Why are so many of Chicago Financial elite so interested in public education?
Like sleek predator birds circling a large wounded animal, Chicago's economic royalist are eyeing the Chicagol Public Schools billion dollar money pot. This comes to light with the revelation that Mayor Rahm Emanuel's picked CEO of Chicago Public Schools (CPS), Barbara Byrd-Bennett is under federal investigation for granting a no-bid $20MM contract to a former employer.
The company, SUPES provided management training services that would have been available from local universities at a much lower cost. The deal was approved unanimously by Rahm's appointed school board.
There's a bunch of compelling aspects to this situation, but the one that fascinates me is how it exposes the real basis of the City's business/financial elite interest in education reform, namely investment opportunity.
Behind the pompous talk about reforming education put out by the national funding foundations like Gates, Broad and Walmart, the education razzamatazz from myriad educational consultants and entrepreneurial types and the outright duplicity from our for-sale politicians, there is a persistent mad scramble for the prize, a share of the 600 billion dollar US education market.
And Chicago investors are not going to be left behind. After all this city's motto is “Where's Mine?”
Ms Bennett's no-bid contract to her formal client/employer the SUPES company in suburban Chicago is noteworthy because according to the Chicago Tribune [1] that company received initial funding from The Chicago Public Education Fund. The Fund's board is a virtual who's who of Chicago financial elites who have made “restructuring” Chicago schools a top priority.
The Fund's board includes familiar names such as Ken Griffin, Illinois' richest man and a major contributor to both Democratic Mayor Rahm Emanuel's and Republican Governor Bruce Rauner's political campaigns; billionaire Cindy Pritzker whose family firm Hyatt, received a $5 million TIF grant from our city to help build a private for-profit hotel in Hyde Park; and Governor Bruce Rauner whose firm managed CTU pension funds. Rauner's income last year, $58 million.
Other prominent Fund board members are Helen Zell, wife of billionaire real estate magnate Sam Zell, Susan Crown, daughter of Chicago magnate Lester Crown and president of a start up ed tech firm, and Mellody Hobson, president of Ariel Capital Management and wife of film maker George Lucas. Many of the Fund's board members have donated to Emanuel's and Rauner's political campaigns.
Deborah Quazzo—A Walking Conflict of Interest?
Another Fund board member is Deborah Quazzo who also sits on the CPS board, which coincidentally has awarded several millions dollars worth of contracts to companies she is associated with. Chicago Teacher Union Vice President Jesse Sharkey called Quazzo “a walking, talking conflict of interest. She is a person who has personally profited from the institution that she is supposed to exert direct oversight of.”
Quazzo is a managing partner at the investment firm GSV Advisors, which invests primarily in educational technology firms. “That is not who we need in the school board representing our interests,” he continued. “She is not accountable to the public.”
So it appears that the Fund is a Nexis of interrelated wealthy types who use their money to elect our political leaders regardless of party who then turn over control of a major public institution to them and for what purpose? They say they want to restructure education in our city presumably for the better.
But what we've seen so far of their restructuring plan--approved by the mayor and his appointed schools board and implemented by his appointed CEO--has consisted of the closing of 50 public schools and opening of charter schools, probably as a first step to privatizing them and eventually making them for-profit enterprises that the financial elites can invest in.
It looks like under their restructuring, investment opportunities for the Fund Board members will abound in testing, ed tech, but mostly in ownership and running of charter schools not to mention the buying and selling of the CPS real estate. Like the privatization of Chicago's parking meters, privatized schools would ensure steady profits because the money stream will be guaranteed by city tax payers. (You can bet foundations will stop donating once the public schools are privatized.)
Even if we assume that the Fund Board members are motivated only by the desire to improve education in our city—and not just the desire for guaranteed returns--they are creating a system driven by concerns for profit, not education. Their system will spawn enormous incentives to cheat and bribe.
It will resemble America's for-profit system for financing health care, which has produced an incredibly expensive, unfair and inefficient system that produces huge profits for investors and corporations but only mediocre results for patients and still doesn't provide health care for all.
This privatization coup is unfolding right now before our eyes. Fortunately, local media, the Chicago Tribune and Sun Times have exposed the shady goings on. But Chicago progressives, union members and community groups need to continue investigating and protesting the efforts of the tiny elite that has gained control of the city's education system and seems intent to turning into a 21st century profit machine.
Beware those of you who live outside Chicago. The financial royalists will be eying your town's school system soon.
1. Dardick, H. and Perez Jr. J., Feds eye CPS records on elite nonprofit ties, Chicago Tribune, Sunday April 19, page 1.