Social Impact Bonds Are Still A Thing, Sadly

 Remember Social Impact Bonds? They've been around for at least a decade or so (here's an explainer I wrote in 2015). Also called "pay for success" programs, these are another instrument for privatizing public stuff.

As such, they make an appearance in the new book The Privatization of Everything, a must-read from Donald Cohen and Allen Mikaelian. The book is a deep dive into the many, many, many ways in which privatization has wormed its way into the public sphere in everything from prisons to pharmaceuticals to patents to health care to municipal water systems to parking spaces. And roads. And the weather. And, of course, education. You should buy this book, and read it slowly and carefully while sitting down.

Tucked in the book (page 175) is a look at social impact bonds, and reminder of what a lousy scam these things are, a great method for "taking money from a public good and transforming it into private wealth."

What the hell are social impact bonds? This is always hard to explain, starting with the fact that they aren't actually bonds. They're a deal for private investors to fund social welfare programs and make a profit doing it, as if it were a literal investment.

The steps as listed by the Corporate Finance Institute are:

1) Identify the problem and possible solutions

2) Raise money from investors

3) Implement project

4) Assess the project's success and pay the project manager and investors

It's a chance, as one site says, for "doing good while doing well." It's also a creepy way to monetize people's struggles.

So, for instance, Cohan and Mikaelian explain one SIB program that involved veterans. The VA looked to set up a program to help deal with PTSD and veteran suicides. They ran a pilot, and the turned to investors to scale it up. Those investors would get back all their money, plus up to 18% bonus based on reaching certain numbers of veterans having sustained employment. 

The price tag for the scaled program was $5 million, and the SIB "investment" certainly looks a lot like a plain old loan with a huge interest rate.

As Cohen and Mikaelian point out, there is some weird reasoning going on here. The premise for many SIB programs is that government needs private investors because government can't afford to finance the program itself--except that it's going to pay that same amount plus extra to pay the investors. It's like saying, "I can't afford to pay a babysitter $25 to babysit tonight, so will you please pay them for me, and then if they do a god job, I'll pay you $30." 

Worse yet, an SIB leaves all the risk with the government. If the program doesn't succeed, it's true that they investors don't get paid--but the social need still has to be met, plus cleaning up whatever mess the failed program left. 

SIBs also rest on the notion that the private sector will drive efficiency and innovation that will make the program leaner and better. This is baloney.

First, in practice, SIB pretty much never fuel innovation, because investors like sure bets. From a NYT piece about SIB's in 2015:

“The tool of ‘pay for success’ is much better suited to expanding an existing program,” Andrea Phillips, vice president of Goldman’s urban investment group, said in an interview on Wednesday. “That is something we’ve already learned through this.”

And as far as the efficiency goes, this is just the same old Myth of the Gifted Amateur, with which we're already plenty familiar in the education field. In fact, SIBs have targeted PreK programs, because investment bankers know so much about early childhood education. But they do now how to bet carefully; an SIB in Chicago funded the expansion of a proven program, using trained personnel and district infrastructure. Mostly what Goldman Sachs provided was a very expensive loan that the district has to pay back. In Utah, as the authors report, Goldman Sachs bankrolled a program that promised lowering the number of children needing special services and then used pre-existing programs and a population of students that was already free of special needs. They did nothing and brought no value to the program, but they still made a bundle on it.

And let's not even start on the heavy lifting involved in imagining that Goldman Sachs is in a position to teach people about disciplined  efficiency.

SIB programs also depend on stark, clear definitions of success, preferably a number of some sort, what one interviewee called "incentives that would be considered corruption pressures." This doesn't just encourage a simplistic, bone-headed definition of success--it requires it. It's Campbell's Law on steroids, goosed up by putting a bunch of investor money on the line. Put another way, SIB investors don't get paid for changing reality, only for hitting their numbers.

There is something very icky about the idea of investment bankers sitting around a desk cheering, "We kept 123 kids out of special ed! Ka-ching!!" And there's something unpleasant about having our tax dollars used to hire somebody to hire somebody to deliver a program. 

I've talked for years about how high stakes testing turns schools upside down; instead of serving the students, the upside down school now demands that students serve it by generating the right test numbers. This is more of that. Theoretically with SIB, we still get the social welfare programs we asked for, only now they are set up not to serve the human beings who need them, but to serve the investors who put the money into them. Every dollar spent on a child cuts into investor profits, so make sure to spend the least possible on the service that is actually supposed to be the point. It's no way to run a school--or much of anything else.

I'll finish with this paragraph from the book

The rise of social impact bonds fits a pattern. Throughout our history, private interests have worked to separate the worthy from the unworthy poor and to reinforce the idea that assistance is charity--a benevolence from on high--not a right and responsibility that we should bear as citizens. Social impact bonds and pay-for-success models are, far from being innovative and disruptive, simply a slightly altered means to the long-standing goal of putting the private sector in charge and sidelining the public while separating citizens from government and from each other.

PA: One More Cyber School Regulatory Failure

This is a small thing, but it's an important one that points toward how the rules in PA are written to make running a cyber-charter just like printing money.

In Pennsylvania, there's been a rule since 2003 (Act 48) limiting how much money a school district can park in its unreserved fund balance--basically just extra money in the bank that's not assigned to any purpose. Limits are in the 8%-10% range. This addressed a real issue--when my local went on strike in 2002, we found that the school district had so much money in the bank that they could have given taxpayers a full year off and still run the district without going into debt. It's legit to wonder why schools should collect taxpayer dollars just to sit on them. 

So the legislature said that the districts could only have X% of their full budget parked in the bank as undesignated "extra" money. 

Guess which outfits the rules does not apply to?

A report issued back in June, 2021 by the Pennsylvania Charter Performance Center shows that thirteen Commonwealth cyber charters were sitting on $74 million in unassigned fund balances in 2019-2020--$52 million of that added in just the previous year. Some gains were modest-- Commonwealth Charter Academy has less than a million banked. Some are astonishing; PA Cyber added $18.7 million to its bank account, bringing its total to $32.4 million. PA Leadership jumped from $1 million to $16 million (a whopping 1,140% increase). 

But maybe they just have really big budgets, and these amounts aren't out of line? In some cases, says the report, that is true. But PA Leadership's extra money is 38% of its budget. PA Cyber's nest egg is 21% of its budget. 

All of that would be before the cybers hoovered up large piles of American Rescue Plan and ESSER II dollars (CCA pulled in an astonishing $54 million). PA Cyber which, remember, already had $18 million in "extra" money got a federal bailout of $34 million. 

Two things to remember about all that money parked in the bank. First, every dollar came from taxpayers. Second, it could have been spent on students, but it wasn't.

Two caveats with this. One is that public school hands are not all clean--many now instead of undesignated fund balances simply park their extra money in the "big roof project some day fund" or some such shenanigans. The other is that having a low charter fund balance can just as easily mean that they just handed all that extra money to their CEO and the Chater Management Organization.

However, it is one more way in which cybers are not subject to the same kind of oversight and accountability that public schools are, and that there is no way to characterize this non-regulation as beneficial to students--it is, in fact, the exact opposite. It makes it really easy to take taxpayer dollars and NOt spend them on students. 

The Absence of Government Is Not Freedom

I have considerable sympathy for Libertarians. Maybe it's my New Hampshire roots, but I don't have limitless faith in government's ability to do stuff well. But Libertarians and the Free Market crowd are, I think, critically wrong in one respect.

The argument is that removing government and its ability to impose its will by force would bring about greater freedom, that the playing field would be level if not for the heavy hand of government regulation.

But the absence of one source of power simply advantages other sources of power. With government, but even more so without, your access to "freedom" and "choice" is directly related to how much money and power you have. If you are poor and powerless, the blessings of freedom are somehow not so available to you--your choices about where to live, what to eat, how to get around, are all limited.

I've had conversations with local Libertarians (nice guys, pleasant people, good neighbors) who explained that, for instance, that courts and government would be necessary for simple protections. So, for instance, if a big company was dumping toxic waste in your back yard, you could take them to court for violating the law and be protected that way. But that's a fantasy-- it would be you and the lawyer you could afford against the high-powered gazillion dollar law firm. We know how this kind of suit works out, because the two sides do not have equal power. 

For some (I'm thinking Betsy DeVos style conservatives) the justification for this is simple--the belief that it is natural and normal for people to arrive at different stations, different levels of power and money, and that such sorting is a direct result of their own efforts and virtue (effort itself being one such virtue). In other words, rich or poor, you are where you deserve to be. In this view, government efforts to lift up the poor literally fly in the face of nature. Sometimes this is tied to American exceptionalism and the idea that the US is the one place where anyone can achieve anything (with an asterisk indicating that, yes, there were a few bugs in that system but we fixed those in the Civil War and the civil rights movement of the 1960s and it's all okay now). 

So for some, it's a matter of "Yes, there is inequality, and that's a feature, not a bug."

For others, it's not that inequality is good or okay, but it can be fixed with more freedom from government mucking about. And maybe--maybe--if there were a magic reset button that put everyone back to an even start, such a thing could be sort of true kind of maybe. Okay, I'm skeptical, but let's move on because it doesn't matter because there is no reset button. If the government were shrunken and drowned in a bathtub tomorrow, massive inequality would still be in place, and vast amounts of power and wealth would be employed to maintain vast amounts of power and wealth. Not freedom.

Somebody always has power. Always. Regardless of the system, the time, the rules. The field is always tilted, and somebody always has the advantage. There is no system that negates this reality.

Part of the genius of the American experiment it is structured largely around the counter-balance against power rather than the assignment and use of it. The Declaration talks about the human rights that are to be protected against whatever threatens them. The Constitution seeks to use checks and balances to keep power from accumulating on one corner of the playing field.

The government's earliest stated job was to protect those without power from those that have it. The mistake of modern hard-right thought is to say, "This fence is keeping all you sheep penned up; we need to get rid of it so that you are free," imagining that the freedom to become a buffet for various predators is somehow a step forward.

Some hard right folks have never quite worked out how this should work. I always believed that Betsy DeVos really did believe that students with special needs, among others, should not be let down. I even believe that she doesn't think education should harbor racism. But she also firmly believed that government should never step in to enforce any such rules, and so she's left stuck in some world where people with power should willingly give up some of their power even though nobody is going to say boo if they don't.

Similarly, free marketeers talk as if they believe that if we take away rules and regulations, the free market will bloom and every parent will have a multitude of choices for their child. There is no reason to believe this is true. People with power and money will have the choices they want. People without power and money will not. People will, as is usually the case, have as much choice and freedom as they can afford to pay for. The market, to the extent that it is unregulated, will be filled with charlatans and fraudsters, and parents, lacking the power that comes with information or the oversight of someone with more power than one parent with a tiny voucher--those parents will be at the mercy of the people who have the power in the marketplace--the vendors. They will have the freedom of leaves on a heaving ocean.

Can government step too far, exert too much overreach, exert too much power in its attempt to counter power? Absolutely, and we can talk about that another day. But it does not follow that the only restriction on a person's freedom is the government. Freedom can be, is, and always has been, restricted by people with more power than you have. Setting government oversight aside is simply abandoning the people without power to the mercies of those who have it.

If there's anything I keep coming back to in education (and most all other issues) it's that balance and tension are everything. It is never a matter of finding the right setting for the machinery of the world and welding it in place; it is always a matter of balancing different opposing forces, straining against each other on a field that is balanced on a pin in the midst of a raging, changing wind. To imagine that banishing government from that field will somehow yield stability and a greater good is a fantasy.

FL: Charter $chool New$

It turned up as an item in the South Florida Business Journal, and the lead tells you just where we're headed.

The campuses of three charter schools in Broward County were purchased for a combined $49 million by a company in Boise, Idaho that specializes in charter school real estate investments.

That just says a lot. Let's look at some details.

The big deal involves--well, several companies. We've got AEP Charter Renaissance. These folks sold a school they bought back in 2017. That charter school was located in a former Target store in Tamarac that had been bought by an investment capital group and a development group for $6.3 million; AEP Charter Renaissance bought it for $22 million. That purchase was part of a two-school deal that merited this kind of language in industry blurbs:

Part of the Colliers team’s successful strategy required educating prospective buyers on each individual Charter Management Organization (CMO) and nuances of each charter school including charter terms, for this asset class considered a special purpose building. 

“This is a highly-specialized asset class which inherently requires a longer and more thorough phase of due diligence,” noted Colliers Senior Vice President and Education Services Group Member Achikam Yogev. “Because of the complexities, charter schools have traditionally sold individually and rarely as a portfolio, but the continued interest in this asset class has paved the way for more creative strategies and more complex deals being done on behalf of our clients.”

By "industry," of course I mean real estate and investment, because none of this has to do with education. At any rate, AEP Charter Renaissance just sold that school (which has somehow shrunk to 85,233 square feet) for $26 million. AEP Charter Renaissance is managed by Charter School Capital, whose CEO and co-founder Stuard Ellis is based in Portland. They serve "charter school leaders, back-office/business service providers and brokers & developers" and they make a lot of money doing it. Also, "AEP" stands for "American Education Properties," of which Ellis is also the CEO. FWIW, his degree from University of California, Berkley (1988), is in Political Economies of Industrial Societies. You can watch Ellis provide a history of charter school capital.

The school that was sold is Renaissance Charter School at University, and while it was owned by a company in Portland, it is operated by Charter Schools USA. It was sold to PCSD Schools LLC, a company that is based in Boise, Idaho, but filed as a Florida LLC in December of 2021. 

PCSD stands for Performance Charter School Development, run by Brian Huffaker, who has worked his way up through the ranks in Hawkins Companies as an accountant. Hawkins is a commercial real estate development and property management company. Hawkins' client list is mostly retail and chain outlets, though they boast of the 700K square footage they have found for charters. PCSD is headquartered in Houston; their Boise branch office has the same address as Hawkins. They call themselves a "national full-service real estate firm specializing in helping new and existing charter schools meet their facility needs." Their website outlines a process by which they can help charters set up a facility, and even offers the option to buy it, and a portfolio of satisfied customers all over the country, including most of our favorite privatization states.

The whole story features two more transactions like this one (though one was actually a money loser), underlining once again that for many folks, charter schools are an "industry" just like real estate investment and malls and setting up a fast food franchise location. Meanwhile, a school in Florida that is operated by a company somewhere else in Florida has been sold by a company in Portland to another company located in Idaho but headquartered in Texas. It's as if all the interested and invested parties aren't really in the education business at all.

ICYMI: So This Is 2022 Edition (1/2)

 Well, here we are. It's almost as if the physical universe is not particularly impressed by our arbitrarily created markings of the passage of time. I remain optimistic, however. Here's the reading list for the week. 

The Coming Troubles of Public Ed In Virginia

Nancy Bailey joins those looking at the incoming administration in Virginia and concludes that it means bad news for those who love public education and student data privacy.

Education Exodus

A news report covering an Oregon study that looks at teacher stress over the past year.

New laws and old

Gregory Sampson takes a look at how the old law of unintended consequences is about to follow a new law covering teacher personal days in North Carolina

Is McKinsey China's weapon against America?

Gordon Change contributes a Newsweek op ed about our old friends at McKinsey and one other consern about their compass-free approach to business.

How Maine is trying to take food insecurity off kids' plates

PBS takes a look at one state's attempt to deal with child hunger

The quiet effort to change Massachusetts' education policy

By now you're familiar with the attempts to gag the teaching of anything related to race--the efforts that involve screaming and noisily ramming laws through. But you may have missed some quieter, but equally scary attempts, like what's going on in Massachusetts.

Lost in the critical race theory debate: the enduring value of the free press

From the Philadelphia Inquirer (beware the limited number of free articles), a new take on CRT panic, and how it threatens the free flow of information that journalism is all about.

A truly patriotic education requires critical analysis of US history

At The Hill, Wallace Stern talks about how to teach true history and face the controversies.

End of the year compilation posts are kind of a pain, but Steve Snyder always does two, God bless him-- the posts that were most popular at his blog, and those that he thinks were most overlooked.

God keeps me and us around

Jose Luis Vilson has had quite the year, and his summation is well worth the read.

And, this week at Forbes, I pointed out that courts in North Carolina have now ruled that charter schools are not public schools--twice. Then we went to Oklahoma and Florida to look at how those states are putting more threat in their teacher gag laws. And finally, asking if we'll ever get school covid policy out of the kluge stage.

Look Back. Look Forward. Breathe.

 I'm not always moved to do a "look at the year" post or a "predictions for the upcoming year" post. A lot of these compilations are meant to be a way to lessen workload at a busy time, but as anyone who has done the work can tell you, it doesn't actually lessen anything.

Plus, the new year is one of those things that we humans made up and then tried to imbue with great weight and importance, as if the next 24 hours are somehow more significant than any other.

They aren't. We draw a line in the sand and then expect the waves to honor it when they come rolling in.

That's more evident than ever this year. Covid will not be marking the new year, just as it failed to mark the last new year. And why should the passing of Betty White on this last day of the year be extra bitter, except that we make it so by drawing the calendar lines where we currently choose to. Almost a century, and all of it well spent.

But I do honor the impulse to stop and look back, look forward, and take a breath at various points in the year. Birthdays. Anniversaries. Why not the New Year, since we've all agreed to more or less do so at the same time?

It has been a rough time for public education. Lots of vultures have decided that the pandemic is their signal to swoop, hoping they can finally hurry along a hoped-for demise and grab a treasured piece of the carcass. Weak, cowardly, and just plain bad administrations have been caught in a troubled time, an occasion that they are unwilling or unable to rise to. Public schools reflect the society of their time, and right now our nation is managing to have the worst response to a public crisis that we've ever had in our history. 

And yet, I feel hopeful about public education. First, much of the general panic is the result of our new media, which creates such a droning buzz that folks now have to scream bloody murder and apocalyptic terror to break through and claim their market share and/or political clout. Turn off the media noise (even if, like me, you're a tiny part of it) and pay attention to the world around you, the people around you, and you can see something of beauty and value in the world. There are things, and people, worth embracing, supporting, cheering. 

That means that going forward, we can find stars to guide us, even if we are surrounded in noise and smoke and an unhelpful swath of human-made fog. And for me, public education will always be part of that. 

It's an amazing thing, an astonishing achievement, and when you consider what we've set out to do as a nation--to provide a decent, elevating, heartening, useful education for every single child in this country--it's no wonder that we've often stumbled. It's a huge undertaking, usually under-supported and under-resourced and yet, still chugging forward. To help every child better understand and grasp their best strengths, to fully become themselves, to learn how to be fully human in the world--that's a bold and beautiful goal, a worthy goal. Nobody--no parent, teacher, child--who pursues that goal should ever be ashamed to rise in that pursuit. 

There are times when the future does not rise clearly to meet us, where the road ahead is obscured and, frankly, a bit scary. But when you've got worthwhile work to do, and when you are focused on lifting up your fellow travelers on this globe spiraling through the infinite dark--that is not a bad thing. There is certainly work as worthwhile as teaching, but nothing I can think of is more so. Never doubt, teachers, that you are doing good work. I know there's a chorus screaming, seemingly daily, that you are some kind of lazy, incompetent slacker who entered the field only because you thought was an easy path to a life of wealth and leisure. Those people are full of it; you are doing important work, work that's worth doing, work that is more valuable than, say, spending your days trying to panic people into giving you power. 

The coming week is looming, unpleasant, uncertain, a school year with no clear finish line in sight and no certain path forward. I don't claim to have any brilliant solutions. But I feel certain of this-- if you can say that you are doing important, valuable work to the very best of your ability, and you are taking care of the people around you with the strength and heart that you have, then you are making good use of the short time you have on the planet, regardless of what numbers show up on your calendar. You and I may not hit a century, may not even get close enough to feel cheated if we come just 18 days short, but if our days are well spent, then that'll be pretty damn okay.

Check the past to see where you've been and what you owe, and look forward to see the stars that guide you. Breathe. Clear your head and listen to your heart. here we go, one day at a time, until they stack up to another year. Spend it doing work worth doing. Happy New Year.

PA: Bucks County Classroom Chill

I've predicted this kind of thing for states that are leaning hard into book bans and teacher gag laws, but here's a perfectly good example of how this sort of thing works right here in Pennsylvania.

The process is simple. 

Step One: You put some threats in place, from fines against the school district to possible lawsuits to just the fact that you have increased the likelihood that some agitated parent will feel empowered to call and complain. 

Step Two: Watch all your most conflict-averse school administrators implement far more repression and silencing within their district than you ever dreamed of.

If you've taught for at least a decade, you know the kind of administrator I mean. Raise your hand if you've ever had some version of this conversation.

Administrator: You have got to stop doing X in your classroom. Parents are all upset and I'm getting all kinds of phone calls.

Teacher: How many phone calls?

Administrator: Well, one. But she sounded really angry.

Teacher: So, how many parents?

Administrator: Look, just stop doing X. That's our new policy.

Sometimes, there isn't even this much discussion. The administrator supervising the junior high at my old district simply pulled two novels from the curriculum without so much as talking to the department chair. 

In Pennsylvania, Pennridge School District (Bucks County) has sent out a memo from the assistant superintendent for elementary education stating, in part,

The district is requesting that library books with content regarding gender identity be removed from the current elementary student circulation.

The books will be reviewed for, among other things, "sensitive topics involving foul language, intense violence, gender identity, and graphic sexual content." If the book is slapped with a scarlet C, then it goes in a special library gulag from which students can only get the books with parental permission. If you are a young person with questions, you can't be allowed to look for answers on your own (well, unless, of course, you have encountered the internet).

One of the first books to be pulled under this policy is Heather Has Two Mommies, which includes no violence, graphic sex, or foul language.

That parental control runs through several district policies. No using a preferred name or pronoun without parental permission. And if a student doesn't tell her parents that she's pregnant, then the school will (no clear word on whether the male who helped create the pregnancy will be likewise turned in to his folks). 

I have sympathy with parents who want to be in the loop of their children's lives, but coverage of these policies turns up an example of a story that every single teacher could have predicted, involving student James Peuplie:

In 8th grade, Peuplie asked his teacher to use his proper name and pronouns. The school then asked his mother and father to come in to discuss his gender identity. His father had not previously known Peuplie was transgender.

“A couple of nights later my dad ended up kicking me out,” said Peuplie. “So we had a really big falling out with a really big argument.”

Peuplie and his father then had an argument where the police were involved. He ended up being taken to the hospital and diagnosed with situational depression.

Every teacher knows a story like this one about an LGBTQ student whose home turned out to be an unsafe place for them to be. This is exactly the spot where parental rights and student rights collide, and it is a mistake to declare that parental rights must always take precedence. Parental rights folks often say that the child does not belong to the school, which is absolutely true, because the child does not belong to anybody--including their parents.

Pennridge has its own little Liberty group that has been busy pursuing goals of abolishing critical race theory, promoting patriotism, and standing up for parental rights. They made enough noise to get the district to fold up its Diversity, Equity and Inclusion initiative, as well as getting some Black authors pulled from the curriculum. That became a winning campaign brag to fuel a GOP sweep of the last board election (theme "Parents over Politicians")

The district is 30 miles north of Philadelphia, with an 85% white student body. In 2018, 225 high school students participated in the national student walkout in response to the Marjorie Stoneman Douglass High School murders; the students were given detention. The school board vice-president, a Trump supporter, called them "Marxist truant[s]." That same member, Joan Cullen, was in DC on January 6.

Bucks County is also home to Woke Bucks County, now expanded to Woke PA, whose website (complete with eagle head and stars and stripe shield) declares their work "to reclaim our schools from activists promoting harmful agendas. Through network and coalition building, investigative reporting, litigation, and engagement on local, and state policies, we are fighting indoctrination in the classroom--" Their website offers yet another chance to turn in anonymous tips about awful things that somebody is doing. You can turn those anonymous tips in here. Right here. Any tips at all. 

So the district is getting plenty of noisy pressure from one set of parents, and now other parents are also speaking up against the district's anti-LGBTQ message, and the region is politically hot. But that kind of political heat in a community translates into a deep, frosty chill in classrooms where everything remotely approaching an uncomfortable topic is ignored, erased, and silenced--even if that happens to involve the lives of actual students.