Agassi and Wall St. invest in charter schools in effort to prime the pump for public funds

Investing hundreds of millions in new charter schools for 40,000 students nationwide is a huge goal and one born of a partnership between tennis pro and local charter-school developer Andre Agassi and Bobby Turner, chairman and chief executive of Canyon Capital Realty Advisors in Los Angeles.  According to their website:

“Canyon Capital Realty Advisors LLC and its affiliate Canyon Capital Advisors LLC are registered investment advisors and money management firms based in Los Angeles, California, with approximately $19.2 billion of capital under management” (http://www.cc-ra.com/).

Turner said that he had an epiphany while reading Agassi’s 2009 autobiography, “Open.” The book charted Agassi’s professional and personal life and included a discussion of his experiences with Agassi Prep in Las Vegas, the school he started in 2007. Turner, who has partnered with basketball great Earvin “Magic” Johnson since 2001 to invest nearly $2 billion in urban residential and commercial projects nationwide, thought Agassi might have a few good ideas — and a good way to make some hard cash off of little boys and girls.  Investing cash soaked sport dignitary monies in education and social projects are nothing new.  Epiphany or for-profit wet dream?

Agassi and Turner announced June 2, 2011 that they’re launching the Canyon-Agassi Charter School Facilities Fund, an investment group designed to help some of the nation’s 5,400 charter schools and their 1.7 million students find permanent school buildings (Las Vegas Review-Journal http://www.lvrj.com/news/agassi-investment-team-to-help-charter-schools-in-u-s-123007038.htm).  The two partners have already received commitments for the investments from Citigroup as well as Intel, through its Intel Capital investment subsidiary. The Ewing Marion Kauffman Foundation, a Kansas City-based entrepreneurship think tank, has signed on as well.

Canyon-Agassi executives say they’ve received commitments that, combined with a “moderate amount of leverage,” will finance $500 million in new building or retrofitted space for 75 top-performing charters and 40,000 students nationwide. Stating that due to securities regulations, the partners declined to discuss specifics on investment time horizons, amounts and other details.  This excuse might be woofed down by those who see such luminaries as “wanting to help kids” but what the group really fears is that by naming the sundry hungry corporate wolves and deep pocket vagabonds the public may become weary of the huge amounts of money pouring in from Wall Street and the venture capitalists in an effort to destroy public education.

As I argued in my semi-censored book, Charter school movement: history, politics, policies, economics and effectiveness, 2009, Greyhouse Publishing, priming the pump with private investment capital is how these firms plan to both leverage public monies through up front investments, derive profits by socializing costs, and undermine public education by hurdling the whole enterprise into a ‘free enterprise zone’.  It is a brazen move, but one that can be seen now snaking around every corner as public education falls by the wayside. 

Notice that one never hears of Race to the Top anymore?  No need, the decimation of teachers, the destruction of the commons, the deracination of students, public schools, their workers and parental constituencies is doing the work that Race to the Top could never do.  All Race to the Top did was to offer a canopy of cover for the oligarchs to begin to dismantle public education in favor of for-profit education.  They needed government buy-in and corporate Obama was happy to concede:  a corporate option for health care and a corporate option for education.  How nice, and how consistent.

Just what will the fund do?

According to Agassi:

“…the fund’s investment model will spur billions of dollars in additional charter-school development and hundreds of thousands more charter-school seats once it’s “fully executed and proven” in three to four years” (ibid).

The new corporate investment funds are aimed directly at charter schools.  At least for now.  Charter schools are mere Trojan horses for the real right wing motive: parental vouchers and the dismantling of all public education in favor of corporate education. 

The argument made by the privatizers is that the problem for many charters is that unlike traditional public schools, charter startups aren’t guaranteed classroom space or building funds by the public. The privatizers argue that traditional public schools can tap into property tax revenue to finance new construction, an option that is off-limits for most charters.  But this is a despicable lie for when it comes to public funds for schools all one sees on the horizon are cuts, cuts and more cuts.  The argument that public schools have a ‘lead’ when it comes to building sites is simply not true.  Those who make the argument know this and they lament the fact that no public monies can be used to underwrite their plans for continual profit leaching off of students and the public.  So, they seek to set the stage for a new from of pump priming that will then force the public to fund the building sites.  This is how the neo-liberals who say they hate government look for any chance they can get to use it for their own self-interests.

According to the article in the Las Vegas Review Journal:

“Without dollars to build dedicated facilities, charter schools launch in abandoned store spaces, church basements or nonprofit offices, and must pull together financing to buy or build true classroom space. That’s a tall order given the funding gap charters face: A 2010 study from Ball State University found that charter schools on average receive $9,460 per pupil, compared with $11,708 for conventional counterparts in the same state. That’s a 19.2 percent funding difference” (ibid) 

The assumption is that charter schools, or privatized enclaves should be given the same amount of public monies that public schools are given.  But why?  Fighting for the ‘private option in education’ is why.  All of this rhetoric and posturing has nothing to do with providing quality education for children as much as it has to do with subsidizing Wall Street and the giant companies that seek opportunities for capitalizing on our children for profit.

According to Robin Lake, associate director of the University of Washington’s Center on Reinventing Public Education, a pro-privatization front group:

“By far, the biggest barrier charter schools face is getting access to decent facilities. It’s something a lot of communities are trying to figure out right now.  It’s a big distraction trying to figure out how to finance facilities, and it takes away from schools’ instructional focus” (ibid). 

It’s just not fair, the argument goes, that public funds cannot be used for private venture capitalist seeking to build charter schools as a way to ‘compete’ with public schools.  Interestingly, one certainly does not hear this argument when it comes to providing a public option in health care, but when it comes to private options, well that is different.  

So, enter the Canyon-Agassi fund. The new venture capitalist group plans to build new charter schools or retrofit existing properties for high-performing charter schools looking for environmentally friendly permanent space. The plan is to have the schools lease the buildings until they reach full occupancy. At that point, Canyon-Agassi then will help operators get permanent financing to buy the buildings via New Markets Tax Credits, tax-exempt bond offerings or money from the U.S. Treasury’s Community Development Financial Institutions Fund.  Buy the buildings from whom?  Canyon-Agassi and the corporate vultures, that’s whom.  So you see, under the banner of altruism (Ayn Rand’s nemesis) the investment group will retrofit and buy buildings, get them operative and then sell them at a profit for public funds that you and I will provide in the form of taxes. 

So let’s see: Canyon-Agassi will use private capital to eventually assure socialized costs and for-profit charters or in the case of non-profits, contracting out services at public expense.  This is the game and it is nothing new.  Again, I write about the capital improvement needs of charter schools in my book referenced above and how this ‘tick’ has and is being used all over the nation. 

 Why Aagassi?

Agassi, like Magic Johnson, is a well known public sports figure and a good icon for those seeking to bank money for future investment profits and ‘sell the idea’ to a not so shrewd public.  Agassi opened ‘Agassi Prep’ in September 2001 with 150 students — none of whom was at grade level in math, reading or writing — in third, fourth and fifth grades. Agassi lobbied tirelessly to raise more than $40 million to build the school’s campus at 1201 W. Lake Mead Blvd., kicking in millions from his own fortune and gaining contributions from local ‘philanthropists’ (as they like to call themselves) and a bond from the city of Las Vegas.  Today, the school serves more than 650 students from kindergarten through 12th grade. It graduated its first class in May 2009 and says it sent 100 percent of those grads on to college (ditto for the class of 2010) (ibid).  Of course we do not know if the colleges the students went to were for-profit criminal enterprises like the Phoenix University or the notoriously criminal syndicate, Kaplan University.  All we know is that the assumption is that if kids get accepted into some college, the ‘prep school’ or ‘charter’ must be doing something right. 

But Agassi’s academy had its share of startup troubles. Its teaching staff operates on annual contracts rather than tenure (in other words they work harder, have no collective bargaining rights, have less academic freedom, little decision making power, and lower wages and benefits), and the school saw almost total teacher turnover in 2003 and 2004. This teacher turnover is not unusual as the average employment for the charter school teacher is 3-4 years.  The business plan mirrors the Wal-Mart approach to education as associates replace professional teaching staff.  Also, a 2004 Clark County School District review found violations of state laws related to personnel and reporting of student information. 

These ‘violations’ are just simple ‘transparency problems’ and certainly is not worrying Intel or CitiGroup, the bank that laundered Mexican drug money under the reign of Sandford ‘Sandy’ Weill, then its CEO and now reminted as another ‘philanthropist’.  They were also bailed out by taxpayers in the grand scheme launched in 2008.  In fact, Citigroup, the fund’s largest investor, called the partnership “inspiring.”  The company only exists to assure that it’s fiduciary responsibility to investors is satisfied so the inspiration must be found in the increased opportunities for shareholder profits and company bonuses for this is the only fiduciary responsibility the company has.

Intel, which has invested more than $1 billion in education initiatives worldwide in the past decade, said the Canyon-Agassi fund would further its school-aid efforts.  Like Citigroup and other Wall Street investment hacks, Intel is ginned up and of course need investment opportunities to continue to grow capital. 

For all its benign and caring prognostications, the Canyon-Agassi group is a capital investment fund and we know that capital is invested to maximize profits.  Nothing under capitalism is created unless it is profitable to shareholders and the case of charter schools is no different. 

I would caution those who follow these political and economic developments to focus on the issue of how these investment companies are placing their bets on virtual online learning supported by national or state vouchers (This explains both Intel and Microsoft’s eagerness to enter into the new for-profit educational market.  These companies are merely placing themselves as large players, along with Goldman-Sachs and Microsoft, in the eventual voucherization of education for cyber online learning.  This is the real issue: boiling down public education to a for-profit sauce that can then be ladled to boost company profits, destroy public education, replace learning with obedience training and assure that an educated citizenry is little more than one that takes orders.  It is truly a Race to the Bottom, all gussied up as a way to ‘help kids’.