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

Looking Ahead

The so-called voucher movement is continuously evolving, so the effects of the public policy changes it will foster will only be revealed over time. However, what we know about the voucher pilots now in place in Wisconsin and Ohio should cause all policymakers grave concern. Though the full picture has not yet emerged, there are some clues that suggest potential motives and future directions for those who are investing so heavily in its success. (See the accompanying “Grand Illusions” report for a fuller discussion of the Milwaukee and Cleveland voucher programs.)

To the Right

For the Religious Right and others who are looking for the combination that would unlock public funds for religious schools, the voucher campaign may be for many an end in itself. After years of trying to force schools to accept creation theology into biology classrooms, purge classes and libraries of the ideas they object to, Religious Right leaders can, with vouchers, obtain tax dollars to fund the teaching of the movement’s beliefs in classrooms. In fact, the grants of CEO America and its affiliates favor religious schools. Religious schools typically charge lower tuition than other private schools. By targeting poor children and providing vouchers that cover only a portion of costs, the CEO/CSF formula virtually guarantees that most children’s “choice” will be limited to religious schools. For example, the local CEO affiliate grants in San Antonio, a flagship program for the private voucher movement, averaged a mere $629 in 1996 – clearly not enough to cover tuition at most secular private schools.78

Perhaps a more salient point is that currently, approximately 80% of private schools in America are religious; thus, the immediate beneficiaries of publicly funded vouchers are religious schools. CEO, and private investors like David Brennan who want to own private, non-sectarian schools, cannot succeed without the influence of religious schools and their advocates in the Religious Right. Although this reliance on religious schools raises no constitutional concerns regarding CSF’s privately funded scholarships, it raises fundamental constitutional questions when public funding is involved.

A Profit Motive

CEO America’s and CSF’s activities are probably not calculated just to lay the groundwork for legislative action to provide public funding for religious schools. For at least some in the CEO and CSF power hierarchy, the ultimate goal is privatization more generally – the opening up of a vast new market for venture capital and investor return.

  • John Walton, the Wal-Mart heir and director, sits on the CEO America Board of Directors and is a co-founder of the Children’s Scholarship Fund – but he also is a major backer of Education Alternatives Inc./TesseracT, a for-profit public school management corporation.

  • Ohio businessman and voucher proponent David Brennan has been heavily involved in educational services. Brennan is also one of Ohio’s biggest supporters of the state and national Republican parties and has raised money for political races that appeared to further his push for publicly supported vouchers. Brennan was a longtime supporter of former Ohio Gov. George Voinovich, who named him to chair the Commission on Educational Choice in 1992.79In 1995, the Ohio legislature adopted a $5.25 million one-year voucher pilot and Brennan immediately formed private for-profit schools to participate. Today Brennan operates two voucher schools in Cleveland started with a $500,000 grant from his own foundation and John Walton’s Walton Family Foundation.80
    • California venture capitalist Tim Draper is heading an effort to draft a voucher initiative for California’s March 2000 ballot. Draper’s company has become increasingly active in education-driven companies. As early as 1993, Draper said, “we see a burgeoning [investment] opportunity in the entertainment and educational content area.”81

  • The private education industry also includes players like Michael Milken, who has $500 million invested in education-related companies.82 The press has begun to report on Wall Street’s identification of education as the next growth industry. As the growth of HMOs has been the story of this decade in area of health care, so the advent of the EMO could become the story of the next. Keith Gay, an education industry analyst from NationsBanc Montgomery Securities, said, “From our view, the people who are always early and usually right are focused on education right now.” He added, “education is now where health care was 20 years ago – a growing part of our GDP, with little presence in equities.”83 The emergence on the scene of high-powered entrepreneurs, such as those at CEO America, CSF, and their affiliated state and local organizations, and the presence of high rollers like Milken signal that the long-term goal of return on the investor dollar is clear.The appeal of diverting public education dollars into private industry is understandable when one considers the size of the figures involved – primary and secondary education in America is at least a $300 billion endeavor. U.S. Education Secretary Richard Riley estimated that if a national voucher system were put in place, taxpayers would spend $15 billion to subsidize students already in private schools.

    False Promises

    The implications for public schools are many and of great concern. No matter how many vouchers are available or how many new schools of whatever quality finally emerge, it is clear that there will always be many students in public schools. Public policy must address this reality.

    The evidence that CEO/CSF has an agenda beyond philanthropy is made more obvious by what the organizations don’t do than what they do. The vast majority of the nation’s children depend on the public schools for their education. CEO/CSF’s claims to want public schools to get better by having to compete, and to give children a better education. But they don’t contribute to troubled schools or the proven school reform efforts essential to their future – and certainly to their ability to improve over time. The strategy of CSF/CEO actually creates new barriers for public school improvement as lobbying and public relations efforts encourage the diversion of funds to vouchers.

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