The money behind school reform

Proposed TEPCO plant on Texas Gulf coast.

Disaster capitalists Gates, Buffett...

Whenever there's an environmental disaster in the world, I always look to see how deeply Bill Gates, his partners, and his foundation are involved. The Gates Foundation's investments in Nigeria have helped turn much of that country into an unlivable, oil-polluted wasteland.

Gates got off scott free after the massive BP oil spill in the Gulf, even though his foundation owns millions of shares of BP and his hedge-fund school reform partners Warren Buffett and Whitney Tilson own NALCO the company that makes COREXIT, the dispersant that is even more harmful to the environment than the oil.

Now comes the horrific nuclear disaster at Fukushima which has even greater world-wide implications. Gates has been among the loudest champions of building more nukes in this country. He and his foundation have billions of dollars invested in nuclear development, here and around the world.

The reactors at Fukushima were built by Gates partner, G.E. and operated by TEPCO. TEPCO, which is being bashed by the Japanese government for spreading lies and misinformation in order to protect themselves and their investors from liability, is currently building more nukes down in South Texas. Partners in the South Texas project include--yes, you guessed it-- Gates and Buffett.

Gates is also the largest single owner and board chairman of TerraPower, Washington state's nuclear energy company. Other TerraPower investors include, Microsoft, Apple and Intel to Sony and Nokia to Google and eBay — that have poured about $5 billion into Gates' nuke projects.

His partner in the nuclear power industry is the Japanese company, Toshiba and Toshiba along with NRG Energy and G.E. are the direct partners with TEPCO in the U.S.and Japanese nuke business.

Warren Buffett, owns Constellation Energy--67% of which is nukes.

Gates recently put $35 million into Charles River Ventures and Khosla Ventures to build nukes.

It it any wonder then that U.S. politicians, including Pres.Obama are still singing, "NUKE BABY, NUKE" and "DRILL BABY, DRILL"? There's lots of reasons for Gates and his nuke partners to exert influence over pols in both parties. Among them, huge corporate tax breaks. G.E., the nation's largest corporation, pays only about 12% of its earnings in taxes. Don't you wish you were taxed at that rate? Gates does them one better. By investing so heavily through his $36 billion foundation, he is taxed at about a 1% rate on profits from corporate investments. Bad news for Gates--the rate may soon go up to 1.9%.

Finally, it's worth thinking about how much public school reform and public schooling itself, have become dependent of these non-taxable profits gained from these dirty and destructive Gates Foundation investments.

WEEKEND QUOTABLES

Where's Cathie Black? Village Academy wants to know.

A fig leaf

"This compromise is not a compromise at all, but a very transparent and flimsy fig leaf that will allow Ms. Black to be in charge despite a complete lack of qualifications for the job." (Mona Davids, President of the New York Charter Parents Association)

FBI raids hedge-fund operators

It's another shadow cast over an industry that despite frequent scandals, bailouts and complicity in the collapse of the credit markets, still has enough credibility on Capitol Hill to avoid a real crackdown. Campaign contributions buy respect where it counts. (Sun-Times business columnist David Roeder)

How DFER got started

Hedge-fund Republicrats like Whitney Tilson hooked up with billionaire right-wing yahoos like Wal-Mart's John Walton. Then they used big bucks to lobby, influence, and win over Democrats and Arne Duncan.

The main obstacle to education reform was moving the Democratic party, and it had to be Democrats who did it, it had to be an inside job. (DFER Watch)

Frank Rich

Now corporations of all kinds can buy more of Washington than before, thanks to the Supreme Court’s Citizens United decision and to the rise of outside “nonprofit groups” that can legally front for those who prefer to donate anonymously. (Still The Best Congress Money Can Buy--NYT)

Bob Herbert 

A stark example of the potential for real conflict is being played out in New York City, where the multibillionaire mayor, Michael Bloomberg, has selected a glittering example of the American aristocracy to be the city’s schools chancellor. Cathleen Black, chairwoman of Hearst Magazines, has a reputation as a crackerjack corporate executive but absolutely no background in education. (Winning the Class War--NYT)

Ariana Huffington

"When we have two-thirds of Americans right now who expect their children to be worse off than they are, when we have America ranked number ten in upward mobility - behind France and Scandinavia countries and Spain - when we have 25 percent of young people out of work and 27 million people unemployed or underemployed, we know there is something fundamentally wrong.  (Public Anger Is Beyond Left or Right--CBS)

WEEKEND QUOTABLES

Mayor Bloomberg on his appointment of Cathie Black

“It’s a chance to change the world.” (N.Y. Post)

Former N.Y. Supt. Rudy Crew

We’re in danger of making the New York City public schools a plaything for the rich and famous. Perhaps the thinking is that directing schools is something you do when you’re finished doing your real job; an avocation that starts with a love of learning and warm remembrances of being in school yourself.(NYT)

Hedge-funder Tilson lays it out bare naked

Charter schools, explained Whitney Tilson, the founder of T2 Partners and one of their most ardent supporters, are the perfect philanthropy for results-oriented business executives. For one thing, they can change lives permanently, not just help people get by from day to day. For another, he said, “hedge funds are always looking for ways to turn a small amount of capital into a large amount of capital.”

A wealthy hedge fund manager can spend more than $1 million financing a charter school start-up. But once it is up and running, it qualifies for state funding, just like a public school. Except that in most cases, charter schools save the taxpayers money because they are much more cost-conscious than the typical big city public school. “It is extremely leveraged philanthropy,” Mr. Tilson said.(NYT) h/t Fred Klonsky

Privatizing the garbage

Rahm Emanuel officially launched his Chicago mayoral campaign Saturday, with a pledge to open the city's garbage collection to bidding from private companies. He has already committed himself to privately funding Chicago's version of Race To the Top.

“Should we continue to collect Chicago’s garbage the same way we have for decades when it can be done cheaper and more efficiently, as other cities have shown?" (Chicago News Cooperative)

Who knew?

Tilson may be right about being bullish on BP stock. It turns out that they can deduct much of the cost of the Gulf cleanup from their taxes. Destroying the Gulf of Mexico and the economy of 5 states is deductible. Who knew?

Bullish on BP

Have no fear, Bill Gates. Your foundation's millions of BP shares are safe. Hedge-fund ed "reformer" Whitney Tilson is bullish on BP.

Profit in charters? Yes

"There's a very fine line between what all of us do, and fraud..."--Whitney Tilson, hedge-fund school reformer


Skeptical friends continue to ask me: "Is it really possible to make a profit operating a charter school(s)?" I remember the above-mentioned Tilson mocking anyone who suggested such a thing and edu-business experts like Mark Dean Millot saying that running schools, "is a very unprofitable business." I've offered several explanations to my friends about why profits may be driving much of the charter school business.

Maybe Juan Gonzalez from Democracy Now, can convince them that there's gold in them charters. 

AMY GOODMAN: Juan, before we move on to the Gulf, you have a very interesting column in the "New York Daily News" today, an exposé around big banks and charter schools.

JUAN GONZALEZ: Yes, Amy, one of the things I've been trying now for a couple of years is to try to figure out why is it that so many hedge fund managers, wealthy Americans, and big banks, Wall Street banks- executives of Wall Street banks, have all lined-up supporting and getting involved in the development of charter schools. I think I may have come across one of the reasons.

There's a lot of money to be made in charter schools, and I'm not talking just about the for-profit management companies that run a lot of these charter schools. It turns out that at the tail end of the Clinton administration in 2000, Congress passed a new kind of tax credit called a New Markets tax credit. What this allows is it gives enormous federal tax credit to banks and equity funds that invest in community projects in underserved communities and it's been used heavily now for the last several years for charter schools. I have focused on Albany, New York, which in New York state, is the district with the highest percentage of children in charter schools, twenty percent of the schoolchildren in Albany attend are now attending charter schools. I discovered that quite a few of the charter schools there have been built using these New Markets tax credits. What happens is the investors who put up the money to build charter schools get to basically or virtually double their money in seven years through a thirty-nine percent tax credit from the federal government. In addition, this is a tax credit on money that their lending, so they're also collecting interest on the loans as well as getting the thirty-nine percent tax credit. They piggy-back the tax credit on other kinds of federal tax credits like historic preservation or job creation or brownfields credits. The result is, you can put in ten million dollars and in seven years double your money. The problem is, that the charter schools end up paying in rents, the debt service on these loans and so now, a lot fo the charter schools in Albany are straining paying their debt service- their rent has gone up from $170,000 to $500,000 in a year or- huge increases in their rents as they strain to pay off these loans, these construction loans. The rents are eating-up huge portions of their total cost. And, of course, the money is coming from the state.

One of the big issues is that so many of these charter schools are not being audited. No one knows who are the people making these huge windfall profits as the investors. Often, there are interlocking relationships between the charter school boards and the nonprofit groups that organize and syndicate the loans.

There needs to be some light on this whole issue and the state legislature right now is considering expanding charter school caps, but one of the things I press for my column, there has to be the power of the government to independently audit all of these charter schools or we're not going to know how public dollars are ending up in the coffers of Wall Street investors.

As you may know we covered a story about hedge fund managers getting in on the charter school action...

This is almost too good

Palin & Gen. Tata hawking their books

I mean, first you've got Arne Duncan backer and DFER's patron hedge-funder, Whitney Tilson calling for more rich, white folks to "take reform to the next level, both politically and operationally." Can we call them Duncan's White School Reform Army?

Then you've got WaPo ed writer Bill Turque, back, I assume, from his censorship exile in WaPo's rubber room, telling us about Rhee's Tata. That's Brigadier General Anthony J. Tata, recently appointed by D.C. Supt. Michelle Rhee as her second in command after a stint in Eli Broad's Superintendent's Academy..

Gen. Tata is no one to fool with, writes Turque. He's:

...a distinctive, alpha-male presence at a school headquarters filled with 20- and 30-somethings transfixed by their BlackBerry devices -- and where five of Rhee's top aides, including her chief of staff, are women. No one else is likely to talk about how to take an issue and "shoot it between the eyes."

And you were worried about Rhee and her broom.

Tata is definitely not into Obama's hopey, changey thingy either, writes the rehabilitated Turque.

In December, he wrote a glowing review of Sarah Palin's book, "Going Rogue," on the "Big Hollywood" site operated by conservative activist Andrew Breitbart. He said that Palin "is far more qualified to be president of the United States than the current occupant of the White House" and that the former Alaska governor and vice presidential candidate is "precisely the kind of leader America needs."

It all adds up if you think (really) long and hard about it.

You see, Tilson loves Duncan. Duncan loves Tilson and Rhee. Rhee loves Tata. Tata loves Palin--hates Obama. Turque writes critically about Rhee. Turque is censored by Rhee/WaPo. Turque comes back with a softer piece on Rhee & Tata. Whew!

There's much more tangled up in this web of deception, publishing, censorship (right Russo?) and the ownership society. But for now, I need to take a nap.

NEW YEAR QUOTABLES

Tilson on Meier--'She should visit a charter school'

In his latest diatribe, hedge-fund billionaire and educational no-nothing, Whitney Tilson goes off on Deborah Meier, Diane Ravitch, and, Jonathan Kozol, calling their writings, "idiotic" and "moronic." Lines like the one below would be mildly amusing were it not for Tilson's influence in the Bloomberg administration and in Arne Duncan's DOE:

In short, Meier is so ignorant about charters that it boggles my mind. Has she ever visited a high-performing charter school?! I can only assume not.

What Tom VanderArk liked most about the Bush years

1. NCLB--"...marked a consensus that 1) measurement matters, 2) all students deserve good life options, 3) we should rely on average achievement to measure a schools success..." 2. Private control of public schools--"There was a massive increase in education entrepreneurship—school developers, human capital initiatives, and learning platforms—funded by massive new money foundations...Democrats for Education Reform and Education Equality Project joined the fray" 3. The Recession--"brought a new wave of talent into the sector that will make a difference for a generation."

Me: He left out the tsunami, which taught people how to run for higher ground.


What Chicago machine politician, Dan Burke, likes most about the Daley machine

"Yeah, there is a machine. A machine is created to do a job more efficiently."

His opponent, community activist, Rudy Lozano, Jr.

"It's like therapy," he said. "It's the closest true way for me to understand what my father was doing 26 years ago. I missed most of that. This experience has given me the opportunity to walk in those footsteps."

Putting down the insurrection

Rotherham and the boys at Eduwonk worry about the growing resistance movement:

In both counterinsurgency and education reform don’t assume that because the statues in the capital come down the resistance is over.

Me: I think Andrew is badly needed in Kabul.

WEEKEND QUOTABLES

Tilson The Terminator

Hedge fund school reformer Whitney Tilson, whose best quotable ("There's a very fine line between what all of us do, and fraud") was reported here a few weeks ago, now advises Arne Duncan to ditch his turnaround plan. His single strategy for neighborhood public schools?

"TERMINATE THEM...SHUT THEM DOWN!

More hedge fund school reformers on the fashion page

This time its about Tilson's investment partner Ravenel Boykin Curry IV:

That hedge fund multimillionaires have embraced the charter movement may seem odd: their own children are unlikely ever to see the inside of a neighborhood school, and there are more traditional routes to social prominence through philanthropy, like support of hospitals and cultural institutions. But to those who know the sociology of Wall Street, it makes sense. Charter schools appeal to the maverick instincts of many who run hedge funds. (Fashion & Style section of New York Times)

The education business

Forget all that crap about instructional leadership. Duncan says principals need to be CEOs.

"We have to treat them as such, and we have to train them as such," he says in this new podcast, the second in a series of interviews with some of the nation's brightest leaders. (US News)

Not just preparation...

In the end, it is time to stop thinking of school as preparation for real life and instead show students that the time they spend in school can be a vital and enriching part of their very real and very important lives. (Chris Lehman in Principal Leadership)

Hedge fund school-reformer nearly fesses up

"There's a very fine line between what all of us do, and fraud..."

Whitney Tilson is the sugar-daddy and co-founder of Democrats for Education Reform (DFER)-- Democrats in name only. Tilson and the hedge-fund reformers have lots of pull inside the DOE at present. Their goal is to move Duncan more towards school vouchers and privately-managed charters. Basically a current version of the Ownership Society in ed policy.

In this video, Tilson responds to the acquittal of former Bear Stearns hedge-fund managers Ralph Cioffi and Matthew Tannin and breathes a sigh of relief at the failure of the U.S. govt.'s first case against Wall Street bankers for wrongdoing in the run-up to the current global financial collapse.

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?