The funding of American public schools is historically based on regressive local property taxes; and this applies to charter schools as well. Notwithstanding subventions from the state to local school districts, spending per pupil has long varied from district to district, state to state. More specifically, ever since the 19th century, spending on public education has importantly been a function of the per pupil wealth of the local district, with low wealth districts the most disadvantaged.
Because of more than thirty years of litigation that began in the late 1960s, this problem has now been substantially ameliorated in some states—states like Kentucky, New Jersey, Texas, Wyoming and California—although, even today in California, for example, some wealthy communities like Beverly Hills continue to outspend most other districts. Overall, however, inter-district spending inequalities remain significant in most states and very large in some states. Inter-district spending inequalities also create a dilemma for charter school funding. Either, charter schools will be funded (typically by their local sponsoring districts) at a level that relates to the spending level per pupil in the districts that charter them—this is the most typical solution around the country. Or, they will be funded (perhaps directly by the state) at some state average level of funding per pupil—this, for example, is increasingly the California solution.1
The issue of charter school funding can be deceptive and intentionally so. The Education Policy Studies Laboratory notes that for charter schools, there is a much greater concern that no charter school will have much of a chance to succeed unless it has substantial extra outside funding from either for profit or non-profit sources; funding that goes beyond per-pupil state financial limits. This, in turn, means that certain sorts of charter school initiators are far more likely to survive than others, with local grass roots groups most likely to be in the ‘worse off’ category. Why is this? Simple, competition creates winners and losers and any economist will be quick to report. And that is what we are seeing now, the weeding out of charter school providers with the big guns, Green Dot, KIPP, Alliance Schools and others beating out the competition in the neo-liberal market they have created. Competition, or slugging it out in the marketplace, is the last thing these charter companies want, they full-spectrum dominance over the charter school market and they cannot get it without the help of the government which they so dearly lambast while going through its pockets. The perfidy is truly astonishing to watch for the kleptocracy takes place in broad daylight. In fact, these financiers and charter turnaround artists need the government in a big way, not just to deregulate and pass laws favorable to their agendas, but to bestow on them the necessary stimulus funds they so eagerly wish to get their jeweled hands on.
In light of the new experiment in charters the funding for facilities for charter schools by profit, non profit and public sectors has grown exponentially with the surge in the growth and development of charter schools beginning in 1991. In the 2007 edition of the Landscape, in a study entitled “2007 Charter School Facility Finance, Landscape”, the Local Initiatives Support Corporation, a national nonprofit dedicated to helping nonprofit community development organizations transform distressed neighborhoods noted:
Due in part to support from the U.S. Department of Education (ED), the facility financing sector for charter schools has grown rapidly over the last few years. Today, 25 private, nonprofit organizations provide financing to charter schools for their facilities, collectively providing over $600 million in direct financial support to date… In addition to unrated charter school facility debt, there are now roughly 70 rated charter school bond issuances totaling over $1 billion. See Appendix A for Standard & Poor’s and Moody’s Investors Service ratings on 67 of these issuances. While the financing opportunities available to charter schools for their facilities are increasing, the sector remains fragmented, with individual providers having different eligibility requirements, financial products and geographic markets. Obtaining access to financing is still difficult for smaller schools and those earlier in the charter school life cycle, with start-up schools facing the greatest challenges… Only 11 jurisdictions provide a per pupil funding stream specifically for charter school facilities. Of those 11, only eight provide such funding at a level of $500 or more, and only three provide $1,000 or more on a per pupil basis. Recognizing these obstacles, the federal government has sought to stimulate private sector investment and increase state per pupil funding for facilities through two U.S. Department of Education programs: the Credit Enhancement for Charter School Facilities Program and the State Charter School Facilities Incentive Grants Program. However, while receiving appropriations over the past several years, both programs have faced challenges garnering Congressional support for funding at levels requested by the Administration.2
Not anymore. The Second Great American Depression now has assured that billions will be available to ‘help-out’ with the efforts and of course this means more ‘distressed areas’ they can move into.
As the study notes, in the private sector there are 25 nonprofit organizations that provide significant facilities assistance to charter schools in the form of grants, loans, guarantees, real estate development and technical assistance. There are currently two public-private partnerships that help provide facilities financing for charter schools, the Indianapolis Charter Schools Facilities Fund and the Massachusetts Charter School Loan Guarantee Fund. Six federal programs provide varying types of assistance to, or on behalf of, charter schools for their facilities. The U.S. Department of Education provides grant funds through two programs administered by the Office of Innovation and Improvement: the Credit Enhancement for Charter School Facilities Program and the State Charter School Facilities Incentive Grants Program. The Department of Education has made credit enhancement grant awards totaling $160 million that have helped attract private capital to the sector and state incentive grant awards totaling $50 million to spur states to share in the public funding of charter school facilities. In addition, there are four other federal programs administered by diverse federal agencies that charter schools can access for their facilities needs, including the Public Assistance Grant Program administered by the Federal Emergency Management Agency, the New Markets Tax Credit Program and the Qualified Zone Academy Bond (QZAB) Program administered by the Department of the Treasury, and Community Programs administered by the Department of Agriculture. Descriptions of these six programs are provided in “Public Initiatives—Federal Programs.” “Non-profit” is the new face of the charter charlatans for they see this as both a way to legitimize their efforts in the face of public opposition to –for profit schools, but also as a way to shovel out for-profit contracts through the back door, buying commercialized curriculum, contracting out security, clerical work, and administrative duties. Now, with the stimulus monies, the sky’s the limit.
Philanthro-Capitalists and Charters Schools
Private philanthropy has been aggressively recruited in the struggle to fund charters, for deep pockets must rocket the movement into institutional permanency and what better way to do this than to go to the pirates of industry who are flush with the surplus labor of their workers and an eager eye on investment opportunities. For example, in New Orleans where charters are a national experiment and springboard for efforts in Washington D.C., Los Angeles and New York, three philanthropic groups will give $17.5 million to “public schools” in New Orleans. It is the largest donation by private groups since the school system was reorganized after Hurricane Katrina. The grants, from the Bill and Melinda Gates Foundation, the Doris and Donald Fisher Fund and the Broad Foundation, will be given over a three year period. They will go to three nonprofits, New Schools for New Orleans, New Leaders for New Schools and Teach for America-Greater New Orleans. New Schools for New Orleans will get $10 million, mainly to support and bolster charter schools. New Leaders for New Schools will get $1 million to train and support 40 principals. Teach for America, the reserve labor army for the charterists (the pair recent college graduates and professionals with urban or rural schools deemed in need for two years) will get $6.5 million to attract teachers for the city.3 This is how they cement their real agenda of destroying public education in favor of their own tightfisted educational reform efforts that go under names such as Diverse Provider Strategy, Portfolio Schools, Charter Management Organizations and the like.
Or take for example the issue of long waiting lists for charter school students who wish to enroll in successful charter schools. In Texas, Knowledge is Power Program (KIPP) co-founder Mike Feinberg lamented when he found out that KIPP run charter schools in Houston, Texas had long waiting lists for its charter schools. No problem. A group of philanthropists decided a super-expansion of both the Houston-based KIPP schools and another charter group, the YES Prep Public Schools was in order. In two years these philanthropists raised more than $90 million for a supercharged expansion of KIPP and YES in Houston. That’s a big cookie bake by anybody’s standards. While charter schools openly beg for funds from the same financial hooligans who will one day look to exploit the labor of the children of these schools, they also mouth the same old rhetoric: that ‘competition’ is good for kids and parents, when in fact there is no city, no parent group, nor any public school that could possibly compete with the largess of the guilded few, and they know it.
According to the Philanthropy Round Table:
Within a decade, the two programs expect to use that money to create a school district within the school district. By 2017, they intend to be serving a total of more than 30,000 students annually—roughly 15 percent of all public school students in the Houston Independent School District (HISD). It will require a massive expansion effort. In ten short years, KIPP and YES plan to build, staff, and launch a total of 55 new schools—42 KIPP schools, 13 YES schools-all without diminishing the quality of the education provided. It is a philanthropic initiative never before witnessed in the realm of charter schools, with implications for the growth of charter schools nationwide-and for large urban school districts everywhere.”4
The magazine goes on to note that:
A project of this scale has attracted Texas-sized contributions. So far, five donors have made eight-figure grants to the effort. Houston Endowment Inc. has given $20 million, split evenly between KIPP and YES. From Austin, the Michael and Susan Dell Foundation has donated a total of $10.9 million to the two charter school networks. Three more philanthropists have each given $10 million to KIPP. Two are prominent Houston couples: Jeff and Wendy Hines, as well as John and Laura Arnold. The third is the Seattle-based Bill and Melinda Gates Foundation. In every case, the donors say they decided to make major gifts to KIPP and YES not only because of the schools’ success at raising the academic achievement of inner-city students, but also because the expansion plans present an opportunity to revolutionize urban public education.
The group is not alone. John Arnold and Jeff Hines, both of whom serve on the KIPP:Houston board, were among the first to respond to the call for philanthropy; each gave $10 million to the expansion effort. At age 33, John Arnold was the youngest member of the Forbes 400 in 2007. He was formerly an oil trader at Enron, he now runs the hedge fund Centaurus Energy.4
Many of these same philanthro-capitalists serve as board members with governing responsibilities, including financial decision making. So is the philanthropic gift giving a conflict of interest? You bet it is. These board members will decide how to dole out hefty contracts for privatized services even if their facial front is “non-profit” in form and legalese. As the schools they fund get bigger and the charter school chains get larger, taxpayer money will be recruited like a poor farm boy from Iowa is recruited into the military– with promises of better schools now that these same benefactors have left a decimated public school apocalypse in their wake. But that is what it is all about, replacing regular public schools with the “new age” charters, targeting the subprime kids that come with monies attached and offering up a uniform standardized curriculum, just like KFC offers up golden brown fried chicken with a dose of secret sauce. The Walton Family Foundation through its Public Charter School Initiative aims to increase the number of children who have access to high-quality public charter schools by making grants available – in other words subsidizing the break up of public education.
For many who envisioned that charter schools would be a kind of democratic, local community response to regular public schools, this is likely to be disheartening if not a nauseating calamity.5
And these private entrepreneurial fund-centers are just the tip of the huge financial iceberg that is growing, while public education deliquesces. New Schools Venture Fund, created by various venture capitalists and in existence since 1998, “is a national nonprofit venture philanthropy firm that seeks to transform public education – particularly for underserved students – by supporting education entrepreneurs and connecting their work to systems change.”6
The goal of these venture or better said, “vulture” capitalists is to create and increase the number of charter schools in low-income communities – that is where the bucks are, where the ‘sub-prime’ kids live and thus the federal and state dollars that follow them, school to school. Yet because traditional funding will not cover the myriad costs associated with establishing and maintaining a charter school, this requires cold, hard private cash. The New Schools Venture Fund hosts funding by mega-charities such as the Bill & Melinda Gates Foundation, Eli and Edythe Broad Foundation, Robertson Foundation, Irvine Foundation and Walton Family Foundation and the Walton Family. In their first phase funding, from 1998-2002 New Schools:
supported nine entrepreneurial nonprofit and for-profit ventures. These organizations addressed key leverage areas within the context of standards, accountability and choice. Some of these organizations started systems of public charter schools, while others focused on preparing and supporting teachers and leaders, developing research-based curricula, or providing school performance information that parents and community members need to make effective decisions about education.7
In the second phase funding, from 2002-2006, New Schools:
raised a second fund, which totaled nearly $50 million. The goal of the fund was ambitious: to help create dozens of new public charter schools and to develop organizations with the capacity to provide thousands of underserved students with an excellent education. Toward this end, the fund supported more than a dozen charter management organizations (CMOs) that today collectively manage more than 100 schools that serve close to 30,000 students. These organizations are tightly managed nonprofit systems of charter schools that bring more consistent quality and greater scale to the growing charter school movement. In addition, the fund invested in a variety of charter school support organizations. These organizations provide charter school operators with the critical infrastructure they need to continue growing with quality, such as facilities development, administrative services and academic support.7
Charter Schools as an Industry: “They Walk Around in Thousand Dollar Suits”
Unquestionably, the huge increase in charters has included a massive growth in private and philanthropic start-up monies to support them, as well as the growth of a burgeoning educational industry to distribute the grants and sell ‘educational products and services’ while receiving tax dollars for their efforts. Yet for those wondering aabout ‘neo-liberalism’ and what it means in this context the answer is clear. None of this could have been done without the deregulation, favorable legal legislation and govern,ment intervention in the market. What we are seeing is the transfer of public funds into the private troughs of the handwringing elite who clothe their true agendas in the name of “children”. Unfortunately, this is true all over the nation now, and is being fueled by Arne Duncan and the billions of stimulus monies he uses to extort cities and states. All of this is now wrapped up in the noble lie and pious fraud of providing charter school innovation as competitive model that can raise the standards and levels of education. Is it true? Of course not, that is all sophistic rubbish and the alchemists that coin it know it, as do those of us who oppose it.
According to Don Gaetz, a Florida republican freshman senator and former Okaloosa school superintendent: “Charter schools were a movement, but now charter schools are an industry. They have lobbyists — they walk around in thousand-dollar suits, some of them.”8
The St. Petersburg Times of Florida noted that in the state of Florida:
Those lobbyists, and an embarrassingly compliant state Department of Education, have turned charter education into a $560-million-a-year enterprise that is so immune to oversight that an Escambia school convicted of fraudulently using its students to work on road crews is still receiving tax money. A Pensacola school where not a single student has passed the state’s standardized reading and math tests in four years is still receiving tax money. A Vero Beach school investigated twice for suspicion of cheating on standardized tests is still receiving tax money.8
It would best be said that the Department of mis-Education is now a wholly supported subsidiary of an elite cabal of financiers and philo-capitalists and that we are truly the ragged-trousered philanthropists whom support them.
Vested Interest dressed up in Drag
Charter benefactors have a vested economic and social interest in seeing the charter experiment work for it is profitable, and for this they will donate tremendous amounts of capital to help establish new charters in their attempt to dismantle traditional public schools. It is called priming the pump and with the government on its knees it is working. It’s a great business opportunity as well as acts as good public personae for the pirates of Wall Street. They understand that charters provide a unique business opportunity for many financial players in the educational entrepreneurial industry, their buddies and cronies, and they also know that left by itself the charter movement would not be able to come up with the seed money, the start-up costs needed due to the way public funding for schools is presently confabulated. Yet ironically, much of the ‘success’ of the charter movement is economic success and comes from both a toxic mixture of government as well as the private sector funds. For this is part and parcel of the new neo-liberal educational disorder that is now pillaging and prevailing over the wholesale dismantlement of public education in the United States. All in the name of the “kids”.
- (Serrano v. Priest (“Serrano II”), 557 P.2d 929 (Cal. 1976); Serrano v. Priest (“Serrano I”), 487 P.2d 1241 (Cal. 1971); Abbott v. Burke (“Abbott II”), 575 A.D.2d 359 (N.J. 1990); Abbott v. Burke (“Abbott I”), 495 A.D.2d 396 (N.J. 1990); Edgewood Indep. Sch. Dist. v. Kirby (“Edgewood “III”), 826 S.W.2d 489 (Tex. 1992); Edgewood Indep. Sch. Dist. v. Kirby (“Edgewood “II”), 804 S.W.2d 491 (Tex. 1991); Edgewood Indep. Sch. Dist. v. Kirby (“Edgewood “I”), 777 S.W.2d 391 (Tex. 1989); Lincoln County Sch. Dist. No. 1 v. State, 985 P.2d 964 (Wyo. 1999); Campbell County Sch. Dist. v. State, 907 P.2d 1238 (Wyo. 1995); Washakie County Sch. Dist. No. 1 v. Herchler, 606 P.2d 310 (Wyo. 1980 [↩]
- “Local Initiatives Support Corporation,” 2008. [↩]
- NY Times, December 14, 2007. [↩]
- Philanthropy Roundtable 2008.” [↩] [↩]
- “Education Policy Analysis Archives,” Education Policy Analysis Archives, 10 (34), August 9, 2002. [↩]
- “New Schools Venture Fund.” [↩]
- “New Schools Venture Fund.” [↩] [↩]
- St. Petersburg Times, 2007. [↩] [↩]