Well, You Asked . . .

What the J.A. and Kathryn Albertson Foundation Doesn't Want You to Know about Charter Schools, Hedge Funds, Tax Breaks, and Andy Smarick

by Kevin S. Wilson

For nearly two years, the J.A. and Kathryn Albertson Foundation has been a primary sponsor and promoter of the ED SESSIONS, a monthly speaker series featuring what the foundation bills as “national / international education reformers who are promoters of civil discourse about school improvement and wholesale reform.” Advertised at various times as “an invitation to begin a dialogue” and as “a conversation,” the ED SESSIONS are aimed at “parents, educators, policymakers, and everyone in Idaho”—unless, apparently, you are a parent, educator, policymaker, or an anyone in Idaho who asks inconvenient questions.

If you are, then you’re likely to find that your questions receive no answers, but elicit only the sound of chirping crickets. Ask enough inconvenient questions, and you may find yourself banned from the ED SESSIONS page on Facebook and find that all of your inconvenient questions have been deleted.

That’s what happened to me, after the social-networking social engineers at the ED SESSIONS solicited questions for an upcoming speaker, Andy Smarick, a partner at Bellwether Education Partners, Distinguished Visiting Fellow at the conservative think-tank the Thomas B. Fordham Institute, Adjunct Fellow at the equally conservative American Enterprise Institute, and CEO of the National Alliance for Public Charter Schools. Though he’s never taught and has no academic background in education, Mr. Smarick has emerged as one of what the Albertson Foundation describes as “thought leaders” in education reform, with his thoughts these days focused on tearing down so-called “failing” schools and replacing them with chains of public-funded charter schools, in a process described in his latest book, The Urban School System of the Future: Applying the Principles and Lessons of Chartering.

Charter schools may be uppermost in the mind of this thought leader, but don’t ask him about them in public. By all means, do not ask him about the ability of hedge-fund managers and venture capitalists to double their money in seven years by financing and operating charter schools while leveraging their investment with something called the New Markets Tax Credit Program. And for heaven’s sake don’t ask him about the KIPP Challenge, or about Education Voters of Idaho, the political action committee forced by a lawsuit filed by the Idaho Secretary of State to reveal the names of the millionaires and billionaires who ponied up $600,000 in an attempt to prevent the repeal of the Luna Laws (Propositions 1, 2, and 3).

If you do, you’ll be silenced. Here’s how it happened to me.

In early March of this year, in anticipation of Mr. Smarick’s presentation at the ED SESSIONS, the managers of the ED SESSION Facebook page said that Mr. Smarick had questions for Idahoans:

“Andy Smarick asks Idahoans a question: Are we positioning our kids for success in the changing, more competitive world? Are we actively participating in reform or are we on the sidelines? Are we making the most of Federal opportunities?"

I responded with the following:

What does Mr. Smarick mean by "Federal opportunities"? Does he have in mind, for example, the New Markets Tax Credit Program, established by Congress in 2000 to spur new or increased investments into operating businesses and real-estate projects located in low-income communities? The New Markets Tax Credit Program attracts investment capital to low-income communities by permitting individual and corporate investors to receive a tax credit against their Federal income tax return in exchange for making equity investments in specialized financial institutions called Community Development Entities.

NCB Capital Impact is one such Community Development Entity. Located in Virginia, NCB Capital Impact was until 2011 the non-profit affiliate of National Cooperative Bank and a member of the NCB Financial Group of companies. Today it operates as an independent, non-profit organization acting as a strategic partner of its former parent companies. NCB Capital Impact is "making the most of Federal opportunities" in a number of markets, including health care and charter schools, with an emphasis on leveraging New Market Tax Credits to increase its return on investment .

And why not? New Market Tax Credits offer a seven-year 39% federal tax credit to banks and private-equity firms like NCB Capital Impact, notably to those investing in the construction and operation of charter schools. According to the New York Daily News, "The credit can even be piggybacked on other tax breaks for historic preservation or job creation. By combining the various credits with the interest from the loan itself, a lender can almost double his investment over the seven-year period." In addition, NCB Capital Impact receives a 3% "originating and management fee for the charter-school construction deals it arranges."

From where I sit, this substantial return on investment and the associated management and origination fees go a long way toward explaining the love affair that hedge-fund managers and venture capitalists have for charter schools. They also go a long way toward explaining why in 2010 JPMorgan Chase created "a new $325 million pool to invest in charter schools and take advantage of the New Markets Tax Credit." They help explain, as well, why hedge-fund managers and venture capitalist were so well represented on the list of donors to Idaho Voters for Education, the faux-grassroots political action committee that raised over $600,000 to fight the repeal of the so-called Luna Laws. One such donor was John Fisher, co-chair of the board of directors of the Charter School Growth Fund, a hedge fund devoted solely to investing in chains of charters schools. Another was Frank E. Baxter, the U.S. ambassador to Uruguay during the G. W. Bush administration and current chairman of the Alliance for College Ready Public Schools, which operates a chain of 21 public charter schools in and around Los Angeles.

For me, the question at hand is this:

Does the New Markets Tax Credits Program also help to explain why Mr. Smarick believes that “Chartering is the replacement system for the failed urban system”? Does the New Markets Tax Credit Program also explain the fundamental premise of Mr. Smarick’s 2011 book, The Urban School System of the Future, which premise one reviewer summarized in the Washington Post as "Traditional urban school systems are broken and can’t be fixed. They have to be replaced. And charter schools should be the blueprint”?

About the time I had finished posting that response, I realized that the ED SESSIONS people had actually asked three questions in one, posing them as questions from Andy Smarick. In response to the second question ("Are we actively participating in reform or are we on the sidelines?") I wrote the following:

Saying NO to so-called school reform is also a way of actively participating, a way chosen by hundreds of thousands of Idaho voters who said "NO" to Propositions 1, 2, and 3 just four months ago.

I wrote that response two months after the 2013 Idaho Legislative Session had begun. Having watched the majority party in the Idaho Legislature serve up bits and pieces of Propositions 1, 2, and 3 like so many warmed-over, unwanted Thanksgiving leftovers, I figured that this was as good a time as any to remind the ED SESSIONS and the J. A. and Kathryn Albertson Foundation that no means no. Apparently, they didn’t want to hear that reminder any more than did the legislators busily at work on Luna Laws version 2.0.

After posting the questions purportedly aimed at Idaho by Andy Smarick, his ED SESSIONS handlers also wrote on the Facebook page, "Do you have questions for Andy Smarick? Post them here."

Granted, a “please” would’ve been nice, but I understand how zeal for the ED SESSIONS’ mission (“to bring inspiration, facts, and discovery around [sic] the topic of education in the 21st Century”) might lead to a momentary lapse in manners. Wanting to be an accommodating fellow—and very much wanting to hear what Mr. Smarick had to say—I posted a few questions, as follows.

QUESTION ONE

Mr. Smarick:

Writing in the Washington Post, Emma Brown quotes you as saying "Chartering is the replacement system for the failed urban system in my view.” She characterizes your view of charter schools as follows: "It boils down to this: Traditional urban school systems are broken and can’t be fixed. They have to be replaced. And charter schools should be the blueprint."

In her blog "Mother Crusader," Darcie Cimarusti carries this characterization a step or two further. First, she wonders WHY you believe that charter schools should be the blueprint, so I suppose that that is also my first question to you. Why charter schools?

Ms. Cimarusti goes on to suggest that your enthusiasm for charter schools may be influenced by the fact that "charter operators can double their money in seven years using New Market Tax Credits in low income communities to arrange private financing for charter schools in urban districts" and that "there is LOTS of money to be made closing 'wobbly' urban charter schools and opening edubusinesses!"

Ms. Cimarusti concludes her article by saying, "If reformers like [Macke]Raymond, [Greg] Richmond, [Chris] Cerf and [Andy] Smarick get their way, urban schools will be reduced to businesses and real-estate projects for the rich. And don't think for one minute that if they find "success" in urban areas they won't come after suburban areas, too."

My question, then, is this:

How do you respond to claims that you and other proponents of charter schools are more concerned with making money than you are with improving education?

QUESTION TWO

Mr. Smarick:

More than two years ago, the former U.S. Assistant Secretary of Education and education historian Diane Ravitch issued what she refers to as "The KIPP Challenge" (defined below). In October 2012, Dr. Ravitch singled you out as a recipient of the KIPP Challenge, in response to your book "Chartering the Future," which Dr. Ravitch summarizes as an argument that "urban school systems are so broken that they should be eliminated and replaced by charters, lots and lots of charters." The KIPP Challenge she directs your way is as follows:

"Find one impoverished district that is willing to invite KIPP in, and let’s see how it works out. Take all the children. Open your doors to all. Do it in one place before imposing it on everyone."

The original KIPP Challenge clarifies those stipulations further:

"KIPP should find an impoverished district that is so desperate that it is willing to put all its students into KIPP’s care. Take them all: the children with disabilities, the children who don’t speak English, the children who are homeless, the children just released from the juvenile justice system, the children who are angry and apathetic, and everyone else. No dumping. No selection. No cherry picking. Show us what you can do. Take them all."

Mr. Smarick, will you be accepting Dr. Ravitch's challenge? What are your thoughts on the basic premise behind it, that increased academic achievement at individual charter schools has yet to be replicated on a larger scale, across an entire district? What about Dr. Ravitch's implicit claim that charter schools cherry-pick students, skimming the cream of the crop and leaving to traditional public schools those students who are likely to cause trouble, cost additional money, or lower scores on standardized tests?

QUESTION THREE

Mr. Smarick:

You regularly appear at speaking engagements and other venues with Joe Williams or other representatives of Democrats for Education Reform. As you know, one of your colleagues at Bellwether, Sara Mead, is on the Board of Directors of Democrats for Education Reform.

What is the connection, if any, between Bellwether Education Partners and Democrats for Education Reform?

How do you respond to the following characterization of Democrats for Education Reform?

"DFER inspires rich people to use Bill Clinton’s New Market Tax Credits to lend money to corporate run charter schools which use taxpayers’ money to pay back the loan with interest, increasing the hedge fund managers’ money double-fold in a matter of a few years" (SchoolsMatter.info).

 

QUESTION FOUR

Mr. Smarick:

Your article "The Turnaround Fallacy" (Educationnext, Winter 2010) offers a 3-step prescription for addressing "failing" schools: "Stop trying to fix failing schools. Close them and start fresh." By "start fresh" you appear to mean close traditional public schools and replace them with many charter schools, citing the experience of the KIPP chain of charter schools as a model for this process:

"Groups like KIPP (Knowledge Is Power Program) and Achievement First open new schools; as a rule they don’t reform failing schools. KIPP’s lone foray into turnarounds closed after only two years, and the organization abandoned further turnaround initiatives."

In analyzing the latest Mathematica Policy Research study of the KIPP chain of public charter schools, Bruce Baker concludes that many of the academic achievements credited to KIPP schools may be the result of KIPP spending far more per student than districts do in traditional schools (as much as $5,000 more per student), paying teachers substantially higher salaries, and maintaining small class sizes, coupled with what Mr. Baker calls "a dose of old-fashioned sit-down-and-shut up classroom/behavior management and a truckload of standardized testing." Mr. Baker goes on to characterize this approach as "Nothin’ too sexy . . . . Nothin’ that reformy. Nothin’ particularly creative.”

My question, then, is a basic one:

If public charter schools attain better results than traditional public schools by spending more per student, paying teachers a salary commensurate with their professional status, and keeping class sizes small, why don't we just do that for ALL public schools in the existing system?

Some related questions:

If we were to close schools--even entire districts--and replace them with many "boutique" charter schools, who pays? How does one justify the expense of replacing existing facilities with new ones? How does one justify the duplication of resources, effort, and expense that a half dozen new charters create in comparison to one large, centralized school?

 

I don’t know if Andy Smarick ever saw my questions. He certainly didn’t address them in his presentation at the ED SESSION, either specifically or generally.

The questions remained on the Facebook page for a few days—patiently waiting, plaintively hoping for someone’s passing attention, perhaps a wave of a hand or a wink of an eye from Mr. Smarick, from his handlers at the Albertson Foundation, from anyone, really—and then they were gone. And I was banned from the ED SESSIONS page, unable to post anything there at all, much less post the one question that I now wanted very much to ask:

What is the Albertson Foundation afraid of?

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SOURCES

Albany charter cash cow: Big banks making a bundle on new construction as schools bear the cost

http://www.nydailynews.com/new-york/education/albany-charter-cash-big-banks-making-bundle-new-construction-schools-bear-cost-article-1.448008

NCB Impact Web Site

http://www.ncbcapitalimpact.org/index.aspx

Charter School Growth Fund Web Site

http://chartergrowthfund.org/

CREDO Study "Reinforces The Essence" Of "One Million LI(v)ES" Campaign To Close Schools

http://mothercrusader.blogspot.com/2013_01_01_archive.html

Who Were the Two Dozen Secret EVI Donors Anyway?

http://thebluereview.org/who-were-the-two-dozen-secret-evi-donors-anyway/

Can traditional school systems be replaced by charters?

http://www.washingtonpost.com/blogs/dc-schools-insider/post/can-traditional-school-systems-be-replaced-by-charters/2013/01/30/e33a013a-6a71-11e2-95b3-272d604a10a3_blog.html

Board of Directors of Democrats for Education Reform

http://dferwatch.wordpress.com

Empty of Fact: Rachel Brown's Bellwether Propaganda

http://www.schoolsmatter.info/2012/10/empty-of-fact-rachel-browns-bellwether.html

The Turnaround Fallacy

http://educationnext.org/the-turnaround-fallacy/

The Non-Reformy Lessons of KIPP

http://schoolfinance101.wordpress.com/2013/03/01/the-non-reformy-lessons-of-kipp/