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Corporations Advise School Closings, While Private Charters Suck Public Schools Away

As charter proponents aim to cash in on major investment returns, Philly braces for a massive schools shakeup.

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But as parent-organizer* Helen Gym points out in the Washington Post, the savings achieved by these closures amounts to just one percent of the school district’s overall budget. She explains:

It’s worth remembering that in the spring, the School Reform Commission [the group of governor-appointed officers who make financial decisions about the Philadelphia school district]  authorized an unprecedented expansion of more than 5,000 charter seats at a projected cost of $139 million over five years – at a time when Chief Recovery Officer Tom Knudsen threatened that schools may not even open in September. Among the expansions were a 1,400-student high school for Performing Arts Charter, even though the district already has four performing arts high schools drawing from a citywide population. Charters with school performance index figures that ranked them among the worst in the district received five-year renewals and expansions. In fact, of the 26 charters up for renewal last spring, the SRC voted to close just three, and two are appealing.

So if this isn’t actually about reducing the school district’s bottom line, what’s pushing the move towards charters? Could it be the substantial amount of money to be made by individuals, private management companies and others through charterization?  

Thanks to a little discussed law passed in 2000, at the end of Bill Clinton’s presidency, banks and equity funds that invest in charter schools and other projects in underserved areas can take advantage of a very generous tax credit – as much as 39% -- to help offset their expenditure in such projects. In essence, that credit amounts to doubling the amount of money they have invested within just seven years. Moreover, they are allowed to combine that tax credit with job creation credits and other types of credit, as well collect interest payments on the money they are lending out – all of which can add up to far more than double in returns. This is, no doubt, why many big banks and equity funds are so invested in the expansion of charter schools. There is big money being made here -- because investment is nearly a sure thing.

And it’s not just U.S. investors who see the upside of investing in charters. Rich donors throughout the world are now sending money to fund our charter schools. Why? Because if they invest at least $500,000 to charters under a federal program called EB-5, they’re allowed to purchase immigration visas for themselves and family members -- yet another mechanism in place to ensure that the money keeps rolling in.

Proponents of education reform insist that investments like these are all about how successful charter schools are, and show how much support they’ve garnered in just a few short years. But it’s hard to take this on faith when there are billions of dollars of profit—and, for some, a path to U.S. immigration—at stake in these investments.

Philadelphia teacher Kathleen Melville of the advocacy group Teachers Lead Philly tells AlterNet that for market-dependent actors like these it’s all about finding “market-based approaches to funding education.” But she doesn’t blame private investors alone for the educational crisis the city now faces. “In Philly, another major cause of our budget crisis (and the resulting closings) has been education budget cuts in Harrisburg,” Melville points out. “Years of inequitable funding and neoliberal policy [have] led us to this point.”

In Philadelphia, Resistance Grows

There are real, documented problems with the quality and exclusiveness of charter education in the United States. But officials and business leaders, who have very little to lose and much to gain, promote them as a silver bullet solution for schools throughout the nation. This is why it’s so important for parents, teachers and students to understand how the money flow is working. Charterization is not motivated by, or necessarily interested in, a just or equitable model for education. The current reformers apply neoliberal business logic to children. And as in business, there are children who lose and children who win in this model.