression. He knew that winning this war of economic ideology in America required spoon-feeding the next generation of leaders the doctrines of a free-market theology, from high school all the way through graduate and business school.

At the time, college campuses were rallying points for the progressive activism sweeping the nation as young people demonstrated against poverty, the Vietnam War, and in support of civil rights. Powell proposed a list of ways the Chamber could retake the higher-education system. First, create an army of corporate-friendly think tanks that could influence education. “The Chamber should consider establishing a staff of highly qualified scholars in the social sciences who do believe in the system,” he wrote.39

Then, go after the textbooks. “The staff of scholars,” Powell wrote, “should evaluate social science textbooks, especially in economics, political science and sociology. . . . This would include assurance of fair and factual treatment of our system of government and our enterprise system, its accomplishments, its basic relationship to individual rights and freedoms, and comparisons with the systems of socialism, fascism and communism.”

Powell argued that the civil rights movement and the labor movement were already in the process of rewriting textbooks. “We have seen the civil rights movement insist on re-writing many of the textbooks in our universities and schools. The labor unions likewise insist that textbooks be fair to the viewpoints of organized labor.”41 Powell was concerned that the Chamber of Commerce was not doing enough to stop this growing progressive influence and replace it with a pro-plutocratic perspective.

“Perhaps the most fundamental problem is the imbalance of many faculties,” Powell pointed out. “Correcting this is indeed a long-range and difficult project. Yet, it should be undertaken as a part of an overall program. This would mean the urging of the need for faculty balance upon university administrators and boards of trustees.” As in, the Chamber needed to infiltrate university boards in charge of hiring faculty to make sure that only corporate-friendly professors were hired.

Powell’s recommendations targeted high schools as well. “While the first priority should be at the college level, the trends mentioned above are increasingly evidenced in the high schools. Action programs, tailored to the high schools and similar to those mentioned, should be considered,” he urged.

Next, Powell turned to the media, instructing that “[r]eaching the campus and the secondary schools is vital for the long-term. Reaching the public generally may be more important for the shorter term.” Powell added, “It will . . . be essential to have staff personnel who are thoroughly familiar with the media, and how most effectively to communicate with the public.” He advocated that the same system “applies not merely to so-called educational programs . . . but to the daily ‘news analysis’ which so often includes the most insidious type of criticism of the enterprise system.”

Following Powell’s lead, in 1987 Reagan suspended the Fairness Doctrine (which required radio and TV stations to “program in the public interest,” a phrase that was interpreted by the FCC to mean hourly genuine news on radio and quality prime-time news on TV, plus a chance for “opposing points of view” rebuttals when station owners offered on-air editorials), and then in 1996 President Bill Clinton signed the Telecommunications Act of 1996, which eliminated most media-monopoly ownership rules. That same year, billionaire Rupert Murdoch started Fox News, an enterprise that would lose hundreds of millions in its first few years but would grow into a powerhouse on behalf of the monopolists.

From Reagan’s inauguration speech in 1981 to this day, the single and consistent message heard, read, and seen on conservative media, from magazines to talk radio to Fox, is that government is the cause of our problems, not the solution. “Big government” is consistently—more consistently than any other meme or theme—said to be the very worst thing that could happen to America or its people, and after a few decades, many Americans came to believe it. Reagan scare-mongered from a presidential podium in 1986 that “the nine most terrifying words in the English language are: I’m from the government and I’m here to help.”

Once the bond between people and their government was broken, the next steps were straightforward: Reconfigure the economy to work largely for the corporate and rich, reconfigure the criminal justice system to give white-collar criminals a break while hyper-punishing working-class people of all backgrounds, and reconfigure the electoral systems to ensure that conservatives get reelected.

Then use all of that to push deregulation so that they can quickly consolidate into monopolies or oligopolies.

Categories Accountability, Corporate Reformers, Corruption, Democracy, Deregulation, Disruption, Economy, Elections, Ethics, For-Profit, History

Thom Hartmann: How the Bork Doctrine Promoted Monopolies and Billionaires

By dianeravitch
March 4, 2024 //
40

If you are old enough to remember a different America, an America of neighborhood shops, of local bakeries, butchers, drugstores (with a soda fountain), shoe stores, bookstores, and dress shops, you may have wondered why most of them have been replaced by national chain stores and anonymous strip malls. Now we see even neighborhood public schools replaced by national charter chains, some even operated by for-profit corporations. Thom Hartmann explains the roots of this change in his new book The Hidden History of Monopolies: How Big Business Destroyed the American Dream. He is releasing the book a chapter at a time on his blog, which should whet our appetite to buy and read the book. This chapter describes the legal ploy that resulted in crushing local enterprise and creating billionaires.

He writes:

Robert Bork was Richard Nixon’s solicitor general and acting attorney general and had a substantial impact on the thinking in the Reagan White House—so much so that Reagan rewarded his years of hard work on behalf of America’s monopolists with a lifetime appointment to the federal bench in the DC Circuit, frequently a launching pad for the Supreme Court.

In the years following Lewis Powell’s 1971 memo, as numerous “conservative” and “free market” think tanks and publications grew in power and funding, Bork’s ideas gained wide circulation in circles of governance, business, and the law.

In 1977, in the case of Continental T.V., Inc. v. GTE Sylvania, the Supreme Court took up Bork’s idea and, for the first time in a big way, embraced the “welfare of the consumer” and “demonstrable economic effect” doctrines that Bork had been promoting for over a decade.

Neither of those phrases exists in any antitrust law, at least in Bork’s context. Nonetheless, the Supreme Court embraced Bork’s notion that the sole metric by which to judge monopolistic behavior should be prices that consumers pay, rather than the ability of businesses to compete or the political power that a corporation may amass.

When Ronald Reagan entered the White House in 1981, bringing with him Bork’s free market philosophy and a crew from the Chicago School, he ordered the Federal Trade Commission to effectively stop enforcing antitrust laws even within the feeble guidelines that the Supreme Court had written into law in GTE Sylvania.

The result was an explosion of mergers-and-acquisitions activity that continues to this day, as industry after industry concentrated down to two, three, four, or five major players who function as cartels. (A brilliant blow-by-blow cataloging of that decade is found in Barry C. Lynn’s book Cornered: The New Monopoly Capitalism and the Economics of Destruction.)

Bork’s reasoning—that antitrust law should defend only the consumer (through low prices), and not workers, society, democracy, or local communities—has become such conventional wisdom that in the 2014 Supreme Court case of FTC v. Actavis, Chief Justice John Roberts wrote a virtual word-for-word parroting of Bork: “The point of antitrust law is to encourage competitive markets to promote consumer welfare.”

Barak Orbach, professor of law at the University of Arizona, is one of a small number of scholars today who are genuine experts in the field of antitrust law. In a 2014 paper published by the American Bar Association, he wondered if Bork knew he was lying when he wrote that the authors of the Sherman Antitrust Act intended to reduce prices to advance “consumer welfare,” instead of protecting the competitiveness of small and local businesses, and the independence of government at all levels.

His conclusion, in “Was the ‘Crisis in Antitrust’ a Trojan Horse?” was that Bork was probably just blinded by ideology and had never bothered to go back and read the Congressional Record, which, he noted, says nothing of the kind.74

While Bork wrote that “the policy the courts were intended [by the Sherman Antitrust Act] to apply is the maximization of wealth or consumer want satisfaction,” Orbach said, “Members of Congress . . . were determined to take action against the trusts to stop wealth transfers from the public.” So much for that: today the Walton (Walmart) family is the richest in America and one of the richest in the world. They’re worth more than $100 billion, having squirreled away more wealth than the bottom 40% of all Americans. And they spend prodigiously on right-wing political causes, from the national to the local.

Amazon’s Jeff Bezos is now wealthier than any Walton; with a registered net worth of $112 billion, he is the richest single person in the world. Bezos is so rich that when he divorced his wife, MacKenzie Bezos, she received 19.7 million shares of Amazon worth $36.8 billion. She instantly became the world’s third-richest woman, and Jeff Bezos remained the world’s wealthiest man.75 While local newspapers are shutting down or being gobbled up all over the country, Bezos personally purchased the 140-year-old Washington Post in 2013 for $250 million. Now Bezos, like the Walton family, can use his sub- stantial wealth to obtain political ends that protect his wealth and allow Amazon to continue to grow.

Categories Billionaires, Competition, Democracy, Deregulation, Disruption, Economy, Ethics, Extremism, For-Profit, History

Ohio: $1 Billion Per Year for Unaccountable Private Schools

By dianeravitch
February 29, 2024 //
17

The leadership of the Ohio legislature decided, without consulting the voters, to shift significant funding from public schools, which the overwhelming majority of students attend, to private schools, which are wholly unaccountable to the state.

It is an enduring puzzle as to why Republican-led legislatures in states like Ohio, Arizona, and Ohio demand strict accountability from public schools but no accountability from private schools that receive public money.

William Phillis, formerly a Deputy Commissioner of the Ohio Department of Education, puts a price tag on state subsidy of private schools: $1 billion.

One billion tax dollars per year will be going to private schools with no public audit.

In addition to non-public administrative cost reimbursement, auxiliary services, and student transportation services, the state will be providing a billion dollars per year for private school vouchers. There is no provision in Ohio law to audit private schools. Is this the way state government should treat taxpayers? Voucher expenditures will escalate year after year and the state is giving private schools an open checkbook without any financial accountability.

It gets worse. Some state officials are planning to authorize the use of tax funds for private school facilities with no public oversight. What are state officials thinking?

Ohio taxpayers need to wake up to chicanery concocted by state officials in Ohio.

Like us on Facebook: https://www.facebook.com/OhioEandA

vouchershurtohio.com

William L. Phillis | Ohio Coalition for Equity & Adequacy of School Funding | 614.228.6540 |ohioeanda@sbcglobal.net| http://ohiocoalition.org

Categories Accountability, Education Industry, For-Profit, Funding, Ohio, Privatization, Vouchers

Will Your Child’s Private Data Be Sold by the College Board?

By dianeravitch
February 22, 2024 //
11

In at least 20 states, the College Board collects and sells student data, despite state law forbidding it.

New York was one of those states, but activist parents led a years-long campaign to block the practice.

Recently, State Attorney General Letitia James won a judgment against the College Board for $750,000, and it agreed to stop monetizing student data in New York.

What happens in your state? Does your state protect the privacy of student data? Does it enforce the law?

Read Leonie Haimson’s account of how parents in New York pushed back and finally won. She includes a list of other states that protect student privacy.

She writes:

For decades, the College Board has been selling student names, addresses, test scores, and whatever other personal information that students have provided them,  when they sign up for a College Board account and the Student Search program. According to the AG press release, in 2019 alone, the College Board improperly shared the information of more than 237,000 New York students.  Since New York’s student privacy law, Education §2-d, calls for a fine of up to $10 per student, the penalty for selling student data during that one year alone could have equaled more than $2 million.

And yet for years, on their website and elsewhere, the College Board has also  falsely claimed they weren’t selling student data.  Instead they called  it “licensing” data, a distinction without a difference.  For years, they also claimed that they never sold student scores, though that was false as well, as they do sell student scores within a range.

The College Board urges millions of students to sign up for their Student Search program, with all sorts of unfounded and deceptive claims, including that it will help them get into better schools or receive scholarships.  The reality is that their personal data is sold to over 1,000 colleges, programs and other companies – the names of which they refuse to disclose — who use it for marketing purposes and may even resell it to even less reputable businesses.

Is your state one of them? Is the law enforced?

Categories Accountability, Data and Data Mining, Education Industry, Ethics, For-Profit, Justice, New York, Parent Groups, Privacy and Privacy Rights

Trump Pauses Presidental Campaign to Launch “Trump Sneakers,” Marks Death of Navalny Without Mentioning Putin

By dianeravitch
February 20, 2024 //
20

Donald Trump continued his March to the Republican Presidential nomination and found time to attend “SneakerCON” in Philadelphia. There he hawked his new line of sneakers, proudly showing off the top of the line: Golden Trump sneakers priced at $399. The 1,000 pairs on hand quickly sold out. A business triumph for Trump, who is in hock for nearly half a billion $$$ in New York.

Have we ever seen a former President monetizing his campaign?

And at last, Trump mentioned Navalny’s death, but he didn’t mention Putin. Instead, he compared himself to Navalny. Chutzpah!

He wrote on his Truth Social site:

“The sudden death of Alexei Navalny has made me more and more aware of what is happening in our Country,” Trump posted to Truth Social on Monday. “It is a slow, steady progression, with CROOKED, Radical Left Politicians, Prosecutors, and Judges leading us down a path to destruction. Open Borders, Rigged Elections, and Grossly Unfair Courtroom Decisions are DESTROYING AMERICA. WE ARE A NATION IN DECLINE, A FAILING NATION! MAGA2024.”

Words fail me when I read that Trump can’t bring himself to condemn Putin, and even more astonishing that he sees himself as analogous to Navalny.

Categories Elections, For-Profit, Trump

New York State Wins $750,000 from College Board for Selling Student Data

By dianeravitch
February 14, 2024 //
10

For years, parent advocates for student privacy have been pushing the state to stop the College Board from selling student data to colleges. See Reuters story here. The state Attorney General Letitia James and Board of Regents Chair Betty Rosa sued the College Board and won.

FOR IMMEDIATE RELEASE    
February 13, 2024

Attorney General’s Press Office/212-416-8060nyag.pressoffice@ag.ny.gov

Attorney General James and NYSED Commissioner Rosa
Secure $750,000 from College Board for Violating Students’ Privacy

NEW YORK – New York Attorney General Letitia James and New York State Education Department (NYSED) Commissioner Betty A. Rosa announced a $750,000 settlement with College Board for violating students’ privacy and unlawfully selling their personal data. For years, College Board collected students’ personal information when they took the PSAT, SAT, and AP exams in school, and then licensed this data to colleges, scholarship programs, and other customers who used it to solicit students to participate in their programs. In 2019 alone, College Board improperly licensed the information of more than 237,000 New York students who took their exams. In addition, College Board improperly sent promotional materials to students who signed up for College Board accounts in connection with exams or AP courses. As a result of today’s agreement, College Board must pay $750,000 in penalties and will be prohibited from monetizing New York students’ data that it acquires through its contracts with New York schools and school districts.

“Students have more than enough to be stressed about when they take college entrance exams, and shouldn’t have to worry about their personal information being bought and sold,” said Attorney General James. “New York law requires organizations like College Board to protect the data they collect from students when they take their exams in school, not sell it to customers for a profit. I want to thank Commissioner Rosa for her work on this investigation to ensure we hold College Board accountable and protect New York students’ privacy.”  

“When the organizations we trust to provide meaningful services to our students exploit student information for profit, it violates privacy laws as well as the public trust,” said Commissioner Betty A. Rosa. “We will continue to ensure that every student’s information is appropriately utilized and protected. We are grateful to the Attorney General for her collaboration in protecting the interests of the students and families of New York.”

College Board is a New York-based non-profit institution that develops and administers standardized tests, primarily to high school students who take them as part of the college admissions process. It also develops other college readiness programs, such as AP courses, and has a contract with NYSED to subsidize AP exam fees for low-income students. In addition, College Board operates the Student Search Service (Search), in which it licenses data it collects from students — including their names, contact information, ethnicity, GPAs, and test scores — to customers like colleges and scholarship programs to use for recruiting students. 

Beginning in 2010, College Board contracted with New York schools and school districts to allow schools to offer the PSAT and SAT exams during the school day and to pay for the students’ exam fees. In the past five years, approximately 20 New York schools or school districts, including the New York City Department of Education, which operates more than 500 high schools, have entered into such contracts. Schools across New York have also consistently signed agreements with College Board to offer AP courses and exams.

An investigation led by the Office of the Attorney General (OAG) revealed that prior to June 2022, College Board solicited students to provide information, such as their GPA, anticipated course of study, interest in a religiously affiliated college and religious activities, and parents’ level of income, during the administration of PSAT, SAT, and AP exams, as well as when students signed up for a College Board online account. Although providing this data for participation in Search was optional, students were solicited to participate in the urgent context of an important exam and were encouraged to sign up because it would connect them with scholarship and college opportunities. From 2018-2022, College Board licensed New York student data to over 1,000 institutions through Search and received significant revenue from data related to New York students who took PSAT, SAT, or AP exams during the school day.    

The investigation further found that College Board improperly used student data for its own marketing. Until fall 2022, College Board used student data collected in connection with PSAT and SAT exams administered during the school day to send marketing communications. In addition, until 2023, when New York students registered for the AP program, they were solicited to opt in to receiving College Board marketing materials. 

Under New York law, it is illegal to use student data obtained under a contract with a New York educational agency for commercial or marketing purposes. The investigation found College Board improperly used student data obtained in connection with PSAT and SAT exams administered during the school day and the AP program by licensing student data to Search clients and using student data to send its own marketing materials.  

Under the settlement announced today, College Board must pay $750,000 in penalties, disgorgement, and costs to the state. College Board is also prohibited from using New York student data it collects or receives in connection with a contract with a New York educational agency for any marketing or commercial purposes. This includes data obtained from administering PSAT, SAT, or AP exams during the school day. In addition, College Board cannot solicit students to participate in Search or similar programs during these exams.

This matter was handled for OAG by Assistant Attorneys General Laura Mumm, Jina John, and Hanna Baek of the Bureau of Internet and Technology, under the supervision of Bureau Chief Kim Berger and Deputy Bureau Chief Clark Russell, with special assistance from former Special Advisor and Senior Counsel for Economic Justice Zephyr Teachout. The Bureau of Internet and Technology is part of the Division for Economic Justice, which is overseen by Chief Deputy Attorney General Chris D’Angelo and First Deputy Attorney General Jennifer Levy.

This matter was handled for NYSED by Chief Privacy Officer Louise De Candia and Counsel & Deputy Commissioner for Legal Affairs Daniel Morton-Bentley.

Categories Accountability, Education Industry, For-Profit, New York, Privacy and Privacy Rights

Private Equity is Buying Up Hospitals, Squeezing Out Big Profits, Letting Them Die

By dianeravitch
January 28, 2024 //
21

I am more than a little touchy on the subject of for-profit takeovers of hospitals that serve the community. That happened in my neighborhood a few years back. The city sold a major hospital to a for-profit firm. The hospital eventually went bankrupt and was sold off and converted to other uses. This hospital saved my life in 1998, when I walked in to the emergency room, short of breath and limping. As it happened, I had an advanced pulmonary embolism. Had I not gone to the hospital, I would not have survived the night, said the pulmonary specialist the next morning.

Larry Edelman of The Boston Globe in his column called Trendlines tells the story of what happened to a small chain of hospitals that served high-needs communities:

The hound from hell

It was a match born of voracity and desperation, as many private equity buyouts are. Cerberus Capital Management hit a home run with Steward Health Care. But Steward may be about to go down swinging.

Rewind: In 2010, Cerberus agreed to bail out Caritas Christi Health Care, a struggling network of six Catholic hospitals serving mainly poorer communities in cities including Boston, Brockton, Fall River, and Methuen.

The New York firm paid $246 million in cash, assumed more than $200 million in pension liabilities, and promised to invest $400 million in the company, rechristened Steward Health Care.

When the deal was announced, a Cerberus executive told the Globe it was “a big win for the hard-working communities of Greater Boston.’’

Fast-forward: After a national expansion, Steward is on the ropes. Last week, the Globe’s Jessica Bartlett broke the news that the company — now owned by a group of physician-managers — is having trouble paying rent and may have to sell or close hospitals.

But the deal was a big win for Cerberus. It cashed out of Steward in early 2021, quadrupling its money with an $800 million gain, according to Bloomberg.

The backstory: Cerberus bought Caritas Christi four years after a blockbuster hospital deal: the 2006 leveraged buyout of HCA for $21 billion by Kohlberg Kravis & Roberts and Bain Capital of Boston.

The sheer size of the acquisition — and the involvement of two respected firms — supercharged a health care buyout binge that extended beyond hospitals to nursing homes, physician practices, and home health providers.

Cerberus jumps in: After taking a high-profile beating on its 2007 bet on Chrysler, Cerberus saw an opportunity to profit on a turnaround of the “St. Elsewhere”-esque Steward. The plan: buy up other hospitals around the country, deploy new technology, improve efficiency, control costs, and bill Medicare and Medicaid as aggressively as possible.

It was a vision adeptly articulated by Dr. Ralph de la Torre, Caritas’ chief executive officer who remained in charge under Cerberus.

But it was a tough slog for the cardiac surgeon. His expansion plans were thwarted, and Steward didn’t make any money until 2015, when a reduction in pension payments put it in the black.

The big breakthrough: The following year Steward sold its hospital properties for $1.2 billion to Medical Properties Trust, a real estate investment trust that also paid $50 million for a 5 percent stake in the company.

Steward, which leased the properties back from Alabama-based MPT, earmarked the proceeds to buy more hospitals and pay down debt. It also returned Cerberus’ initial investment, though the firm held on to a controlling stake in the company.

In effect, de la Torre had landed a new financial backer, letting Cerberus off the hook.

“We look forward to expanding our relationship with Steward in the years ahead,” MPT chief executive Edward K. Aldag Jr. said at the time.

And MPT did just that in 2017, writing a $1.4 billion check and buying an additional $100 million of Steward equity. De la Torre used the money to buy IASIS Healthcare, a $2 billion purchase that gave Steward 18 hospitals in Arizona, Arkansas, Colorado, Louisiana, Texas, and Utah, making it the largest for-profit chain in the country.

The next year de la Torre moved the company’s headquarters to Dallas, where taxes are lower and regulations lighter.

Minimal disclosure: As a private company, Steward isn’t required to make its financial statements public. Moreover, it has largely ignored Massachusetts requirements that it file detailed financial information on an annual basis.

But publicly traded MPT discloses some Steward financials because the chain is its largest tenant, accounting for about 20 percent of revenue. That’s how we know that Steward booked operating losses of $322 million in 2017 and $270 million in 2018.

Steward’s leaseback deal with MPT significantly boosted its expenses, but as Jessica reported, the health system blames its dire financial straits on rising interest rates and labor costs, an increasing Medicaid population, and difficulty collecting bills.

MPT has been hit hard by Steward’s woes. Its stock tumbled nearly 40 percent after it announced earlier this month that Steward was having trouble paying rent.

Moreover, COVID clobbered all hospitals. Despite receiving government pandemic aid and hundreds of millions of dollars in loans from MPT, Steward is strapped.

Good timing: Cerberus was out before the bedpan hit the fan.

In May 2020, it swapped its stake with Steward doctors in exchange for a note paying interest. Then, in January 2021, Steward borrowed $335 million from MPT to pay off the debt.

Cerberus was free and clear.

Parting thought: It’s not the only time the firm — named after the three-headed dog that guards the gates of Hades in Greek mythology — scored big on a company that went bust.

It did well on its buyout of Mervyn’s by selling off the department store chain’s real estate before it went bankrupt. And it recouped its investment and then some at arms maker Remington by paying itself a dividend before the company went broke. Such strategies are common in private equity.

You see, when firms like Cerberus do business, it’s often “heads I win, tails you lose.”

Categories Budget Cuts, Disruption, Economics, For-Profit, Funding, Health, Massachusetts

Sam Wineburg: The Lies That Advertisers Tell Students

By dianeravitch
January 3, 2024 //
20

Sam Wineburg is the Margaret Jacks Professor Emeritus of Education at Stanford University. This essay is based on his latest book, with co-author Mike Caulfield, Verified: How to Think Straight, Get Duped Less, and Make Better Decisions about What to Believe Online (University of Chicago Press, 2023). Here, he highlights the ways that corporations deceive students with advertising that looks like news.

Our Kids Are Being Sold to and They Don’t Know It–

And Neither Do We

A recent California bill mandating the teaching of media literacy cites a Stanford University study showing that “82 percent of middle school pupils struggled to distinguish advertisements from news stories.” Along with my Stanford colleagues, I was the author of that study.

Between 2015-2016 our research team collected nearly 8,000 student responses. In one exercise, we asked middle school students to examine the home page of Slate, the online news magazine. The site was organized as a series of tiles, each with a headline, the name of the author, and an illustration. However, some tiles were author-less, such as “The Real Reasons Women Don’t Go into Tech,” which was accompanied by the words sponsored content. This label notwithstanding, the vast majority of middle schoolers believed that “The Real Reasons Women Don’t Go into Tech” was news.

 

If only the solution to students’ confusion were as simple as teaching what “sponsored content” means.  In the past few years, a dizzying array of terms—“in association with,” “partner content,” “presented by,” “crafted with,” “hosted by,” “brought to you by,” or, simply—and enigmatically—“with”—have been concocted to satisfy the Federal Trade Commission requirement that ads be labeled. As we describe in our new book, Verified: How to Think Straight, Get Duped Less, and Make Better Choices What to Believe Online, it’s not only middle school students who are getting hoodwinked by this farrago of terms. We all are. 

 

Researchers at Boston University and the University of Georgia surveyed people across age levels and backgrounds after they had read a 515-word article, “America’s Smartphone Obsession Extends to Online Banking.” The article came with a label saying that it was created for the Bank of America. But the disclosure was overshadowed by the masthead of The New York Times and the article’s headline. Only one in ten respondents identified the article as an ad. The marketing firm Contently found similar results: 80% of respondents mistook an ad in the Wall Street Journal for a news article. The study’s author, an advertising insider with reasons to downplay the obvious, admitted: “There’s little doubt that consumers are confused by native ads.” 

 

Native ads, so-called because they’re designed to fade into the surrounding “native” content, use the same fonts, color schemes, and style as regular news stories. An article may look like news, written by an independent and trustworthy journalist, but in reality, it’s tainted by the agenda of the company that paid for it. You think you’re being informed only to find out—if you do find out—that you’re being swindled. In 2018 native advertising raked in $32.9 billion, eclipsing all other forms of digital advertising and growing at astronomical rates.

 

 

At first, it was only scrappy upstarts like BuzzFeed (masters of clickbaity stories like “Ten Important Life Lessons You Can Learn from Cats”) that pioneered this new form of advertising. But as ad income plummeted in places like The New York Times, the Wall Street Journal, and the BBC, they, too, got in on the game. Initially, the price didn’t seem too steep: sacrifice a modicum of integrity to stay afloat. But the slope downward was slippery. If the long-standing commitment of journalism was to erect a wall of separation between the news side and the business, native advertising dissolved the mortar in the wall. The resulting seepage blurred the boundaries beyond recognition. Publishers tried to convince themselves they weren’t doing anything wrong. But in their heart of hearts, they knew they were engaging in journalistic hanky-panky. “When I explain what I do to friends outside the publishing industry,” wrote one publishing insider, “the first response is always ‘so you are basically tricking users into clicking on ads.’ ”

 

In 2019, after a stream of headlines bemoaning the confusion caused by misinformation, we undertook a second study. This time our sample matched the demographic make-up of high school students across the country. Over 3,000 students with access to a live internet connection participated. One exercise asked them to evaluate items appearing on the website of The Atlantic.  The first, entitled “Why Solving Climate Change Will Be Like Mobilizing for War,” was written by Venkatesh Rao; the second, “The Great Transition,” featured an infographic about energy usage along with the statement, “saving the world from climate change is all about altering the energy mix.” The logo of The Atlantic appeared in the upper left corner next to a hyperlink with the words “Sponsor Content What’s this?”, next a small yellow shell. Two-thirds of high school students failed to identify the infographic as an ad from Shell Oil.

 

Why should we be concerned?  To start, if students are to become informed citizens, they need to understand that multi-national companies are not in the business of helping humanity or adopting stray animals. Their goal is to please shareholders by increasing profits. Fossil fuel companies, especially, may want us to think they’re on the right side of history when it comes to climate change. But actions speak louder than ads. Clean energy investments by big oil companies (“renewable resources” as the Shell ad calls them) represent a mere sliver, one percent, of their yearly capital expenditures, a pittance compared to what they spend exploring and discovering new ways to dredge fossil fuels from the earth and sea. Shell might not be outright lying in its infographic but we can be sure of one thing: they’re not going to pay for something that casts them in a negative light. The whole point of native advertising is to burnish a company’s image. Instead of having us view Shell as the enemy of climate change, its ads are designed to soften us up, to plant a seed of doubt. “OK, they may be an oil company,” we’re supposed to think, “but maybe—just maybe—they’re really trying.” 

 

We can sum up why we should teach students to be skeptical of Shell’s infographic in three words: conflict of interest. It goes against the company’s interest to be forthright about the harmful effects of fossil fuels. Big oil, writes Harvard professor Naomi Oreskes and author of Why Trust Science, “may be a reliable source of information on oil and gas extraction,” but they are “unlikely to be a reliable source of information on climate change.” Why? For one simple reason: “The former is its business and the latter threatens it.”

 

It’s not just big oil who’ve gotten in on the native ad game. With China and Russia leading the pack, foreign governments spend millions of dollars to place “news” stories in leading digital publications like the Washington Post, the Wall Street Journal, and the Chicago Tribune. In the twelve months from November 2019 to October 2020, the China Daily Distribution Corporation funneled over nine million dollars to influence American audiences. A favored venue was MSN, Microsoft’s web portal, which featured an upbeat story about how Tibet, the nation ravaged by China in a brutal 1950 takeover, had “broken free from the fetters of invading imperialism and embarked on a bright road of unity, progress and development.” Nowhere does the article say the story was paid. You only discern this if you recognize “Xinhua” as China’s state-run news agency.

 

Whether paid for by a multi-national corporation or a foreign government, the goal of native advertising is the same: to persuade us when our guard is down. Sponsors know that if their message were plastered with the word “ad” in big red letters, we’d ignore it. At the same time, it’s important to understand that just because something’s an ad doesn’t necessarily mean it’s false. Big companies are wary of ads backfiring. They fear the consequences of being outed as liars. Persuasion can assume many forms in addition to outright lying. An ad can tell only part of the story. It can leave out the broader context. It can ignore evidence that goes against the story a company or foreign nation wants to tell. It can emphasize some facts and de-emphasize others. It can use examples that tug at our heartstrings, even when those examples misrepresent general trends. In fact, a partial truth is often more dangerous and harder to detect than a pack of lies. 

 

The internet is one giant marketing experiment and today’s students are the guinea pigs. Richly compensated PhDs work diligently figuring out how to deceive them without their noticing.  This deception is not an aberration or bug in the system—it’s how the game is played. Our students are part of a treacherous game. If we don’t teach them how it’s played, who will? 

 

Certainly not Shell Oil. 

————    

Sam Wineburg is the Margaret Jacks Professor Emeritus of Education at Stanford University. This essay is based on his latest book, with co-author Mike Caulfield, Verified: How to Think Straight, Get Duped Less, and Make Better Decisions about What to Believe Online (University of Chicago Press, 2023)

Categories Curriculum, Fake News, For-Profit, Hoax, Ignorance, Media

Biden Wants to Lower Prices on Drugs Developed with Public Funding

By dianeravitch
December 20, 2023 //
45

David Sirota’s blog “The Lever” is a source of excellent investigative reporting. It recently revealed that President Biden is taking on Big Pharma. Some advocates said he needed to go further, but this is a huge opening move to establish the principle that the federal government may cap the prices of drugs developed with public money. The following was written by Katy’s Schwenk.

White House Takes On Pharma Patents

The White House plans to exercise its authority to lower the price of costly medications that were developed with public funding — a potentially powerful new tool in the battle against sky-high medication prices.

The Biden administration announced last week that it had concluded, after a months long review, that it had the authority to break the patents of drugs developed with public funding if their cost was too high. This authority — dubbed “march-in rights” — has never been used, and is likely to encounter major pushback from Big Pharma.

Take, for instance, the case of the drug Xtandi, which is used to treat prostate cancer. The drug was developed at the public University of California, Los Angeles, using federal funding from the National Institutes of Health and the U.S. Army. The university then licensed the drug to a pharmaceutical company called Medivation, which is now owned by Pfizer, and the Japanese pharmaceutical behemoth Astellas. Pfizer and Astellas have made billions selling the drug worldwide. In the U.S., Xtandi costs on average $190,000 a year, more than five times higher than in Canada and Japan.

The Bayh-Dole Act, which was passed more than 30 years ago, allows the federal government to use march-in rights to intervene if drugs developed with public money are not being made accessible to the public. Despite Xtandi being more or less a perfect case for the use of this authority — a cancer drug developed with public money being sold at an egregious premium — the Biden administration declined to use march-in rights in March to seize the patent and allow a generic competitor to enter the market, forcing down the drug’s cost.

Since then, though, federal officials have been reviewing march-in authority. And now, the White House’s announcement signals that they may begin using it to fight drug profiteering.

While the announcement is a critical step forward, the White House’s framework has still drawn some blowback from some advocacy groups for being less aggressive than it could be. In this week’s announcement, the Biden administration implied it would exercise march-in rights only in the most extreme cases of price gouging by Big Pharma. “Where most drug prices already are egregious and force rationing, few drugs will seem ‘extremely’ priced by comparison,” argued the consumer advocacy group Public Citizen.

But even the prospect of limited use of march-in rights has stoked fear in the pharmaceutical industry, which is spending more than ever to oppose drug pricing reforms. Industry groups have already declared their opposition to the measure. It’s a sign of how much is at stake for Big Pharma — and for those paying a premium for life-saving medication.

Categories Biden, For-Profit, Health, Science
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