How Wall Street Power Brokers Are Designing the Future of Public Education as a Money-Making Machine

Given that Arthur Rock has a net worth of $1 billion, lives in California and spends his time heaping money on tech startups (with the mantra, “Get in, get out,” as his guide), a local school board race in Atlanta, Ga. seems an unlikely candidate for his attention.

Yet there is his name, on the campaign finance disclosure reports of four candidates—two of whom were elected in November, and two who won a runoff on December 3—for the board of Atlanta Public Schools. On each report, two columns over from his name, the sum of $2,500 is listed, the maximum allowable amount.

The APS race was a pivotal one for Atlanta, a city still dealing with the fallout of a cheating scandal that thrust its public school system into the national limelight. Just three incumbents were re-elected to the nine-seat board.

The biggest question facing the board of newcomers is to what degree they will embrace charter schools. Last year, Georgia voters passed a constitutional amendment that enabled the creation of a state-appointed commission authorized to bypass local and state school boards in approving new charter schools. Critics say the measure passed because the text on the ballot, written by governor Nathan Deal, referenced “parental involvement” and “student achievement,” but not the specific authorities of the commission. In this climate, APS, which already has the most charter schools of any Georgia school district, will only avoid becoming the next laboratory for corporate education reform with significant pushback from the new school board.

That’s where Arthur Rock comes in. And a lot of other rich people, too.

Rock is not the only name on the reports with financial power and a less than obvious connection to Atlanta Public Schools. Greg Penner of the Walmart empire, Dave Goldberg of the Sheryl Sandberg empire (they’re married), and Kent Thiry of the DaVita kidney dialysis empire (it sounds inglorious, but he pulls in $17 million annually), are among the names that had some Atlantans scratching their heads this election season.

Michelle Constantinides has three children in Atlanta Public Schools, and was alarmed by the level of corporate influence in the race. She explains her worry is not that donors will directly dictate board members’ decisions: “It’s much more sophisticated than that,” she says. Rather, “it’s about building a relationship with people and making them feel comfortable, and then once they feel comfortable, coming in and providing a service.”

As evidence, she points to Arthur Rock’s investment in Rocketship Education, a charter school management company. In donating to school board candidates, she says, “He’s marketing a product.”

That product has Constantinides concerned. She doesn’t like the data-driven approach of many charter schools and education companies, an approach she says is already too strong in Atlanta’s schools. She recounts how her third-grader, who attends a traditional public school, became so anxious about having to take standardized tests for the first time next spring that he vomited twice during the first week of school this fall.

Teachers in Atlanta are hurting, too, according to Verdaillia Turner, president of both the state and local chapters of the American Federation of Teachers. Free from the regulations that hold traditional schools accountable, charter school administrators in Georgia are able to fire teachers without due process, require them to take on extra work without extra compensation, and set other employment policies that nullify the rights historically afforded to public school teachers.

Turner cautions that while most of Atlanta’s charter schools are non-profit organizations, they are very much a part of the for-profit education market. They can spend money without oversight, and direct much of it to private management companies and other contractors.

“This is about corporate control of taxpayers money,” she says. “[The private sector] already has part of the military, some of the roads, that kind of thing. The new money pot is education.”

Valued at $1.3 trillion, the U.S. education market is more like a giant cauldron, and many of the individuals stirring it have a long track record of funding pro-charter candidates for state government across the country.

Now, as Rock’s investments in the APS race indicates, they’re setting their sights even further down the food chain, pumping big money into local school board elections, which have historically been the stuff of door-to-doors visits, town hall meetings, and fundraisers that yield a few thousand, or even just a few hundred dollars in campaign funds. As a result of their interest, it’s increasingly common for pro-charter school board candidates to outspend their opponents six to one, in races that are fast becoming the new front in the battle to privatize public education.

From Classroom to Boardroom

In the APS race, Rock and the gang honed in on four candidates: Courtney English and Matt Westmoreland, who were elected in November, and Jason Esteves and Eshé Collins, who won recent runoffs.

Campaign reports filed in October show that contributions to English’s campaign totaled over $85,000, Esteves more than $70,000, Collins raised $46,500, and Westmoreland, who ran unopposed, racked up just over $37,000.

With 26 candidates, plenty of whom were pro-charter, how did the millionaires choose these four? Besides being pro-charter, the commonality between them is that they are all alumni of Teach For America, the service corps that has come under increasing criticism for molding Ivy League graduates into pro-charter, anti-union footsoldiers in the war on public education.

In 2008, TFA established a political offshoot called Leadership for Educational Equality. LEE’s purpose, according to job postings on the section of its website accessible only to members, is to channel 250 TFA alumni into elected office, 300 into policy or advocacy leadership roles, and 1,000 into “pipelines for public leadership,” by 2015.

LEE provided the Atlanta TFA slate with nearly $14,000 in in-kind services like consulting, website development, and the use of an online fundraising platform called Democracy Engine.

Perhaps more importantly, LEE provided them with a network. Arthur Rock sits on LEE’s board, as does Michael Bloomberg’s daughter, Emma Bloomberg, who donated $2,500 to Esteves. Rock is also a member of TFA’s national board, along with Greg Penner and Joel Klein, who “reformed” New York City Public schools with deleterious results during his reign as chancellor.

Now Klein serves as CEO of Amplify, an education technology company owned by Rupert Murdoch. Amplify struck a $16 million deal with a school district in North Carolina earlier this year, providing 21,000 students with tablet computers that were recalled several months later after thousands of screens and adapters had broken and other defects, like overheating chargers, were reported. Klein donated $2,500 to English in the Atlanta school board race.

This is the tip of the iceberg. The few power brokers mentioned so far are a handful of the many venture capitalists, hedge fund managers, CEOs, and politicians who are connected through a tangled and overlapping web of affiliations with nonprofits, businesses, and PACs (committees organized to raise and spend money in order to influence elections) dedicated to education privatization. TFA and LEE are two organizations that are part of the connective tissue. Here are a few more:  

• Democrats for Education Reform: Since its inception in 2006, this PAC has opened chapters in 13 states, funneling millions of dollars to candidates who support charter schools, vouchers, performance pay, parent trigger laws, and other neoliberal “reforms.”
  
  DFER’s board members are mostly hedge fund managers with vested interests in charter schools. Boykin Curry, whose portfolio is valued at $20 billion, co-founded Public Prep, a network of charters in Manhattan and the Bronx. Whitney Tilson, also a hedge fund manager, sits on the board of KIPP-NYC, a cluster of schools in a national charter franchise founded by TFA alumni. It’s no surprise then, that one of their first projects as members of DFER was to successfully push to raise the cap on charter schools in New York City. Tilson donated a modest $250 to a TFA alumnus in the Atlanta school board race.

• Education Reform Now: The nonprofit arm of DFER that advocates for the same “reforms,” with a budget of over $6 million. ERN was the face of DFER’s push to increase charter schools in New York, and has funded similar campaigns everywhere that DFER has peddled its influence. ERN has also proselytized market-based education reforms through projects like DoneWaiting.org, a campaign to promote the documentary Waiting For Superman. (That domain name now leads to a spammy-looking blog about gambling.)
  
  DFER and ERN share an executive director and two board members, one of whom, Charles Ledley, is married to Rebecca Ledley. She sits on the board of a charter school management organization in Massachusetts, as well as the board of Students for Education Reform.
  
• Students for Education Reform: Founded in 2009 by two Princeton undergrads who made the Forbes 30 under 30 list—possibly because their organization’s revenue skyrocketed from $30,000 to $1.8 million in one year. SFER purports to be a “student-led movement to end educational injustice.” But their work seems to come down to shuttling politically ambivalent students around to lobby against teachers’ unions.
  
  SFER is also connected to Teach For America: Its latest tax records list TFA CEO Matt Kramer as a board member, though according to a SFER representative, his term has ended. Other board members of note include Jonathan Sackler, who sits (along with Dave Goldberg) on the board of New Schools Venture Fund, which invests in charter schools and education technology companies. Both Sackler and Rebecca Ledley donated $2,500 to Jason Esteves in the Atlanta school board race.
  
• Education Reform Now Advocacy, Inc.: This outfit is a shell of a nonprofit created by the same folks who started DFER and ERN in 2006. The organization seems to have been dormant for awhile, perhaps in part because its name doesn’t exactly roll off the tongue. Interestingly, its 2008 tax return contains a pointed statement of purpose that diverges from the feel-good rhetoric espoused by its more active sibling organizations. This shady quadruplet does not aim to “return the Democratic Party to its rightful place as a champion of children,” as DFER’s website claims. It is concerned simply with, “Promoting policies and state and federal level [sic] to increase the number of charter schools and strengthen teacher evaluations in K-12 public schools.”

More Branches on the Education Reform Family Tree

DFER and its homophonous sibling groups are also connected, through board members and donors, with Stand For Children, an organization with both a nonprofit and political arm that together spent over $21 million last year in order to elect 78 state-level and 15 district-level “education champions.”

And DFER is a major contributor to Michelle Rhee’s notorious organization, StudentsFirst, which pledged to spend $1 billion backing reformer candidates and policy changes. StudentsFirst was one of the top contributors to a PAC that successfully lobbied for the Georgia constitutional amendment that allows a commission to override state and local school boards in approving new charters. The top contributor to that campaign was Alice Walton—Sam Walton’s daughter, Greg Penner’s aunt-in-law.

The Education Reform Industrial Complex is a dizzying house of mirrors, with money ricocheting back and forth between many more players. To outline all of the connections would be a Herculean task.

Suffice it to say, their investments are paying off. National charter school enrollment has increased from 340,000 students in 1999 to 1.8 million in 2011. As of 2009, President Obama’s Race to the Top fund rewards states for tying teacher compensation to test scores. Teach for America boasts over 19,000 corps members and alumni teachers in 36 states and the District of Columbia, and has nearly doubled the number of alumni in school system leadership in the past two years. As a result, business is booming for education companies like K12 Inc., the country’s largest operator of full-time virtual schools, whose CEO received a compensation package of $6 million in 2011.

Most of this change has taken place as the result of campaigning and lobbying at the state and federal levels. But as the Atlanta school board election shows, no race is too small for the millionaires behind the education “reform” movement.

Last year these same millionaires bought school boards in New Orleans, Indianapolis, Memphis, and a little town in New Jersey called Perth Amboy. (The money in that purchase came from a man who made his fortune selling Bank of America shares to the government for twice what he paid, while stroking a pair of brass testicles he keeps on his desk for good luck.) This year Denver and Los Angeles were also sites of the onslaught, with reformer candidates collecting hundreds of thousands of dollars in campaign contributions.

A Sliver of Silver Lining

In Seattle, Wash. and Bridgeport, Conn., the same script concluded with very different results. Last year, Bridgeport voters rejected a measure that would have ended school board elections for good by authorizing the mayor to choose board members. The referendum was backed by Michelle Rhee and Michael Bloomberg, but real grassroots organizing efforts shot it down.

This year, in Seattle, blogger and activist Sue Peters ran for school board on a platform critical of corporate education reform. She was outspent 4 to 1 by her billionaire-backed opponent, but squeaked by with 52% of the vote.

These cases offer hope that when voters are made aware of the money trail, they turn out and vote in their community’s interest.

Now that elections are over in Atlanta, constituents like Michelle Constantinides will have to channel that awareness into pressuring the new board to steer clear of corporate fixes as it seeks to remedy a troubled school system.

There is some indication that community influence could sway the TFA alumni. In an unplanned interview at a recent parent-organized event, Courtney English acknowledged that high-stakes testing hinders real educational progress, and even stated that he would support a standardized-test strike like the one Seattle teachers waged earlier this year.

But he is firm in his belief that charter schools offer opportunities to children who he says, “should not be forced to go to a bad school.”

Constantinides says that as families who can move their children to charter schools do so, those left in “bad” schools are disenfranchised.

She agrees, like most reasonable people, that, “Kids should be going to the best school that they can,” but, she adds, “the best school choice should be their neighborhood school.”

That, public school advocates say, can be achieved without the intervention of corporate interests. Verdaillia Turner says a redistribution of resources could make a world of difference for Atlanta’s underperforming public schools. She points to the growing outcry about the last school board’s decision to spend $147 million renovating an 11-story office building as the new site of North Atlanta High School, which is located in Georgia’s wealthiest zipcode.

The new school building, which opened this fall, boasts views of the Atlanta skyline, spiral staircases leading to a 900-car parking garage, a landscaped campus with a lake, a performing arts complex, a broadcast and video center, tennis courts, a food court, and an indoor shooting range.

Meanwhile, on Atlanta’s poorer south side, Booker T. Washington High School—Georgia’s first public high school for black students and Martin Luther King Jr.’s alma mater—has mold growing on the walls and raw sewage seeping up from the floors. Somehow, the school district couldn’t even find funds to replace band uniforms destroyed by mold, spurring film director Tyler Perry to donate the needed cash.

Turner says it’s schools like Booker T. Washington that are targeted to be turned into charters.

“[The district] starves them out and then shows where they fail. I have to take my hat off to the teachers. They are doing a great job given the circumstances they are under every day.”

If Washington were to become the next charter school in Rocketship Education’s portfolio, the students might benefit or they might not, depending on a number of factors. But there is no question that in such a scenario, local taxpayer dollars would benefit a certain venture capitalist 3,000 miles away, who would see his investment paying off.

Correction: This article was amended to remove a reference to ERN's contributions to SFER, and to clarify the nature of Matt Kramer's relationship to SFER. He is a former, not current, board member.Adiitionally, three, not two, incumbents were reelected in the Atlanta race, and an language was added to clarify the nature of the malfunctions that occured with Amplify's donated tablets.