Privatization of Public Education: A Joint Venture of Charity and Power

CSF – CEO America’s Business as Usual

The Children’s Scholarship Fund was launched in June 1998 with a $100 million contribution from Wal-Mart heir John Walton and venture capitalist Ted Forstmann. Both men were major financial backers of the Washington Scholarship Fund, a private voucher program in Washington, D.C., before moving to the national level.

While CSF strives to present a non-ideological public image, its history and the resumes of its cofounders demonstrate that its mission is an element of the overall strategy of CEO America and its allies in the political and Religious Right.

John Walton

John Walton is one of the heirs to the Wal-Mart fortune. In addition to his activities with CEO America and his efforts in Texas with James Leininger, Walton’s philanthropy is carefully coordinated to dovetail with the political movement for tax-funded school vouchers, much as it is with other wealthy voucher backers like Rooney, Leininger, Ohio businessman David Brennan and Michigan’s Richard DeVos. In fact, the leading funders of private voucher programs often coordinate with the political strategists of the tax-funded voucher movement.

For instance, a few months after the high-profile launch of Children’s Scholarship Fund, Walton was a featured speaker at a weekend conference on “Parental Choice and Corporate America” sponsored by the Milton & Rose D. Friedman Foundation. The conference was heavily focused on strategizing, with seminar topics such as “Working the Halls of Power” and “Understanding and Overcoming the Opposition.” Other major political players in the voucher movement spoke at the conference: the Institute for Justice’s Clint Bolick, GOP presidential candidate Steve Forbes, Wall Street Journal editorial board member John Fund, former U.S. Rep. Floyd Flake, Minnesota Gov. Arne Carlson, Arizona schools Superintendent Lisa Graham Keegan and Ohio voucher backer David Brennan.30

Walton was funding pro-voucher initiatives and candidates long before he turned his attention to private voucher programs. In addition to his Texas contributions, Walton gave over $250,000 to California’s Proposition 174 in 1993, making him one of the largest contributors to that voucher initiative, which was defeated by 70 percent of voters.31

One of Walton’s most telling contributions was the financial backing he gave to found the American Education Reform Foundation (AERF), a voucher advocacy group.32 AERF was a driving force behind efforts to get voucher initiatives on the ballot again in California in 1996 and 1998, and has since relocated to Indianapolis.33 One California reporter noted in a 1995 article, “With its California initiative, the American Education Reform Movement hopes to launch a national movement. Welcome to schoolmart.”34

In 1998, AERF funded a series of newspaper ads and television commercials designed to pressure Congress into supporting House Majority Leader Dick Armey’s plan to impose a publicly funded voucher system on the District of Columbia’s school system over the objections of local officials.35 Among the opponents of the D.C. voucher plan were local ministers who had been deceived by an earlier AERF-funded lobbying proposal.36

Like other voucher proponents, AERF sees teacher’s unions as its main obstacle to establishing a voucher system. Not surprisingly, AERF contributed close to $50,000 to a so-called “paycheck protection” initiative in California that would have greatly limited the ability of unions to participate in the political process.37 Walton himself contributed another $360,000 to the proposition,38 and other voucher proponents like James Leininger, J. Patrick Rooney, David Brennan, Howard Ahmanson39 and Richard DeVos (via his Amway Corp.) also contributed to the ultimately unsuccessful campaign.40

Walton has other interests in privatizing public education. He’s a director of the TesseracT Group (formerly Education Alternatives Inc.), a for-profit corporation that manages charter and public schools.41 Education Alternatives was operating schools in Baltimore and Hartford, Conn., until both cities ended their contracts amidst controversy over finances and academic results.42 Walton is also the founder of School Futures Research Foundation, a nonprofit group that manages charter schools in California.43

Ted Forstmann

Ted Forstmann, according to his official bio, is known in the financial world as a “pioneer of the leveraged buyout.” In addition to serving as co-chairman of Children’s Scholarship Fund with John Walton, Forstmann serves as honorary chairman of the Washington Scholarship Fund. He is a steady supporter of conservative candidates. During the last election cycle, he funneled over $200,000 in soft money to the Republican Party and individual contributions to Sens. Rick Santorum and Lauch Faircloth, among others.44 The New Republic described him as “one of the Republican Party’s leading moneymen.”45 When former speaker Newt Gingrich resigned from the House of Representatives early this year, Forstmann quickly persuaded him to join the board of directors of his New York buyout firm.46 He also gave $10,000 to the campaign for passage of California’s anti-affirmative action Proposition 209.47

Forstmann – along with former education secretary William Bennett and former HUD secretary Jack Kemp – founded Empower America in 1993, a conservative advocacy group formed to map a new direction for the GOP following the loss of the White House.48 During the ‘80s, Forstmann served as finance chairman for Citizens for America, a conservative grassroots lobby group founded by conservative New York activist Lew Lehrman. Other leaders of the group have included Don Devine, Ronald Reagan’s OMB director, and Alan Keyes, currently a GOP candidate for president in 2000.49

Like Walton, Forstmann’s interest in school privatization and commercialization predates the Children’s Scholarship Fund. The leveraged buyout firm that Forstmann heads attempted to acquire major investments in a company already profiting from public schools – Whittle Communications, the home of the Channel One television program used in many schools. At the time of the attempted Forstmann deal, Whittle was in the R&D phase of the Edison Project, a national chain of private schools.50

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