“The education industry represents, in our opinion, the final frontier of a number of sectors once under public control… represents the largest market opportunity… the K-12 market is the Big Enchilada.” — Montgomery Securities prospectus quoted in Jonathan Kozol’s The Big Enchilada
Most of the time the charter school industry’s corporate leadership is able to craft their messaging so as to distract the populace from the real purposes undergirding their projects. But occasionally, someone in their sector goes off script and tells the truth about what chartering is all about. Usually it’s those in the sphere of finance capital—gleefully celebrating how lucrative the charter school industry has been for them. The Forbes piece, Charter School Gravy Train Runs Express To Fat City , is an excellent example of this.
Sometimes individuals in the neoliberal corporate education reform camp spill the proverbial beans. Industry proselytizers like Andy Smarick and Paul Vallas have been candidly honest about charters discriminating against Students with Disabilities (SWD), and charters eschewing veteran teachers, respectively. Revelations of the dark secrets behind the charter industry’s insatiable drive for profits also shine cleansing light on a current local issue—namely the attempts of charter industry profiteer Refugio “Ref” Rodriguez, and his California Charter Schools Association’s (CCSA) campaign to capture the Los Angeles Unified School District (LAUSD) Board of Education seat for District 5. One of Rodriguez’s fellow CCSA profiteers inadvertently provided incontrovertible evidence of why the school privatization camp spent over three quarters of a million dollars in the primary election alone.
A Twitter follow from a name I recognized as a marginal player in the corporate education reform camp sparked curiosity. A moment spent checking their LinkedIn profile yielded a veritable gold mine of information unequivocally proving the charter industry’s, and particularly CCSA’s, drive for profits comes at the expense of children and community. The prose from their profile says it all:
Co-Founder/VP – School Services & Products
California Charter Schools Association
July 2003 – July 2007 (4 years 1 month)
Launched and operated association services and products division providing financial, insurance, special education, and other member services that broke-even the first year and generated 30% profit margins in subsequent years–with 20-30% lead generation and 20-50% close ratios.
Profit margins, lead generation, and close ratios… refreshing honesty from an industry that claims it “puts kids first.”
Like the hedge fund managers discussed in the Forbes piece above, platitudes about helping kids are quickly subsumed by talk of plentiful profits, revenues, and business opportunities when charter school executives talk among themselves. This focus on profits drives Ref Rodriguez’s CCSA charter school industry trade association to eliminate any political opposition, and also explains their unhinged viciousness and ruthlessness towards the Honorable Bennett Kayser, our sitting LAUSD Board member, who has had the temerity to oppose charter schools placing greed over student need. Let’s look more closely at CCSA’s business dealings, how they harm students enrolled in charters, how they harm students enrolled in public schools, and then we’ll return to the implications of the May 19, 2015 General Municipal Election in Los Angeles.
Charters convert public funds into private profits
California Charter Schools Association’s (CCSA) business ventures were so outrageously profitable, they drew in an array of corporations, privately held companies, and large foundations wanting a share. Firms like EdTec, Arthur J. Gallagher & Co., Charter Impact, Inc., and Discover Re (The Travelers Indemnity Company) jumped in CCSA’s profits pool. Longtime school privatization advocates The Walton Family Foundation and Bill & Melinda Gates Foundation loomed large. Seeing an opportunity to exploit public education dollars nationally, the CCSA, Walton Family Foundation, Travelers, and Gallagher & Co. launched School Risk Management, LLC, which later became known as CharterSafe/PrivateSafe. Here is an excerpt of a 2007 press release from one of the corporate entities involved in this deal.
“In 2007 as a response to the growing need for appropriate insurance for charter schools nationally, Gallagher partnered with the California Charter School Association JPA and the Walton Family Foundation to form a risk management and insurance program for charter schools. This program has been known as the CharterSafe program. Recently the California Charter School Association JPA began promoting their self insured pool program as CharterSafe. In an effort to differentiate the national program from the California based JPA program, we have decided to change our program name. Going forward, we will be known as the Charter First Insurance Program.”
Note the prominence of the right-wing-reactionary Walton Family Foundation in the press release. Walmart fortune heiress, Carrie Walton Penner, is currently the CCSA Board Vice-Chair (term ending 6/30/2017). By most accounts Walton Penner is close to both profiteer “Ref” Rodriguez of the PUC Charter School Corporation, and the well-heeled Ana Ponce of the Camino Nuevo Charter School Corporation. Rodriguez was a CCSA Board member from 2005 to 2009, while Ponce currently serves as the CCSA Board secretary. Like all 501(c)3 “non-profits”, the CCSA Board is unelected, and, to all intents and purposes, is unaccountable to anyone other than its charter executive membership and private funders. CCSA’s public funders (the taxpayers) have no voice in the 501(c)3 corporation’s affairs. Its private investors get seats on the board. Known for their aversion to public education, and their exploitation of working class families, the Walton Family Foundation is CCSA’s biggest funder. In 2010 they showered the CCSA charter school industry association with a staggering $3,940,652.00. Annual investments like that are nothing when one considers the return of investment in the forms of profitable finance capital spinoffs like CharterSafe, LLC.
The avaricious insurance executive… ahem, “education entrepreneur” who oversaw growth of the hugely profitable CCSA CharterSafe enterprise, then launched his own consulting firm to skim more money from the trough of public funds. Funds which became entirely unregulated when the charter school industry was created by corporate interests in the nineteen-nineties. Refugio “Ref” Rodriguez’s revenue hungry PUC charter school chain is a client of that selfsame consulting firm.
The money making aspect of chartering is so predominant, that peripheral concerns like pupils, pedagogy, or populace are not part of the discussion. Here is a LinkedIn endorsement for our CharterSafe protagonist by the Senior Vice President for Strategic Initiatives at the National Alliance for Public [sic] Charter Schools:
“Ted is one of the most creative people I know. He is an excellent partner because he always makes sure the business relationship benefits both parties. I have introduced him to our customers, and they always come away impressed.”
I doubt many think of children, schoolteachers, or education when they see phrases like “business relationship”, or “introduced him to our customers”, but that’s what the charter school project is all about—business. Big business at that.
The charter industry’s profits-first agenda hurts it’s own students
The CCSA counts 14 of the schools comprising Refugio “Ref” Rodriguez’s charter empire among its membership. As mentioned above, CCSA and its business partners profit from selling financial products and services to its corporate charter members. Additionally, just like the U.S. Chamber of Commerce, CCSA charges dues. Their formula is based on enrollment. Of issue is whether these corporate charters can demonstrate that the dues they pay to their trade association come from somewhere other than taxpayer funds intended for students. Rodriguez’s PUC has paid well over a hundred thousand dollars into the CCSA slush fund, which in turn is used for political lobbying to increase charter industry profits. Those funds, regardless if they came straight out of taxpayer pockets, or are front end investments from billionaire ideologues like Walton Penner, would be better spent on students. Yet as we saw above, when it comes to choosing between profits and pupils, the charter industry always prioritizes the former. The “non-profit” designation of the charter industry is simply a tax status, indicating they don’t have shareholders. The 501(c)3 “non-profit shells” of these organizations merely serve as fronts to the myriad businesses they feed education funds to. Real estate, leasing, insurance, administration, and many more lucrative industries benefit from this arrangement.
Charter executives make sure they partake of the profits too. I remember interviewing a young person who had worked for a wholly owned subsidiary of the Green Dot Charter Corporation. They told me they had lost any illusions that they were a “non-profit” when they saw Green Dot’s Alma Vivian Marquez roll up in a brand new Porsche Cayenne. A sampling of Los Angeles corporate charter school CEO salaries is eye opening, especially when one realizes that they all work for schools with a tiny fraction of the student population that the public school district serves:
|Charter Chain||Executive||Total Compensation||Form 990, Part VII§A|
|Aspire||James R. Willcox||$293,687.00||2012|
|Green Dot||Marco Petruzzi||$279,478.00||2013|
|Camino Nuevo||Ana Ponce||$230,811.00||2012|
Robert D. Skeels