Education “Reform”: Putting Middle Men First


Last summer, I asked this question:

Why are millionaires and billionaires targeting public education? For the same reason banksters pimped mortgage loans. For the same reason Wall Street wanted to privatize Social Security. For the same reason Willie Horton Sutton robbed banks.

Answer this question: What is the largest portion of the budget in all 50 states?

A couple of new columns chronicle further moves by what former Assistant Secretary of Education Diane Ravitch calls “The Billionaire Boys Club” to take their cut of public education tax dollars.

The New York Times  has a Sunday piece on billionaires using the “leveraging effect” of philanthropic advocacy to steer public policy. Efforts by the billionaire-funded Gates and the Broad Foundations to promote charter schools resulted in the Obama $4.3 billion “Race to the Top” program which, says the Times , prohibits states from limiting the number of charter schools. According to Ravitch, Obama appointed someone from the NewSchools Venture Fund that promotes charter schools to run “Race to the Top.”

The philanthropists, “some with roots in the loosely libertarian milieu of Silicon Valley or Wall Street,” might have noble intentions, but also have their critics:

“It’s sort of influence-peddling writ large,” said Richard L. Brodsky, a senior fellow at the liberal-leaning research organization Demos and a former New York State assemblyman. “The notion that the society is better served by the super-rich exercising their charitable instincts is in the end anti-democratic.”

But not anti-capitalist.

The Sunday Washington Post  looks at the growth of “virtual schools.” Ronald J. Packer, CEO and founder of K12 Inc. of Herndon, VA (just outside Washington), controls the country’s largest provider of public virtual schools. The Post  reports that between 2004 and 2010, “K12 gave about $500,000 in direct contributions to state politicians across the country, with three-quarters going to Republicans, according to the National Institute on Money in State Politics.” If K12 were a school district, it would rank 30th largest among the nation’s 1,500 districts.

Packard, 48, took a roundabout route to education. A former Goldman Sachs banker, he was working as a consultant with McKinsey and Co. when he got a call from Michael Milken, the financier who pleaded guilty to securities fraud in 1990 and later became a philanthropist partly focused on education.

Packard joined Milken’s education investment holding firm and ran one of his companies, a chain of preschools. About the same time, Packard was trying to find an online math course for his 6-year-old daughter. Frustrated by the dearth of options, he saw a business opportunity.

He founded K12 in 2000 with a $10 million investment from Milken and Larry Ellison, the chief executive of Oracle Corp., maker of software and hardware systems. William J. Bennett, education secretary under President Ronald Reagan, became the company’s chairman, bringing his conservative bona fides and political connections to a company that originally aimed for the home-schooling market. Bennett resigned from K12 in 2005.

K12 Inc. has the right backers. It has the right location. It bought the right friends. And it had revenues of $522 million in the last year, netting the investors $12.8 million in profits and Packard $2.6 million in total compensation. Says Packard, “For many kids, the local school doesn’t work. And now, technology allows us to give that child a choice. It’s about educational liberty.” [Emphasis mine.]

If that cheese-whiz grifterism doesn’t make the hair stand up on the back of your neck, you haven’t been paying attention.

Aside from investors, how are virtual schools doing for their presumptive clientele, children? How well are they learning in front of a monitor? The Post  reports that there is not yet enough data to be sure, but by standard measures for-profit “virtual schools — often run as charter schools — tend to perform worse” than the traditional public school room.

At the Colorado Virtual Academy, which is managed by K12 and has more than 5,000 students, the on-time graduation rate was 12 percent in 2010, compared with 72 percent statewide.

That same year, K12’s Ohio Virtual Academy — whose enrollment tops 9,000 — had a 30 percent on-time graduation rate, compared with a state average of 78 percent.

Last year, about one-third of K12-managed schools met the achievement goals required under the federal No Child Left Behind law, according to Gary Miron, a Western Michigan University professor who called that performance “poor.”

But not poor enough to get investors to give up on the idea. Not when cracking the education market guarantees investors a steady, recession-proof stream of public tax dollars.

The Nation  reports on efforts to “reform” public education through vouchers, charters and privatization. This “gold rush” in the K-12 online learning industry, according to one study “will grow by 43 percent between 2010 and 2015, with revenues reaching $24.4 billion.”

Investment banker Michael Moe is one of those who has worked to turn public schools into Wall Street’s next “cash cow,” writes The Nation’s  Lee Fang.

A veteran of Lehman Brothers and Merrill Lynch, [Moe] now leads an investment group that specializes in raising money for businesses looking to tap into more than $1 trillion in taxpayer money spent annually on primary education. His consortium of wealth management and consulting firms, called Global Silicon Valley Partners, helped K12 Inc. go public and has advised a number of other education companies in finding capital.

To help those companies land lucrative public contracts, Patricia Levesque, former lobbyist, advisor to former Governor Jeb Bush on education reform, told a 2010 education reform retreat of her plans in Florida to sponsor statewide decoy legislation — on promoting religious schools or union busting — aimed at keeping opponents busy while charter school bills fly under the radar.

According to a report in Mother Jones , former Florida governor, Jeb Bush, spoke at the 2010 commencement ceremonies for Electronic Classroom of Tomorrow (ECOT), Ohio’s largest virtual charter school. Bush has teamed up with a Democrat, former West Virginia Gov. Bob Wise, to launch Digital Learning Now, another “reform” initiative aimed at promoting public funding of for-profit virtual schools. Mother Jones  calls online schools

… part of a larger agenda that closely aligns with the GOP’s national strategy: It siphons money from public institutions into for-profit companies (including those that are supporting Bush’s initiative). And it undercuts public employees, their unions, and the Democratic base. In the guise of a technocratic policy initiative, it delivers a political trifecta — and a big windfall for Bush’s corporate backers.

Like K12, Inc., ECOT’s performance falls far short of the hype. ECOT collects an annual $64 million in state tax dollars:

With more than 10,000 kids, ECOT is bigger than some of Ohio’s 609 school districts. But its test scores rank above those of just 14 other districts. In 2010, barely half of its third-graders scored (PDF) proficient or better on state reading tests, and only 49 percent scored proficient in math, compared with state averages of 80 percent and 82 percent, respectively. ECOT’s graduation rate has never exceeded 40 percent.

ECOT spokesmen argue that this is because it enrolls students already far behind in learning.

The stories continue to multiply. Bipartisan-sounding rhetoric aside, the feeding frenzy and the grifterism (see Schools for Scoundrels ) suggest that children’s education is not exactly the top priority for the school reform movement. The players, the performance and the profits in the reform gold rush suggest education reform is not about education. Not about children. Not about America’s future. There’s a conservative political tie-in, sure: big government. But it is only big government when public money is flowing to the wrong people. This “reform” is about the money, about the right people getting their cut of that steady, recession-proof stream of public tax dollars.

Once our public schools have been thoroughly privatized, once middle men control our middle schools, what happens to America’s schools and its workforce once investment gurus decide the K-12 market is no longer the hottest way for savvy investors to feed at the public trough?

Categories : Corruption, Education


  1. gern blanston says:

    I believe that’s willie sutton.

  2. Dee Dee Allan says:

    By keeping the populace ignorant and thus under-employed, these “investors” are effectively murdering our democracy. Without an educated and working middle-class, a democracy cannot and does not exist.

  3. Sondra Stamey says:

    WOW! This is news to me. I know about Charter Schools and the issue of funding to them for services they don’t provide, and how it is effecting Public Schools. Of course, then there is the constant attacks via cuts in the Budget by Congress for Education. This is a well articulated article, that pulls information together in a comprehensive manner. No wonder the GOP is screaming about dismantling the Department of Education. Thanks. Great article.

  4. Diogenes says:

    “Recent grads with mountains of debt know that without their tax dollars, these big lenders wouldn’t continue to exist.

    “They want their loans forgiven or at least written down, and they think the lenders should pay.

    “The principles laid out on the OccupyStudentDebtCampaign


    site call for free tuition at public universities, an end to interest on student loans, and for private and for-profit institutions to open their books so that students know how their money is being spent.”


  5. TJ says:

    My son went to a charter school, as my daughter does now


    My son is heading to MIT, so I don’t get the connection to keeping people ignorant. They have to raise money, and I have not seen them fail to provide a rich and diverse education.

    @Dee Dee:

    keeping the populace ignorant and thus under-employed

    And, how is the charter school doing that?

    I find that public or charter schools both have challenges. I have an issue with public schools
    getting budget cuts, making a solid educational experience difficult. I turned to charter to provide my children with diversity.

    Am I supposed to let my children flounder while I wait for the schools get the tools they need, so I really feel that public schools are a realistic option?

  6. TJ says:

    Sorry, I meant to say:

    public schools getting… This is a slow device, I guess it took my edit.

  7. Tom Buckner says:

    The actual education your child gets in a particular charter school might be very good. That’s not the point. Your personal experience may be a good one, but this qualifies as anecdotal evidence. A broken system can still work for some people, otherwise none would defend it.

    Well known phenomenon: deciding where to live based on “this town has good schools.”

    We put man on moon etc. etc. and should be able to educate every child well so why are our schools so dodgy and patchy? Much of the answer is how they are funded. Property taxes, local variations, wealthy towns have great public schools, you know the drill…

    The real objection to charter schools is that there’s a corporation skimming profits off the funding stream, and ultimately this is taken right out of the pockets of the poorer students in the worst schools elsewhere.

    One of the corrupting facets of a corrupt system is that it forces rational people like TJ to make choices that make sense for themselves but arguably don’t make sense for society. (Practically everyone does something that can be characterized this way. Who am I to talk? I drive a car).

    There’s a relevant George Carlin video clip, which I shall go now to submit as a new post…

  8. TJ says:

    “The actual education your child gets in a particular charter school might be very good. That’s not the point. Your personal experience may be a good one, but this qualifies as anecdotal evidence. A broken system can still work for some people, otherwise none would defend it.”

    I guess I wonder why more parents have not taken the step of creating a better educational system, the way parents in any educational co-op do. I agree it doesn’t work to take money from other poor schools, in preference of a charter school. My response is that if we could demand, and receive, a better education in the public system, there would never have been a second thought from me about where my kids go to school (okay, I’ll admit that when Matthew was young, I checked into, and for a short time, sent him to a private daycare, until they started faxing artwork to my work place, which was the ending point for me b/c of the absurdity of it).

    I would actually like to see the public school barons feel so threatened at losing their money to charters, that they amped up the quality of education. I am all for “let me live simply, so that others may simply live,” but I will not relegate my children to lives of ignorance and poverty, and non-critical thinking just to support a failing public system.

    As for corporate syphoning, is there somewhere I can find out more about that? Far as I know, ours is locally operated, but then, I don’t work behind the scenes. How do we find out? I definitely would not want to knowingly support a corrupt system.

    I am passionate about my children having the best I can provide for them, which means they come first in my choices (although, schools was not a factor for my choice living here-although, I know that is a big selling point with realtors). My passion runs deep, but I am equally as passionate in justice for ALL people, in ALL areas of life.

    I will do what I can if I find our charter school corrupt in any way (just as I mentioned our “leader,” the mayor, being a bigot as demonstrated with the Equality Resolution, may not be the “role model” they want to invite to speak at a graduation, being a school that wants to be recognized as progressive and employing gay/lesbian employees).

    So, as they say, “where’s the beef?!” and I will bring “it” to anyone’s attention I can.

    Meanwhile, I am hopeful that my raising two thinking and compassionate
    children will help create a better future where such an education is just a product of an intelligent, caring society.

  9. tombuckner says:

    Charter schools are a complicated topic. The Wikipedia article on Charter Schools runs ten thousand words, and that’s intended to be a concise overview. It seems to give a good account of the ins-n-outs, pros and cons. Critiques include the profit motive, the fact that most charters are non-union and burn out teachers with long hours, and studies suggesting that charters do not result in higher average test scores.
    Pros (in theory, at least) are higher accountability, specializede schools, and some studies showing better results. Remarkably, the article shows that charter schools often receive significantly less funding per student.
    Hot debate all around.

    From the wiki, a contrast between two countries:


    Chile has a long history of private subsidized schooling, akin to charter schooling in the United States. Before the 1980s, most private subsidized schools were religious and owned by churches or other private parties, but they received support from the central government. In the 1980s, the dictatorial government of Augusto Pinochet promoted neoliberal reforms in the country. In 1981 a competitive voucher system in education was adopted.[43] These vouchers could be used in public schools or private subsidized schools (which can be run for profit). After this reform, the number of private subsidized schools, many of them secular, grew from 18.5% of schools in 1980 to 32.7% of schools in 2001.[44] Recent figures show that fully half of Chilean students study in charter schools.[45] This has led to repeated protests such as the Penguin Revolution of 2006 and nationwide protest action in 2011.
    Main article: Education in Sweden

    The Swedish system of “free schools” was instituted in 1992.[43] Free schools are publicly funded by school vouchers but independent in governance, and can be run by both charity groups or for-profit companies. The schools are not allowed to supplement the vouchers with tuitions or top-up fees, and pupils must be admitted on a first-come, first-served basis – entrance exams are not permitted.[46] There are about 900 free schools in total throughout the country.[47]

    The Pinochet government was installed in the coup of September 11, 1973 with much help from Nixon and the CIA. It represents, in many aspects, a testbed for what conservatives wanted to do here, and in the intervening years American conservatives have broadly succeeded with their agenda.

    Notice the contrast with Sweden. Sweden’s charter schools may accept vouchers but the voucher covers the whole cost. Important because, if the voucher doesn’t cover the full tuition at a given school, low-income parents won’t tend to send their children there. They will send their children to public schools or to charters that the voucher does cover. Thus the more expensive charter school will get more affluent students and their education there is subsidized at the expense of less affluent students. Those attending the lower-cost charter school are more apt to get the bare-minimum for their voucher.

    But the real ugliness, by the look of it, is in higher ed, where high-dollar diploma mills subjugate students into lifetimes of inescapable debt and Jerry Falwell’s Liberty University got more federal money in 2010 than NPR did.

  10. tombuckner says:

    Oh, and look at this!
    Khan Academy

    Watch. Practice.
    Learn almost anything for free.

    With a library of over 2,700 videos covering everything from arithmetic to physics, finance, and history and 240 practice exercises, we’re on a mission to help you learn what you want, when you want, at your own pace.

    Khan Academy is turning a lot of heads.

  11. TJ says:


    I guess what I am trying to get at is the idea of charter schools feeling like a threat. I see it as an opportunity to challenge and raise the bar for ALL schools. Our school works hard to keep teachers, The same kindergarten teacher my daughter had (now, age 9) is still there. My son’s 1st grade teacher is still on payroll. In fact, except for change of staffing due to educational budget cuts, only one or two teachers have moved on. They also pay the “living wage” to all the teachers. The kids take trips to D.C., Ripley’s aquarium, help at Manna food bank, etc. They have fundraisers to do these things, and even kids with low income are included, by parents donating a bit extra. I have seen them be a strong community, helping needy families, whether because they lost a home to a fire, a father got shot at his workplace, and, even offering real support during a time when I isolated from everyone else, dealing with emotional pain.

    I share all that to say, this is the upside to a community based school. As happy as I am that my son is now at SILSA, I have yet to have that sense of community… although, I am not ruling it out, or saying it does not happen-as I know it can and does. It’s just more difficult with a larger student body.

    As to funding issues, I was not impressed with CA’s handling of the vouchers. People would camp out all night, just to get a ticket to be in a lottery. It turns the whole experience into a competition, which is no way to start building the idea of community and connection.

    Chance, fate, whatever, I wouldn’t trade my kid’s education for anything. As for what it provides… I know my experience is anecdotal, but many parents go by that kind of experience, rather than a brochure bragging about all the school offers – you know, word of mouth. The outcome for my son is that he sets the standard on the state EOG’s(of course, genes play a factor 😉 ).

    As to whether this is a “typical” experience, I would argue it could be. It is a complicated issue, I would agree, and no one thing makes it “good” or “bad.” Of course, for a parent, I would guess most would agree that what and how our children learn are the essential keys.

    I also find it interesting that for all the complaints about charter schooling, the local public schools do little to protest a student going out of district. They also get to pocket 300.00 for us to have that privilege. I could care less, really, about the money, it’s just the idea that they get to charge for the change, when they can’t charge the local students attending.

    I grew up attending a couple of private schools, and finished up in public school. Education-wise, it was a lot better, although, I think there are MANY reasons we don’t see the same quality now.

    Personally, I admire ANY and EVERY teacher who tries to instill the love of learning into the children. I am thankful that there are people who love being with children and try to give them a hopeful future. I think it sucks that teachers don’t get appreciated more, and think any politician who supports cutting educational needs, should be dragged out, tarred and feathered… or, even, be considered a “terrorist,” and “traitor.”

    They all too easily cut programs, and it is treasonous because it is creating a future where people are less educated and we are less competitive in the world market. They are acting like terrorists as they take control over things that can bring our society down, just as surely as a plane took down the WTC.

    Why are we not chasing them out of office, and setting the dogs on them for the damage they are causing our society?

  12. Tom Sullivan says:

    We covered this ground over the summer. This isn’t about one-off, community-based charters like EVERGREEN COMMUNITY CHARTER, organized in Asheville, North Carolina as a nonprofit.

    We’re talking about the for-profit, well-financed, politically connected, Wall Street-based national education corporations — charters, virtual, whatever — that will set their sights soon enough on the Evergreens for assimilation. Depending on what you count, estimates range from $500 million to $2 trillion spent annually on public education in this country.

    Why did Willie Horton rob banks?

  13. TJ says:

    “Khan Academy is turning a lot of heads.”

    Bleh… I’ll be impressed with Khan when some graduate can demonstrate a solution to the Riemann hypothesis…

    “Why did Willie Horton rob banks?”

    To pay for his education? okay, okay, “because that’s where the money is…” (I guess he didn’t mean Wachovia.

    @Tom S: Sorry if I am making this redundant. I’m still on my learning curve. I don’t know about Evergreen, but if our school ever gets approached to sell out, I doubt I’m the only one who will not go quietly.

    As for those trillions, I’d like to ask “where’s the beef?”

    We walked away from one of those “Wall St.” schools, when we decided against Asheville School. I have yet to regret it, but wish our government valued our country’s future enough to prepare our children for adulthood.

    Of course, that’s the catch, isn’t it? Why prepare students when you would prefer to have mindless beings easy to control? Better than having to deal with dirty hippies, eh?

  14. Davyne Dial says:

    My first impression is WTH are the likes of a Michael Milken and his ilk doing getting into education? It can’t be out of the goodness of their souls…they have none.

  15. TJ says:

    I was thinking this over and a question came to mind:

    Given the controversy of charter schools, and follow that with many failing public schools, I wonder about this anomaly…

    SILSA is considered public school, yet, it is specialized in its focus, as it targets students who are high achievers. Through a grant, they are able to provide every student with a laptop for home use, and are trying to go paperless. Admittedly, I don’t know everything about it, yet, but, so far, I am pleased with the personal interest the teachers take. They even do a home visit before school starts to talk to parents and kids, and do a brief orientation and answer questions, as well as get an idea of the home life of the kids.

    This tells me that quality education IS possible and it becomes, in part, a matter of how much energy we invest in the educational system. I also know parents/guardians who are so overwhelmed with day to day life, that extra energy is hard to come by. That is when I, an interested party, step up and offer to get involved. It is rewarding personally, but if more people do that, it would also be rewarding societally.

    I don’t think the system is bound for failure, unless we sit by, wringing our hands, and pining for the “good ol’ days.”

    People like me need to just have a map showing which way to go and do what we can.

    For now, Occupy is calling…

  16. Tom Sullivan says:

    Right you are, Gern. Got my felonious Willies confused.

  17. Tom Sullivan says:

    As I’ve been saying, look out community-based charters (and virtuals), the Wal-Marts of education are coming for you, K12 among them, and they’re hungry:

    The company’s opponents in Tennessee are particularly bitter about the fact that when K12 came in, the state’s own online educational program went out. “It won numerous awards, the children were successful, and last session they made a decision to junk it, because K12 Inc. made a decision to lobby the Legislature to pass the Virtual School Act,” said Berke.


    Anyway, here is what happened as soon as the law went into effect: K12 made an arrangement with the rural Union County school district, which became the home of the new Tennessee Virtual Academy. Any Tennessee parent can pull her child out of the local system and enroll him in Union and the academy.

    There are now about 2,000 students in the virtual school, which is just about the same number of people who reside in Maynardville, the Union County seat. The district gets a small cut of the $5,387 in state aid that attaches to each student, while K12 gets the rest. Yet another thing we don’t really know is how much it costs K12 to run the academy, although we do know company profits have been soaring.

    And that’s just they way they like it.

  18. TJ says:

    Wow! Like I said, I’m still learning. It’s scary to think about how badly things can go.

    So, given the Pit Bull locked jaw tenacity which corporate dogs have on every facet of our lives, what do you suggest? Sorry, if I missed that class during summer school, teach….

    All I know is I am not willing to sacrifice my children’s futures and ability to think critically for the “greater good.” If someone has a realistic option that helps promote a better system within my children’s educational lifetime, I would consider it. I fear it would turn out like the ASHEVILLE CIVIC CENTER-for anyone who cares about the name still 😉 . By that, I mean, plenty of conversations, lots of complaining, but, no apparent alternatives to a bad situation.

    It’s good to sound the societal alarm, but it can easily lead to inaction, if alternatives are not raised which are realistic to the general public. It is one thing to have knowledge that something is indeed going wrong. It is another matter to be able to galvanize a battle-weary public to stand up against the vultures, circling lower and lower. No one likes to feel helpless, which leads many into denial as a protective measure-which, of course, is what the sharks are counting on.

    (my apologies to any animal lovers for any disparaging characterizations of any animals used to compare to the corporate monsters)

  19. Tom Buckner says:

    I think it was maybe Plato who said that the perfect school was a log with a teacher sitting on one end and a student on the other.

  20. Tom Sullivan says:

    First, don’t waste time fighting the Kraken’s tentacle, aim for its heart. They’d rather keep you tied up, as Patricia Levesque suggested above, fighting skirmishes with tentacles rather than trying to kill the monster itself. Follow the money. It leads to Wall Street via K Street.

    Constitutional amendment, anyone?

    Grassroots Momentum Builds Toward Passage of a Constitutional Amendment

    LOS ANGELES, CA – Next week the Los Angeles City Council will vote on a resolution that calls on Congress to amend the Constitution to clearly establish that only living persons — not corporations — are endowed with constitutional rights and that money is not the same as free speech. If this resolution is passed, Los Angeles will be the first major city in the U.S. to call for an end to all corporate constitutional rights.

    The campaign in Los Angeles is the latest grassroots effort by Move to Amend [1], a national coalition working to abolish corporate personhood. “Local resolution campaigns are an opportunity for citizens to speak up and let it be known that we won’t accept the corporate takeover of our government lying down,” said Kaitlin Sopoci-Belknap, a national spokesperson for Move to Amend. “We urge communities across the country to join the Move to Amend campaign and raise your voices.”

    Earlier this year voters in Madison and Dane County, Wisconsin overwhelmingly approved ballot measures [2] calling for an end to corporate personhood and the legal status of money as speech by 84% and 78% respectively. In November voters in Boulder, Colorado and Missoula, Montana both passed similar initiatives with 75% support.

    “We are experiencing overwhelming support for what may be a historic turning point in restoring a voice to the voters and setting an example for the rest of the country,” stated Mary Beth Fielder, Coordinator of Move To Amend LA. “This action would provide the basis for overturning the recent Supreme Court decision in Citizens United v. Federal Election Commission.”

    Move to Amend volunteers in dozens of communities across the country are working to place similar measures on local ballots next year, including West Allis, WI, a conservative suburb of Milwaukee where last week local residents successfully qualified a measure for their spring ballot.

    Move to Amend’s strategy is to pass community resolutions across the nation through city councils and through direct vote by ballot initiative. “Our plan is build a movement that will drive this issue into Congress from the grassroots. The American people are behind us on this and these campaigns help our federal representatives see that we mean business. Our very democracy is at stake,” stated Sopoci-Belknap.

    The campaign in Los Angeles is endorsed by a growing list of organizations including Common Cause, Occupy LA, LA County Federation of Labor, Physicians for Social Responsibility, The Environmental Caucus of the CA Democratic Party, Southern California Americans for Democratic Action, MoveOn LA, Progressive Democrats of the Santa Monica Mountains, Democracy for America, Women’s International League for Peace and Freedom, Strategic Actions for a Just Economy, AFSCME 36, LA Green Machine and California Clean Money Campaign.

    For a complete list of all resolutions passed to date see: [3]. Read Move to Amend’s proposed amendment here: [4].

  21. TJ says:

    @Tom B: The Socratic method is my favorite. Just ask my kids when they are not driving me insane 😉

    @Tom S: Thanks for the info. Like I said, I’m still learning…although I’ve got the
    Wall St. connection part down. Not ready for my finals yet, though. Please bear with me