National Radio Project

1714 Franklin Street #100-251 • Oakland, CA 94612 • 510-251-1332
ALL RIGHTS RESERVED. For permission to reproduce and/or reprint, please contact us.


Transcript: #32-98 Cashing-In on Public Schools
August 12, 1998

Program description at

Phillip Babich: Welcome to Making Contact, an international radio program seeking to create connections between people, vital ideas and important information. This week on Making Contact:-

Libero Della Piana: If you create a two-tiered system, where some kids can buy out and go to private schools, then what you'll do is, then, build that private school sector, have more and more kids pull out, and eventually the public schools will collapse.

Phillip Babich: First HMOs and health care, now EMOs and public education? That's right. Private firms, dubbed "Education Maintenance Organizations" by Wall Street Investment firms, are already managing school districts in some parts of the United States. And more heavy hitters are lining up trying to cash in as lawmakers consider school vouchers and charter schools. On this program we take a look at privatizing education. I'm Phillip Babich, your host this week on Making Contact.

In May of this year, a collection of wealthy investors lined up to bid for the powerhouse publishing company, Simon & Schuster, owned by the media giant Viacom. Among them was former junk bond king and convicted felon, Michael Milken, who is now chairman of Knowledge Universe. Milken's later enterprise is a private billion-dollar-a-year education company that owns computer training businesses, a software design firm, and 250 pre-schools, and partially owns a change of private elementary and junior and high schools. Acquiring Simon & Schuster would continue his push into the so-called "education market." The publishing company is the nation's biggest producer of textbooks and is one of the leaders in a satellite distribution system of videotapes educational materials called "distance learning." According to Newsweek Magazine, Milken predicts that investment opportunities in education will grow as quickly as those in health care. As it turned out, Viacom sold Simon & Shuster's educational and reference publishing divisions to a British media company. But Milken's attempted purchase may be a preview of what some education advocates are calling the corporate takeover of our schools. Correspondent Judy Campbell has more on this trend.

Judy Campbell: The United States public education system has been heralded as a cornerstone of American participatory democracy. An educated citizenry makes for a better functioning society. In a country of immigrants from diverse backgrounds, public education levels the playing field. That's the story of American education, but many communities aren't buying it. They say the disparity of education in poor inner cities and wealthy suburbs is the stuff of third world countries. Public education is commonly viewed as a dismal failure. And increasingly some are proposing that the solution to that, discussed on the floor of Congress, in Presidential debates, Parent Teachers Association meetings, and corporate boardrooms is privatizing education. Privatization is a trend that has been sweeping over health care, public utilities, and social services. And over the last ten years, it's been creeping into education. Privatization in education takes many forms. The most popular is the voucher system, which gives public money to fund private education. There is also a growing trend of for-profit schools being contracted by public school districts. And corporate sponsorship of school programs, services, and sports teams. Critics say that privatization marks an abandonment of public education. Libero Della Piana is the senior research associate at the Applied Research Center, which has been studying privatization issues. He says that although privatizing education is, in practice, new, the idea has been around for a long time.

Libero Della Piana: This is, goes back to Milton Friedman and the Chicago School. And since the 50s, this has been his vision. He very clearly saw vouchers as a tool to destroy what he calls the public school monopoly, or the public monopoly of the education industry. And what it is, is that if you create a two-tiered system where some kids can buy out and go to private schools, then what you'll do is, then, build that private school sector, more and more kids will pull out, and eventually the public schools will collapse.

Judy Campbell: Della Piana argues that the public school system has always served corporate interest. He says that America had an system that educated the few people who would control the economy very well, And the rest, the work force, were given a basic rudimentary public education. But now, he says, the economy has changed, and public school education is seen as obsolete by corporate interests.

Libero Della Piana: We have a new situation in public education. And one is that public education is educating a lot more students than are needed for this booming computer economy. There's a crisis of jobs in this country, and there's a two-tiered system where some kids have to prepare for high tech, high skilled jobs, and other kids don't even need to know to add to add up a hamburger in a restaurant any more. And so, I think this move to privatization is in response to that.

Judy Campbell: On the face of it, the voucher debate is a straightforward Right versus Left issue. Conservatives tout the school choice idea, where parents can opt out of public education and get the money that would have been spend at the public schools to use for private schools. Liberals argue that the programs suck dry an already chronically underfunded public education system. Those that are left in the public schools, often poor minority students, will have to put up with crumbling buildings, sparse textbooks and supplies, overcrowded classrooms, and overworked, underpaid teachers. The NAACP, in partnership with People for the American Way, has campaigned against vouchers, calling them a disaster for inner city black families. But when it comes to children, people are quick to abandon ideological lines, and the voucher debate has blurred Left/Right distinctions. At the core it seems that few people trust that the public schools will get better anytime soon, and it's hard to argue that a parent who has an opportunity for their child, shouldn't take it.

Annette Polly Williams is an African American liberal Democrat State Legislator in Wisconsin, representing Milwaukee.

Annette Polly Williams: To blame the low income families for the demise of public education, when we don't accuse the upper income or middle income families, all of whom have abandoned the public schools...The only children left in the public schools now are basically low income families, Black and Hispanic children. Milwaukee is only 19% white students. 19 percent! So which families have abandoned the public schools, middle and upper income families have abandoned the public schools, because they have the funds and the money, and the political clout to get what they need for their children. This vouchers program or parental choice program is just, is a program to try to even out this level playing field, just to allow low income families to do what all the other families have done. Leave this system if it's not educating your children.

Judy Campbell: Williams wrote the state's voucher bill in 1990, that proponents call a success. The programs was limited to just 1.5% of the public school population, or 1500 students. It was means tested, so vouchers just went to low income students. The program is bound to become more controversial as it grows. In 1995 the bill was expanded to cover 15% of the public school population, and to included religious schools. That sparked a separation of church and state battle that went to the Supreme Court that upheld the state's program. Critics of voucher programs, though, say the Milwaukee example is not a standard one. Other states' programs are not means tested, so the funds would actually supplement white and middle income students who may already be going to private schools. Another hot issue in the privatization debate is for-profit schools. These fall under the charter school system, a politically popular alternative option in which a school writes and follows its own charter. The for-profit schools get contracts from a school district to take over a public school. The idea is a common refrain...scrap the government bureaucracy and run it like a business. John Chubb is the director of curriculum, instruction, and assessment for the Edison Project, the largest in the for-profit industry.

John Chubb: What a private company can do that is unique is, number one, it can invest private capital in the start-up of a school, so a school can get off to a stronger start if it has a private partner. We invest in all new instructional materials and very substantial training for the teachers and in a technology system. So, as opposed to a typical charter school which has to sort of scrape by as it can save the money for what it needs, a partnership school with Edison can get off to a stronger start. So that's a private sector advantage. Then I think the other advantage is, and I think certainly in our case, I think in the case of many private contractors, there's very strict accountability. There's a school district that's dissatisfied with the way a partnership is going, can terminate the contract, that has to provide for stricter accountability than you'd find in typical schools.

Judy Campbell: But the American Federation of Teachers says for-profit schools are not held accountable, as traditional schools are. They say that the school districts do not conduct the regular assessment and oversights that they do for public schools. Nor are they held at the same standard for credentialing teachers. The AFT and the other major teachers' union, the NEA, oppose privatization. The AFT conducted a study of Edison Schools, and found that their test results were not as good as the company had reported, and that Edison often relies on inexperienced teachers, with a high turnover rate. Nancy Van Meter is the AFT's privatization specialist. She says that without the AFT study, no one other than Edison Schools themselves would have assessed the results.

Nancy Van Meter: If the Edison project is going to be utilizing public dollars, then we believe that they need to be held accountable for those results. And our report was really the first effort on the part of anybody to take a look at what those results were, after they had been running schools for several years.

Judy Campbell: Without accountability, the AFT argues, all that is left is a profit motive. So things that don't turn a profit, like services for disabled and disadvantaged students will tend to fall by the wayside. Libero Della Piana-

Libero Della Piana: It's part of an overall argument by conservatives that government can't manage things as well as business. We need schools that run like a business. And what we have to remember is that businesses in the past 20 years have laid off people, have abused people's rights, have smashed unions, destroyed public accountability, and, you know, do we want our schools run like runaway shops? And I think that we don't.

Judy Campbell: John Chubb, with Edison, says, "If you don't like it, don't buy it."

John Chubb: It's simply a service, and if a district wants to buy it, it's because they judge that the service that they’re getting is worth the taxpayers' money. And if they choose not to buy our service, it's because they feel it's not worth it. But, so in that regard we don't regard for-profit education as anything special. We're a business just like any other business, and it we do a good job, then our customers will be interested in making purchases, and if we don't then we won't be a business. Ultimately for us to be a successful business we have to do well by kids. There's just no market for poor education services.

Judy Campbell: Back in 1992 when Edison started, the plans were huge. They were shooting for 1000 schools by the year 2000, enrolling two million students. They haven't come close, but the founder of Edison, Chris Whittle, has already made inroads into America's school with Channel One, the 12-minute commercial newscast piped daily into thousands of classrooms. Eduventures, an investment backing corporation, estimates the education industry (their term) is worth about 650 billion dollars. The for-profit industry has been expanding at an annual rate of about 25 percent. Edison has the largest share of that; it operates almost 50 schools. For-profit school have yet to actually turn a profit. That will happen later, they say, as they get enough schools to make the sharing of their administrative costs pay off. Some are already losing ground, though. Education Alternatives, Inc., has not performed well in the schools and has lost major contracts. The City of Baltimore dropped them from a contract to run nine schools in the district. Meanwhile teachers and parents have been speaking out against corporate influence in the classroom. Pamela Coxon was a volunteer at the coincidentally named Thomas Edison School in San Francisco, when the Edison Project began a marketing blitz to acquire the school. Edison won, but Coxon and others actively resisted their presence.

Pamela Coxon: The problem is that the whole package is a canned package, and the same exact programs are in every one of the Edison Schools. In fact the, I think Christopher Whittle himself has described them as the McDonalds of education. So you have...if you go in a classroom of an Edison Project school in Kansas, and then you go into another one in California or Boston, you see exactly the same stuff on the walls, exactly the same.... Even someone who visited some of these schools said that the teachers even come out and say exactly the same words to you describing their programs. It's a very programmed thing. And I think a lot of us don't want that kind of education. We want a more freer, more open style of education.

Judy Campbell: For Making Contact, I'm Judy Campbell.

You're listening to Making Contact, a production of the National Radio Project. This program can now be heard on 130 stations in the United States, Canada, Haiti, and South Africa, and around the world on Radio for Peace International Short Wave. If you want more information about the subject of this week’s program, or if you want to know how you can get involved with Making Contact, please give us a call. It’s toll-free, 800-529-5736. Call that same phone number for tapes and transcript orders. That’s 800-529-5736. We also welcome comments and suggestions for future programs.

Phillip Babich: The Federal Government first began experimenting with corporate involvement in schools under the Nixon Administration in the early 1970s. The program, known as Performance Contracting, was abandoned when it proved vulnerable to corruption and fraud. Presidents Reagan and Bush revived the concept, and according to Alex Molinar, author of "Giving Kids the Business," corporations have gained ground in the classroom under the Clinton Administration. Molinar spoke with correspondent Julie Light.

Alex Molinar: Unfortunately the Clinton Administration, in that regard, is indistinguishable from the Reagan and Bush Administrations. It continues the emphasis on contracting out. And in the case of EAI, now Teserec, one of the firm running or attempting to run schools for a profit, Hillary Rodham Clinton made a pilgrimage to Baltimore where that corporation at one time was running nine schools, and sat for a photo opportunity. So there's a lot of bi-partisan, high level political support behind the idea of running schools for profit. So you can see how the deregulatory trajectory of American public policy is encouraging the development of these for-profit, commercializing activities in the schools. That's quite a bit different from whether or not they're actually improving the quality of education that children are receiving. In point of fact, there is very little evidence to suggest that these corporations are going to do anything of much value to America's school children.

Julie Light: You said that one of the issues with these private for-profit companies coming and contracting with school districts to run the schools are based on the myth that money doesn't matter. The inequities, particularly the inequities between urban inner-city schools and suburban schools, don't matter. Want to talk about why money does matter?

Alex Molinar: Our school is being funded largely by local taxpayers mean the ability of local to raise and spend money for education determines to a large extent the quality of the educational opportunities the children receive. Rather than address the self-evident truth, it's become very popular to say that the problem is that poor districts aren't spending money efficiently. The difficulty with that, for those who advance the argument, although it's very appealing politically and certainly plays well to corporate executives who believe that somehow the efficiencies they believe they've visited on the private sector can be put to good effect in the public sector...the problem is if you look at the amount of, let's say, the administrative overhead in the public school sector, you see that the public schools are in fact much leaner and much more efficient than the private sector. If you look at the health care sector, in which the United States has an enormous private health insurance industry, it is the most wasteful inefficient sector of our economy. Enormously profitable. These are two different things, by the way. The public benefit and the profitability of institutions are two very different things.

Julie Light: Let's talk a little bit about Edison and EAI. The vision of it was that it was going to set up originally a chain of private schools; it's now going into particularly inner city public schools and running some of them. What has its track record been?

Alex Molinar: When you look at the results of the Edison Project, and there are now some test results to look at, what strikes a person who is familiar with American public schools is that they are in no way extraordinary. They've got some schools that are performing well, they've got some performing less well. The Edison Schools are ordinary. They are in no sense of the word a role model for the reform of public education. What public education really needs is some close attention, some wise investment (we've got about 112 billion dollars just in unmet infrastructure needs in the public education sector), we have tremendous inequalities that need to be addressed with money, that's how you have to address them, and we need to put in place what we know about student achievement having to do with smaller classes, developmentally appropriate curriculum, and so on. A market, by definition, can't address issues of equity. Nor do I think a market can provide public education and make a profit, as long as equity concerns are a factor in the equation. The only reason that the health care industry can make a profit is because it has nothing whatever to do with equity. We've got 40 million Americans who at any given day don't have health insurance. Now, that's a social catastrophe. The same thing would happen in education. If you cut the schools loose from any kind of concern for equity, you could carve out schools that you could run for a profit. However it would be at enormous social cost.

Julie Light: Well, let's talk a little bit about some of those social costs. I think parents, in particular, are attracted to whether it be privatized public schools, vouchers, charter schools, some of the different private-public solutions because there's the sense that 'I want the opportunity as a low income parent to get my kid out the way affluent parents might have that opportunity.' Do these experiments, and many of them corporate experiments, represent a real alternative, since you said they don't address issues of equity.

Alex Molinar: Well, they might represent an alternative for a handful of poor people in some circumstances, but they can never be a broadly based or widespread alternative for all parents. So what we've created is a kind of lifeboat mentality, in which we've said "a quality education is a scarce commodity." Not everybody can get it. And since not everybody can get it, the best thing you can do is not operate collectively to change the tax structure, not operate as a community in order to improve the public schools, not divert the resources that are necessary to public education and children... The best thing that you can do as a parent is to behave completely as an individual, and try to beat out everybody else on your block, so that if there is only one seat in a high quality school available, your child will get it. Now, that's of course very alluring to poor parents who say, "Well, but the way it works in this country is the affluent parent, like you, Professor Molinar, for example, can send your children to any school that you want. But we can't." Now the problem is that I, Professor Molinar, if I had chosen to send my children to private schools, which I did not, could have supplemented the tuition. Let's say that I got a tax supported voucher that was good for four thousand dollars. But the tuition at the school I wanted to send my child to was seven thousand five hundred, or eight thousand dollars. My family could afford to do that. A poor family that got a voucher for four thousand dollars couldn't afford to do that. So wherein do they have a choice?

Julie Light: A moment ago you mentioned that Edison and EAI have had a very mixed track record at best. It was unclear whether anybody can make a profit from running public schools. Do you think they're a flash in the pan? In other words, the market will deal with them if they're unable to pay dividends to their investors in a few years? That they'll just vanish?

Alex Molinar: They may represent a kind of creeping failure. Except for Channel One, Chris Whittle really has, he was successful early in his career, at one time he was a co-owner of Esquire Magazine. Successfully turned that publication around. But since he launched Whittle Communications in the mid 1980s, Channel One has really been his biggest and most profitable enterprise. Since he launched Channel One, the Edison Project and a number of sort of sight-based electronic advertising vehicles that he came up with, these have all been losers. His investors included Phillips Electronics, associated newspaper holdings, Time Warner, all of whom took a bath. They all lost their shirts with Mr. Whittle , and that is certainly possible again with the Edison Project. Right now, he's able to pay the salaries of his staff, and his flacks around the country, primarily because he's existing on venture capital. At some point, those venture capitalists are going to want to see a profit. Now, it is possible that if this country continues its headlong rush away from any kind of idea of equity, and essentially says, what we'll do is we will provide children X-amount of dollars for their education (four thousand dollars, six thousand dollars, you name the number, that's not really important, rich child, poor child, child with disabilities, it doesn't matter) there’s their educational grant. And any parent who is clever enough, good enough, hard-working enough to have enough money to supplement that grant, well, god bless him. If we turn it into that kind of situation, Mr. Whittle might well be able to set up shop in some suburban communities, and perhaps turn a profit. Although the paradox is, that in those communities where the schools get a large enough grant, or where the parents have enough money to subsidize a grant, people are generally very pleased with their public schools. They don't actually want to send their children anywhere else.

Julie Light: How do you go into poor communities, communities of color, where people are saying, "Well, it's fine to talk about reforming the whole educational system, but I want to get my kid an education now."?

Alex Molinar: The anguish at seeing one's children in schools which could be better, but aren't better...that's a real, that's a real issue that is hard to respond to. I think the problem is that 30 years ago, people would have demanded a tax structure which wasn't so unjust. They would have demanded an allocation of resources which wasn't so unjust. They would have demanded an investment in social institutions such as public schools that benefit us all, instead of the parsing out of $12.50 to every taxpayer in a tax cut. What's lacking in conversations with people who are desperate to see that their children are well-educated is hope and political vision that these sorts of policies can be changed, can be turned around, and that their participation could actually make that possible.

Phillip Babich: Alex Molinar, author of "Giving Kids the Business," speaking with Julie Light, editor of the on-line magazine, Corporate Watch. To learn more about privatization in education, check out Corporate Watch's feature: The Education Industry: The Corporate Takeover of Public Schools. The publication takes a look at the landscape of corporate involvement in schools from Taco Bell lunches, to Dow Chemical science curricula. The address is

That's it for this edition of "Making Contact," a look at privatizing education. Thanks for listening. This program has been a co-production with Corporate Watch, the on-line publication of the Transnational Resource and Action Center. And special thanks this week to Shereen Meraji and Nora Haldeman, who provided production assistance. I’m Phillip Babich.

If you want more information about the subject of this week’s program, call the National Radio Project at 800-529-5736. Call that same phone number for tapes and transcripts or if you’d like to make a comment or a suggestion for future programs.

"Making Contact" is an independent production funded by individual contributors. We’re committed to providing a forum for voices and opinions not often heard in the mass media. Our national producer is David Barsamian. Phillip Babich is our managing producer. Our senior advisor is Norman Solomon. Peggy Law is our executive director. Our theme music is by the Charlie Hunter Trio. For every one at "Making Contact," thanks for listening.