Rebuilding New Orleans on the cheap

12.10.07

Where did all the money go?

First they fired every union teacher in New Orleans and turned the city into a mecca for privately-managed charter schools doing education on the cheap with many low-paid and unqualified teachers and rookie principals. Now come the reports that the city is being rebuilt by exploiting low-wage, immigrant, non-union labor brought in from Mexico and Central America. These undocumented workers have no rights and are paying the ultimate price. They are suffering from a range of respiratory diseases and other potentially deadly ailments from Katrina's toxic residue with no access to medical care or treatment. The main problem?—fear of being deported if they seek care or drugs.

"The majority (of us) have had breathing problems," says one worker, nodding toward the men milling around behind him. They don't give their names because they are all undocumented immigrants from Mexico, Honduras or Guatemala. "We work in demolition, construction," he says. "But many times, the bosses don't give us masks or gloves or glasses or filters."

Philly a black majority city with little equity

In response to the official release yesterday of the Urban League's 2007 "State of Black Philadelphia" report, a couple of hundred Philadelphians packed a meeting room at the Loews Hotel to listen to a panel discuss the report and its bleak findings. The report found that the quality of life for black Philadelphians, configured as a "Philadelphia Equality Index," measures up to only 72 percent of that of whites.

Wharton School economics professor Bernard Anderson says he believes African-Americans actually represent nearly 50 percent of the population. "You can't have half of the population groveling in poverty and still be a vibrant, growing city," he said.

‘Motown may soon be notown’

In Chicago, journalist extraordinaire, Danny Schecter writes over at Pacific Free Press about his visit to Jesse Jackson’s Operation Push. Danny is here to show his 2006 film, In Debt We Trust.

(Nearby Detroit is harder hit. Yesterday, residents of the Detroit area who opened their paper were greeted with 122 pages of the 2008 Tax Foreclosure list for Wayne County. The current figure for Wayne county reports that a staggering 1/4 homeowners are in default on their mortgage.) This is worse than Katrina, a disaster in the making. Motown may soon be notown.

Danny, sitting in Rev. Jackson's church, makes the right connection:

I flashed back to the churches I visited during the civil rights movement back in the South in the 60's where politics and religion became one in a blend of inspiration and resistance. It seemed like that movement may be on the verge of being reignited, This will be a movement for economic justice, not just civil rights.

The Business Model

September 13, 2007

How to 'make a killing' in charter schools

"Trying to make a killing in the charter school business"?! Yeah, that's right, the charter school business is so profitable that I'm telling all my friends in the hedge fund business that they're in the wrong business. My message: "If you really want to make a lot of money, start a charter school!" LOL! - Whitney Tilson

LOL, indeed.

Edweek reports that C. Steven Cox, the founder of the now-defunct California Charter Academy, was indicted Sept. 4 on 56 counts of misappropriation of public funds and 56 counts of grand theft. Mr. Cox was also accused of failing to file a state tax return.

But while Cox was caught, a closer look at the way CCA operated may shed some light on how many for-profit EMOs use vertical integration (see below) to “make a killing” in the charter school business (despite denials by DFER's charter investor types like Whitney Tilson).

CCA was formerly the largest charter school operator in California, with multiple campuses scattered throughout the state. Cox founded Educational Administrative Services Corporation (EASC) in March of 2000. This for-profit company was to manage the day-to-day operations of the charter schools.

But while EASC was providing contracted administrative services to CCA, the company also began to diversify. EASC formed the following subsidiaries while continuing to manage the CCA charters: Everything for schools .com (EFS), Maniaque Management Group, Xtreme Motor Sports, and Hautlab Music Group. Auditors suggest that remuneration received by EASC from the charter schools for administrative services was somehow inappropriately funneled to fund these business ventures.

___________________

From Klonsky's business guide to for-profit charter school operators:

Full vertical integration occurs when a firm incorporates the value-chain of a supplier and/or that of a distribution channel into its own value chain. This generally happens either by a firm’s acquiring a supplier and/or a distributor or by a firm’s expanding its operations. Expanding operations means to perform activities traditionally undertaken by suppliers or distributors.

_________________

In December of 2001, the CCA charters formed the American Public Agency Authority, a joint powers authority under Cox’s guidance. The agency was to "pool" resources of the charters to develop a self-insurance plan. The APAA offered a liability package, workers' compensation, and health care. Ironically similar to companies affiliated to CCA, board members consisted of individuals involved in CCA charter schools. In addition to the CCA charters, 12 other charter schools applied for either workers compensation or liability insurance.

The CCA audit found that APAA charged highly inflated rates for their insurance coverage. Adding to the sum of money APAA made through charging excessive rates, it was also alleged that APAA financed the same insurance policies twice. This supposedly contributed to a surplus of cash which APAA did not require to pay their $517,000 premiums to insurance carriers. Similar to earlier payments received by EASC, EASC again transferred funds paid by the CCA charters for services rendered to APAA bank accounts.

Got it, Mr. Tilson? But then, who am I to tell you?

'Making a killing" in school reform

I don't think so.

August 31st

Response to Whitney Tilson

Thanks, Whitney Tilson, for responding to my blog. It boosts my confidence to know that bigwigs like you read it regularly and that it gives them shpilkes. Seriously, I really didn't mean to get you so upset.

But when a leader of Democrats for Educational Reform comes out in support of vouchers in Florida, I figure, they know someone's going to be critical. So, why shouldn't it be me?

Anyway, why act so offended? When I poked at you Wednesday for your pro-voucher, anti-union views, you responded in ill temper (I think that's what they call it at the Harvard Business School), calling my post "a pack of lies" and going so far as to correct a typo in my blog (my daughter already caught it, Whitney, so there).

This was your puny defense:

"Trying to make a killing in the charter school business"?! Yeah, that's right, the charter school business is so profitable that I'm telling all my friends in the hedge fund business that they're in the wrong business. My message: "If you really want to make a lot of money, start a charter school!" LOL! And I guess anyone who criticizes the behavior of the teachers unions is ipso facto a union hater. HA! I amnot a union hater -- though I hate many things that certain unions do.

I love his final line

"With Democrats like this, who needs Republicans?" I want Democrats to be so strong in leading the charge on school reform that Republican support isn't necessary -- that's the goal!!!

First let me say that I really like the LOL stuff. It shows that you're really into all this bloggerese.

Secondly, I'm not quite sure what you mean by "leading the charge on school reform." Did you mean that you want Democrats to outdo the conservatives in their attack on real reform? Be even more aggressive on union bashing and vouchers? What exactly do you mean, Whitney? How do you want to out-reform or supplant the neocons?'"

And what exactly do you tell your friends in the hedge fund business? C'mon, you can tell me. I promise not to share. And while you're at it, please tell me why a guy with friends in the hedge fund business should have so much say over what goes on in public education anyway?

I only made that "making a killing" crack after reading about you and your fellow money managers in Elizabeth Green's New York Sun article. Remember Whitney, I don't make this stuff up.

A money manager recently sent an e-mail to some partners, congratulating them on an investment of $1 million that yielded an estimated $400 million. The reasoning was that $1 million spent on trying to lift a cap on the number of charter schools in New York State yielded a change in the law that will bring $400 million a year in funding to new charter schools.

You see, that came straight from you and your friend and co-investor, Ravenel Boykin Curry IV (remember, I covered his wedding). While I'm certainly no money manager myself (not that I wouldn't like to be, but for educators, managing money takes on a completely different meaning) this article made me realize that there are different ways to "skin the cat," as you guys so nicely put it.

Here's your own quote, Whitney. After reading it, I think you will owe me an apology:

As investors, the group's leaders spend their days searching for hidden diamonds in the rough: businesses the market has left for dead, but a savvy investor could turn for a profit. A big inner-city school system, Mr. Tilson explained, is kind of like that — the General Motors of the education world. "I see very, very similar dynamics: very large bureaucratic organizations that have become increasingly disconnected from their customers; that are producing an inferior product and losing customers; that are heavily unionized," he said. A successful charter school, on the other hand, is like "Toyota 20 years ago."

OMG, you guys are trying to make a killing in the charter school business. I think our differences are semantic ones, over the words "make a killing." It's really all about what you are trying to kill, i.e., public education and what you are ("ipso facto") trying to save, i.e., vouchers.

BTW, how do you reconcile being a Democrat with your support for vouchers? LMAO. As I said, "with Democrats like this, who needs Republicans?"

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PREAPrez knowledgably points out:

"There’s a start of a conversation you never hear in the teachers’ lounge: 'As I was telling my friends in the hedge fund business…'"

With Democrats like this, who needs Republicans?

August 29th

He likes Obama and vouchers

A while back, Alexander Russo asked the question, "Who the hell is Whitney Tilson?" Turns out he's part of a group of four Ownership Society entrepreneurs trying to make a killing in the charter school business. See my post on this here and Elizabeth Green's story in the New York Sun. He's also a player in KIPP, a union hater, and a Democratic (yes, I said Democratic) Party honcho who claims to support Barack Obama.

Not surprisingly, he is a favorite of Andy Rotherham, who runs Tilson's pro-voucher commentary on his Eduwonk bog.

With Democrats like this, who needs Republicans?

_________________


How the hate campaign worked

Samuel Freedman has a piece in today's NYT ("Critics ignored record of a Muslim principal") about the hate campaign against the Kahlil Gibran International Academy and how it succeeded in driving Principal Debbie Almontaser out of her job.

For anyone who bothered to look for it, Ms. Almontaser left a clear, public record of interfaith activism and outreach across the boundaries of race, ethnicity and religion. Her efforts, especially after the Sept. 11 attacks, earned her honors, grants and fellowships. She has collaborated so often with Jewish organizations that an Arab-American newspaper, Aramica, castigated her earlier this summer for being too close to a “Zionist organization,” meaning the Anti-Defamation League.

Getting a return on their "investment" in public education [Archived]

We see a school...they see a Toyota

If you want greater insight into how ownership society entrepreneurs use their money to drive public school policy, look no further that the May 31st New York Sun where where reporter Elizabeth Green takes us into the world of big-time ed investing.

A money manager recently sent an e-mail to some partners, congratulating them on an investment of $1 million that yielded an estimated $400 million. The reasoning was that $1 million spent on trying to lift a cap on the number of charter schools in New York State yielded a change in the law that will bring $400 million a year in funding to new charter schools.

Wow! How would you like to get a return of 400% annually on your investments? You could, if you had a name like Ravenel Boykin Curry IV.

The money managers who were among the main investors in this law — three Harvard MBAs and a Wharton graduate named Whitney Tilson, Ravenel Boykin Curry IV, Charles Ledley, and John Petry — are moving education-oriented volunteerism beyond championing a single school. They want to shift the political debate by getting the Democratic Party to back "innovations" such as merit pay for teachers, a longer school day, and privately-run charter schools.

I just like saying, "Ravenel Boykin Curry IV."

Friends call him "Boykin." Here a story about his wedding, if you're interested. My invitation must have gotten lost in the mail.



However, I couldn't find anything in his background that would make him a legitimate educator or policy expert. But Boykin's wife, Celerie Kemble (left), seems knowledgeable about lots of stuff.

From SFGate:

Palm Beach bred and Harvard educated, Kemble can declaim with Clintonian stamina on topics like charter schools, the foibles of her class and decorating theory. "Decorating styles right now are like politics," she said, noting that they both cleave to the middle.

More metaphors...

Why do money-manager types get to bring their own metaphors and similes to the education table? I mean decorating styles? Cleavage? And what are the foibles of her class anyway?

Wait! How about this one--Toyotas?

From Sun story:

As investors, the group's leaders spend their days searching for hidden diamonds in the rough: businesses the market has left for dead, but a savvy investor could turn for a profit. A big inner-city school system, Mr. Tilson explained, is kind of like that — the General Motors of the education world. "I see very, very similar dynamics: very large bureaucratic organizations that have become increasingly disconnected from their customers; that are producing an inferior product and losing customers; that are heavily unionized," he said. A successful charter school, on the other hand, is like "Toyota 20 years ago."

Hear that kids and teachers? Your charter school is like a 20-year-old Toyota. If I were you, I'd find out where that beater is headed and who's driving?