School Choice & Charters

Effort is largest single private investment.

By Jeff Archer — June 10, 1998 3 min read

Two high-profile millionaires-turned-philanthropists plan to launch a national privately financed voucher program that would offer scholarships to as many as 50,000 poor students over the next four years.

New York City financier Theodore J. Forstmann and John Walton, the son of the late Wal-Mart founder Sam Walton, have together pledged $100 million to the proposed effort, according to sources familiar with the project.

The venture, which was expected to be announced this week, represents the broadest and richest single private commitment to school vouchers since supporters began implementing the idea. The program aims to raise as much as $200 million through matching funds in cities across the country to support existing scholarship programs and create new ones.

The Children’s Scholarship Fund, as it would be called, already plans to back current efforts under way in New York City, where the organization is based, and in Washington. The money would also help establish new programs in Los Angeles and Chicago to serve more than 4,000 students a year in each. About 200 students in Jersey City, N.J., are also expected to benefit from the largess.

$1,000 Per Family

In each community, the programs would offer scholarships of about $1,000 to low-income families. Families would be responsible for covering the difference between the gift and the full cost of tuition. Roman Catholic elementary schools, for instance, typically charge about $1,500 a year.

If more students applied than there were scholarships available--which has often been the case with such programs--a lottery would likely be held to decide the recipients, sources said.

“It’s really wonderful that a group with this prominence can bring this idea to communities across the country,” said Daniel McKinley, who directs Milwaukee’s PAVE program, one of the country’s first such privately underwritten enterprises. “And this idea will win on it’s merits.”

Scaling Up

Both of the programs’ initial backers have experience in education philanthropy. The two last fall gave $6 million to the Washington Scholarship Fund. The gift enabled that organization to offer scholarships to 1,000 more students than the 460 already served by the voucher program in the nation’s capital.

Mr. Forstmann is a well-known figure on Wall Street for his success in carrying out leveraged buyouts. He is also a chairman of Empower America, a Washington-based nonprofit group that advocates public policy changes in the areas of tax, tort, and education reform. The organization’s co-directors include former U.S. Secretaries of Education William J. Bennett and Lamar Alexander.

Mr. Walton is a director of the Walton Family Foundation, which supports the CEO America Foundation, an organization that already advises and provides seed money to local efforts to start privately subsidized voucher efforts. The Bentonville, Ark.-based organization claims some 30 affiliate programs serving more than 12,000 students nationwide. Although Mr. Walton is associated with CEO America, the new endeavor would not operate under its auspices, sources said.

In addition to supporting the kind of voucher programs the new Children’s Scholarship Fund would help create, CEO America has lent assistance to more unusual efforts. Those include a $50 million scholarship project, announced this spring, that will offer as much as $4,000 each to nearly every student in the impoverished Edgewood district in San Antonio. (“Group Offers $50 Million for Vouchers,” April 29, 1998.)

“What Mr. Forstmann is getting ready to do is take this to the next level by bringing in people from all over the country and not just the conservatives who’ve supported this before,” said Fritz Steiger, the president of CEO America. “This is not going to be geared to a public policy effort. It’s about helping a lot of kids in the inner cities.”

Reaction from some observers to the possibility of a new national effort directed at privately financed vouchers was mixed.

“If their intent is to go in and work to help kids get out of lousy schools and into higher-quality schools, then I think that’s an admirable aim of the corporate community,” said Bruce Fuller, a professor of public policy and education at the University of California, Berkeley. “I don’t think it does much to help the public schools, where 90 percent of the kids are going to go.”

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A version of this article appeared in the June 10, 1998 edition of Education Week as Effort is largest single private investment.


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