Charter Schools

On this page you will find news articles, research/reports, comments, and the status of any pending bills in the legislature and/or proposed changes in regulations relating to charter schools.

 

Republicans Champion the Charter School Movement

by dianeravitch

Rick Cohen of the Nonprofit Quarterly traces a clear pattern: The Republican party has embraced charter schools as their cause.

Republicans have always favored school choice, assuming that competition makes all schools better.

But they have never been able to persuade any electorate to endorse vouchers for private and religious schools.

So, charters are now the darlings of Republican donors and candidates.

The fact that charters have failed to demonstrate consistently superior academic performance doesn’t bother the Republicans, nor does the number of failed charters, nor are they dissuaded by the charters that have been caught up in financial scandals.

Nor do they care that the expansion of charters drains money from the public schools.

Nor are they troubled that many charters cherrypick their students and exclude students with disabilities and English learners.

Follow the money.

Cohen writes:

In politics, you have to follow the money. The editorial board of the San Antonio Express-News found it almost laughable to imagine that what it counted as more than $800,000 in campaign contributions from “charter school interests” between 2006 and 2013 didn’t play a role in convincing the Texas legislature to lift the state’s cap on charter schools. The Express-News is referring to the findings of a report from Texans for Public Justice that indicated people affiliated with the state’s top six charter school chains doubled their political contributions in recent years, comparing 2006 and 2008 to 2010 and 2012.
The bulk of the charter school contributions were linked to KIPP, particularly in the Houston area, where Doug Foshee, the former CEO of the El Paso Corporation natural gas producer, sits on the KIPP board and is treasurer for the conservative-leaning Texans for Education Reform. The biggest recipients were gubernatorial candidates Bill White, a Democrat, and the eventual winner, Rick Perry, a Republican, in 2010. New York Governor Andrew Cuomo may have scored a $10,000 campaign donation from the state’s largest teachers’ union in the past few months, but charter school advocates have given the governor much more, including $40,000 from Bruce Kovner, a billionaire among the 100 richest people in the U.S. who is a well known financial backer of Brighter Choice Charter Schools in Albany; $25,000 from StudentsFirst NY, the New York State affiliate of Michelle Rhee’s pro-charter political arm; and $14,000 from the pro-charter Democrats for Education Reform. Cuomo says he can’t be bought by campaign contributions, but like the editorial editors at the San Antonio News Express, most people would find the notion that campaign money doesn’t affect political positions as ludicrous.
Republican politicians like Rick Perry might get some money from charter school supporters, but given the large Republican soft money edge across the nation, donations from supporters of KIPP or IDEA are kind of inconsequential. In fact, strong charter school and privatization supporters like Eli and Edith Broad and John and Laura Arnold are major donors to Democratic politicians, although it is possible that those campaign contributions make the Democrats a little more charter-friendly. But around charter schools, campaign financing follows a bipartisan mold. The Arnolds’ foundation, for example, has put substantial funding into promoting charter schools in Houston and Louisiana. (The latter is where conservative Republican governor Bobby Jindal is closely allied with the expansion of charter schools and publicly funded vouchers for students to attend private schools.) Republican supporters of charter schools have also been somewhat bipartisan; the American Federation for Children, funded by Republican donor Betsy DeVos, for example, made more than one-third of its political donations to Democrats. Similarly, Michelle Rhee’s StudentsFirst Tennessee poured dollars into both to Republican and Democratic campaign coffers trying to win favor for charter schools and school choice.
The fact that President Obama and Secretary of Education Duncan support charters allow Republicans to appear bipartisan even as they embrace a strategy that undermines and weakens public schools:
This new charter school strategy by multiple Republican gubernatorial candidates isn’t just serendipitous. It is a conscious strategy—kinder, gentler, and kid-focused— for a Republican Party that generally has not supported the strengthening of public schools. Perhaps charter schools in Texas and elsewhere feel that they are not in a position to deny politicians like Abbott the opportunity to shoot TV ads in their facilities, especially if today’s denied politician turns out to be tomorrow’s governor. It might be a little bit awkward for charter schools, many of them managed by nonprofits like KIPP, to find themselves positioned by Abbott, Walker, and others as avatars for reduced public sector support of public school systems. Maybe some, however, are not all that discomfited by their use as props in Republican campaigns.
In a National School Choice Week editorial, Georgia Governor Deal lauded both private schools and charter schools as the means for parents “to ensure their child is getting an excellent education to compete in today’s world.” He made his position on charter schools clear. “These schools are given greater flexibility in return for strong accountability for student academic success,” Deal wrote. “By observing high-performing charter schools throughout Georgia, it’s clear these institutions promote competition, innovation and creativity while encouraging strong parental involvement.” He offered not a scintilla of analysis about how to make the public schools of Georgia, beyond the 310 charters already operating, also attractive choices for parents.
Deal didn’t acknowledge how the $1.51 million given to the Georgia Charter Schools Association in the past few years by Home Depot co-founder Bernie Marcus’s foundation and the $3.99 million given to the Association by the Walton Family Foundation, much of it devoted to building charter school capacity, boosts the attractiveness of that choice over traditional public schools, whose staff are often scrounging for basic supplies and services. He didn’t mention the past several years of grants to KIPP in Georgia, including at least $21.825 million in foundation grants to the KIPP Metro Atlanta Collaborative ($2.653 million from the Marcus Foundation, $9.456 million from the Community Foundation in Atlanta, and several large seven-figure grants and PRIs from various foundations for the construction of the KIPP Strive primary school), over $2 million for the KIPP West Atlanta Young Scholars Academy, and funds specifically targeted for KIPP Strive Academy and KIPP South Fulton Academy. These and other grants hint at the private capital that Deal’s Democratic opponent Thurbert Baker pointed to in his explanation that charter schools’ complaints about facilities funding, not to mention operations, might be a little unwarranted.
The Foundation Directory Online lists over 960 grants in the past several years in support of specific charter schools or charter school networks in Texas, more than half of them between 2008 and 2011. KIPP Academy pulled in 208 of those grants, eight of them in the seven-figure range, with major support from a couple of community foundations as well as the Houston Endowment, the M.D. Anderson Foundation, the Michael and Susan Dell Foundation, and the Brown Foundation—plus over $40,000,000 from the Bill & Melinda Gates Foundation. YES Prep Southeast received 106 foundation grants or loans, including seven larger than $1 million. KIPP Aspire Academy got 40 grants, KIPP Truth Academy 35. The Laura and John Arnold Foundation made only a handful of grants, but one was for over $6 million in 2011 to the YES Prep Public Schools. Traditional public schools, which serve the bulk of students in Texas and elsewhere, can only dream about and salivate at these sources of private contributions.
Why do Republicans detest public schools? That is hard to say. It used to be that Republican businessmen served proudly on local and state school boards. Now they flock to privately managed charters, without any concern for the community public schools that serve their town or city.
Some think it is because charters are overwhelmingly non-union. But Republicans support charters just as enthusiastically in states where unions are prohibited.
Bottom line is that Republicans as well as leading Democrats are unconcerned about creating a dual school system: one sector that can pick its students and kick out the ones it doesn’t want, and the other sector that must take all students.
Some people thought that the Brown decision of 1954 foretold the end of dual publicly-funded school systems in the United States. Not so. Now we will have one sector for the strivers, another for the undesirables rejected by the charters.
Why do Democrats support the school choice movement, which was once seen as a signature policy of the far-right? That’s even more puzzling than why Republicans are ready to abandon our nation’s public schools.
dianeravitch | February 6, 2014 at 8:00 am | Categories: Charter SchoolsPrivatization,Republicans | URL: http://wp.me/p2odLa-6Yw

Texas Education Code, Section 12.  

When you digest this document, you will have a good sense of what the legislature has been up to in moving toward their agenda of privatization of our public schools.

http://www.statutes.legis.state.tx.us/Docs/ED/htm/ED.12.htm

PTA Mom Looks at Charter School Reform–a Fiscally Irresponsible Plan by Kim Burkett, Feb. 21, 2012.

See http://educatefortexas.wordpress.com/2013/02/21/pta-mom-looks-at-charter-school-reform-a-fiscally-irresponsible-plan/

Why Sending Your Child to a Charter School Hurts Other Children by Paul L. Thomas, AlterNet, Mar. 6, 2013.

See  http://www.alternet.org/education/why-sending-your-child-charter-school-hurts-other-children

Linda Ethridge’s Op-Ed on S.B. 2, Sen. Dan Patrick’s Charter Bill

Linda Ethridge, Trib Board of Contributors: State power grab undermines elected school boards, local taxpayers

LINDA ETHRIDGE Trib Board of Contributors

While many in the education community anticipated that a bill to increase the number of public school charters statewide would be filed during the 83rd Legislature, few expected the alarming provisions in the startling piece of legislation known as Senate Bill 2. Among other things, local school districts would lose control of their taxpayer-funded facilities to state whims if this bad bill is passed.

Filed on Feb. 18 by state Sen. Dan Patrick, chairman of the Senate Education Committee, this measure seems far more about disenfranchising local voters, eroding the power of locally elected school boards and seizing control of public properties than allowing for an increase in charter schools.

Public charters involve schools that receive public tax funds but without the oversight of locally elected trustees. These schools generally have appointed governing boards and, while such institutions adhere to some state rules, they’re exempt from most. Yet this bill would allow such schools even more leeway, undermining taxpayers in the process. Consider some provisions in Senate Bill 2:

n Voters could petition their local school board to form a district charter commission. Petitioners would have to get a mere 5 percent of registered voters in a district to support such a petition. Once that is met, the school board is obligated to form the charter commission and forward the district charter school plan to a newly created Charter School Authorizing Authority. This authority, created by the bill, would take the right to approve, disapprove or revoke away from the duly elected State Board of Education and transfer it to a group stocked with political appointees. Sound very democratic to you?

n Local school trustees would have no option to reject petitioners’ requests. No provision in the process would allow voters who do not favor the charter plan to influence the decision.

n As outlined, there are no requirements for hearings and no provisions for appeal. This state-appointed authority does not even have to act in a public meeting. (So much for transparency!) The charter is deemed approved if the state authority does not act within 30 days of submission of the charter plan.

Especially astounding, this bill would seriously impair local school boards’ abilities to be good stewards of the brick-and-mortar facilities owned by school districts and financed by the voters through bond elections. Once a charter has been approved by this state authority, a charter operator may make a written request to the trustees to lease or purchase underutilized or unused facilities. It further states that the district shall enter into an agreement with the charter to sell or lease this property for only $1. That’s right: one dollar.

In short, the property’s status, unused or underutilized, would be determined by the state — not the local property owners (in this case, we the taxpayers and a duly elected school board). State officials could force a sale of our school properties right out from under us.

Think a moment about the economic impact this would have had on the Waco Independent School District during last year’s consolidation of its schools. Aside from the administration’s painful streamlining of district-wide expenses, trustees voted to sell some unused properties to bring in much-needed revenue at a time when the state cut public school funding across Texas by some $5.4 billion. The old University High School property on Bagby Avenue, for instance, was sold for $5 million. Would the district have been forced to accept just $1 if a charter school had wanted it under Sen. Patrick’s plan? As currently worded, the provisions in this bill to force the sale or lease of school properties is a huge overreach of state power.

Yes, Sen. Patrick’s demand that local school districts sell or lease certain buildings to charter schools for a buck has drawn much outcry in recent days and he has discussed changes in his bill requiring a public school district part with its property for a price reflecting fair-market value. Still, what gives the state of Texas the right to determine how local school districts manage or market their properties?

Ironically, some of this legislation’s supporters are the very same folks who embrace and defend states rights. These sorts usually stand for less government, less government intrusion, and stress that government closest to the people is best able to make good decisions for their voters. I only hope they’re willing to apply this principle to locally elected school trustees.

Linda Ethridge is former mayor of Waco, former president of the Waco Independent School District board of trustees and co-founder of the grassroots organization Texas Kids Can’t Wait, which advocates for equitable public school funding. It will host a public forum at 6:30 p.m. Monday in Robinson ISD at the junior high school cafetorium.

The Poor Performance of Texas Charter Schools

The following is a list of all the Texas charter schools that were rated “unacceptable” in 2011 (there were no ratings last year due to new STAAR tests). These schools constitute a larger percentage of the total charter schools than do the percentage of public schools rated as “unacceptable.”

Alpha Charter School. American Youthworks Charter School. Austin Discovery School. Azleway Charter School Willow Bend. Bay Area Charter Middle School. Bexar County Academy. Brazos School for Inquiry and Creativity. City Center Health Careers. Comquest Academy. Education Center at Little Elm. Educational Center International Academy. Mesquite Charter Academy. Gabriel Tafolla Academy. George I. Sanchez Charter High School San Antonio. Girls and Boys Preparatory Elementary Academy. Girls and Boys Preparatory High School Academy. Hampton Preparatory Middle Campus. Hampton Preparatory Primary Campus. Henry Ford Academy Alameda School. Wilmer Honors Academy. Preparatory Academy of Houston. Houston Can Academy Charter School. Houston Can Academy Hobby. Jamie’s House Charter School. KIPP Sunnyside High School Houston. Koinonia Community Learning Academy. Lighthouse Charter School. Metro Academy of Math and Science. Meyerpark Elementary. Orenda Charter/Gateway High School. Phoneix Charter School. Cesar Chavez Academy/Por Vida Academy. Corpus Christi Preparatory High School/Por Vida Academy. Por Vida Academy Charter High School. Radiance Academy of Learning. Reconciliation Academy. Richard Milburn Academy. San Antonio Can High School. San Antonio Preparatory Academy/Sendaro Academy. San Antonio Technology Academy. School of Excellence in Education. School of Science and Technology. Shekinah Radiance Academy. Shekinah Walzem Charter. Phoenix School/Southwest. Texas Virtual Academy of Southwest. Tekoa Academy of Accelerated Schools. Tekoa Academy of Accelerated Schools. Tekoa Academy of Accelerated Schools. Texas Empowerment Academy. The Varnett School–Northeast. Varnett Charter School. Vista del Futuro Charter School.

In 2011 there were 496 public school campuses rated “unacceptable.” That is 5.8% of the total of 8,526 campuses in Texas.

In 2011 there were 38 charter schools rated “unacceptable” or 7.9% of the total number of charters–482.

7.9% is 2.1%age points higher than 5.8%. Public schools, therefore, outperform charter schools!

In 2011 there were 34 AEA public school campuses rated “unacceptable.” That is 0.4% of the total.

In 2011 there were 16 of 3.3% of AEA charter school campuses rated “unacceptable.”

3.3% is 2.9%age points more than 0.4%. Again, public schools outperform the charters.

So, the Perry/Dewhurst/Patrick meme about wanting more charters to give parents choice is simply not the real agenda. We believe the real agenda is the elimination of public schools in Texas, and we ask everyone to join us in the fight against that. Preserving public education and funding it appropriately–adequately and equitably in all schools–is the REAL civil rights issue of our time.

Research on New Jersey Charter Schools

http://dianeravitch.net/2012/12/07/what-the-credo-study-of-nj-charters-really-said/

More evidence of bad financial management in charter schools:

http://www.tnr.com/blog/plank/110355/its-easy-fleece-charter-schools?goback=%2Egde_2102482_member_188308243#

Sleeze already! What will it be like if charters multiply?

http://www.azcentral.com/news/articles/20121016insiders-benefiting-charter-deals.html?nclick_check=1&buffer_share=c513a&utm_source=buffer

Charter School Frauds in Arizona; Same Company Just Got Approval for a Charter in San Antonio!

http://wp.me/p2odLa-32Z

Charter School Funding Coming from Other Countries?

http://www.reuters.com/article/2012/10/12/usa-education-charter-visas-idUSL1E8LAOAK20121012

Education for Profit in Detroit:  The Buying and Selling of “Failing” Children, Nov. 16, 2012, by Tolu Olorunda, Truthout

http://truth-out.org/news/item/12790-education-for-profit-in-detroit-the-buying-and-selling-of-failing-children

 Austin Has 4 NEW Pro-Public School Board Members

http://dianeravitch.net/2012/11/08/community-supporters-win-seats-on-austin-school-board/

Follow the Money to Know Who Is Behind Charters!

http://dianeravitch.net/2012/11/07/cracking-the-story-about-money-behind-charter-referenda/

http://dianeravitch.net/2012/11/07/the-bill-gates-challenge/

Schools on the Ballot

In Georgia voters approved on Nov. 6, 2012, a separate commission to approve charter schools, taking that decision away from a community’s local school board and reducing the amount of funding available for public schools.  This bill was promoted by ALEC and is among those on their menu for privatization.

In Florida, however, voters did a good thing!  They rejected the proposition to convert public tax money into vouchers that families could use to send their children to private and religious schools.

It is important to become informed about these issues in other states so that we can learn what works and what does not work in keeping public schools money in public schools.

http://blogs.edweek.org/edweek/state_edwatch/2012/11/highlights_from_state_k-12_votes_bennett_goes_down_charters_win_in_ga.html?cmp=ENL-EU-NEWS2

Charter School Students Join “Efficient & Adequate” Lawsuit, Oct. 29, 2012, Texas Insider:

http://www.texasinsider.org/charter-school-students-join-lawuit-for-efficient-adequate-funding/

The following document from the Texas Public Policy Foundation

lays out the privatization (referred to as “school choice”) agenda:  http://www.texaspolicy.com/sites/default/files/documents/2011-10-PP13-SchoolChoice-CEP-JamesGolsan.pdf

Who Are Charter School Teachers?  Comparing Teacher Characteristics, Job Choices, and Job Preferences, Sept. 24, 2012, EPAA

http://epaa.asu.edu/ojs/article/view/1021/1004

Spending by the Major Charter Management Organizations:  Comparing Charter School and Local Public District Financial Resources in New York, Ohio, and Texas

May 2012, by Bruce Baker, Rutgers University

http://nepc.colorado.edu/files/rb-charterspending_0.pdf

Charter Schools No Cure-All for Black Students, Says Study

by Dr. Julian Vasquez Hellig, Apr. 11, 2012, UT Austin

http://www.utexas.edu/news/2012/04/11/charter_vasquez_heilig/

Evaluation of New Texas Charter Schools, 2007-2010,

July 2011, published by Texas Center for Educational Research

http://www.tcer.org/research/charter_schools/new_charters/documents/ntcs_final_web.pdf

Two New Studies on Charter Schools

by Valerie Strauss, Washington Post, June 28, 2010

http://voices.washingtonpost.com/answer-sheet/charter-schools/2-new-studies-on-charter-schoo.html

Research Brief:  Spending by the Major Charter Management Organizations:  Comparing Charter School and Local Public District Financial Resources

by Baker, Libby, Wiley  http://nepc.colorado.edu/publication/spending-major-charter

New Charter Schools Proposed for San Antonio  http://choosetosucceed.org/


Education Profiteering: Wall Street’s Next Big Thing?

October 15, 2012  |

Editor’s note: Jeff Faux’s new book is The Servant Economy: Where America’s Elite is Sending the Middle Class  [3](Wiley, 2012).

Source URL: http://www.alternet.org/education/education-profiteering-wall-streets-next-big-thing

The end of the Chicago teachers’ strike was but a temporary regional truce in the civil war that plagues the nation’s public schools. There is no end in sight, in part because — as often happens in wartime — the conflict is increasingly being driven by profiteers.

The familiar media narrative tells us that this is a fight over how to improve our schools. On the one side are the self-styled reformers, who argue that the central problem with American K-12 education is low-quality teachers protected by their unions. Their solution is privatization, with its most common form being the privately run but publicly financed charter school. Because charter schools are mostly unregulated, nonunion and compete for students, their promoters claim they will, ipso facto, perform better than public schools.

On the other side are teachers and their unions who are cast as villains. The conventional plot line is that they resist change, blame poverty for their schools’ failings and protect their jobs and turf.

It is well known, although rarely acknowledged in the press, that the reform movement has been financed and led by the corporate class. For over twenty years large business oriented foundations, such as Gates (Microsoft), Walton (Wal-Mart) and Broad (Sun Life) have poured billions into charter school start-ups, sympathetic academics and pundits, media campaigns (including Hollywood movies) and sophisticated nurturing of the careers of privatization promoters who now dominate the education policy debate from local school boards to the US Department of Education.

In recent years, hedge fund operators, leverage-buy-out artists and investment bankers have joined the crusade. They finance schools, sit on the boards of their associations and the management companies that run them, and — most important — have made support of charter schools one of the criteria for campaign giving in the post-Citizens United era. Since most Republicans are already on board for privatization, the political pressure has been mostly directed at Democrats.

Thus, for example, when Andrew Cuomo wanted to get the support of hedge fund managers for his run for governor of New York, he was told to talk to Joe Williams, director of Democrats for Education Reform, a group set up to lobby liberals on privatization. Cuomo is now a champion of charter schools. As Joanne Barkan noted in a Dissent Magazine report, privatizers are even targeting school board elections, in one case spending over $630,000 to elect two members in a local school board race last year in Colorado.

Wall Street’s involvement in the charter school movement — when the media acknowledges it — is presented as an act of philanthropy. Perhaps, as critics claim, hedge funders are meddling in an area they know nothing about. But their motives are worthy. Indeed, since they send their own children to the best private schools, their concern for other people’s children seems remarkably altruistic. “Wall Street has always put its money where its interests of beliefs lie,” observed this New York Times article [4], “But it is far less common that so many financial heavyweights would adopt a social cause like charter schools and advance it with a laser like focus in the political realm.”

Yet, with the wide variety of social causes and charitable needs — poverty, health, housing, global warming, the arts, etc. — why would so many Wall Streeters focus laser-like on this particular issue? The Times suggest two answers. One is that the money managers are hard-nosed, data-driven investors “drawn to the business-like way in which many charter schools are run; their focus on results primarily measured by test scores.”

Twenty years ago, one might have reasonably believed that the private charter schools, which are managed to produce the numbers, would produce better outcomes — as measured by the numbers. But the overwhelming evidence is that they do not. The single most comprehensive study [5], by researchers at Stanford University, found that 17 percent of charter school students performed better than their public school counterparts, 46 percent no better and 37 percent worse. Stanford’s conclusions have been reinforced by virtually all of the serious research, including those at the University of California, the Economic Policy Institute and the policy research firm Mathematica.

Nor do charter schools seem more efficient. Those promoted as the most successful examples have been heavily subsidized by foundations and Wall Street donors. The film, Waiting for Superman that portrays a heroic charter school organizer fighting a selfish teachers union was widely hyped in the media — including popular TV shows like Oprah Winfrey’s. Yet, as Diane Ravitch, an assistant secretary of education under George H.W. Bush and a former charter school supporter turned critic, noted, the film neglected to report that the hero educator kicked out the entire first class of the school because their test scores were too low, that the school was heavily subsidized by the pro-reform foundations and that the hero took an annual salary of four hundred thousand dollars.

Neither do the data on international comparisons support either privatization in general or charter schools in particular. The foreign education systems that out score America’s are government-run, unionized, monopolies. Ravitch asks: “I look around the world and I don’t see any country doing this but us. Why is that?”

Good question. Although the data do not support the supposedly data-driven privatizers’ claims, their enthusiasm is undiminished. In response to an op-ed by Bill Gates that crudely misrepresented the statistics on school performance, education policy analyst Richard Rothstein observed: “It is remarkable that someone associated with technology and progress should have such a careless disregard for accuracy when it comes to the education policy in which he is now so deeply involved.”

The Times‘ other guess about Wall Street’s motives was that hedge funders are attracted to the anti-union character of the charter schools. This is undoubtedly true; the attack on the pubic schools is clearly a part of the broad conservative campaign to discredit government.

Wall Street has always loathed the labor movement. And in the last decade it has had even more of a reason since corporate profits now depend more on cost cutting and less on the creation of new products. The Chief Finance Officer of JP Morgan reports that some 75% of the net increase in corporate profits between 2000 and 2007 — before the financial crash — was a result of cuts in workers’ wages and benefits. Given that unions are the only serious vehicles for resistance to the corporate low-wage strategy, Wall Street’s antipathy has become even stronger.

But today unions represent less than seven percent of private sector workers. And the influence of public sector unions on the bargaining position of workers in profit-making corporations is, certainly in the short run, negligible. So while hostility to unions plays a role, is it is not quite credible to believe that Wall Street profit maximizers would be spending so much of their time and money simply to beat up on a proxy for the private sector unions that they have already so beaten back.

As usual, when looking for what motivates capitalists in a market system, the answer is likely to have something to do with making money.

Having been rescued from the consequences of its own folly by the Bush/Obama bailouts with its de-regulated privileges intact, Wall Street is once more on the prowl for the new “big thing” — a new source of potential profits upon which to build the next lucrative asset bubble.

The landscape of the coming decade is not promising. Most forecasters see a near term future of slow growth, sluggish consumer spending and government retrenchment. Despite the Federal Reserve’s commitment to low interest rates there is little demand for equities, indicating widespread investor pessimism about the future. As Bill Gross, the founder of global investment giant Pimco, wrote in August, “Boomers can’t take risk. Gen X and Y believe in Facebook but not its stock. Gen Z has no money.”

The financial bubble of the 1990s was driven by new business start-ups exploiting technologies whose development had been subsidized by the taxpayers. The bubble of the 2000’s was built on the boom in subprime mortgages organized and subsidized by Federal housing programs. But with a virtual Washington consensus on cutting back public spending, investors have little expectation of new government money being poured into some dormant economic sector on a scale sufficient to generate widespread speculative excitement.

Education privatization would not, per se, create a net new stimulus for the economy. But by diverting large existing flows of money from the public to the private sector it would create new profit-making ventures that could be capitalized and transformed into stocks, derivatives and leveraged securities. The pot has been sweetened by a 39 percent federal tax credit for financing charter school construction that can double an investor’s return in seven years. The prospect of new speculative opportunities could well recharge the animal spirits upon which Wall Street depends.

Some “liberal” privatization promoters claim that charter schools should not be considered private. But that’s an argument the management companies that run the schools only use when they are asking for more government funding. At the same time they argue in courts and to legislatures that as private enterprises they should not be subject to government audits, labor laws and other restrictions.

These companies rent, buy, and sell buildings; make contracts for consulting, accounting and legal services, food concessions, and transportation; and pay their managers far more than public school principals earn. In cases where city governments have given land to charter schools, for profit real estate companies have ended up owning the subsidized land and buildings. In states where charter schools are required to be nonprofit, profit-making companies can still set them up and then organize a board of neighborhood residents who will give them the right to manage the school with little or no interference.

In 2008 Dennis Bakke, CEO of Imagine Schools, a private company that managed 71 schools in eleven states, sent an email to the firm’s senior staff. It reminded his managers not to give school boards the “misconception” that they were “responsible for making decisions about budget matters, school policies, hiring of the principal, and dozens of other matters.” The memo suggested that the community board members be required to sign undated letters of resignation. “It is our school, our money, and our risk,” he wrote, “not theirs.”

The potential for private profits from publicly funded education is not limited to K-12. Profit-making universities and vocational schools — increasingly substituting remote internet learning for classroom teachers — are among the fastest growing businesses in the country. The sector is rife with high-pressure sales tactics and shoddy training, which leaves students – many of them low-income — deeply in debt and no further up the job ladder. Most of their growth is financed by Federal aid and Federally guaranteed student loans.

“You start to see entire ecosystems of investment opportunity lining up,” Rob Lytle, an business consultant earlier this year told a meeting of private equity investors interested in for-profit education companies. According to Stephanie Simon of Reuters, who reported on the event, investment in for profit education has already jumped from $13 million in 2005 to $389 million in 2011. Among others, Goldman Sachs and JP Morgan Chase have created multimillion-dollar funds for education investments.

These “data-driven” investors are not so much interested in students’ scores, as in the opportunities to cut costs by using online technology. Ironically, while reformers insist their goal is to develop more skilled teachers, a goal of their financier allies is to get rid of them. The central question, says education entrepreneur John Katzman is “How do we use technology so that we require fewer qualified teachers?”

According to none other that Rupert Murdoch, the U.S. education industry represents a five hundred billion dollar opportunity for investors. In 2010, he hired prominent reformer Joel Klein from his post as chancellor of the New York City Department of Education to run Murdoch’s education technology company. A few months later the firm received a $2.7 million contract from the city.

Charter schools, for profit on-line universities and other forms of privatization may not in the end fulfill all the dreams of its Wall Street promoters. But there is clearly money to be made here. And where there is money to be made, we can be sure that there will be money to finance political campaigns, to support career ladders that move between government and business and to bribe the media into ignoring the data. So the war on public education will continue. All of course “for the sake of the children.”





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