Education Opinion

The Dialogue With the Gates Foundation: What Happens When Profits Drive Reform?

By Anthony Cody — September 03, 2012 15 min read
  • Save to favorites
  • Print

Follow me on Twitter at @AnthonyCody

This is the last exchange in this formal dialogue with the Gates Foundation. The tension uncovered by this dialogue reveals a disconnect between the work of the Gates Foundation and many of us who have spent our lives working in schools. Nonetheless, this represents an opportunity to move beyond the impasse. Similar to the polarization that has occurred in the national political scene, the battle lines over education reform have become so hardened that it seems as if we cannot even agree on a common understanding of reality. Therefore bridging our differences requires us to share and discuss those realities, even though our perspectives are very different. I hope that in the months to come this dialogue will deepen, and that the tensions we have revealed will not lead us throw up our hands and abandon the effort, but rather will strengthen our commitment to continue to wrestle with these issues in the interest of our students.

This post can also be read and commented upon over at the Gates Foundation’s Impatient Optimists blog.

Today we are taking on a big question: What is the role of the marketplace in pushing forward education improvement and innovation?

Last week at the Republican National Convention, Jeb Bush used this analogy to talk about schools:

Go down any supermarket aisle - you'll find an incredible selection of milk.
You can get whole milk, 2% milk, low-fat milk or skim milk. Organic milk, and milk with extra Vitamin D.
There's flavored milk-- chocolate, strawberry or vanilla - and it doesn't even taste like milk.
They even make milk for people who can't drink milk.
Shouldn't parents have that kind of choice in schools?
Choice has emerged as the solution at the same time that the public schools have been actively portrayed as an abject failure. How did we get here?

Public Education in the Crosshairs

Over the past decade, No Child Left Behind has left schools, especially those serving children living in poverty, battered and scarred. Why would people who supposedly want to improve schools treat them this way? There is a deep belief held by many conservative business leaders, that schools will only improve when the “government monopoly” is broken and market forces are brought to bear.

As Time magazine reported in 2008,

...many early critics insisted that No Child Left Behind was nothing more than a cynical plan to destroy American faith in public education and open the way to vouchers and school choice.
Now a former official in Bush's Education department is giving at least some support to that notion. Susan Neuman, a professor of education at the University Michigan who served as Assistant Secretary for Elementary and Secondary Education during George W. Bush's first term, was and still is a fervent believer in the goals of NCLB. And she says the President and then Secretary of Education Rod Paige were too. But there were others in the department, according to Neuman, who saw NCLB as a Trojan horse for the choice agenda -- a way to expose the failure of public education and "blow it up a bit," she says. "There were a number of people pushing hard for market forces and privatization."

This campaign is now well under way, fueled not only by the ravages of NCLB, but by its more recent incarnation, Race to the Top, which required that states lift caps on charter schools to qualify for special Federal funding.

Among those who have been working towards this were the leaders of the Thomas B. Fordham Foundation. Their five year report from 2001 explains the approach, which embraced:

...today's most promising education reform strategies: "standards-based" reform (with its trinity of academic standards, tests, and consequences for success and failure) and "market-style" reform (with its emphasis on school choice, competition, alternative providers, and accountability to clients). Some think these strategies are opposed or incompatible. By our lights, just the opposite is true: Each needs the other if it is to have the brightest prospect of succeeding.
We shun two other popular theories of education reform that, in our experience, simply do not work to change institutions, alter behavior, or boost academic achievement. More money--absent standards and markets--won't make a difference. It's just paying the same people more to do the same things. And we've seen little evidence that the addition of more "expertise" to the present system will by itself bring about the needed reforms. That's because, with rare (and happy) exceptions, the present system does not much want to change. Hence we favor strategies that, in effect, force it to.

Here is how this approach works. Impossible-to-meet ever-rising test targets have been used to “prove” that the public schools are failing. This message is reinforced at every opportunity, and the schools are even wrongly blamed for problems in the US economy. The supposed “failure” of the public schools then creates the “market” for alternatives, and legislators shift funds away from public schools towards all sorts of charter schools, virtual schools and even parochial schools.

This has unfolded largely according to plan. We saw the storyline played out in the 2010 pseudo-documentary “Waiting For Superman.” The public schools, burdened by unionized teachers impossible to fire, are failures, and the only salvation for students is in the scrappy charter schools that make no excuses.

One under-reported aspect of the Common Core national standards is that once they are implemented, the results will further accentuate disparities in achievement between states. Indeed, investors are already eying the opportunities this will create in the states revealed to be “behind” in their performance on Common Core assessments. One slide in this investment advisor’s presentation proclaims excitedly: “Help Close the Performance Gap! If Common Core has teeth, the “Performance Gap” will get a lot bigger!”

The Risks we Run with Profit-Driven Reform

The market, by definition, seeks to tap the desire to make money as a motivation for solutions. Marketeers envision an environment where creative or ambitious entrepreneurs will establish new schools, new ways to educate, and this will result in efficiency and innovation. But a decade in, we are discovering some huge problems with the way market solutions play out in the real world.

In 2010, the Gates Foundation laid out a strategy for three specific innovations to reform the public education system. Public and corporate partners were listed, to share in the implementation of each innovative program goal.

For the innovation it called, “Measure of teacher effectiveness and systems for helping teachers improve,” it labeled the risk “high.” The partners listed are “U.S. Department of Education; school districts; charter schools; teacher groups.” The risk spelled out in this plan was “Will teachers, including their unions, schools, districts, and states, be willing to change? Will budget cuts slow the work?”

But there are some far greater risks that were apparently not considered.

Bill Gates seemed to acknowledge some of the dangers of using VAM scores in this recent speech, when he said:

Now, let me just say that at this time, we don't have a point of view on the right approach to teacher compensation. We're leaving that for later. In my view, if you pay more for better performance before you have a proven system to measure and improve performance, that pay system won't be fair - and it will trigger a lot of mistrust. So before we get into that, we want to make sure teachers get the feedback they need to keep getting better.

It is good to see this apparent shift in philosophy, but, thanks to strong advocacy by many organizations directly funded by the Gates Foundation over the past decade, and by the Department of Education, that mistrust has already been earned. The many districts and states that now use VAM to pay and/or evaluate teachers, even as one of “multiple measures,” are now experiencing the mistrust that Mr. Gates warns us of. This recent article found that Florida teachers are finding the new evaluations “artificial,” “frustrating” and even “humiliating.” Will the Gates Foundation actively seek to undo the damage that has been done here?

Making Data Profitable

In the Gates Foundation’s vision for a well-engineered education system, data is the driver. Therefore profit-making partners are needed to manage the data that is needed to measure performance of everyone in the system. The Gates Foundation has even emerged as a sort of market broker to encourage this. This has led the Gates Foundation to partner with a new non-profit organization, the Shared Learning Collaborative LLC, as Vicki Phillips explained last year:

As part of our contribution, the foundation took an important first step a few weeks ago and selected a vendor to build the open software that will allow states to access a shared, performance-driven marketplace of free and premium tools and content. That vendor, Wireless Generation, will create the software, but it will be owned by an independent nonprofit, so that any school, school district, curriculum developer, or tool builder can contribute to the collaborative.

To be clear, a “free and premium tools and content system” means that bare bones tools will be offered for free, but districts will need to pay for full service versions.

Wireless Generation is owned by Rupert Murdoch, who also owns Fox News and the Wall Street Journal. A year ago, the state of New York awarded a no-bid contract to Wireless Generation in part to compile a statewide database of student test scores. The phone-hacking scandal at Wireless Generation’s parent company, News Corp., led the state comptroller to void the contract out of concerns about privacy. However, the state later decided to move forward with the database project, at least in part as the result of the Gates Foundation’s prior sponsorship of a multi-state student-data system worth $76 million—$44 million of which went to Wireless Generation. In other words, the Gates Foundation has the financial wherewithal to make sure the systems it favors go through.

The Gates Foundation has also formed a partnership with the Pearson Foundation to develop “cutting-edge learning resources” aligned with the Common Core standards. and will soon be offering online reading and math courses.

Investing in Charter Schools

In his 2009 Annual Letter, Bill Gates explained,

Based on what the foundation has learned so far, we have refined our strategy. We will continue to invest in replicating the school models that worked the best. Almost all of these schools are charter schools. Many states have limits on charter schools, including giving them less funding than other schools. Educational innovation and overall improvement will go a lot faster if the charter school limits and funding rules are changed.

The Department of Education agreed with this thinking and required that states remove caps on charter schools as a condition for receiving Race to the Top funds.

When school districts sign something called the Gates Compact, they can get a special grant of $100,000, and be eligible for millions more, if they agree to open their doors to charter schools, and treat them the same as public schools.

Unfortunately the largest study conducted to date, which compared charter schools to nearby public schools, found them no better, and in many cases a bit worse, than the regular public schools.

But more disturbing have been a number of recent reports focused on ways in which the market has incentivized shortcuts to success, and even corruption.

The Capital Roundtable For-Profit Education Private Equity Conference, held in July of this year, shared this on the conference web page:

Education is now the second largest market in the U.S., valued at $1.3 trillion. So while an industry of this size will always be scrutinized by regulators, the most onerous recent changes are likely over, and investors should face an easier climate down the road. And while eventual passage is not guaranteed, several pieces of legislation favoring the for-profit industry have been proposed in Congress.

In the K-12 space, the federal "Race To The Top" initiative has enabled a growing level of privatization in the K-12 segment, and rewarding districts for embracing alternative models, technological advances, and locally-based criteria.
Schools in these states have more flexibility in how they spend federal funds to benefit students, which benefits for-profit companies focusing on high-quality programs and services.

This video explains the thinking now driving investments in charter schools:

The opportunity to make money has attracted lots of entrepreneurs towards education as a profit center. The testing companies were in on the ground floor, and have been active in supporting test-based reforms for years. The market for high stakes tests is experiencing double digit growth, according to this industry report. The Pearson Education Foundation was investigated for flying legislators around the world to education conferences, in advance of decisions they made granting Pearson lucrative test contracts. In the years since then-governor Jeb Bush created the McKay Scholarship Fund, hundreds of millions of tax dollars have flowed to schools with little to no oversight, leading to widespread fraud.

Just a few weeks ago, the Associated Press reported that charter schools are leaving special needs students behind. The article says,

Most charter, parochial and magnet schools serve children with disabilities, but they are often milder disabilities, leaving the brunt of students with significant needs in traditional district schools.

Charter schools have also been faulted for various forms of selection. Most draw from a pool of parents who are seeking them out. Some have requirements for parental support and participation, which excludes some students. And some, such as the KIPP schools, have been found to have higher than average rates of attrition, meaning students who are not making the grade are transferring back into the public schools, something I witnessed in Oakland.

Charter schools are also faulted for the level of racial segregation. The 2010 report by the Civil Rights Project of UCLA reported:

While segregation for blacks among all public schools has been increasing for nearly two decades, black students in charter schools are far more likely than their traditional public school counterparts to be educated in intensely segregated settings. At the national level, 70 percent of black charter school students attend intensely segregated minority charter schools (which enroll 90-100 percent of students from under-represented minority backgrounds), or twice as many as the share of intensely segregated black students in traditional public schools.

One problem with turning education into a hotbed of entrepreneurship is that many advocates of “reform” also stand to make big profits. In this environment, it is hard to tell if the objective is better outcomes for students, or simply more dollars on the bottom line. One arena that appears highly profitable is online education - often offered through “virtual charter schools.” Legislation requiring states to allow or even require students to take online courses has been promoted recently by the American Legislative Exchange Council. Jeb Bush has vigorously promoted this, according to this report by The Investigative Fund.

The nonprofit behind this digital push, Bush's Foundation for Excellence in Education, is funded by online learning companies: K12 Inc., Pearson (which recently bought Connections Education), Apex Learning (a for-profit online education company launched by Microsoft co-founder Paul Allen), Microsoft and McGraw-Hill Education among others.

Just yesterday the Maine Sunday Telegram published an expose entitled “The profit motive behind virtual schools in Maine.” This report states,

...a partnership (was) formed between Maine's top education official and a foundation entangled with the very companies that stand to make millions of dollars from the policies it advocates.
In the months that followed, according to more than 1,000 pages of emails obtained by a public records request, the commissioner would rely on the foundation to provide him with key portions of his education agenda. These included draft laws, the content of the administration's digital education strategy and the text ofGov. Paul LePage's Feb. 1 executive order on digital education.
K12 Inc. donated $19,000 to [Maine Governor] LePage's election campaign through a political action committee. K12 and Connections Education provided support to Jeb Bush's foundation and to a controversial corporate-funded organization for state legislators, the American Legislative Exchange Council, or ALEC. Both K12 and Connections Education built relationships with Maine lawmakers and officials who introduced laws and policies beneficial to the companies' bottom lines.

As Gary Miron reported recently, the nation’s largest “virtual school” chain, K12 Inc, has very weak academic results, in spite of outstanding revenues and a CEO with a $5 million salary.

The Role of the Gates Foundation

So how does all this inform our dialogue?

From my perspective, the drive for profits is problematic as a motive force for school reform. As we see with the virtual charter sector, there are great incentives to create “efficiencies,” and, lacking significant oversight, there are huge problems with quality. The collusion between the profiteering virtual charters, the testing industry, ALEC and the legislative bodies that are being influenced through legalized bribery taints the entire project.

The Gates Foundation has had a seminal role in many of the groups that have advanced both parts of the education reform formula - the high stakes testing that has been used to discredit public schools, and the market-based solutions we have been sold as the alternative. The Gates Foundation has funded most of the market-based reform groups mentioned in this report.

  • The Gates Foundation gave $2 million to publicize Waiting For Superman.
  • Jeb Bush’s Excellence in Education has been funded by the Gates Foundation for a number of years, and just received a grant for $151, 068 “to complete a statewide communications campaign in Florida delivering the message on why there is a drop in school grades, why it is temporary, and how raising the bar on education standards leads to greater student success.”
  • You have heard of the new “parent trigger” movie, “Won’t Back Down”? The organization that initiated the idea, “Parent Revolution,” started in 2009 with funding from the Gates Foundation.
  • The Gates Foundation has funded the Media Bullpen, which issues “grades” to the media based on how supportive they are of market-based reforms such as vouchers and charters.
  • The Gates Foundation also funded the creation of the Cities for Education Entrepreneurship Trust which launched stating: “CEE-Trust’s goal is to accelerate the growth of high-impact entrepreneurial education solutions in member cities across the country.”
  • And although the Gates Foundation announced they would not extend future funding to ALEC, their grant of $376,635 remains in effect, “to educate and engage its membership on more efficient state budget approaches to drive greater student outcomes, as well as educate them on beneficial ways to recruit, retain, evaluate and compensate effective teaching based upon merit and achievement.”

The Gates Foundation funds a tremendous amount of activity in the education sector, and I am not suggesting that every project, or every person who takes funding from the Gates Foundation is a partisan in this campaign. The Gates Foundation has funded many organizations that have done good work - but to be clear, there is no real “balance” here. Even though the Gates Foundation occasionally gives grants to the teacher unions, it is to fund projects aligned with the Common Core standards, or efforts to support “collaboration” with administrators. It is never - as far as I know - to fund efforts to de-emphasize standardized tests, or defend due process for teachers.

Public Schools: A Public Trust

Our public schools are one of the cornerstones of democratic life in our country. They exist not only to provide opportunity for individual students, but also as a common resource, in which we invest as community members. We bring together children from all races, religions and walks of life under one roof, to learn together.

We have seen what has happened to our health care system when it is driven by profit. People who are high risk cannot get insurance, and die without treatment. The same thing is happening to children walled off from educational excellence, shunted into dead end schools. For all the proclamations about education being the civil rights issue of our time, the marketplace does not fix inequity - it makes it worse. The children of the poor are more likely to have special needs, more expensive to educate, and thus less likely to be served by profit-seeking charters.

Choice in education is an illusion. In some cases it allows a lucky few access to a better school. But those seeking profit rarely want a level playing field - they seek whatever advantages they can get, and often that means leaving behind the special education student and the English learner.
As a parent, I was not only concerned about my own sons. I wanted the best education possible for all the children of our community. The public schools were a legacy handed to us by generations before that built them. It is our challenge to rebuild them into places that fulfill that now tarnished ideal, to educate everyone well. It is critically important that institutions such as our schools be driven not by decisions based on what is most profitable, but instead by our interest in the common good, and by our commitment to providing excellent opportunities for every child, even when this is unprofitable.

In the process by which decisions are being made about our schools, private companies with a vested interest in advancing profitable solutions have become ever more influential. The Gates Foundation has tied the future of American education to the capacity of the marketplace to raise all boats, but the poor are being left in leaky dinghies.

Neither the scourge of high stakes tests nor the false choices offered by charter schools, real or virtual, will serve to improve our schools. Solutions are to be found in rebuilding our local schools, recommitting to the social compact that says, in this community we care for all our children, and we do not leave their fate to chance, to a lottery for scarce slots. We have the wealth in this nation to give every child a high quality education, if that is what we decide to do. With the money we spent on the Bush tax cuts for millionaires in one month we could hire 72,000 more teachers for a year. It is all about our priorities.

So as we bring this dialogue to a close, we come up against some of the hardest questions.

Can we recommit to the democratic ideal of an excellent public school for every child?

Can the Gates Foundation reconsider and reexamine its own underlying assumptions, and change its agenda in response to the consequences we are seeing?

Given the undesirable results that we are seeing from the use of VAM in teacher pay and evaluations, is the Gates Foundation willing to put its influence to work on reversing these policies?

Does the Gates Foundation intend to continue to support the expansion of charter schools and “virtual” schools at the expense of regular public schools?

Must every solution to educational problems be driven by opportunities for profit? Or could the Gates Foundation consider supporting a greater investment in programs that directly respond to the conditions our children find themselves in due to poverty? Things like smaller class size, libraries, health care centers, nutrition programs, (none of which may be profitable ventures.)

What do you think of the role of the market in education reform? How about the role of the Gates Foundation in this regard?

Note: The Shared Learning Collaborative has posted an FAQ in response to some of the issues discussed above.

[CORRECTION: The original version of this post inaccurately suggested that the reason New York state initially cancelled its contract for a student-data system with Wireless Generation had do with concerns about the contract process. The post also incorrectly stated that the Gates Foundation’s contract with Wireless Generation for a multi-state student-data system was entered into after the initial New York contract was cancelled.]

The opinions expressed in Living in Dialogue are strictly those of the author(s) and do not reflect the opinions or endorsement of Editorial Projects in Education, or any of its publications.