Why Michelle Rhee Is Giving Millions to Conservatives in Dozens of States

Who's winning, who's losing, and why.
March 7 2014 12:03 PM

The Schoolyard Fight

Michelle Rhee’s new organization is giving millions to support conservative candidates in dozens of states.

(Continued from Page 2)

The StudentsFirst Institute reported spending just shy of $1 million on lobbying between Aug. 1, 2011 and July 31, 2012, the most recent fiscal year whose tax reports are available. The group also gave $1 million in that period to the affiliated Great New England Public Schools Alliance, or GNEPSA.   

GNEPSA, in turn, made just shy of $158,000 in independent expenditures in Connecticut legislative races in 2012 and received contributions from Bloomberg and venture capitalist Nick Beim, campaign finance records show.

StudentsFirst, the 501(c)4, spent another $346,000 on lobbying during the 2012 fiscal year. State records suggest the group far exceeded this number in the following fiscal year, between Aug. 1, 2012 and July 31, 2013, though the group’s tax filing isn’t yet available for that time period.

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Because StudentsFirst is not required to disclose its donors, it’s impossible to know where most of the group’s funds come from, a point that detractors use as a reason to question the group’s motives. Those donors whose names appear on the occasional lobbying disclosure report or tax filing include high-profile figures in political, financial, and technological industries.

For example, StudentsFirst spokesman Francisco Castillo indicated a 2012 Huffington Post story that named billionaire New Jersey hedge fund manager David Tepper, a major Mitt Romney supporter, among StudentsFirst’s funders. The article also named the Broad and Arnold families.

Castillo declined to further detail the group’s donors, citing organization policy.

Many other education reform groups are more open about who’s providing the means to their methods. As a result, they offer a small window into the rolls of donors injecting cash into the education reform movement as a whole.

An example of this is the Coalition for School Reform, which spent nearly $4 million on school board races in Los Angeles last year. The group received $1.4 million from Bloomberg, $500,000 from Broad, and $250,000 from former Univision owner Jerry Perenchio, according to city campaign finance records. Other donors included StudentsFirst, Hastings, the Arnold family, former Los Angeles Mayor Richard Riordan, former New York School Chancellor Joel Klein, and DreamWorks Animation CEO Jeffrey Katzenberg.

The high-profile donors help give prominence to the groups and their causes, according to Jessica Levinson, a law professor at Loyola Law School who serves on the Los Angeles Ethics Commission. But above all, these donors have money to spare—a lot of money to spare.

“It’s clear that these groups are funded by people who seem to have an endless supply of corporate money,” said Tenoch Flores, spokesman for the California Democratic Party.

Motives vary

Why the groups and their donors have chosen to support charter schools and voucher programs is sometimes less clear. The American Federation for Children chooses which races to back based on where the group feels it can help increase educational options available to parents, according to Frendewey.

StudentsFirst’s Castillo echoed these sentiments. “Our organization supports candidates that will be important partners in our ongoing push to ensure that every student attends a great school and is taught by a great teacher, and that's the reason we're pleased to support local and state reform-minded candidates,” he said in a written statement.

Rhee’s group and many other education reform organizations believe that privatizing education will prove beneficial for the country’s students, explained Michael Apple, who specializes in education policy at the University of Wisconsin. The same is true of the groups’ donors.

“If you look at Broad, Bloomberg, they’re in favor of strong mayoral control of education,” he said. “Some of it is also this belief that the corporate sector is the last remaining set of institutions that form the engine of our society.”

But changing the way public education functions also opens windows for private corporations and individuals to make a profit, which is likely a factor in at least some donors’ decisions to open their wallets, he said. He compared education to health care, “meaning the sources of profit are immense.”

The education reform agenda creates opportunities for companies that operate online learning programs and computerized testing, said White, of the NEA. The agenda also places a heavier emphasis on standardized testing, offering potential financial benefits to companies that offer those services.

In the past, K–12 education has been a “sluggish,” highly regulated market that investors were wary of jumping into, said Patricia Burch, an education professor at the University of Southern California. Not so anymore.

The technology schools use to administer tests and supplement coursework has emerged as a multibillion-dollar industry, according to Burch’s research. In 2002, the education sector spent an estimated $146 million on technology. By 2011, that number was estimated at $429 million, according to Burch.

Burch points to recent transactions and mergers as signs of the potential windfalls this market can offer. In 2011, textbook giant Pearson purchased SchoolNet, a tool that helps districts track students’ achievement on standardized tests, for $230 million. Providence Equity Partners bought online educational platform Blackboard Inc. for $1.6 billion. For the low price of $13 million, K12 Inc. acquired Kaplan Virtual Education, which offers computer-based learning for public and private schools in nine states. (Disclosure: Kaplan Virtual Education was owned by Graham Holdings, which owns Slate.) In 2012, Apple also partnered with Pearson, McGraw-Hill, and Houghton Mifflin Harcourt to offer digital textbooks for the iPad.

“It’s in the early stages. We know that there’s potentially tons of revenue to be generated,” Burch said.

Campaign costs spiral

Though few elections occurred in 2013 around the country, the education reform movement continued to inject an historic volume of funds into local and state races. The most expensive was the race for school board in Los Angeles that attracted more than $6 million in outside spending.

In the month leading up to the May mayoral and city council election in Jersey City, N.J., the Better Education for New Jersey Kids, Inc., PAC dumped more than $342,000 into advertising and mailers. The PAC is associated with the nonprofit Better Education for Kids, which is not required to disclose its donors but lists Tepper among its trustees.

A special legislative election in Wisconsin and a school board race in Seattle proved ripe battlegrounds for political spending arms races between education reformers and their opponents.

In Denver County, Colo., a committee whose largest donors were Bloomberg and the political arm of education reform nonprofit Education Reform Now spent $103,000 on a school board race.  

In nearby Douglas County, Colo., the labor-backed Committee for Better Schools Now spent $935,000 on a school board race. That spending was countered by the Colorado chapter of Charles and David Koch’s Americans for Prosperity Foundation, which claims to have spent $350,000 on campaign efforts. No public records exist of the group’s spending.

Each of these races suggests that education reform spending is going to continue on an upward trajectory, at least for the near future. “Historically we haven’t seen that kind of spending on school board races here [in Los Angeles], but it’s likely to become a lot more commonplace in the future,” said Dan Schnur, a former Republican strategist who is running for California secretary of state. “My guess is in five years, we’ll be looking back at the relatively restrained fundraising levels of 2013 with some nostalgia.”

This story was published by The Center for Public Integrity, a nonprofit, independent investigative news outlet. For more of its stories on this topic go to publicintegrity.org.

Rachel Baye is an American University fellow at the Center for Public Integrity and a former reporter for the Washington Examiner.

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