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Forces behind the privatization of education

Published May 17, 2012 9:57 PM

Philadelphia students protest school closings and cuts in staff.
WW photo: Joseph Piette

The basic formula behind the drive for for-profit education varies little from state to state: Close public schools, open privately managed schools, cut the budget. It is usually coupled with the negation of union contracts and lower wages and benefits for school workers. While charter schools are paid out of public tax funds, they are exempt from many state and local regulations, especially those protecting work conditions and employee rights.

According to a January report from the National Education Policy Center and Western Michigan University, 35 percent of all U.S. charter schools are operated by private education management organizations (EMOs), accounting for about 42 percent of all school enrollment. By 2010, there were around 5,000 charter schools in the U.S., with around 1.5 million students.

The name EMOs was coined by Wall Street after its name for Health Maintenance Organizations. HMOs were the health insurance industry’s business model for increasing profits by denying services. The first EMO was legalized in Minnesota in 1991, but financial deregulation in the 1990s provided Wall Street with the incentive to get into the education business. Recently, the Obama administration has pumped hundreds of millions of dollars of federal “education” money to facilitate the privatization drive.

Charter schools drain money away from local public school districts. Unlike public schools, EMOs can dismiss students who have “disciplinary problems” or even refuse to admit them.

Charter schools are not obliged to provide instruction in English as a second language. National studies have shown that EMOs are more likely to increase school segregation and isolate students by race and class than public schools.

A 2010 Western Michigan University-sponsored study found charter schools spent proportionately more on administrative costs than traditional public schools and less on instruction. It found that student support services averaged $858 per year for public schools compared to $517 for charters.

Surge in for-profit EMOs

While nonprofit EMO corporations have grown from 46 in 1999 to 197 in 2011, with total enrollment growing from 20,133 to 384,067, for-profit EMO corporations increased from 33 in 1999 to 99 in 2011, with total student enrollment growing from 70,743 to 394,096.

Enrollment in EMO-operated online charters has grown from 11,500 in 2003-04 to around 115,000 in 2010-11. These virtual schools account for 10 percent of all for-profit EMOs. A considerable portion of public funding for online schools ends up paying for advertising. (nepc.colorado.edu, Jan. 12)

Charter schools are heavily concentrated in urban areas in lower-income, working-class and poor communities. U.S.-based online schools have expanded to Britain, Chile and Mexico.

Historically, the largest for-profit EMO was EdisonLearning (formerly Edison Schools), whose revenues grew from $12 million in 1995 to $217 million in 2000. Edison was the first for-profit EMO to move into the Philadelphia school district, despite massive opposition from students, parents and teachers.

Behind privatization: ALEC

In 2012, the major EMOs nationally include The Apollo Group, K12 and the National Heritage Academies, which all share a common connection — membership in the American Legislative Exchange Council.

With the drive to privatize public schools picking up steam over the last decade, education management cor­por­ations are raking in lucrative profits. Several of these companies are members of ALEC, whose Next Generation Charter Schools Act has been used as a model for charter school legislation in 42 states and the District of Columbia.

ALEC is the right-wing power behind Florida’s racist “Stand Your Ground” law, which George Zimmerman will use in his defense for killing unarmed Black teenager Trayvon Martin on Feb. 26. It’s also behind other reactionary legislation targeting undocumented workers and women and supporting the prison-industrial complex.

On the website alecexposed.org, the Center for Media and Democracy gives a summary of the provisions of the Next Generation Charter Schools Act. CMD describes this “model” legislation as an “attempt to have state taxpayers subsidize charter schools … to compete with public schools, while exempting charter schools from complying with any of the legal requirements that govern public schools.”

Under the model legislation, charter schools don’t have to adhere to qualification standards when hiring teachers or principals, nor do they have to stick to prevailing wage and hourly requirements, giving them a competitive edge over public schools.

The act gives state governors “unilateral power to appoint separate, un-democratic charter school boards, whose members would not be compensated by the state,” with “no rules against conflict of interest by whomever actually employs” them. The act also removes limits on the number of charter schools in a given state.

Top three for-profit EMOs

Among the for-profit education corporations with membership in ALEC is the leading online EMO, The Apollo Group, a Phoenix-based company known for its chain of for-profit career colleges and other for-profit educational institutions. The corporation’s FY2010 earnings were $4.93 billion.

Apollo’s Connections Academy and Connections Education had total revenues of $2.1 billion in 2010. Connections Academy is also a member of ALEC. As of 2011, Mickey Revenaugh, the company’s co-founder and a vice president, was co-chair of ALEC’s Education Task Forces.

Apollo initially ran the online Insight School in Washington state. Most of Insight’s teachers were non-union and part-time. Staff ratio was one teacher for every 53 online students. State records found many Insight students were struggling. In school year 2009-10, only 50 percent were passing their classes, 45 percent had dropped out, and only 7.2 percent were expected to graduate on time. (KING 5 News, Oct. 31)

In school year 2010-11, a new for-profit charter corporation, K12, took over the Insight schools. Also an ALEC member, K12 was established as a publicly traded entity in 2007, with $90 million from Michael R. Milken, the junk-bond dealer and securities-fraud felon.

K12 now has 81,000 students in 27 states. While K12's schools are designated “nonprofit,” states hire them as a for-profit management company. This arrangement allowed K12 to corner the Pennsylvania online charter market where it received 80 percent of the funding of traditional schools — $8,000 per student — while providing no buildings, books or teachers. Its students are home-schooled.

According to a 2011 study by Western Michigan University, three-quarters of K12’s students failed to achieve Annual Yearly Progress goals. In June 2011, Pennsylvania filed a complaint against K12 for its students’ failures in reading and math proficiency. (Bloomberg Businessweek, June 2) K12 generated $500 million in revenue in 2011.

One of the largest for-profit EMOs is National Heritage Academies, another ALEC supporter, which has led the way in profiting off public education. Based in Grand Rapids, Mich., the company operates 71 schools across the country, including 43 in Michigan. National Heritage Academies was established by J. C. Huizenga, son of the billionaire founder of Waste Management, Inc. and Blockbuster video.

National Heritage Academies is basically a Christian school system. It was successfully sued in 2000 by the American Civil Liberties Union for teaching creationism with public funds.

Promotion of charter schools has also proven to be lucrative for politicians. Pennsylvania’s Gov. Tom Corbett received $334,000 in campaign contributions in 2010 from the founder and CEO of Chester Community Charter, the state’s largest EMO, which now enrolls more than half of the impoverished Chester Upland school district’s K-8 students.

Contrary to the hype of “Waiting for Superman,” there is little proof that private charter schools are capable of providing any better education than seriously underfunded public schools. In fact, studies have shown that the opposite is true. In the film, it is even admitted that only 1 in 5 charter schools has achieved the “amazing results” promised.

Stanford economist Margaret Raymond conducted a national study of charter schools in 2009 which evaluated student progress on math tests in half of the 5,000 charter schools in the U.S. The study found that 17 percent were superior to a matched traditional public school, while 37 percent were worse than a public school. The remaining 46 percent had academic gains no different than those in similar public schools. (Washington Post, Oct. 11)