How billionaire-funded ‘ed reform’ groups push charters, vouchers

Michelle Rhee (by Sarah L. Voisin/The Washington Post ) Michelle Rhee (by Sarah L. Voisin/The Washington Post )

How powerful are organizations such as  Michelle Rhee’s StudentsFirst and other like-minded groups that support charter schools, voucher programs and the weakening of teachers unions.?

The Center for Public Integrity, a nonpartisan, nonprofit investigative news organization that works to reveal abuses of power, corruption and betrayal of public trust by public and private institutions, takes a look at this issue in a new post on its Web site, “Education groups battle teachers unions in state races.” It reveals the growing power of the purse of “education reform” organizations that are funded by wealthy philanthropists and that are spending big bucks to support mostly conservative candidates running for local and state offices around the country.

And get this: Federal tax rules allow them to operate without revealing from whom they get their money, meaning the public doesn’t know who is funding many candidates running for public office.

Here, with permission from the center, are excerpts from the article, and you can find the rest here:

Michelle Rhee — is leading a new wave of “education reform” organizations, funded largely by wealthy donors, that are challenging teachers’ unions and supporting mostly conservative candidates up and down the ticket in dozens of states.

These groups promote charter schools, voucher programs and weakening of employment safeguards like teacher tenure, all ideas bitterly opposed by unions.

StudentsFirst flooded at least $3 million in outside spending into state elections in 2012, putting the group roughly on par with the Service Employees International Union, or SEIU, across 38 states examined by the Center for Public Integrity and the National Institute on Money in State Politics.

The Sacramento, Calif.-based group is far from the only education reform organization that has gained prominence in the aftermath of the 2010 Supreme Court decision that made it easier for corporations to fund political campaigns.

Among the biggest spenders: the American Federation for Children, 50CAN, Stand for Children and Democrats for Education Reform . The organizations flooded states across the country with independent advertising and canvassing efforts in the run-up to the 2012 primary and general election.

They have been funded by a slew of billionaire donors, like philanthropist Eli Broad, former New York Mayor Michael Bloomberg, hedge fund manager Dan Loeb and Netflix CEO Reed Hastings. However, the full list of funders opening their checkbooks for the education reformers remains a mystery since StudentsFirst and many of the other groups are so-called social welfare nonprofit organizations, which fall under section 501(c)4 of the U.S. tax code.

Such groups are not required to reveal their donors.

Since 2012, the funding onslaught by these groups and their backers has shown no signs of slowing.

Spending has reached unheard of heights, even at the school board level.

The race for Los Angeles school board in May 2013 attracted nearly $4 million in spending on reform-minded candidates. Major supporters of the pro-reform committee include Bloomberg, StudentsFirst and Broad, a Los Angeles resident. The organization was countered by roughly $2 million from labor groups.

The American Federation for Children spent $110,000 in outside spending supporting three candidates for the Wisconsin State Assembly in the run-up to an election on Nov. 19, 2013.

Great Seattle Schools, an education reform-focused political action committee, spent just shy of $62,000 in outside spending in the months leading up to the city’s November 2013 school board election.

Democrats for Education Reform was among the committee’s backers, as were local wealthy figures like Chris Larson, a former Microsoft executive who owns a minor stake in the Seattle Mariners , and venture capitalist Nicholas Hanauer.

At the helm of this movement, StudentsFirst has dominated campaigns for state legislators and ballot initiatives that often seem outside the group’s education-focused mission statement. As StudentsFirst faces off with labor groups and labor-backed candidates, the group’s considerable financial heft may be shaping more than education policy.

Rhee, the controversial former chancellor of Washington’s public school system, established StudentsFirst not long after resigning her post in 2010. The new organization’s goal, she said, would be to provide some much-needed opposition to the teachers unions’ political power.

“The problem to date has been that you’ve had these incredibly powerful teachers unions that have lots of resources, and they use those resources to have influence on the political process,” Rhee said last year during an interview at the Commonwealth Club of California.

Rhee said StudentsFirst is the first education-oriented national interest group to seriously challenge the unions.

Since leaving Washington, Rhee has backed legislation curbing collective bargaining rights in several states. In the 18 states where the group is active, StudentsFirst has fought to eliminate “last in, first out” provisions in teachers’ contracts and to increase the role that quantitative evaluations play in teachers’ job security.

Accordingly, StudentsFirst tends to oppose candidates who align with unions.

Among these union-supported candidates in 2012 was Michigan state Rep. Rashida Tlaib, an incumbent who ran against fellow incumbent Rep. Maureen Stapleton in the Democratic primary as a result of statewide redistricting.

Though Stapleton was a former teacher in the Detroit Public Schools, Tlaib received the endorsements of the Michigan Education Association and the Michigan Federation of Teachers. Stapleton, on the other hand, backed charter schools and linking teacher salaries to performance, both key components of StudentsFirst’s mission.

Between July 20 and the Aug. 7 primary, StudentsFirst poured $195,000 in outside spending supporting Stapleton. Meanwhile, the Michigan Federation of Teachers, the Michigan Education Association and several other labor groups contributed directly to Tlaib’s campaign.

“You almost never see a state house race in the city of Detroit go over $30,000, so when StudentsFirst put $190,000 into that, that was an extraordinary amount of money for a Democratic primary,” said Rich Robinson, executive director of the Michigan Campaign Finance Network.

A couple months earlier, voters in Whittier, Calif., saw a similar phenomenon. The teachers unions supported Democrat Rudy Bermudez to represent the overwhelmingly Democratic district in the state assembly. But StudentsFirst backed a different Democrat, Ian Calderon.

A then-26-year-old surfing champion who had never held public office, Calderon’s dad is former state Sen. Charles Calderon and his uncle is state Sen. Ron Calderon.

According to Al Jazeera America, Rhee’s representatives met in February 2012 with former Assemblyman-turned-lobbyist Thomas Calderon, brother of Ron and Charles, to gain support for a bill that would eliminate the last-in-first-out clause of California teachers’ contracts. The next day, Ron introduced the bill.

Rhee’s group then spent more than $378,000 backing Calderon in the 11 days before the primary election on June 5, most of which paid for broadcast advertising, campaign finance records show.

Calderon defeated Bermudez by 337 votes in the primary before handily defeating Republican Noel Jaimes in the general election.

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Politics aren’t new to education. For example, the American Federation for Children has been around, though under a different name, and has been fighting the teachers’ unions for more than 15 years.

What’s new is the unprecedented level of education-focused political spending at state and local levels.

“They’re the recipients of money from Wall Street and Silicon Valley and some of the wealthiest people in America,” American Federation of Teachers spokesman Michael Powell said of StudentsFirst. “And they’ve raised it at a fairly high clip, and it makes them more competitive in these races around the country, there’s no doubt about it.”

Karen White, national political director for the National Education Association, traced the new dynamic to the aftermath of the Citizens United Supreme Court decision that invited corporate spending into the political process.

White said, she sees no distinction between Rhee’s StudentsFirst and the other corporate-backed special interest groups the union has begun to face in recent years.

“We’re going to get outspent,” she said. “We’re going to do everything we can to fight back and be strategic with our spending, but we are never going to be able to compete with the folks who are trying to corporatize education … It’s clearly a national battle that they’ve taken on all across the country.”

Despite White’s concerns, the NEA’s outside spending in 2012 state races was at least $6.4 million, more than double the amount spent by StudentsFirst in the states examined by the Center for Public Integrity.

Any comparison between education reform groups and the NEA is “really a David and Goliath situation,” said Matt Frendewey, spokesman for the American Federation for Children.

“They are one of the largest unions in the country. Period,” he said. “They carry a tremendous amount of clout, especially in relation to how many members they have, and they have a tremendous influence.”

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The influence web

StudentsFirst is made up of a coalition of nonprofit organizations and affiliated political action committees in a handful of states, a structure that’s common among political groups.

There’s StudentsFirst, the main “social welfare” nonprofit or 501(c)(4), and the Great New England Public Schools Alliance, another 501(c)(4) nonprofit that operates mostly in Connecticut. There’s also the StudentsFirst Institute, which is not allowed to participate in elections since it falls under section 501(c)(3) of the U.S. tax code. Together these groups spend millions on lobbying, direct campaign contributions and outside spending.

Since 2011, the StudentsFirst Institute received $9 million in grants from the Walton Family Foundation, $7 million from billionaire philanthropists Laura and John Arnold, and $1 million from billionaire hedge fund manager Steven Cohen and his wife Alexandra.

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.

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….

Read about the motives of the groups and more here.

Valerie Strauss covers education and runs The Answer Sheet blog.

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Valerie Strauss · March 11, 2014