It only makes sense that the article appeared in the Style section of the New York Times. Sure, it’s about hedge fund managers supporting New York City’s charter schools. But if we are to believe the breezy slant of the piece (Sunday, Dec. 6, 2009, “Scholarly Investments”), these young turks pick out charters the way their fathers shopped for the latest fedora. Cause it’s fashionable. Cause it reflects their inner selves. Cause it makes them feel good.
The author, Nancy Hass, admits that thirty-something multimillionaires embracing public education “may seem odd.” Their kids, after all, are far more likely to go to Greenwich Country Day. But the explanation is simple enough if you know what she calls “the sociology of Wall Street.” These guys from Goldman Sachs and Morgan Stanley have a certain level of “nerdiness,” and charter schools appeal to their “maverick instincts.”
According to this benign scenario, the same analysts who spend all day in cut-throat financial competition toss away their Blackberries come dusk and do the right thing by joining the boards of charter schools. Privately run and often non-union, charters are seen by their advocates as the free market alternative to traditional public schools. Or, as the article puts it, “an entrepreneurial answer to the nation’s education woes.”
Typically, we’re told, a charter board consists of a dozen or so members who are asked to donate or raise $1.3 million over three years. Let’s see … that’s around $36,000 a board member per year. Certainly sizable but not gigantic given their annual “eight-figure incomes.” Especially since donations to organizations like Democrats for Education Reform are tax deductible.
Whitney Tilson, on the board of a company that manages charter schools, says they “present the kind of opportunity that ‘electrifies’ hedge fund managers.” Tilson calls it “the most important cause in the nation, obviously.” He adds, “With the state providing so much of the money, outside contributions are insanely well leveraged.”
Ah! Now we’re getting somewhere. New York State provides 75 to 90 percent of the per-student cost at a charter school. That’s because schools like the Harlem Success Academies are still technically public and draw from public funds. So if the young analysts look at their donations as an investment – which the article insists they do not … or not that kind of investment – then their dollars are heavily backed by tax dollars. That is to say, by our dollars.
Ravenal Boykin Curry IV of Eagle Capital Management has co-founded two girls prep schools and is head of the board of a third. He explains that he’s been “knee deep in educational issues” since his 20’s. Almost in passing he adds that these schools are: “exactly the kind of investment people in our industry spend our days trying to stumble on, with incredible cash flow, even if in this case we don’t ourselves get any of it.”
So maybe the Blackberries and the financial acumen don’t disappear at night? Perhaps charter schools appeal to the investors’ “maverick instincts” because they look a lot like the instruments these guys fight over (or in Mr. Curry’s more benevolent term “stumble on”) during the day? That has certainly proven the case across the country, where start-up management firms see charters as prime, for-profit ventures. Through various real estate deals and cost-cutting practices (like paying teachers less), these private/public schools have already shown themselves to be potential money makers. One real estate trust recently sunk $170 million into 22 charters. Said its CEO: “The charter public schools offer lenders/leaseholders a dependable revenue stream backed by a government payer. It’s a very desirable equation.”
The young turks may not profit directly from their board work. But as the Style article makes clear, New York City’s charter school network is the new country club. It’s where the elite meet, where potential business connections are made. And even if these Masters of the Universe don’t “get any” from the schools they back, they’re in on the ground floor of a growth industry. Their experience in New York City may well influence their financial recommendations and investments elsewhere.
“The underlying drive,” as John Petry, partner at Gotham Capital and member of the Success Charter Network, puts it, “is to build something that can spread, can be recreated in different cities; otherwise it’s not as meaningful to us.” Only 2.5% of the city’s public school students are in charters, the article states, but that’s more like 20% in Harlem and parts of Brooklyn. And the movement gets that much more “meaningful” in New Orleans, for example, where over half the kids are in newly formed charters. A national string of hedge-fund-backed, privately run schools begins to look like a real option: a chain competing with and siphoning funding from standard public schools. As Robert Reffkin, a vice president at Goldman Sachs, puts it his peers now “understand what’s at stake and what the return can be.”
Except the educational return is still unclear. There’s no conclusive evidence that charters do a better job than traditional public schools. Meanwhile, the investments these young tycoons have made are already changing public education – and changing it to more closely resemble the financial models they work with during the day. Those models, as we’ve learned over the last couple years, don’t always pan out.
If they don’t? If the charter bubble bursts? Where does that leave the kids who’ve switched over from the less sexy, less well-funded, regular system? Charter schools, the article states, are today’s “hot cause.” But what happens tomorrow, when styles change?
DANIEL WOLFF lives in Nyack, N.Y. His newest book is How Lincoln Learned to Read. His other books include “4th of July/Asbury Park: A History of the Promised Land.” He is a co-producer of the forthcoming Jonathan Demme documentary about New Orleans, “Right to Return.” He can be reached at: email@example.com