Money Grab: Heather Steans, Chicago School Closings and K12 Inc. by John Laesch

March 29, 2013

State Senator Heather Steans and Stand for Children are ultimately responsible for Chicago school closings and the recent increase of charter school applications like the 18-district virtual charter initiated by K12 Inc. in the Chicago suburbs… SB 79 and HB 5825… created and gave the Illinois Charter Commission super “override powers” and autonomy from the Illinois State Board of Education (ISBE). If SB 7 gave education activists concern, SB 79 and HB 5825 should have started a five-alarm fire… K12 Inc. anticipates that the state charter commission will override local rejections of their taxpayer rip-off scheme and approve the charter despite overwhelming local opposition.

In Chicago, Rahm Emanuel took a more direct approach to help out his wealthy friends who want to replace Chicago public schools with profit-driven charter schools. Rahm’s unelected school board president, Barbara Byrd-Bennett, announced on March 21st that CPS would be closing 61 public schools. You can bet that profit-driven charters will be popping up to replace the recently-closed public schools. The Illinois Charter Commission created by SB 79 will pave the way. Rahm’s election and appointment of Byrd-Bennett brought this multi-year, multi-million dollar effort to the 10-yard line.

In a recent In These Times article, Kenzo Shabata explains Byrd-Bennett’s role as a “cleaner”: "Byrd-Bennett can be thought of as something of a 'cleaner…' In the school system of the neo-liberal era, the job of the cleaner is to close as many schools as possible and replace them with charter schools before the public catches on to the plan.'"

It should come as no surprise that Byrd-Bennett has connections to the profitable K12 Inc. According to a Sun-Times profile piece on Byrd-Bennett: “...She’s served as an adviser to K12, Inc., that Virginia-based for-profit company that serves up virtual and cyber schools. And she’s been on the board of Common Core. UNO Charter Schools chief Juan Rangel’s on that, too.”

…Steans, chairmanship of the Appropriations Committee…, could easily trade funding for a “yes vote” on SB 79… [H]er influential husband, Leo Smith, is a teacher at Perspectives Charter School and an ardent advocate for charters. Apparently Smith is a bit of a bully, as evidenced by his aberrant behavior and the interruption strategy he employed at a political opponents’ event in 2009 (Read the PSB account).

Over the course of four years, Steans and Smith donated $100,000 to Rod Blagojevich. Some have alleged that these contributions influenced her appointment to the state senate seat she now holds…

The $36,000 that K12 Inc. spent lobbying Springfield lawmakers over the past six years gets dwarfed by the $1.6M that Stand has spent buying access to Illinois lawmakers. The biggest investors in the charter school money grab are all hedge fund managers who have funded their front group, Stand for Children, a political action committee (PAC) in Illinois. We know that Stand gets its money from hedge fund managers and financial investment firms. We also know that Stand played a critical role in lobbying for SB 79 and HB 5825.

Stand [On] Children Supporters:

Madison Dearborn Partners LLC ($750,000), Crown Family ($580,000), Citadel Group ($500,000), Peak 6 Investments ($474,000), Pritzker Family ($250,000), DRW Trading ($130,000), Merrick Ventures LLC ($100,000), Code Hennessy & Simmons LLC ($100,000), Options House LLC ($26,000), and Leo Smith ($25,000) husband of Sen. Heather Steans. Total: $2,935,000.
[“Externalization is legally enshrined in the limited liability corporation (LLC), which cleverly enables risk-taking and pathologically encourages irresponsibility” (The Seven Deadly Sins of Capitalism by Darrin Drda)].

…The Steans family influence peddling to transform [the public] education system into a profitable business model doesn’t stop with Stand or an appointment to the Illinois Senate. An issue advocacy group cynically named, Advance Illinois, is yet another pro-charter group that works with lawmakers to craft legislation like SB 79 and HB 5825. (Do you remember Advance Illinois' push for SB 7?] It should come as no surprise that the organization is run by Robin Steans, Heather’s sister.

It should also come as no surprise to anyone that financial supporters of Advance Illinois are mega-millionaires and foundations connected to businesses seeking to make money off of profit-driven charters… Some of Advance Illinois Supporters include the Steans Family Foundation, JP Morgan Chase Foundation, CME Group Foundation, Bill & Melinda Gates Foundation, Robert R. McCormack Foundation, and others…

A flaw in SB 79 didn’t allow the new charter commission to receive funding from ISBE. [However], Stand for Children, Steans, and State Representative Linda Chapa LaVia used HB 5825 to fix this oversight. After HB 5825 passed the House on March 28, 2012, Heather Steans added two significant amendments to the bill and passed it through the senate on May 22. The bill was sent back to Chapa LaVia’s committee after she filed Steans' two amendments. With the pension issue dominating discussions, the bill was temporarily stalled. During Veto session (November 2012 - January 2013), lawmakers pushed HB 5825 through the House Rules Committee, according to the League of Women Voters.

--John Laesch

from WBEZ: Charter-school agency’s funding raises questions

A new Illinois commission can authorize charter schools rejected by local officials. Its money comes from a foundation that backs charter schools.

December 2011

A new government agency could boost the number of charter schools in Illinois. But the way the agency is financing itself raises questions. The Illinois State Charter School Commission, created by a law enacted this summer, can authorize charter schools that fail to win approval of local school districts. The per-pupil state funding for the charter schools comes at the expense of the districts. The commission will also monitor the performance of schools it authorizes.

Despite the commission’s responsibilities, the state has not provided it any startup money. The only public-funding mechanism won’t be in place until July [2012], when the commission can begin collecting a fee from schools it authorizes…

The law that set up the commission allows it to raise private money. The commission’s sole funding so far is a $50,000 grant from the Walton Family Foundation, which supports several Illinois charter school operators and their state trade group.

Told by WBEZ about this financing, Illinois Federation of Teachers President Dan Montgomery said it created a conflict of interest. “This is really the rubber hitting the road — why we thought this was a bad law,” said Montgomery, whose union includes most K-12 teachers in Chicago. “The state should reconsider this. I don’t think the people of Illinois would stand for the gaming industry, say, to have the right to reverse a community’s decision not to allow a race track in its town. I don’t know why we wouldn’t give at least the same protections to the children of Illinois.”

A spokesman for the Illinois Education Association, the state’s largest teacher union, echoed Montgomery. But the law’s chief sponsor, state Sen. Heather Steans, D-Chicago, said providing taxpayer funds for the commission’s launch would have been unpopular. “It was not going to make folks happy [to take] dollars away that could be going to the traditional public schools,” she said.

Other states have allowed charter school commissions to launch with private funding, Steans said. The Illinois State Board of Education doesn’t see a conflict with the commission accepting foundation money, according to board spokeswoman Mary Fergus. “If we had any information that specific strings were attached to the donation/funding, that would be a problem,” Fergus said in a statement.

Before the commission’s creation, charter school operators that failed to win authorization from local school districts could appeal to ISBE. That state board received dozens of appeals but, according to Fergus, it reversed a district and authorized a charter school just three times. Charter schools are independently run but depend on public funds. Most of their taxpayer support would otherwise go to local school districts…

The nine commission members — recommended by Gov. Pat Quinn and appointed by ISBE — are already holding official meetings and overseeing a staff member, [according to] attorney Jeanne Nowaczewski… The money for the commission’s staffing and other expenses so far comes from the Walton foundation. That family started Wal-Mart and Sam’s Club. Other recipients of Walton grants include the Illinois Network of Charter Schools, a statewide umbrella. The foundation reports that it gave the network more than $1 million in 2010. Andrew Broy, the network’s president, said the amount for 2011 is about $950,000. The network also serves as an intermediary — a “fiscal agent” in nonprofit parlance — for Walton’s funding of the state commission... [Commission Chairman] Richmond said Nowaczewski receives her paychecks from the network, not the commission. Richmond acknowledged that the Walton money could create the perception that the commission has a conflict of interest...