Wall Street’s next big thing: privatizing public education

What’s really behind the charter school amendment referendum? Corporate greed.

Jeff Faux wrote for AlterNet 15 October 2012, Education Profiteering: Wall Street’s Next Big Thing? Wall Street’s involvement in the charter school movement is presented as an act of philanthropy, but it’s really about greed. He reviews some of the evidence that charter schools don’t improve education, especially when forced on states. Then he gets into why so much money is flowing into charter schools anyway.

Education privatization would not, per se, create a net new stimulus Wall Street greed for the economy. But by diverting large existing flows of money from the public to the private sector it would create new profit-making ventures that could be capitalized and transformed into stocks, derivatives and leveraged securities. The pot has been sweetened by a 39 percent federal tax credit for financing charter school construction that can double an investor’s return in seven years. The prospect of new speculative opportunities could well recharge the animal spirits upon which Wall Street depends.

Some “liberal” privatization promoters claim that charter schools should not be considered private. But that’s an argument the management companies that run the schools only use when they are asking for more government funding. At the same time they argue in courts and to legislatures that as private enterprises they should not be subject to government audits, labor laws and other restrictions.

These companies rent, buy, and sell buildings; make contracts for consulting, accounting and legal services, food concessions, and transportation; and pay their managers far more than public school principals earn. In cases where city governments have given land to charter schools, for profit real estate companies have ended up owning the subsidized land and buildings. In states where charter schools are required to be nonprofit, profit-making companies can still set them up and then organize a board of neighborhood residents who will give them the right to manage the school with little or no interference.

In 2008 Dennis Bakke, CEO of Imagine Schools, a private company that managed 71 schools in eleven states, sent an email to the firm’s senior staff. It reminded his managers not to give school boards the “misconception” that they were “responsible for making decisions about budget matters, school policies, hiring of the principal, and dozens of other matters.” The memo suggested that the community board members be required to sign undated letters of resignation. “It is our school, our money, and our risk,” he wrote, “not theirs.”

Yet in Georgia it’s our tax money they want to use to fund those “public” private charter schools. That’s the “large existing flows of money” they want to divert into their profiteering pockets. No wonder ALEC is so big into charter schools! And look who else:

According to none other that Rupert Murdoch, the U.S. education industry represents a five hundred billion dollar opportunity for investors. In 2010, he hired prominent reformer Joel Klein from his post as chancellor of the New York City Department of Education to run Murdoch’s education technology company. A few months later the firm received a $2.7 million contract from the city.

Charter schools, for profit on-line universities and other forms of privatization may not in the end fulfill all the dreams of its Wall Street promoters. But there is clearly money to be made here. And where there is money to be made, we can be sure that there will be money to finance political campaigns, to support career ladders that move between government and business and to bribe the media into ignoring the data. So the war on public education will continue. All of course “for the sake of the children.”

VoteSmartGeorgia.com If you care more about your local tax dollars than about profits for Rupert Murdoch and Bill Gates and Alice Walton; if you care more about the children of Georgia than about turning public schools into Wall Street’s next big thing: vote No on the charter school amendment!