Sunday, March 09, 2014

Forbes: Charter School Gravy Train Runs Express To Fat City

Charter School Gravy Train Runs Express To Fat City

On Thursday, July 25, dozens of bankers, hedge fund types and private equity investors gathered in New York to hear about the latest and greatest opportunities to collect a cut of your property taxes. Of course, the promotional material for the Capital Roundtable’s conference on “private equity investing in for-profit education companies” didn’t put it in such crass terms, but that’s what’s going on.
NEW YORK, NY - JANUARY 26:  Parents of student...
(Getty Images via @daylife)
Charter schools are booming. “There are now more than 6,000 in the United States, up from 2,500 a decade ago, educating a record 2.3 million children,” according to Reuters.
Charters have a limited admissions policy, and the applications can be as complex as those at private schools. But the parents don’t pay tuition; support comes directly from the school district in which the charter is located.   They’re also lucrative, attracting players like the specialty real estate investment trust EPR Properties EPR -0.93% (EPR). Charter schools are in the firm’s $3 billion portfolio along with retail space and movie megaplexes.
Charter schools are frequently a way for politicians to reward their cronies. In Ohio, two firms operate 9% of the state’s charter schools and are collecting 38% of the state’s charter school funding increase this year. The operators of both firms donate generously to elected Republicans
The Arizona Republic found that charters “bought a variety of goods and services from the companies of board members or administrators, including textbooks, air conditioning repairs and transportation services.” Most charters were exempt from a requirement to seek competitive bids on contracts over $5,000
In Florida, the for-profit school industry flooded legislative candidates with $1.8 million in donations last year. “Most of the money,” reports The Miami Herald, “went to Republicans, whose support of charter schools, vouchers, online education and private colleges has put public education dollars in private-sector pockets.”
Among the big donors: the private equity firm Apollo Group APOL +1.09%, the outfit behind the for-profit University of Phoenix, which has experimented with online high schools. Apollo dropped $95,000 on Florida candidates and committees.
Lest you get the idea charter schools are a “Republican” thing, they’re also favored by big-city Democrats. This summer, 23 public schools closed for good in Philadelphia — about 10% of the total — to be replaced by charters. Charters have a history in Washington, D.C., going back to 1996.
And they were favored by Arne Duncan when he ran Chicago Public Schools. Today, he’s the U.S. secretary of education. In 2009, Duncan rolled out the Obama administration’s “Race to the Top” initiative, doling out $4.4 billion in federal money to the states — but only to those states that lifted their caps on the number of charter schools.
Too bad the kids in charter schools don’t learn any better than those in plain-vanilla public schools. Stanford University crunched test data from 26 states. About a quarter of charters delivered better reading scores, but more than half produced no improvement, and 19% had worse results. In math, 29% of the charters delivered better math scores, while 40% showed no difference, and 31% fared worse.
Unimpressive, especially when you consider charter schools can pick and choose their students — weeding out autistic kids, for example, or those whose first language isn’t English. Charter schools in the District of Columbia are expelling students for discipline problems at 28 times the rate of the district’s traditional public schools — where those “problem kids” are destined to return.
Nor does the evidence show that charters spend taxpayers’ money more efficiently. Researchers from Michigan State and the University of Utah studied charters in Michigan, finding they spent $774 more per student on administration, and $1,140 less on instruction.
About the only thing charters do well is limit the influence of teachers’ unions. And fatten their investors’ portfolios.
In part, it’s the tax code that makes charter schools so lucrative: Under the federal “New Markets Tax Credit” program that became law toward the end of the Clinton presidency, firms that invest in charters and other projects located in “underserved” areas can collect a generous tax credit — up to 39% — to offset their costs.
So attractive is the math, according to a 2010 article by Juan Gonzalez in the New York Daily News, “that a lender who uses it can almost double his money in seven years.”

It’s not only wealthy Americans making a killing on charter schools. So are foreigners, under a program critics call “green card via red carpet.”
“Wealthy individuals from as far away as China, Nigeria, Russia and Australia are spending tens of millions of dollars to build classrooms, libraries, basketball courts and science labs for American charter schools,” says a 2012 Reuters report.
The formal name of the program is EB-5, and it’s not only for charter schools. Foreigners who pony up $1 million in a wide variety of development projects — or as little as $500,000 in “targeted employment areas” — are entitled to buy immigration visas for themselves and family members.
“In the past two decades,” Reuters reports, “much of the investment has gone into commercial real estate projects, like luxury hotels, ski resorts and even gas stations. Lately, however, enterprising brokers have seen a golden opportunity to match cash-starved charter schools with cash-flush foreigners in investment deals that benefit both.”
So how can you, as a retail investor, grab a piece of this? How can you reclaim some of your property tax dollars from the fat cats?
As with many other instances of “extraction”… good luck.
Sure, you could buy shares of the aforementioned EPR Properties. Unfortunately, you’re buying strip malls and ski parks along with charter schools. It’s not a “pure play.”
The history of publicly traded charter school firms is limited and ugly. Edison Schools traded publicly from 1999-2003. During that period, it reported one profitable quarter. Shares reached nearly $40 in early 2001… only to crash to 14 cents.
“There’s a risk to taking education to Wall Street,” says Education Week — “one that helps explain why so few publicly traded companies cater to the educational needs of students in elementary, middle and high school.”
That risk is spotlighted by the only pure play currently trading on a U.S. exchange. In December 2007, just as the “Great Recession” got underway, K12 Inc. went public under the ticker symbol LRN.
It has proven, at best, a trading vehicle.
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Share prices hit nearly a four-year low in December 2012 when The New York Times published an expose on a K12 online charter school venture. Nearly 60% of its students are below grade level in math, and 50% in reading. One-third don’t graduate on schedule.
The story also revealed CEO Ronald Packard collected a salary in 2011 — $5 million — nearly double that of the previous year. And that his bonus is linked not to student performance, but to enrollment.
It’s a lot easier to escape this sort of scrutiny if your charter school venture is privately held — or, in the case of EPR, mixed in with other ventures that have nothing to do with education.
Well, I tried.
“I spend a great deal of time, money and resources looking for new investment ideas that you, dear reader, can act on independently,” I wrote in my Apogee Advisory, early in 2012… “Sometimes what I find instead is outrage.”
For now, the big money in charter schools is confined to those on the inside.  In late 2010, Goldman Sachs announced it would lend $25 million to develop 16 charter schools in New York and New Jersey. The news release said the loans would be “credit-enhanced by funds awarded by the U.S. Department of Education.”  Of course.
Ed. Note: This essay originally appeared at The Daily Reckoning.

Friday, March 07, 2014

Chris Pavone's 'The Accident' fuses literary world, spy craft

Chris Pavone
The cover of "The Accident" and author Chris Pavone. (Crown; Nina Subin),0,2994005.story#ixzz2vIT3iKFL

No advice is more confusing to writers than "write what you know." Taken to its solipsistic extremes, it would mean novelists could not write characters outside of their own gender, race, geography or professional background. While the works of Susan Straight, Khaled Hosseini, Elizabeth George and others make clear the fallacy of that thinking, a writer's experiences and observations do play a significant role, along with research, in creating a believable universe for their characters and stories.
But what of the spy novel? Is special knowledge of spy craft, the inner workings of the CIA, MI6, CIA or Lakam essential in making such fiction credible?
Consider Chris Pavone. A few years ago, the longtime literary editor and ghostwriter moved to Luxembourg to care for his twin sons while his wife took a job in that country. There, Pavone's exposure to similarly uprooted women who knew little of their spouses' work led him to write "The Expats," which masquerades as the story of an expat wife and bored stay-at-home mom but is really a deviously plotted, Edgar-winning thriller that explores the boundaries of honesty, transparency and self-reinvention in marriage, life, and the shape-shifting world of international espionage.
Pavone has again mined his own life experience — this time in the publishing industry, where he worked for almost two decades — to write "The Accident." Told over the course of one fraught 24-hour period on two continents, the novel's heroine is New York literary agent Isabel Reed, battered by tragedy, divorce and being "just old enough to be congenitally uncomfortable with new technologies." Isabel has been up all night compulsively reading "The Accident," a manuscript that landed unsolicited in her in basket at Atlantic Talent Management.
The contents of the tell-all biography of a powerful media magnate, penned by Anonymous, are literary dynamite (for reasons not immediately made clear) and significant enough that Isabel's concerns are not just getting the book to the perfect acquiring editor but trying to figure out how to stay alive long enough to see it published. Before the reader can figure out exactly why, the novel cuts to Hayden Gray, refined cultural attaché and a Paris-based CIA operative introduced in "The Expats." Assisted by Kate Moore (another "Expats" alum), Hayden is surveilling a man in Copenhagen doing research on a book. Is this man "The Accident's" Anonymous, or a fact checker employed by the author? And why should the CIA care?
Pavone layers on further intrigue as he introduces, in successive short chapters, a cast of well-drawn players, all willing to betray one another and their own values at the drop of an eight-figure book deal. Among them: Alexis, Isabel's naively ambitious assistant, who recognizes in her boss a mentor and a launching pad; Jeff Fielder, a once-relevant fortysomething editor at McNally & Sons "who never met a conspiracy theory he didn't like"; Brad McNally, the pot-smoking publisher looking to bring in much-needed revenue to stave off a corporate takeover; and Anonymous, whose relationship to media baron Charlie Wolf provides him with unparalleled knowledge of the tragedy and subsequent dirty tricks at the heart of this too-hot-to-handle biography.
As flashbacks and excerpts from the manuscript are interspersed throughout the novel, readers will come to understand why the secrets that website billionaire Wolf (a self-satisfied mash-up of Arnon Milchan with Ted Turner) and the CIA are keeping would motivate Anonymous to go into hiding in Europe and Hayden Gray to authorize the off-the-books elimination of those even remotely connected to the manuscript. These gruesome events serve to ratchet up the tension for the reader and amplify Isabel, Jeff and Anonymous' desperate search for a way out of this seemingly lose-lose proposition.
"The Accident," like "The Expats," contains enough credible spy craft, dead bodies and incisive observation of the politics and perils of international espionage to pass muster with all but the most persnickety aficionados of the genre. And while Anonymous' identity will probably be obvious to the careful reader, it is Pavone's insights into myriad professional and personal betrayals that infuse "The Accident" with its vibrant core. That and his insider's knowledge of publishing shine, resulting in a novel rich in trenchant details about the motives and machinations of the book business — from genteel back-stabbing in literary agencies and publishing houses to the Pinot Grigio-and-dried-out Manchego book-launch parties.
New York is also knowingly limned here — the private Greenwich Village clubs with rooftop pools and posh midtown brownstones where Isabel seeks help from her well-heeled clients, the Hamptons in all its geographical one-upmanship, where the chase culminates in mayhem and a few surprises that set the stage, one hopes, for more intrigue down the road.
All told, "The Accident" is a propulsive A-train of a thrill ride and worthy successor to Pavone's debut, destined to make readers as compelled to turn its pages as Isabel and her colleagues are to publish the manuscript that spawned it.
Woods has written four mysteries in the Charlotte Justice series and edited several anthologies.

The Accident
A novel
Chris Pavone
Crown: 381 pp., $26

Thursday, March 06, 2014

vote NO on current Regents up for re-appointment

All parents should contact their legislators to vote NO on current Regents up for re-appointment who should be held accountable for their incompetence and refusal to listen to the view of parents and teachers; the vote will take place March 11.

Lawmakers unsure if they'll replace regent incumbents
Gary Stern, TJN 6:16 p.m. EST March 5, 2014

Says the Regents must be held accountable for the much-criticized rollout of the Common Core standards.

Despite widespread criticism of the state Board of Regents for driving the troubled Common Core rollout, it's far from clear that lawmakers will replace any of four incumbents seeking re-election on Tuesday.

Democratic legislators are trying to figure out whether there are enough votes between the Assembly and Senate to support any of close to 20 other candidates for the four seats. If not, the incumbents are likely to be given new five-year terms on the board, which sets education policy for New York.

"The question is which candidates can get enough votes," said Assemblyman Thomas Abinanti, D-Mount Pleasant, who has been harshly critical of the regents and the state Education Department. "This is not just a negative — a case of replacing people. We have to fill the seats."

Regents are elected by an unusual majority vote of the state Assembly and Senate, which traditionally receives little attention. This year, though, the process is being watched closely by parent groups and others because of the regents' aggressive reform agenda, which has created statewide controversy.

Assembly Democrats dominate the process because of their large numbers, with their leadership choosing the initial nominees. But Senate Democrats could play a key role this year in forming a coalition to support or oppose a candidate.
Senate Democratic Conference Leader Andrea Stewart-Cousins, D-Yonkers, said Wednesday that she expects to vote against the four incumbents, even if it will be difficult to gather the votes to support other candidates.

"It's important to send a message that we're paying attention and understand the important role of the regents," she said. "The implementation of the Common Core has been so disastrous, and I understand the anger and frustration in our communities."

On Wednesday, Sens. George Latimer, D-Rye, Cecilia Tkaczyk, D-Schenectady County, Terry Gipson, D-Rhinebeck, and Timothy Kennedy, D-Buffalo, became among the first lawmakers to say they will vote against the incumbents because the regents must be held accountable.

"The incumbents are not bad people, but none were willing to fundamentally reassess the direction we are going in with respect to the Common Core," said Latimer, who attended hours of candidate interviews last month.
The four regents seeking re-election are Christine Cea, who represents Staten Island; James Jackson, who represents Albany; and two at-large members, James Cottrell of Brooklyn and Wade Norwood of Rochester. All four have been generally supportive of the reform agenda promoted by regents Chancellor Merryl Tisch and Education Commissioner John King.

No incumbent has been rejected in memory.
The challengers are mostly self-nominated candidates with a wide range of experience who drew mixed reviews from legislators. Among them is David Levin of Pomona, a high school math teacher in the Bronx.

Candidates will need the support of 107 legislators to be elected. Republican senators generally boycott the vote because of their lack of say in the process.
Assemblywoman Amy Paulin, D-Scarsdale, a member of the Assembly Education Committee who has been very critical of the sweeping changes brought by the regents, said it is unclear who the Assembly leadership may nominate or whether there are enough votes to defeat the incumbents.

One key factor, she said, is that Cea and Jackson are supported by their local legislative delegations.

Paulin, who also attended hours of interviews, said there has been tremendous discussion among Assembly Democrats about how the voting process might go.
"This is a puzzle that hasn't come together yet," Paulin said. "You don't want to scapegoat these four regents, but they were part of the decision-making or ignored it. I'm trying to work with my colleagues to figure out what's best for our schools in the long run."
Twitter: @garysternNY