This article ran in the Spring 2016 issue of The American Prospect
Not too long ago, school board races
were quaint affairs. Even in big school districts, candidates usually
only had to raise a few thousand dollars to compete.
But as the movement to marketize public education gained momentum,
advocates broadened their focus from the federal level to state and
local governments. There, where campaign costs were substantially lower
than in federal elections, the well-funded movement could more
effectively leverage its political money.
One of the starkest casualties of that strategic shift has been the
American school board election. A network of education advocacy groups,
heavily backed by hedge fund investors, has turned its political
attention to the local level, with aspirations to stock school
boards—from Indianapolis and Minneapolis to Denver and Los Angeles—with
allies.
In recent years, this powerful upstart operation has had tremendous,
albeit somewhat stealthy, success playing politics at the local level,
by cultivating reform leaders in areas with disappointing schools and a
baseline desire for change. They have looked to building a state
philanthropic infrastructure that can sustain local efforts beyond one
election.
The same big-money donors and organizational names pop up in news
reports and campaign-finance filings, revealing the behind-the-scenes
coordination across organizational, geographic, and industry lines. The
origins arguably trace back to Democrats for Education Reform, a
relatively obscure group founded by New York hedge funders in the
mid-2000s.
Leila Hadd/Creative Commons
Students at a Knowledge is Power Program (KIPP) Academy charter school in the Bronx, New York.
The Hedge Fund Connection
The hedge fund industry and the charter movement are almost
inextricably entangled. Executives see charter-school expansion as vital
to the future of public education, relying on a model of competition.
They see testing as essential to accountability. And they often look at
teacher unions with unvarnished distaste. Several hedge fund managers
have launched their own charter-school chains. You’d be hard-pressed to
find a hedge fund guy who doesn’t sit on a charter-school board.
Consider Whitney Tilson. Straight out of Harvard, Tilson deferred a
consulting job in Boston to become one of Teach For America’s first
employees in 1989. Ten years later, he started his own hedge fund in New
York. Soon after that, Teach For America founder Wendy Kopp took him on
a visit to a charter school in the South Bronx. It was an electrifying
experience for him. “It was so clearly different and so impactful,”
Tilson says. “Such a place of joy, but also rigor.”
The school was one of two original Knowledge Is Power Program
schools—better known as KIPP—which has since grown into a prominent
charter network with nearly 200 schools in 20 states plus the District
of Columbia, serving almost 70,000 students, predominately low-income
and of color.
But back then, charter schools were still a rather unfamiliar novelty
to most people. Tilson, however, was convinced that they were the
future of education. He started dragging all his friends, most of whom
were hedge fund investors, from Wall Street up to the South Bronx to see
the KIPP school. “KIPP was used as a converter for hedge fund guys,”
Tilson says. “It went viral.”
Many critics of the corporate education-reform movement are quick to
accuse proponents of seeking to cash in on the privatization of one of
the United States’ last public goods. And while there certainly are
those in ed-reform circles who stand to benefit from a windfall of new
education technology, testing, and curriculum services, hedge funders by
and large do not fit that stereotype. Theirs is more of an ideological
and philanthropic crusade, rather than a crude profit-seeking venture.
“I personally never knew what the situation
was like for families forced to attend their local school in the South
Bronx, or Brooklyn,” Tilson says.
As Tilson explains it, hedge
fund managers almost exclusively come from well-off backgrounds and got
the best educations in the world.
“I personally
never knew what the situation was like for families forced to attend
their local school in the South Bronx, or Brooklyn,” Tilson says.
“I didn’t know of anyone who dropped out of high school or college—much
less that there were high schools where half the students dropped off.”
In the mid-2000s, Tilson was on what he says was his 100th visit to
KIPP. Dave Levin, KIPP’s co-founder, told him that Levin was trying to
open up more schools but was running into political resistance. The fact
that KIPP had been succeeding without unionized teachers was
threatening to many in the Democratic Party, Tilson recalls Levin
telling him.
Tilson was shocked that anyone would try to stymie the growth of
KIPP, which had had some promising signs of success early on; he was
even more shocked that it was mostly Democratic politicians opposed to
charter expansion. Why, he wondered, would the party that’s supposed to
be for the less well-off be standing in the way of educating
disadvantaged children?
He directed his anger at what he says is the most powerful
special-interest group in the Democratic Party: teachers unions. So in
2005, Tilson got together with a number of other highly educated,
wealthy investors to build a political instrument to simultaneously
advance pro-charter education reform and beat back what they saw as
oppressive teachers unions.
“Our public school system—including charter schools—is a governmental
system, and that means at the end of the day, it’s run by politicians,”
Tilson says. “And politicians respond to votes and they respond to
money. That means if you want to change a governmental system you’ve got
to play the political game.”
The list of original funders is chock-full of Wall Street A-listers.
There was Joel Greenblatt, head of Gotham Asset Management and author of
the seminal high-finance book
You Can Be a Stock Market Genius.
There were Charles Ledley and James Mai of Cornwall Capital, perhaps
most well known for betting big against the subprime-mortgage market,
which was depicted in the book-turned-blockbuster
The Big Short.
There was David Einhorn, head of Greenlight Capital, who has drawn
scrutiny on more than one occasion for financial wrongdoing.
Basically, if you were anybody who was anybody in hedge funds, you
probably chipped in. Tilson called the group Democrats for Education
Reform (DFER), and set it with a mission “to break the teacher unions’
stranglehold over the Democratic Party.”
Early on, DFER identified then-Senator Barack Obama and then–Newark
Mayor Cory Booker as promising politicians willing to break with
teachers unions. DFER was instrumental in convincing Obama to appoint
charter-friendly Chicago Superintendent Arne Duncan as secretary of
education, and it spent a lot of time and money lobbying the
administration to pursue reformist education policies like Race to the
Top and Common Core. Tied to Obama’s coattails, DFER was now one of the
most influential political players in the ascendant education-reform
movement.
Indiana Gov. Mitch Daniels lifts the bill into the air as Lt. Gov.
Becky Skillman applauds after he signed the bill creating the nation's
broadest school voucher program and another that calls for an expansion
of charter schools, at the Statehouse in Indianapolis, Thursday, May 5,
2011.
“All of a sudden, there were politicians all over the country who
were willing to back education reform,” Tilson says. “We were able to
raise more money, but there were also a lot more fields to play on.” As
it found tremendous success at the federal level, DFER tried to maximize
its newfound influence to leverage reform in local politics.
The Indianapolis Track
Beginning around 2010, charter advocates set their sights on
Indianapolis. In 2011, the newly Republican state legislature passed a
law that made it easier for new charter schools to open, quickly fueling
their growth. Most new charters opened in Indianapolis, home to a
struggling urban district that serves roughly 30,000 students. Many
schools were failing to meet state standards, enrollment numbers were
dwindling, and the clamor for a solution was growing.
At the epicenter of the city’s reform push was the Mind Trust, a
local education-reform group that promotes more school choice, autonomy,
and charter partnerships. To do those things, the district needed a
friendly superintendent and a sympathetic school board. The Mind Trust
helped bring in DFER, the advocacy group Stand For Children, and the
network of political money that came with them.
Annie Roof was first elected to the Indianapolis Public Schools board
in 2010, aspiring to bring a parent’s perspective and substantive
change to the school district. She was fed up with poor communication
from the district and what she says were unfair school spending
patterns. She raised about $3,000 and won a seat. At first, Roof was the
“reform” member on a board that featured a number of strong supporters
of the superintendent, Eugene White, who resisted integrating charter
schools into the district.
Then the 2012 school board elections brought in a new wave of
reformers. One was Gayle Cosby. She and her kids had attended the city’s
public schools, and she had taught in the district.
Greenlight Capital founder David Einhorn, one of many Wall Street
A-listers to contribute money to Democrats for Education Reform.
Several months before the election, Cosby decided to run against a
longtime incumbent for a seat on the district’s school board. “When I
ran, I felt pretty strongly about the idea of autonomy in a broad sense
and felt as a teacher, a lot of what I wanted to achieve with my
students was limited by a top-down feeling of control,” she says.
She was independently running her campaign for several months, trying
to build a rapport with local voters. Then, as the election neared, her
openness to “reform” attracted the attention of DFER, which had
recently launched an Indiana chapter to build off of the state’s recent
changes to public-education law. It quickly zeroed in on building a
pro-charter majority on the school board.
DFER pumped more than $40,000 into Cosby’s campaign, hiring her a
campaign manager, orchestrating several direct-mail flyer blasts, and
buying up radio spots. This was unheard-of in Indianapolis school board
races.
“At that point, I felt a loss of control in certain respects,” Cosby recalls.
“The way they were able to win was through the money, through the
messaging,” says Cosby, adding that about ten mailers were sent on her
behalf. “That’s a huge sum of money; that’s pretty insurmountable when
the public lacks understanding about these issues. The average voter saw
the potential for something shiny and new.”
By the end, Cosby had raked in a total of nearly $80,000. Two other
reform candidates were elected with more than $60,000 in support,
including $10,000 checks from former New York City Mayor Michael
Bloomberg.
Before she was even sworn in to her seat on the board, it became
apparent that Cosby’s idea of reform was different than DFER’s. She and
the other new board members were invited to what she describes as a
secret meeting at Eli Lilly, an Indiana pharmaceutical company with
major philanthropic initiatives. The meeting featured a presentation
pitching a plan to expand and fully integrate charter schools into the
Indianapolis Public Schools system.
“It hit me fully in the face that the
expectation of my role was to support a much larger, clandestine agenda
in the city,” Cosby says.
“It hit me
fully in the face that the expectation of my role was to support a much
larger, clandestine agenda in the city,” Cosby says. “That’s when I realized that this role I was stepping into was going to be filled with problems.”
One of the new reformers was Caitlin Hannon, a Teach For America alum
who had taught in IPS for two years before running. After she was
elected to the board, she became the executive director of Teach Plus
Indianapolis, a Bill Gates–backed organization that amplifies the voices
of young reform-minded teachers, often at the expense of teachers
unions. Hannon raised nearly $40,000, including contributions from
Bloomberg, DFER funder Charles Ledley, and hedge funder Alan Fournier.
In 2013, the new school board bought out the superintendent’s
contract and began looking for a turnaround expert who prioritized
charter-school expansion, autonomy, and innovation. They unanimously
chose Lewis Ferebee, who had previously worked in the Durham, North
Carolina, public school district, overseeing a number of struggling
schools.
Ferebee quickly unveiled a plan that would cut the size of the
district administrative office and begin liquidating school buildings
and renting out space to outside groups—including charters. Soon after,
he was lobbying for a state bill that would allow IPS to form compacts
with charter schools to operate autonomously within the district. Much
to the dismay of many state Democrats and the state teachers union, the
bill passed.
By 2014, the floodgates of outside money were wide open.
By 2014, the floodgates of outside money were wide open. Though
DFER’s Indiana operation had shuttered due to poor local leadership,
its presence was still strong in the school board elections.
By this time, Annie Roof had ticked off the local education reform
organizations like DFER, Stand For Children, and the Mind Trust by
refusing to play ball. Her idea of “reform” did not mesh with the
organized reformers’. “What money has made that word, I’m not a part
of.”
So the network reached into its bench and recruited one of its own.
Education consultant Mary Ann Sullivan was a former Democratic state
legislator in Indiana who co-authored bills to expand the state
charter-school law and revamp the teacher-evaluation and licensure
process. She also sits on DFER’s national advisory board.
In her campaign to oust Roof, who had been elected board president,
from Roof’s at-large seat, Sullivan raised more than $70,000, inundating
the city with mailers, phone-banking, and paid media. She trounced Roof
by more than 25 percentage points.
As Roof puts it, they took out parents and replaced them with politicians.
“I was incredibly disappointed with the city of Indianapolis to buy
into such tactics of cheap mailers and phone calls,” Roof says. “School
board races used to be run by those around the kitchen table. It’s no
longer a local election.”
Elected along with Sullivan was LaNier Echols, an Indianapolis
charter-school dean (who was promoted to principal after getting
elected) who raised $65,000, and Kelly Kennedy Bentley, a former IPS
board member who had also served as DFER Indiana’s treasurer.
With a near-unanimous reform majority now sitting on the board,
Ferebee continued expanding charter-school partnerships—including
handing control of one struggling elementary school over to a charter
school favored by local charter advocates.
Cosby has since taken up the role as the board’s main dissenter. She
believes that charter special interests have completely co-opted the
desire for change in the schools and have promoted an agenda that sees
charter schools and privatization as the only way to fix Indianapolis
Public Schools. Four seats will be up in 2016, including Cosby’s, who
has decided not to seek re-election as she focuses on a doctoral
program.
A National Crusade
The same scenario playing out in Indianapolis has become increasingly
common in school districts around the country, as national
organizations—mirroring DFER’s strategy—have expanded into more and more
states.
DFER currently has active operations in 13 states and the District of
Columbia. Students First, a group launched by former D.C. schools
chancellor Michelle Rhee, is operating in ten states. Stand For Children
has 11 state chapters. The 50-State Campaign for Achievement Now
(50CAN) works in seven states so far. All of the groups have put school
board races in their crosshairs.
Just weeks before the Minneapolis school board elections in 2014,
which were expected to largely influence who the next superintendent
would be, reports surfaced that detailed a massive influx of outside
money in the race for two board seats. Both 50CAN’s Minnesota operation
and Students for Education Reform (SFER) were campaigning for former
Minneapolis City Council member and charter booster Don Samuels. The
reports showed that the 50CAN Action Fund had raised $15,000 and SFER
had raised $36,000. SFER board member Adam Cioth, who manages the
Rolling Hills Capital hedge fund, provided the majority of SFER’s
money—about $23,000.
AP Photo/Manuel Balce Ceneta
Early on, Democrats for Education Reform identified then-Senator
Barack Obama and then-Newark Mayor Cory Booker as promising politicians
willing to break with teachers unions.
Charter advocates also set up a PAC that raised more than $200,000
from three donors—Michael Bloomberg, Teach For America board member and
venture capitalist Arthur Rock, and financier Jon Sackler, who sits on
50CAN’s and SFER’s boards. Samuels won his race.
Last year in Denver, DFER contributed a quarter-million dollars to
launch the Raising Colorado super PAC, which went on to spend $90,000
running ads and mailing flyers in support of Happy Haynes, the incumbent
at-large member, and Lisa Flores, a former Gates Foundation program
officer who was running for an open seat. Both won.
The flood of outside money that’s become a new normal in many school
board elections is troubling for several reasons. And the stakes of 2016
couldn’t be higher. This year alone, 640 of the country’s largest
school districts by enrollment are holding elections, with nearly 2,000
seats up for grabs, according to Ballotpedia. All together, these
districts educate around 17 million students—about 34 percent of all the
K–12 students in the nation.
Compared with other political races where a campaign will stretch
over the better part of a year (or more), school board races are unique.
Filing deadlines are much closer to Election Day, meaning that the
field of candidates doesn’t fully materialize until quite late and the
actual races don’t heat up until about two months out.
That makes it more difficult to vet candidates and learn about
connections. Campaign-finance reports exposing big money often pop up
late—that’s if the locality even includes school board candidates in its
database.
The coordinated and tangled web of charter-advocacy groups’ political
activity makes their financing hard to track. National groups and big
individual donors will often funnel money to local PACs, which in turn
spend money independently from a candidate’s campaign.
Many of these organizations operate as 501(c)(4)s and thus don’t have
to disclose donors or, depending on state law, even fully disclose
independent expenditures. For instance, Stand For Children, which was
the main funder in the 2014 Indianapolis school board races, still won’t
disclose how much they independently spent, though local watchdogs have
gathered that it was a huge sum.
“There’s significant spending happening below the surface,” says
Ballotpedia’s Daniel Anderson. “It’s hard to gauge whether that spending
balances the scales between unions and ed-reform groups or if the
scales are still tilted significantly [toward unions].”
Behemoth groups sponsored by mega-billionaires like Eli Broad, Bill
Gates, the Koch brothers, and the Walton family have spent hundreds of
millions to launch charter schools, sponsor think tanks, and more
broadly steer the ideological DNA of reform. In recent years, newer
organizations have positioned themselves adjacently to that machine
while focusing more explicitly on politics. Critics, though, say there’s
little difference between groups like DFER and those on the right. DFER
has taken heat for teaming up with the Koch brothers and the American
Legislative Exchange Council (ALEC) in backing California referendums
that attacked public education and unions, and in opposing a ballot
measure to impose a tax on millionaires. They’ve also given money to a
right-wing group that was a booster of Wisconsin Governor Scott Walker’s
anti-union agenda, and took out an ad in 2012 blasting the Chicago
Teachers Union in the lead-up to a strike.
For his part, Whitney Tilson insists, “We’re writing the checks, but
we’re not dictating everything that’s going on.” In a written statement
to the Prospect, DFER National President Shavar Jeffries added: “Our
state chapters are not run by people flying in from Washington. They are
staffed by local political organizers and education experts that are
overwhelmingly from the communities they work in.” But the financial
influence of the outside charter-boosters is an ill-kept secret. The
pushback against outside pro-charter money in local races has been
steadily growing as more and more cities are impacted. That anger likely
becomes more visceral when it becomes clear to voters that out-of-state
billionaires are trying to tip the scales in their own backyard.
“Now that we’ve seen two election cycles with huge sums of outside
money, I’m hopeful that voters in Indianapolis have become enlightened
to what’s really happening,” says Indianapolis Public Schools board
member Gayle Cosby. “It could affect some change in 2016.”
