Privatization of Public Education: A Joint Venture of Charity and Power
April 20, 1999
When good people give their own money to a child in need, the best of the human spirit is revealed. When our nation writes its laws and public policies, the spirit of the nation must be reflected in order to care for all children. The decisions we make today about the best way to educate our children must be conducted in the full knowledge that these decisions will shape our children’s future and our future as a nation.
These decisions are political in nature, and thus it is important to understand who stands to win, and who stands to lose. It is the complete overhaul of our system of education that is at stake in the debate over whether vouchers should be funded by public dollars.
The Children’s Scholarship Fund (CSF) is preparing once again to announce the winners of its scholarships to inner-city children to pay a portion of their tuition to private schools. Directing private funds to the education of our children is a worthy endeavor, and the philanthropists associated with CSF are to be commended for their interest in children. But the roots of the private voucher movement are buried deep in the fertile political soil of a proposal to dramatically change how our national education policy is designed and executed. This report examines the architects of this movement and the role and alliances of CSF and its closest ally, CEO America. The private voucher movement is fundamentally connected to the political campaign to win public funding for private school vouchers. Public policy change as pervasive and long-lasting as a major redefinition of the role and function of our public schools requires that we understand the work and vested interests of those who are bankrolling efforts to divert public funds to private schools.
This is a debate about the future of every child.
Dangerous Bedfellows – Who stands to win?
It is important to know that CSF drew much of its original design from another organization – CEO America – and a $50 million startup gift from one of the founders of CEO America, John Walton. The self-described purpose of CEO America is to work for publicly funded vouchers – public policy changes designed to divert taxpayer funds from public schools to private schools, including ones that claim religious development as their primary purpose. From the beginning, CEO America has leveraged private funds as a means to an end; its ultimate goal is the passage of laws that mandate spending public dollars for private and religious schools. Publicly funded Privatization of Public Education People For the American Way Foundation April 20, 1999 page 2 voucher programs are in place in Milwaukee (supported by the local affiliate of CEO) and Cleveland, and experiences there make clear the dangers of these proposals. (See “Grand Illusions,” a PFAWF analysis that accompanies this report.)
The Religious Right political movement is a vigorous participant in the campaign as well. John Walton, J. Patrick Rooney, the Family Research Council, the Christian Coalition, Eagle Forum, and others are regular partners in moving the Religious Right’s agenda forward on this issue as well as others. These efforts include working to elect Religious Right candidates to school boards, supporting anti-union and anti-affirmative action initiatives, and supporting the campaigns of Religious Right candidates for state and federal office.
Religious Right organizations have provided much of the public relations and organizing work that have built the voucher movement’s political momentum. Religious Right leaders conduct unrelenting attacks on the public schools, falsely pointing to some schools’ problems as symptoms of what they claim is systemic failure. Through radio and television broadcasts, through voter guides disseminated among networks of churches, and through aggressive get-out- the-vote efforts on behalf of pro-voucher candidates, Religious Right groups have put their political machinery and their committed activists to work on behalf of the voucher movement. The Religious Right’s political appeal to the general public, however, is limited; thus the critical importance of business leaders and philanthropists in softening the public face of the voucher movement. There are two primary groups who foresee such handsome rewards from public vouchers that it is worth their investment of capital and energy to make massive policy change possible. First, there are venture capitalists and investors who see a business opportunity not unlike the early days of the HMO movement. Second, the Religious Right benefits from having access to massive amounts of public money to fund their teachings and their institutions. Other types of groups expect benefits as well, including Catholic schools, many of which have long records of service in inner cities. On the far end of the spectrum lie extremist and separatist groups for whom the diversity of public schools has always been anathema. Among the enormous risks of publicly funded vouchers, revealed by legislation already moving in some states, is the unfettered access to public capital by organizations of literally every sort – good and bad – and the ancillary abandonment of constitutional prohibitions against government promotion of religion. Support from business and Religious Right groups has embedded two principles into Republican Party platforms around the country: the idea that schools should function as a free market, and the idea that religion should be supported with taxpayer funds. By including philanthropists in their efforts, many of whom give money through CSF, proponents of publicly funded vouchers have designed what they believe to be a winning strategy. Who Loses – the Difference it Makes Privatization of Public Education People For the American Way Foundation April 20, 1999 page 3
The stakes are high when any essential national purpose is subject to the vagaries of politics, ideology, and opportunities for disproportionate influence by the wealthy and others with vested interests. Under these conditions, it is critically important to look beyond the stated goals of any policy’s proponents to examine the real consequences, intended and unintended, of the proposed policy. Only when policy change is based on a full understanding of the issues at stake, and rests on a clear set of values about the worth of every individual, can we feel secure that those on the receiving end of the new policy, in this case the nation’s children, are protected. When there is an obvious payoff for those who can invest in change, it behooves us to study who they are, and why they are interested. CSF represents many players – those who only care to do good, those who have a secular economic interest in access to capital, and ideologues from the Religious Right who would use the funds for sectarian purposes. In any of these cases, schools that receive vouchers – either existing schools or those created specifically to take advantage of voucher programs – might themselves be good, adequate, or dreadfully bad. There are examples of all three in the voucher experiments currently underway. (See “Grand Illusions”)
To some extent, the need for – and the opportunity presented by – systemic change results from a clear public problem that deserves serious consideration. Public schools vary dramatically in quality, and in the resources available to work on their problems. America has great schools with steady support, both financial and community-based, and it has everything in between those schools, which represent the pinnacle of achievement, and grossly underfunded and under- performing schools. Most of the latter are in the inner cities, rural areas and small-town America, and they cry out for intervention. Some public schools have 100-piece orchestras and others don’t have cafeterias. Some have the financial flexibility for students to experiment with hyperbaric chambers, and others are still hoping for a textbook for every child.
The nature of America’s approach to this national challenge will determine the future of the educational system in America. Publicly funded vouchers, by their very definition, present a powerful redistribution of resources. Data from existing voucher experiments identify many classes of losers in the programs in place: · students who want a voucher but never get one. · students who are happy in public schools, but see them weakened by diverted funds. · students in schools that would receive substantial help from proven reform efforts, if the money hadn’t been diverted to a few students for vouchers. · students for whom all available private schools are inappropriate for their needs – because of religion, the absence of special programs (including free lunches for the poor and remedial instruction) or other factors. · students located where private schools are unavailable, or no better than public schools. · parents who lack an informed choice because private schools are not required to release information about the quality of education they provide, or the progress or regress of students in their care. Privatization of Public Education People For the American Way Foundation April 20, 1999 page 4
· students who don’t succeed in private schools, who then must return to public schools that have lost money and community support. · students who must remain in those public schools regardless of the school’s inability to attract funds to replace those lost because of vouchers. · the community, whose public institutions are fewer and weaker, and whose tax investment has gone to build capital for profit-making businesses. · taxpayers, whose money has been separated from public accountability. · anyone who believes the argument that financially strapped public schools, which must serve all students, will be in a position to compete with moneyed investors equipped with access to capital and the flexibility to minimize costs and structure programs to appeal to certain children.
Few of these problems will belong to the owners of new voucher schools. They will be insulated from having to solve these problems, while the public schools will be saddled with them.
Voucher programs, including private scholarship funds, direct money away from schools and children who need the help of all who care about education. In Edgewood, Texas, an already struggling school district was hit with a massive loss of funding, received from the state on a per- pupil basis, when privately funded vouchers distributed by a CEO-affiliated program moved large numbers of students out of the school system. Now that school system is less equipped than ever to tackle its problems, to the detriment of the thousands of students remaining in its schools. When school budgets are drained by vouchers, more children lose. When private money and leadership banks on new institutions and starves the ones where the children are, more children lose. After all, there will always be public schools, and they will always need advocates for support.
The Roles of CSF and CEO America – a Two-Pronged Campaign
CSF and its largest allied organization, CEO America, are interlocking national organizations created to link private philanthropists to efforts to promote the privatization of America’s public schools. They are affiliated with and share board members and common funders with similar local and statewide groups all over the country. CEO America and CSF were both founded as national expansions of local private voucher programs in San Antonio, Texas,1 and Washington, D.C. respectively.2 These local programs have multiple ties to pro-voucher lobbying efforts.
While CEO America was the first to be founded, and originally provided private scholarships, CSF, which received a founding $50 million gift from CEO America founder John Walton, has now stepped to the forefront. Generally, CSF raises money and does the private grantmaking, and CEO raises money and does the lobbying. The overlaps between the two organizations reach down into their local affiliates, and into right-wing foundations, think tanks, and campaign Privatization of Public Education People For the American Way Foundation April 20, 1999 page 5 financing efforts and donor bases – all of them working toward the goal of redirecting public funds to private and religious schools.
Voucher proponents, including some major participants in CSF and CEO, make use of the various parts of the right wing apparatus for fighting for public vouchers. For example, they use the State Policy Network, an affiliation of state-based conservative and free-market think tanks, to provide support and model legislation for state legislators and academic validation for their ideas. The State Policy Network, which is active in 35 states, includes national groups such as the Heritage Foundation, Grover Norquist’s Americans for Tax Reform, J. Patrick Rooney’s Golden Rule Insurance Co. and CEO America as associate members.3
Early Inspirations for Public Vouchers – the Economic Model
Economist Milton Friedman is generally credited with the idea of publicly funded school vouchers as a free-market education fix in the 1950s. Politically minded religious leaders adopted the idea, because it would steer funds to the sectarian schools and causes they were promoting.
As the Religious Right became a powerful political force, vouchers became a centerpiece of their political agenda. Vouchers carry an additional benefit for many of these leaders because public schools are a particular target for ideological reasons. As Pat Robertson said to his followers at the Christian Coalition’s national conference in 1993, “You give every parent a voucher of $2,500 or $3,000 or whatever the cost of education is, and you say to them, ‘You may spend this on the best education you can get for your child, you pick the school.’ And if the public schools do not deliver quality education, let them go out of business and nobody would miss them.”4 Jerry Falwell is similarly frank: “I hope I live to see the day when, as in the early days of our country, we won’t have any public schools. The churches will have taken them over again and Christians will be running them.”5 In fact, some Religious Right leaders, including Robert Simonds of Citizens for Excellence in Education and D. James Kennedy of Coral Ridge Ministries, are now promoting two separate efforts – Rescue 2000 and Exodus 2010 – to encourage all Christian parents to withdraw their students (and their support) from public schools nationwide; vouchers would represent a major step toward that goal.
Rooney & Golden Rule
The concept of leveraging private voucher and scholarship programs to build support for publicly supported vouchers and tuition tax credits – the idea behind CEO America and CSF – is the brainchild of right-wing billionaire J. Patrick Rooney. He is active in several influential conservative think tanks, including those belonging to the State Policy Network. He serves on the board of the National Center for Policy Analysis in Texas and CEO America, both State Policy Network members. Rooney also sits on the Private Enterprise Board of the conservative American Legislative Exchange Council (another associate member of the State Policy Network).6 Privatization of Public Education People For the American Way Foundation April 20, 1999 page 6
Rooney is a major funder of conservative causes. He is also chairman of the American Education Reform Foundation, which has advocated for voucher proposals in many key areas, including California and Washington, D.C.7
Rooney began his voucher work in 1991 in an effort to get the Indiana state legislature to funnel public money to private schools.8 Having failed at that strategy, he and his company, Golden Rule Insurance Co., began providing private scholarships to 500 students.9 Since that time, like- minded individuals across the country have adopted the strategy that private voucher money could leverage public money, a strategy that is finding its latest and largest expression in the CEO-CSF phenomenon.
Texas Takes the Lead
Rooney’s ideas were picked up by James Leininger, a wealthy Texas physician who supports much of the Religious Right’s social agenda and has helped to make Texas an active battleground in the debate over publicly funded voucher debate. Newspaper reports estimate that he has spent at least $5.6 million on politically oriented nonprofits both in Texas and nationally, including the American Family Association, Family Research Council and Focus on the Family. His contributions prompted the San Antonio Current to call Leininger “God’s Sugar Daddy.”10
In 1989, Leininger established and funded the Texas Public Policy Foundation (TPPF), which he modeled after the Heritage Foundation.11 He and TPPF in turn created CEO San Antonio, the precursor to the national group, CEO America.12 Then in 1994, with the help of a $2 million gift from the Walton Family Foundation, CEO America was born as the national clearinghouse for privately funded voucher programs.13 Former Wal-Mart executive Fritz Steiger, whom Leininger had hired to run TPPF, went over to CEO America and now serves as the group’s president. The Texas think tank also belongs to the State Policy Network.14
In addition to soliciting Walton Foundation funds to help create CEO America, Leininger persuaded voucher supporter John Walton to give $100,000 to Leininger’s A+ PAC for Parental School Choice, which contributes campaign funding to state and local candidates who support taxpayer-funded vouchers.15
The A+ PAC, formerly called Texans for Governmental Integrity, helped elect three of the six Religious Right-backed members of the Texas State Board of Education.16 In 1998, Leininger secured loans of $1.1 million and $950,000 to pro-voucher candidates Rick Perry for lieutenant governor and Carole Keeton Rylander for comptroller, respectively; many believe the loans made the difference in their victories over pro-public education candidates.17
A+ PAC was the most active education political action committee in Texas in the 1996-97 cycle, contributing $452,306 between 1995 and ‘97 – with Leininger personally contributing $326,100 – Privatization of Public Education People For the American Way Foundation April 20, 1999 page 7 to candidates to promote publicly funded vouchers.18 A+ PAC eventually became Putting Children First (PCF) and its treasurer, James Mansour (now chairman of CEO America), became PCF’s chairman. John Walton’s continued contributions sustained PCF.19 The public relations firm that was hired by PCF told the Texas Observer that PCF “had one purpose and still has one purpose,” that is, contributing to candidates who support voucher legislation.20
The National Scene: The Birth of CEO America
CEO America was until last year the only national organization directly awarding vouchers. The organization raised money from wealthy individuals to create a demonstration project to show vouchers in action, build public support, and soften legislative resistance to public funding of private schools. In its promotional materials, CEO America makes its pitch to corporate executives tired of “spoon-feeding basic skills to new employees” and says its program was created so that “policymakers and opinion leaders can see firsthand how school choice works.”21
CEO America’s original mission statement read: “To coordinate the expansion and replication [of] privately funded voucher programs designed to provide low-income children with greater educational opportunities and promote the public policy debate on school choice through educational activities.” It has since changed the wording of its statement to de-emphasize the public policy aspects of its efforts.22
CEO America thus set out to work on two fronts simultaneously. First, to push policy changes through legislatures that would legalize and legitimize public funding of private school vouchers. And second, to raise large sums of money from rich benefactors to create a nationwide demonstration project that would build support for public funding for private schools. To meet these marketing goals, CEO America chose a politically appealing target of opportunity – poor children in inner-city communities with underfunded and troubled public schools. (It’s worth noting that this same community was chosen by the Christian Coalition as the 1997 launching pad for its “Samaritan Project,” an effort to strengthen the organization’s political support among African Americans. Christian Coalition officials cut off support for the project a year later.)
CEO itself described this dual approach: “Two factors were behind the Board’s decision [to create the national group]. The most important was the urgency to reach out to more parents of children trapped in failing public schools and giving them the opportunity to choose a better school. The other was rooted in the belief that the programs could be a vehicle of revolutionary change. The reason: they would be working models that would show politicians and government officials the clear benefits of school choice. Furthermore, each new program would create a small but vocal constituency of parents and business executives who understood and valued school choice and whose collective voice could do more to alter public perceptions than could be achieved by even the most massive public relations campaign.”23 Privatization of Public Education People For the American Way Foundation April 20, 1999 page 8
CEO America President Fritz Steiger’s recent fundraising letter illustrates the group’s political and ideological agenda. Citing the statewide voucher bills that stand a good chance of passing in Florida and Texas, Steiger says that “the legislatures are actively considering a number of bills that could open the doors for education initiatives that CEO America has been advocating for years.” He urges supporters to sign enclosed postcards to Governors Jeb and George W. Bush, and to give generously to CEO America to help it “advance these bills through grassroot educational efforts.” With luck, “getting school choice measures approved in two of the nation’s most populous states could snowball into school choice legislation moving to the forefront in legislatures all across the nation.” He concludes by warning that “big-government liberals, the union bosses and the education bureaucrats” are opposed to a simple voucher solution because they are desperate to prevent choice and to rob taxpayers of billions of dollars.24
The Problem of Past Political Baggage
CEO America’s ability to work effectively and simultaneously on both fronts – charity and political advocacy – ran up against serious public relations and political obstacles as its full cast of characters became known. The right-wing cast of the major players included many who joined the Religious Right in their earlier opposition to legislation to help inner-city neighborhoods, schools, the unemployed and workers. Among the organization’s board members, J. Patrick Rooney, for example, is well known as one of the largest individual donors to former House Speaker Newt Gingrich, as well as to his GOPAC and Progress and Freedom Foundation.25 Rooney is also a founding board member of Republican National Coalition for Life, a PAC founded by Religious Right heavyweights like Phyllis Schlafly, Gary Bauer and Beverly LaHaye to keep the abortion plank in the Republican Party strong.26 Wal-Mart heir John Walton is also a major contributor to right-wing candidates such as Lauch Faircloth, Steve Forbes and Pete Wilson.27 In addition to individual candidates such as former Texas Rep. Steve Stockman, James Leininger has also contributed to RNC for Life.28 CEO America board member Peter Flanigan has supported Jesse Helms’ senatorial campaigns and Phil Gramm’s 1992 presidential campaign.29 In addition, CEO’s founders have been active in passing voucher referendums and bankrolling right-wing candidates for state school boards. (The interconnections between the players in CEO America and CSF are detailed in an appendix at the end of this report.)
Children’s Scholarship Fund is Created
The obvious solution to the charity and politics dilemma was to split the two functions and create a new organization – one with a less ideological profile – to carry out most of the fundraising and most of the grantmaking work. On June 9, 1998, CSF was unveiled at a news conference in New York. It was a high-profile launching, with $200 million in donations ($50 million of that from CEO American founder John Walton, $50 million from venture capitalist Ted Forstmann, and $100 million to by raised locally). It included a bipartisan array of luminaries on Privatization of Public Education People For the American Way Foundation April 20, 1999 page 9 hand with letters of support from President Clinton, Senate Majority Leader Trent Lott, House Speaker Newt Gingrich, D.C. Delegate Eleanor Holmes Norton, and Mayors Richard Daley of Chicago and Richard Riordan of Los Angeles. Leaders of the “new” organization spoke of its mission as creating opportunities for poor children and giving their parents a choice other than the public schools. (Few took note of the fact that the gap between school tuition and the $500 scholarships of some cities would not enable most poor children to participate.)
CSF – CEO America’s Business as Usual
The Children’s Scholarship Fund was launched in June 1998 with a $100 million contribution from Wal-Mart heir John Walton and venture capitalist Ted Forstmann. Both men were major financial backers of the Washington Scholarship Fund, a private voucher program in Washington, D.C., before moving to the national level.
While CSF strives to present a non-ideological public image, its history and the resumes of its co- founders demonstrate that its mission is an element of the overall strategy of CEO America and its allies in the political and Religious Right.
John Walton
John Walton is one of the heirs to the Wal-Mart fortune. In addition to his activities with CEO America and his efforts in Texas with James Leininger, Walton’s philanthropy is carefully coordinated to dovetail with the political movement for tax-funded school vouchers, much as it is with other wealthy voucher backers like Rooney, Leininger, Ohio businessman David Brennan and Michigan’s Richard DeVos. In fact, the leading funders of private voucher programs often coordinate with the political strategists of the tax-funded voucher movement.
For instance, a few months after the high-profile launch of Children’s Scholarship Fund, Walton was a featured speaker at a weekend conference on “Parental Choice and Corporate America” sponsored by the Milton & Rose D. Friedman Foundation. The conference was heavily focused on strategizing, with seminar topics such as “Working the Halls of Power” and “Understanding and Overcoming the Opposition.” Other major political players in the voucher movement spoke at the conference: the Institute for Justice’s Clint Bolick, GOP presidential candidate Steve Forbes, Wall Street Journal editorial board member John Fund, former U.S. Rep. Floyd Flake, Minnesota Gov. Arne Carlson, Arizona schools Superintendent Lisa Graham Keegan and Ohio voucher backer David Brennan.30
Walton was funding pro-voucher initiatives and candidates long before he turned his attention to private voucher programs. In addition to his Texas contributions, Walton gave over $250,000 to Privatization of Public Education People For the American Way Foundation April 20, 1999 page 10
California’s Proposition 174 in 1993, making him one of the largest contributors to that voucher initiative, which was defeated by 70 percent of voters.31
One of Walton’s most telling contributions was the financial backing he gave to found the American Education Reform Foundation (AERF), a voucher advocacy group.32 AERF was a driving force behind efforts to get voucher initiatives on the ballot again in California in 1996 and 1998, and has since relocated to Indianapolis.33 One California reporter noted in a 1995 article, “With its California initiative, the American Education Reform Movement hopes to launch a national movement. Welcome to schoolmart.”34
In 1998, AERF funded a series of newspaper ads and television commercials designed to pressure Congress into supporting House Majority Leader Dick Armey’s plan to impose a publicly funded voucher system on the District of Columbia’s school system over the objections of local officials.35 Among the opponents of the D.C. voucher plan were local ministers who had been deceived by an earlier AERF-funded lobbying proposal.36
Like other voucher proponents, AERF sees teacher’s unions as its main obstacle to establishing a voucher system. Not surprisingly, AERF contributed close to $50,000 to a so-called “paycheck protection” initiative in California that would have greatly limited the ability of unions to participate in the political process.37 Walton himself contributed another $360,000 to the proposition,38 and other voucher proponents like James Leininger, J. Patrick Rooney, David Brennan, Howard Ahmanson39 and Richard DeVos (via his Amway Corp.) also contributed to the ultimately unsuccessful campaign.40
Walton has other interests in privatizing public education. He’s a director of the TesseracT Group (formerly Education Alternatives Inc.), a for-profit corporation that manages charter and public schools.41 Education Alternatives was operating schools in Baltimore and Hartford, Conn., until both cities ended their contracts amidst controversy over finances and academic results.42 Walton is also the founder of School Futures Research Foundation, a nonprofit group that manages charter schools in California.43
Ted Forstmann
Ted Forstmann, according to his official bio, is known in the financial world as a “pioneer of the leveraged buyout.” In addition to serving as co-chairman of Children’s Scholarship Fund with John Walton, Forstmann serves as honorary chairman of the Washington Scholarship Fund. He is a steady supporter of conservative candidates. During the last election cycle, he funneled over $200,000 in soft money to the Republican Party and individual contributions to Sens. Rick Santorum and Lauch Faircloth, among others.44 The New Republic described him as “one of the Republican Party’s leading moneymen.”45 When former speaker Newt Gingrich resigned from the House of Representatives early this year, Forstmann quickly persuaded him to join the board Privatization of Public Education People For the American Way Foundation April 20, 1999 page 11 of directors of his New York buyout firm.46 He also gave $10,000 to the campaign for passage of California’s anti-affirmative action Proposition 209.47
Forstmann – along with former education secretary William Bennett and former HUD secretary Jack Kemp – founded Empower America in 1993, a conservative advocacy group formed to map a new direction for the GOP following the loss of the White House.48 During the ‘80s, Forstmann served as finance chairman for Citizens for America, a conservative grassroots lobby group founded by conservative New York activist Lew Lehrman. Other leaders of the group have included Don Devine, Ronald Reagan’s OMB director, and Alan Keyes, currently a GOP candidate for president in 2000.49
Like Walton, Forstmann’s interest in school privatization and commercialization predates the Children’s Scholarship Fund. The leveraged buyout firm that Forstmann heads attempted to acquire major investments in a company already profiting from public schools – Whittle Communications, the home of the Channel One television program used in many schools. At the time of the attempted Forstmann deal, Whittle was in the R&D phase of the Edison Project, a national chain of private schools.50
The State Policy Network
A crucial element to CSF’s and CEO America’s success has been the right-wing State Policy Network. Established in 1992, it links state-based policy groups such as the Buckeye Institute (Ohio), James Madison Institute (Florida) and the Evergreen Freedom Foundation (Washington).51 SPN allows major national groups such as the Heritage Foundation, the Institute for Justice, Citizens for a Sound Economy and the Free Congress Foundation to become associate members. These state think tanks followed the Heritage model of extensive public relations plans courting the media and politicians in an effort to have more impact on public policy. Their agendas are nearly identical: privatization of most public services and hostility to public education.
The State Policy Network has received funding from the Olin Foundation, the Richard & Helen DeVos Foundation, the Bradley Foundation and the Castle Rock Foundation (Coors affiliated).52 The Network meets regularly to share strategies and coordinate activities.
Connecting the Dots at the State Level
The Children’s Scholarship Fund was originally targeted toward five “partner communities” – Chicago; Jersey City; Los Angeles; New York; and Washington, D.C. It has since expanded to a total of 43 citywide and three statewide programs.53 Most of the affiliate programs administer the vouchers locally, with CSF merely distributing funds to the affiliates. Privatization of Public Education People For the American Way Foundation April 20, 1999 page 12
Michigan CSF gave $7.5 million to Michigan’s Education Freedom Fund (EFF), and EFF’s Dick and Betsy DeVos of the Amway Corp. matched the contribution with $7.5 million locally.54 Another $5 million was raised by Cardinal Adam Maida of Detroit, whose archdiocesan schools would realize a government subsidy with vouchers.55
The DeVoses have been avid supporters of taxpayer-funded vouchers for years as well as major funders for Religious Right groups and causes. Dick DeVos fought for vouchers as a member of the Michigan Board of Education in the early 1990s.56 Dick and Betsy DeVos have contributed $25,000, and the Helen and Richard M. DeVos Foundation gave $100,000 to the Mackinac Center,57 a State Policy Network member.58 The Helen and Richard M. DeVos Foundation has also contributed money to such conservative, anti-public education groups as Focus on the Family in Colorado, Gary Bauer’s Family Research Council in Washington, D.C., and Coral Ridge Ministries in Florida.59
Betsy DeVos has been involved in other anti-public education efforts. She served as co-chair for Of The People, the group attempting to introduce parental rights amendments in the states. These state amendments would have provided disgruntled parents with a strong legal weapon for censoring public school curricula, weakened the ability of social service agencies to act effectively on behalf of children, and facilitated the adoption of vouchers for religious schools. She is chairman of the Michigan Republican Party and, according to the conservative Washington Times newspaper, is said to have close ties to Ralph Reed, former executive director of the Christian Coalition, and James Dobson, head of Focus on the Family.60
The DeVos family contributed $1 million to the Republican Party for the 1998 congressional elections.61
Oregon In Portland, Oregon, CSF doles out its funds through the Cascade Policy Institute (CPI)62, another State Policy Network member.63 Cascade’s president, Steve Buckstein, has a history of supporting anti-public education proposals. In 1990, he campaigned unsuccessfully for an Oregon tuition tax credit ballot initiative.64 As finance director for the pro-voucher side of the initiative, he helped outspend the opposition to the initiative $540,000 to $180,000.65
CPI’s executive director for Children’s Scholarship Fund-Portland is Julie Riggs,66 who was previously employed as conference director at the libertarian CATO Institute and as deputy director of the Becket Fund for Religious Liberty,67 a pro-voucher legal organization whose board includes Kenneth Starr.68
New York Privatization of Public Education People For the American Way Foundation April 20, 1999 page 13
New York is another voucher battleground state. One of the five original “partner communities,” CSF provides funds through the School Choice Scholarship Foundation, which actually began in 1997. The program has been championed by New York City Mayor Rudolph Giuliani, who hopes that the foundation’s success will boost his own efforts to enact a program of taxpayer- funded vouchers for public school students to attend New York private and religious schools.69
The School Choice Scholarship Foundation was endorsed by former NYC schools chancellor Frank Macchiarola and former New York Democratic Rep. Floyd Flake,70 who with his wife owns and operates a religious private school in Queens that is associated with his Allen Church. Both Macchiarola and Flake are SCSF trustees.71 The other trustees and financiers include Thomas Rhodes of The National Review, and several board members of either the Manhattan Institute or the Empire Foundation for Policy Research72 (a State Policy Network member).73
Florida Florida is a hotbed of voucher legislation activity, with taxpayer-funded vouchers a major plank in Gov. Jeb Bush’s campaign in 1998. A tax-funded voucher plan recently passed the Florida House and, in a modified version, the Senate. The bills are now pending reconciliation in conference.74
The Miami scholarship program is being funded with $2.5 million from CSF, with another $2.5 million to be matched from funds raised locally. The Archdiocesan Education Foundation of the Catholic Church in Miami has already pledged $150,000.75
Another pro-voucher Miami-based organization, Floridians for School Choice, is being matched dollar for dollar by CEO America in its efforts to help enact publicly funded voucher legislation. Patrick Hefferman, who had been the executive director of the Miami Archdiocesan Education Foundation, is the group’s executive director.76 Floridians for School Choice has 14 registered lobbyists to actively lobby for the passage of taxpayer-funded voucher legislation in Florida.77
LOOKING AHEAD
The so-called voucher movement is continuously evolving, so the effects of the public policy changes it will foster will only be revealed over time. However, what we know about the voucher pilots now in place in Wisconsin and Ohio should cause all policymakers grave concern. Though the full picture has not yet emerged, there are some clues that suggest potential motives and future directions for those who are investing so heavily in its success. (See the accompanying “Grand Illusions” report for a fuller discussion of the Milwaukee and Cleveland voucher programs.)
To the Right Privatization of Public Education People For the American Way Foundation April 20, 1999 page 14
For the Religious Right and others who are looking for the combination that would unlock public funds for religious schools, the voucher campaign may be for many an end in itself. After years of trying to force schools to accept creation theology into biology classrooms, purge classes and libraries of the ideas they object to, Religious Right leaders can, with vouchers, obtain tax dollars to fund the teaching of the movement’s beliefs in classrooms. In fact, the grants of CEO America and its affiliates favor religious schools. Religious schools typically charge lower tuition than other private schools. By targeting poor children and providing vouchers that cover only a portion of costs, the CEO/CSF formula virtually guarantees that most children’s “choice” will be limited to religious schools. For example, the local CEO affiliate grants in San Antonio, a flagship program for the private voucher movement, averaged a mere $629 in 1996 – clearly not enough to cover tuition at most secular private schools.78
Perhaps a more salient point is that currently, approximately 80% of private schools in America are religious; thus, the immediate beneficiaries of publicly funded vouchers are religious schools. CEO, and private investors like David Brennan who want to own private, non-sectarian schools, cannot succeed without the influence of religious schools and their advocates in the Religious Right. Although this reliance on religious schools raises no constitutional concerns regarding CSF’s privately funded scholarships, it raises fundamental constitutional questions when public funding is involved.
A Profit Motive
CEO America’s and CSF’s activities are probably not calculated just to lay the groundwork for legislative action to provide public funding for religious schools. For at least some in the CEO and CSF power hierarchy, the ultimate goal is privatization more generally – the opening up of a vast new market for venture capital and investor return.
· John Walton, the Wal-Mart heir and director, sits on the CEO America Board of Directors and is a co-founder of the Children’s Scholarship Fund – but he also is a major backer of Education Alternatives Inc./TesseracT, a for-profit public school management corporation.
· Ohio businessman and voucher proponent David Brennan has been heavily involved in educational services. Brennan is also one of Ohio’s biggest supporters of the state and national Republican parties and has raised money for political races that appeared to further his push for publicly supported vouchers. Brennan was a longtime supporter of former Ohio Gov. George Voinovich, who named him to chair the Commission on Educational Choice in 1992.79
In 1995, the Ohio legislature adopted a $5.25 million one-year voucher pilot and Brennan immediately formed private for-profit schools to participate. Today Brennan operates two Privatization of Public Education People For the American Way Foundation April 20, 1999 page 15 voucher schools in Cleveland started with a $500,000 grant from his own foundation and John Walton’s Walton Family Foundation.80
· California venture capitalist Tim Draper is heading an effort to draft a voucher initiative for California’s March 2000 ballot. Draper’s company has become increasingly active in education-driven companies. As early as 1993, Draper said, “we see a burgeoning [investment] opportunity in the entertainment and educational content area.”81
· The private education industry also includes players like Michael Milken, who has $500 million invested in education-related companies.82 The press has begun to report on Wall Street’s identification of education as the next growth industry. As the growth of HMOs has been the story of this decade in area of health care, so the advent of the EMO could become the story of the next. Keith Gay, an education industry analyst from NationsBanc Montgomery Securities, said, “From our view, the people who are always early and usually right are focused on education right now.” He added, “education is now where health care was 20 years ago – a growing part of our GDP, with little presence in equities.”83 The emergence on the scene of high-powered entrepreneurs, such as those at CEO America, CSF, and their affiliated state and local organizations, and the presence of high rollers like Milken signal that the long-term goal of return on the investor dollar is clear.
The appeal of diverting public education dollars into private industry is understandable when one considers the size of the figures involved – primary and secondary education in America is at least a $300 billion endeavor. U.S. Education Secretary Richard Riley estimated that if a national voucher system were put in place, taxpayers would spend $15 billion to subsidize students already in private schools.
False Promises
The implications for public schools are many and of great concern. No matter how many vouchers are available or how many new schools of whatever quality finally emerge, it is clear that there will always be many students in public schools. Public policy must address this reality.
The evidence that CEO/CSF has an agenda beyond philanthropy is made more obvious by what the organizations don’t do than what they do. The vast majority of the nation’s children depend on the public schools for their education. CEO/CSF’s claims to want public schools to get better by having to compete, and to give children a better education. But they don’t contribute to troubled schools or the proven school reform efforts essential to their future – and certainly to their ability to improve over time. The strategy of CSF/CEO actually creates new barriers for public school improvement as lobbying and public relations efforts encourage the diversion of funds to vouchers. Privatization of Public Education People For the American Way Foundation April 20, 1999 page 16
The Choice that isn’t a Choice
In the end, the idea behind CEO/CSF – and the private school voucher campaign – counts on success at selling two false promises. The first is choice. Supporters of private school vouchers and “scholarships” say they want to give poor parents the same choice that rich parents have. Yet most of the voucher or scholarship amounts don’t provide sufficient funds to enable the poorest parents to “choose” the elite private schools favored by wealthy parents. And most voucher legislation reveals the sponsors’ desire to protect all private schools from the standards that can provide parents with the necessary information to evaluate a private school. In practice, the only meaningful choice in these voucher or private grant programs belongs not to the parents but to the schools that choose; first, whether to accept voucher students at all and, then, whether to accept – and retain – each individual student who applies. There are growing numbers of private and religious schools that have indicated that they would opt not to accept public vouchers if they have to agree to basic nondiscrimination standards in admissions, or subject themselves to requirements for testing, reporting, and other accountability for their use of public funds. Some religious schools have objected to the idea of allowing students to “opt out” of religious services. And investor-owned schools, in order to return a maximum profit, will always seek to maintain the right to select students based on any criteria they choose and to design programs that accomplish this goal. The choice for parents and students remains limited and unsatisfactory.
The second false promise is that “competition” will create marketplace dynamics that will cause the public schools to improve. As used by voucher and privatization advocates, the concept is tortured. True competition requires a level playing field, but a change to publicly funded vouchers would not create one. Private schools will have access to capital; public schools will lose capital. Private schools will have the ability to pack up and leave when it becomes tough to educate students on the funds available, just as HMO’s do today when a particular market becomes unprofitable. Public education must always be available – profitable or not. Private schools will ultimately find multiple ways to limit their customer base (already evident in Milwaukee as schools have avoided the randomization provision), and public schools will take all comers. Private schools will have the freedom to design a profitable product, choosing programs, capital equipment, and courses based upon their marketing value. Public schools have a long- term commitment to all, and therefore, they can’t play the profit maximization game.
Taking a handful of students out of an urban school district does not reduce such fixed costs as building maintenance, staff salaries, school supplies and administration. Reducing funds from already impoverished schools already unable to afford basic necessities such as textbooks and safe buildings, and preventing teachers from having access to the very tools they need – including community support – is exactly the opposite of a spur to improvement. Privatization of Public Education People For the American Way Foundation April 20, 1999 page 17
Nor do private schools guarantee a quality education. Perhaps the best illustration is a recent example from Cleveland: voucher advocate David Brennan created two new schools specifically to utilize the newly available voucher money. Contrary to expectations predicted by market theory, an Indiana University study concluded that student performance at these schools is “significantly and dramatically lower than both public school and other scholarship students.”84 And private scholarship programs sometimes fare no better, as witnessed by a Wall Street Journal reporter examining CEO America’s flagship program in San Antonio, Texas. Visiting schools that CEO authorized to accept their vouchers, the journalist found the Sword of the Lord Academy to be “a ramshackle cottage with trash cans in the front, old cars in the back and a sticker reading ‘Property of Jesus Christ’ across the door.” According to CEO America, it’s up to the parents to determine quality.85 Voucher programs do not address key questions pertaining to educational quality that affect both public and private schools, such as teacher and principal training.
CSF and CEO America share many things: founders and board members, donors and advisors, regional affiliates and state policy think tank support. Most importantly, they share the same goal: to move money. In order to make that politically feasible, they determinedly claim that vouchers will “fix” our nation’s education problems. This requires them to ignore the realities of public schools and competition, the many successful reform programs in place in the country, the good news of many kinds coming out of public schools around the country, and the benefits to schools and students when financial resources and community support are generous.
CSF’s success in cultivating a diverse support network does nothing to contradict the underlying free-market and right-wing ideology that inspired its creation, or the dedication of those pursuing the parallel political strategy to win public funding for private schools. The bottom line remains the same – diverting money and support from public schools through publicly funded voucher programs provides new barriers to the improvement of those schools.
Our children, our future
Our nation’s system of public education is the foundation of our children’s future and thus the nation’s future. It deserves more than sound-bite debate. It deserves a renewed national commitment – from the public and private sectors, from business, political, religious and community leaders. In this era, with a healthy economy and budgetary surpluses at state and national levels, there can be no excuse for our failure to come together to address the pressing needs of our public schools. The voucher movement distracts time and energy and political capital from this primary national purpose. Rather than investing in the public infrastructure that will build up our children and communities in the decades to come, we are talking about investing in private institutions that have no obligation to be there for our children in the future. Privatization of Public Education People For the American Way Foundation April 20, 1999 page 18
The good news about this entire debate is that it may bring the wider community into the discussion about education in America. We need more discussion about the plight of struggling schools in our cities and rural areas. We need to find funds to implement proven reforms that will strengthen schools that need to be strengthened. We need to build public support for policies that provide fairness and accountability to all students, even those in private schools, and we have begun to see that change written into proposed legislation. The bad news is that by diverting communities energies toward vouchers, which focus on a relative handful of children, we diminish the possibilities of making real systemic changes that can ensure that all our children have access to a quality public education.
1 Dan Calderon, “School voucher foundation starts,” San Antonio Express-News, 1/15/95. 2 Kim Asch, “Private-school funds go national,” Washington Times, 2/3/99. 3 “The Real Story Behind ‘Paycheck Protection,’” National Education Association, 9/98, 65, 74, 80, 87. 4 Christian Coalition National Conference, 9/10/93. 5 Jerry Falwell, America Can Be Saved, 1979, 53. 6 National Education Association, 55. 7 Cindy Loose, “Former D.C. Leader’s Firm Is Being Paid to Push School Vouchers,” Washington Post, 10/6/97. 8 “Conservative Spotlight: J. Patrick Rooney,” Human Events, 3/31/95, 16. 9 Profile of J. Patrick Rooney, Policy Review, 7-8/97, 55. 10 Molly Ivins, “Meet ‘God’s Sugar Daddy,’” http://www.texnews.com/1998/opinion/ivins1210.html 11 National Education Association, 104. 12 Texas Freedom Network Education Fund, “Pro-Voucher Campaign in Texas.” 13 Texas Freedom Network Education Fund, “James Mansour’s Involvement in the Pro-Voucher Lobby in Texas.” 14 National Education Association, 104. 15 Louis Dubose, “Where the Money Is,” Texas Observer, 11/22/96. 16 Texas Freedom Network Education Fund, “James Mansour’s Involvement in the Pro-Voucher Lobby in Texas.” 17 Robert Bryce, “Million Dollar Man,” Austin Chronicle, 2/1/99. 18 Texans for Public Justice, “Texas PACS: A Roundup of the Special Interests Driving Texas' Political Action Committees,” http://www.tpj.org/reports/pacs/major.html 19 Ibid. 20 Louis Dubose, “Deschooling Society,” Texas Observer, 3/27/98. 21 “Tired of ‘Spoon-Feeding’ Your Employees?” CEO America, Children's Educational Opportunity Foundation, Bentonville, AR (no date). 22 CEO America mission statement, 6/5/98, http://www.ceoamerica.org.about.html 23 CEO America History. 24 Fritz Steiger, CEO Foundation of America fundraising letter, 3/25/99. 25 Robert Dreyfuss & Peter H. Stone, “Medikill,” Mother Jones, 1-2/96, 77. 26 Press release announcing the formation of RNC-Life, 11/1/90. 27 Search for contributions from John Walton, FECInfo database, http://www.tray.com/fecinfo/indiv.htm 28 Search for contributions from James Leininger, FECInfo database, http://www.tray.com/fecinfo/indiv.htm 29 Search for contributions from Peter Flanigan, FECInfo database, http://www.tray.com/fecinfo/indiv.htm 30 Friedman Foundation event listing, http://www.friedmanfoundation.org/events.htm 31 John Zebrowski, “Five Fat Cats and a Flip-Flop,” Mother Jones, 9/29/98; Dana Wilke, “Bay Area group pushes new school voucher vote for ’96,” San Diego Union-Tribune, 8/30/95. 32 Ed Mendel, California to spend a lot more on schools, but…,” San Diego Union-Tribune, 9/1/97. 33 Ed Mendel, “School-voucher advocates are all business about next initiative,” San Diego Union Tribune, 7/31/95. 34 Ibid. 35 Ron Hutcheson, “School Voucher Critics say Armey deceitful in try for pilot program,” Fort Worth Star- Telegram, 4/30/98. Privatization of Public Education People For the American Way Foundation April 20, 1999 page 19
36 Loose, 10/6/97. 37 Mike Rose, “With Friends like these…,” American Teacher, 4/98, http://www.claremont.org/campfin/mikerose.cfm 38 National Education Association, 51. 39 Rose, 4/98. 40 California Secretary of State, 1998 Primary Election, late contributions and independent expenditures, http://Primary98.ss.ca.gov/lcrP98/c/980240.htm 41 Friedman Foundation event listing. 42 Mark Walsh, “Privatization Found To Fall Short of Billing,” Education Week, 11/6/96. 43 Susan Gembrowski, “Fund provides tuition aid to poor,” San Diego Union-Tribune, 2/3/99. 44 Search for contributions from Theodore Forstmann, FECInfo database, http://www.tray.com/fecinfo/indiv.htm 45 “Flying High,” The New Republic, 12/21/98, 10. 46 Bloomberg News, “Gingrich set to return home, will serve on advisory board of N.Y. buyout firm,” Washington Times, 1/6/99. 47 Secretary of State of California, Political Reform Division, 11/5/96, general election, Proposition 209. 48 Derk Arend Wilcox, ed., Right Guide, 78, 133. 49 Human Events, 3/22/86; Washington Times, 5/10/88; “Inside the Beltway,” Washington Times, 1/18/90. 50 “Whittle’s Expansion Plans Bolstered by Firm’s $350 Million Investment,” Education Week, 9/11/91; “Media Column,” Education Week, 2/19/92. 51 National Education Association, 38. 52 National Education Association, 40. 53 Children’s Scholarship fund, http://www.scholarshipfund.org/com…unity&cfid=627738&cftoken=40859395 54 Roland Wilkerson, “Burgeoning scholarship fund helps kids go to private schools,” Grand Rapids Press, 3/21/99. 55 George Bullard, “Church to help poor attend Catholic schools,” Detroit News, 3/5/99, http://www.pcfirst.org/PCF/press/0305991.html 56 Wilkerson, 3/21/99. 57 “Known Funding of the Mackinac Center,” http://scnc.mindnet.org/~ferencyj/funding.html 58 National Education Association, 9/98, 90. 59 Richard and Helen DeVos Foundation, CD-ROM database, The Foundation Center, 1998. 60 Ralph Z. Hallow, “RNC may get first female chief, but race is far from uncontested,” Washington Times, 11/11/96. 61 Ben White, “Soft Money Donations Soared Despite Ongoing Investigations,” Washington Post, 1/11/99. 62 Cascade Policy Institute press release, 9/28/98, http://www.cascadepolicy.org/csf/announce.htm 63 National Education Association, 59. 64 Rob Boston, “Radical Measure,” Church & State, 10/90. 65 Dan McGroarty, “Voucher Wars,” Milton and Rose D. Friedman Foundation, http://www.townhall.com/features/voucherwars.html 66 Cascade Policy Institute press release, 9/28/98. 67 Becket Fund for Religious Liberty staff listing, http://www.becketfund.org/other/aboutus.html 68 “Hasidic Jewish Bus Company Sued Over Prayers on Buses,” Becket Fund press release, 10/18/94. 69 Frank Lombardi & Nancie L. Katz, “Rudy Pushing Vouchers, but Crew’s Defiant,” New York Daily News, 3/12/99. 70 “New Private Voucher Program to Serve 1,000 NY City Children,” School Reform News, http://www.heartland.org/education/march/private.htm 71 SCSF board of directors, http://nygroup.com/scs/directors.htm 72 Ibid.; Empire Foundation board list, Foundation Center CD-ROM database; Manhattan Institute board of Trustees, http://www.manhattan-institute.org/html/trustees.htm 73 National Education Association, 97. 74 Jim Saunders, “School Voucher case not shut yet,” Florida Times-Union, 4/5/99. 75 “Archdiocese Donates to Scholarships,” Miami Herald, 12/29/98. 76 Tim Nickens, “School Choice Debate Widens With New Group,” St. Petersburg Times, 6/16/98. 77 Saunders, 4/5/99. 78 Just Doing It 3: 1996 Annual Survey of the Private Voucher Movement in America, National Scholarship Fund, 24. Privatization of Public Education People For the American Way Foundation April 20, 1999 page 20
79 Rose, 4/98. 80 Philanthropy Roundtable, “Great Grants: Recent Benefactors and Programs of Note,” Winter ’97, http://www.philanthropyroundtable.org/1.1/ggrant1.html 81 “Multimedia and Venture Capital,” Red Herring, 6/93. 82 Alan Deutschman, “Up the Green Staircase,” GQ, 10/98, 125. 83 San Francisco Business Times, 2/23/98. 84 Evaluation of the Cleveland Scholarship Program: Second-Year Report (1997-98), Indiana Center for Evaluation, Indiana University, 11/98, 22. 85 “Class Action: A Poor School District in Texas is Learning to Cope in a Test Tube,” Wall Street Journal, 9/11/98.