The Luxe Life of the School-Privatization Business

Sometimes programs operating under the banner of “school choice” produce terrible educational outcomes for students and big profits for operators.

Randi Weingarten is the president of the American Federation of Teachers, a union.
National Journal
May 23, 2014, 7:16 a.m.

The Next Amer­ica will oc­ca­sion­ally in­vite ad­voc­ates from both sides of an is­sue that af­fects a spe­cif­ic seg­ment of the Amer­ic­an pop­u­la­tion to share their thoughts. To ac­cess the al­tern­at­ive point of view on the latest de­vel­op­ments in school choice, please click here.

In Decem­ber 2013, after $2.3 mil­lion in tax dol­lars was di­ver­ted from pub­lic schools to stu­dent vouch­ers used at a single private school in Mil­wau­kee, the founders ab­ruptly shuttered the school in the dead of night and re­lo­cated to a home with an in-ground pool in sunny Palm Coast, Fla.

Here’s what they left be­hind: Just one stu­dent en­rolled in the now de­funct LifeSkills Academy was found to be pro­fi­cient in read­ing and math in the last full school year. Just one.

While privat­iz­a­tion ad­voc­ates say they want to give par­ents choices, they spend plenty of time vil­i­fy­ing our pub­lic schools and their teach­ers. Iron­ic­ally, not a single pub­lic school in the United States has the ap­palling stu­dent per­form­ance re­cord of LifeSkills Academy.

Stor­ies like LifeSkills Academy’s are not an ex­cep­tion. From heads of tax-cred­it-re­ceiv­ing private schools in Ari­zona and Flor­ida pur­chas­ing lux­ury cars with pub­lic dol­lars, out­sourced schools that fail to prop­erly re­port rev­en­ues in Pennsylvania, to schools tak­ing pub­lic dol­lars to teach cre­ation­ism in In­di­ana, these stor­ies are too com­mon. Even worse are ab­uses and im­pro­pri­et­ies that are per­fectly leg­al.

Take a look at the re­cord of one of the largest vir­tu­al schools, K12 Inc. It was foun­ded in 2000 by a Wall Street trader with help from Mi­chael Milken, who made school privat­iz­a­tion his second ca­reer after a felony con­vic­tion ended his ca­reer in high-yield bonds. K12 raked in more than $848 mil­lion last year, largely from tax­pay­er dol­lars.

Like LifeSkills Academy, K12 is paid based on en­roll­ment, re­gard­less of res­ults.

In 2012, an in-depth study re­vealed that only 27.7 per­cent of K12 on­line schools met ad­equate yearly pro­gress test­ing goals, com­pared with 52 per­cent of pub­lic schools. In some states, K12’s “churn” rate of kids who drop out is more than half.

Even though in­de­pend­ent ana­lys­is shows that these kinds of out­sourced “cy­ber-academies” per­form sig­ni­fic­antly worse than brick-and-mor­tar pub­lic schools, the money keeps rolling in. All too of­ten, low-in­come and minor­ity stu­dents — fast-grow­ing parts of the na­tion’s pub­lic-school-aged pop­u­la­tion and privat­ized school stu­dent bod­ies — pay the real price when these cy­ber-academies fail to en­sure that most of their stu­dents ac­tu­ally learn.

Even more troub­ling, politi­cians who peddle school privat­iz­a­tion of­ten at­tack teach­ers’ salar­ies and make un­foun­ded claims of uni­on­ized edu­cat­ors’ so-called gold-plated pen­sions, yet we don’t hear any in­dig­na­tion from them about the ex­cess­ive salar­ies of those reap­ing an in­creas­ing share of pub­lic dol­lars for private gain.

Take Ron Pack­ard, K12’s former CEO. In 2012, he earned a base salary of $625,000, a “per­form­ance” bo­nus of $584,375, a stock award worth $1.25 mil­lion, and stock op­tions worth $1.5 mil­lion. But there’s more. The com­pany matched 25 per­cent of his salary for his re­tire­ment fund. Now that’s a lux­uri­ous pen­sion. And who funds this kind of deal? Tax­pay­ers.

Con­trast that with a pub­lic-school teach­er’s av­er­age salary of about $50,000 and an an­nu­al pen­sion of about $40,000.

How did this hap­pen?

A well-fun­ded polit­ic­al ef­fort is be­ing led by “con­ser­vat­ive” donors, in­clud­ing the De­Vos fam­ily and the Koch broth­ers. Their in­fra­struc­ture in­cludes well-fun­ded PACs, think tanks, and lob­by­ing or­gan­iz­a­tions. One of their key tools for mov­ing state le­gis­la­tion is the Amer­ic­an Le­gis­lat­ive Ex­change Coun­cil, or ALEC. ALEC’s vari­ous task forces pre­pare “mod­el” state le­gis­la­tion to privat­ize pub­lic schools and si­lence the (uni­on) voice of pub­lic em­ploy­ees — and this le­gis­la­tion is voted on be­hind closed doors by politi­cians and lob­by­ists, without the press or pub­lic present. The le­gis­la­tion is then in­tro­duced in com­munit­ies across the coun­try by state le­gis­lat­ors who are mem­bers of ALEC and who have been wined and dined by spe­cial in­terests dur­ing ALEC meet­ings at re­sorts.

ALEC’s lib­rary of cor­por­ate-backed le­gis­la­tion, ex­posed by the Cen­ter for Me­dia and Demo­cracy in 2011, in­cludes bills like the one that made the LifeSkills Academy de­bacle pos­sible. ALEC’s le­gis­lat­ive wish list also re­quires pay­ing vir­tu­al schools the same per-pu­pil rate as pub­lic schools, even though cy­ber-schools have no school­houses, desks, heat­ing bills, cafet­er­ia work­ers, ath­let­ic coaches, or trans­port­a­tion costs. And guess which cor­por­a­tion has a seat and vote on ALEC’s Edu­ca­tion Task Force? K12.

It’s well past time to put the brakes on these privat­iz­a­tion schemes and re­claim the prom­ise of pub­lic edu­ca­tion — giv­ing all chil­dren a great edu­ca­tion that pre­pares them for col­lege, ca­reer, and life. A re­cent sur­vey by the Fried­man Found­a­tion — a pro-vouch­er op­er­a­tion that helps to fund ALEC — found that the pub­lic prefers lower­ing class sizes to in­sti­tut­ing vouch­ers. It’s to the found­a­tion’s cred­it that it re­leased the res­ults of this poll. It would be bet­ter yet if ALEC and the politi­cians who do its bid­ding listened to the pub­lic.

Randi Weingarten is pres­id­ent of the Amer­ic­an Fed­er­a­tion of Teach­ers. Lisa Graves serves as ex­ec­ut­ive dir­ect­or of the Cen­ter for Me­dia and Demo­cracy.

HAVE AN OPIN­ION ON POLICY AND CHAN­GING DEMO­GRAPH­ICS? The Next Amer­ica wel­comes op-ed pieces that ex­plore the polit­ic­al, eco­nom­ic, and so­cial ef­fects of the pro­found ra­cial and cul­tur­al changes fa­cing our na­tion, par­tic­u­larly rel­ev­ant to edu­ca­tion, eco­nomy, the work­force and health. Email Jan­ell Ross at jross@na­tion­al­journ­al.com. Please fol­low us on Twit­ter and Face­book.

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