Public Schools, Private Money
April 2nd, 2009

CORRECTION: This posting had an incorrect number for the size of the contribution to the National Action Network. It was half a million — or $500,000. The post has been updated. This mistake was ours alone — and not from the original Daily News article.

Since taking control of the city schools, Mayor Michael Bloomberg and School Chancellor Joel Klein have sought private funds for schools and also used supposedly private non-profit groups to boost their education agenda. All this may well have brought needed funds to city classrooms, but it also has created a tangled web and led to concerns about conflicts of interest and where the private roles stops and the public one begins.

As evidence, look to a few recent events and reports.

First there was yesterday’s City Council hearing on education contracting, which inevitably turned to discussion of the $15.7 million contract awarded in 2006 to Alvarez & Marsal — without benefit of competitive bidding. (For more on other subjects discussed at the hearing see this account of alleged cost overruns from Gotham Schools, a report on how the department’s contracting procedures allegedly hurt small local businesses and an account of the range of issues in question.) Questions of financial rectitude aside, council members blame A&M for suggesting changes that lead to the school bus botch of winter 2007.

Department of Education officials said the $17 million contract had led to saving of $170 million — since the report has ever been released, who knows? And department contracting chief David Ross said there was no need to put the contract out for bid because A&M had already had a contract with the Fund for Public Schools, a foundation created by the administration.

“Time was of the essence,” Ross said. “It just was not practical to do” a competitive bid.” Or as Ross reportedly said when questioned about this in 2007, A&M “had people on the ground” by the time the contract was awarded.

As a supposedly private organization, the fund does not have to go public with its contracts the way the city does. Its officials do not have to file financial disclosure forms. But what if it serves as a kind of farm team for contractors, allowing them to escape the usual scrutiny? Or as Councilmember John Liu said yesterday, “allows them to get a $16 or $17 million contract without competitive bidding”?

A similar situation arose last summer with the city’s program to train principals. The contract did go out for competitive budding but to no one’s surprise the group that won it was the Leadership Academy, the organization that had created the program when it was supported by private funds.

As skoolboy wrote at the time, “The DOE had a competitive bidding process to award a contract to an organization that Mayor Mike Bloomberg and Chancellor Joel Klein had created and publicly supported over the past five years.

To further blur the public private line, Klein, not content to run the nation’s largest public schools system and the Fund for Public Schools, last year co-founded the Education Equality Project (you’ve got to give the guy points for energy). A joint project of Klein and the Rev. Al Sharpton, it seeks to close the educational achievement gap between white and minority students. On Monday, the Post reported that the city’s malleable Conflicts of Interest Board had granted Klein and top education department staff permission to raise money for the Education Equality Project “using both city time and city resources.”

Council of School Supervisors and Administrators President Ernie Logan, apparently a supporter of the project’s program, reportedly called the fund-raising arrangement “the most absurd thing I’ve ever heard.”

Maybe — but you can’t argue with success.

Yesterday, Juan Gonzalez reported in the Daily News that soon after Sharpton and Klein forged their alliance Sharpton’s National Action Network received a $500,000 donation to support his work for the project. “The huge infusion of cash — equal to more than a year’s payroll for Sharpton’s entire organization — was quietly provided by Plainfield Asset Management, a Connecticut-based hedge fund, where former Chancellor Harold Levy is a managing director,” Gonzalez writes. The money reportedly did not go directly to Sharpton but was channeled through Education Reform Now, a group Gonzalez said is headed by former Daily News reporter and charter school advocate Joe Williams, who also heads Democrats for Education Reform. Williams (another busy guy), who is president and treasurer of the Education Equity project, would not tell Gonzalez how the donation was handled or what it was used for.

Williams did tell his former colleague that the project’s board has not met in the 10 months since Klein and Sharpton formed it and city Education Department employees have so far made all day-to-day decisions.

At the time of the donation, Gonzalez writes, “Plainfield Asset Management, a major investor in gaming operations, was pressing city and state officials for approval of two deals worth hundreds of millions of dollars annually.” At the same time, according to the report, Sharpton was settling a “longrunning IRS investigation of his organization” that resulted in his owing some $1 million in back taxes and penalties.

The Education Equality Project group will be meeting in New York today and tomorrow as part of the National Action Networks annual convention

By on April 2, 2009, 8:49 am
In category: Education,Gotham City,Public Finance | 5 Comments »

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5 Responses to “Public Schools, Private Money”

  1. Joyce Saly Says:
    April 2nd, 2009 at 12:52 pm

    Thank you for this comprehensive overview of some of the corrupt financial practices of the Bloomberg/Klein administration. It is very troubling that the general public still remains unaware of this information. It is apparent that major newspapers do not want to run these stories. How can we promote more widespread coverage of the issues?

  2. Gail Says:
    April 2nd, 2009 at 1:25 pm

    Thanks, Joyce. In all fairness, the major newspapers have provided some coverage — such as Juan Gonzalez’s article yesterday. As to why there’s not more, I can only assume they don’t think it’s as important as other stories. And to promote more, I know reporters get ideas from GG and other sources, such as Gotham Schools, so maybe this item and others like it will get some of the other journalist thinking.

  3. Concerned Citizen Says:
    April 2nd, 2009 at 4:37 pm

    It saddens me that this article and so many others fails to look at the substance of the Education Equality Project. This group is courageously tackling the insidious achievement gap that plagues our country. Shouldnt the debate be about HOW to close the gap and HOW we can all work together to provide every kid in America with a high quality education rather than this?

  4. Outraged Educator Says:
    April 3rd, 2009 at 5:27 pm

    Nobody should be surprised- this movement is dangerous. We now have a emocrat who is calling for the privatization of “public” education.. Aman of color no less. Ask yourselves why there are no “Charter schools” on Long Island and in working class
    or more afflent suburbs-It is because the people would not stand for it. This is a national moveent to privatize and capitalize off of the education of minority children-The Charters take those they deem “OK” and leave the rest to traditional pblic schools.. They don’t take Special needs kids, they don’t take Engish language Learners and yet they brag about their success… It is NOT a level playing field but the media ad the business world are into this big time as it allows them to get their hands on thet huge part of the City, Stae and Federal budgets that is reserved for education… I note with a laugh how Bloomberg’s friends at the NY Post are on a daily mission to promote and save Mayoral Control with him (illegally) at the helm for 4 more years pushing all the money the State gave NYC to foreign consultants, IBM data sytems, lawyers and others…Bloomberg’s crack about “the professionals support us” is a joke -Arne Dunca was a professional BASKETBALL PLAYER,
    Joel Klein a professional LAWYER, neither knows squat about education other than to wash their hands of it and try to privatize it! Stay focused -these are dangerous times- Keep PUBLIC education in the hands of THE PUBLIC!!!

  5. leonie haimson Says:
    April 4th, 2009 at 11:42 am

    This is an excellent summary of many of the complex issues inherent in the tangled web of private and public funding of DOE initiatives — which are becoming even more problematic as the agenda of the DOE is increasingly focused on policies that lead to the privatization of the educational services — like charter schools.

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