It's Magic: Big profits to be made in Chicago's alternative schools

Magic: Panning for gold

Magic Johnson has joined up with Edison Inc., school board member Deborah Quazzo and other profiteers who are panning for gold in the growing dropout market.

WBEZ reports that Magic keynoted a conference in Arizona to which Chicago school board member Quazzo had flown a small contingent of some of Chicago’s most powerful education officials. Deborah Quazzo's investment firm Global Silicon Valley Advisors paid the freight.

The conference was all about the potential for profits in Chicago's growing alternative schools business.

At a press conference in Chicago in February, Johnson said he was approached by EdisonLearning because the company wanted to draw inner-city students into its schools. “What they needed was a guy like myself to come in to more or less brand it,” he said. When asked how much he makes per school, he told WBEZ and Catalyst: “That is all you need to know.”

One month after Quazzo, Hines, another CPS board member Andrea Zopp, CPS chief Barbara Byrd-Bennett and Mayor Rahm Emanuel’s then-education deputy Beth Swanson attended the conference, the Chicago Board of Education approved another $6 million in startup money for for-profit alternative schools. It was the second round of a multi-year expansion. (Quazzo has also come under fire in recent months after a Chicago Sun-Times investigation found that companies she invests in have tripled the amount of money made through contracts held with CPS schools.)

WBEZ and Catalyst Chicago also found that many of the for-profit companies running alternative schools stand to make millions off the deals. Other findings:

• On average, some of the companies spend more than half of their budget on consultants, advertising, technology and fees to affiliated companies.

• Companies can maximize profit by running two or even three sessions a day, serving double the number of kids, yet only hiring the same or fewer staff as a normal school. (One of the for-profit companies, Camelot, is an exception. It operates an eight-hour school day with little online work.) 

• Since the companies are privately owned, the public has no way of knowing who is making money from investing in them or whether they have any connections to district or city officials. 

• In at least one case, CPS contracted with a company that was, at the time, under investigation in California.