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.

Quazzo's desperate letter to her troops. She's a walking billboard for an elected school board.

Rahm's hand-picked school board member Deborah Quazzo is pissed. She gives a bunch of "no comments" to Sun-Times reporters Lauren Fitzpatrick and Dan Mihalopoulos, in their latest expose of her companies. They reportedly raked in another $1.3 million from CPS-funded charters, including: Noble Network of Charter Schools, Urban Prep Academies, KIPP Chicago Public Charter Schools, LEARN Charter School Network and Perspectives Charter Schools.

She says, she can't talk about it because she is under investigation by the IG. But in private, she's making plenty of noise.

"Enough is enough", she threatens in a letter to her corporate friends and supporters as she tries to rally the troops in her behalf. I got a copy of the letter this morning. In it, she blames all her "unwanted publicity" on the Chicago Teachers Union, and a well-coordinated media conspiracy to defame her.

That said, with another story in Monday’s Chicago Sun-Times, I have now been featured in that paper seven times (including three front page stories) since December 22nd – as well as having had my office picketed by the Chicago Teachers Union.  The ink was not even dry on the initial cover article before an editorial was published the very next day calling for my resignation.  It is likely no coincidence that there is a City Club debate on the issue of an elected school board on Monday.  The seeming coordination is remarkable. 

She is a "private person", she says, "who has never sought publicity – favorable or otherwise" and is only serving on Rahm's board because she wants to help "all children". I don't blame her for wanting her dealings with CPS schools to remain in the dark. But maybe she should have thought of that before assuming a public position on the mayor' appointed board.

Most of Rahm's corporate backers protect their city and school board contracts simply by tossing a few grand into his already over-stuffed campaign fund or super PAC. They don't feel the need, as Quazzo obviously does, to sit on a board where they will attract public scrutiny.

She closes the letter with a paean to the mayor, an attack on "adult agendas" and a call for her hedge-fund friends to write angry letters on her behalf to the Sun-Times.

 Under the passionate leadership of Mayor EmanueI and the leadership at Chicago Public Schools, Chicago Public School students have a longer school day, access to full day kindergarten, and expansion of STEM and IB education among other initiatives.  Great progress is being made, as is seen in virtually all measures, but we still have a long way to go.  

I believe it is time for Chicagoans, and, individuals who care across the country, to stand up united against any force that distracts from our core mission – a better future for all Chicago’s children.  Adult agendas are driving focus away from what we should all care deeply about – the welfare of and future opportunity for ALL of Chicago's 400,000 students and for that matter all children in our country.  As an initial step towards that goal, I would so appreciate it if you would take a minute and express your views to the leadership at the Chicago Sun-Times.

She includes their names, pictures and contact information. 

Quazzo sounds pretty desperate. I think she's toast. Too much baggage for Rahm to carry. She should do the right thing and step down. Right now she's a walking billboard for an elected school board.

Chuy Garcia: Rahm treating CPS as a 'profit center'

Quazzo  (F. Klonsky)

Mayoral candidate "Chuy" Garcia accused Rahm of treating education "as a profit center for people with powerful connections." He couldn't be more right. Latest case in point in the mayor's defense of his hand-picked board member, Deborah Quazzo, who uses her board seat to protect her ed-biz investments.

According to the Sun-Times:

Quazzo, a millionaire venture capitalist, has invested in five educational technology companies that have been paid about $3.8 million by CPS since 2010, $2.9 million of it since June 2013, when she replaced Pritzker.

Quazzo is the “founder [in 2009] and managing partner of GSV Advisors—part of GSV Capital Corp., “a publicly traded investment fund that seeks to invest in high-growth, venture-backed private companies. GSV Advisors is “a firm that provides advisory services to companies in the education and business services sectors.” In plainer language, GSV Advisors invests in firms that that bring high-tech to solving problems in education. An example is GVS-backed DreamBox Learning, online individualized math instruction that, the company claims, “improves early educational outcomes for every child—regardless of zip code.”

She's also an ex officio board member of KIPP Chicago (Knowledge is Power Program), a charter school operator; New Schools for Chicago, an organization that raises money for charters.

NEEDED--An elected school board.

Reason 1001 Why We Need an Elected School Board in Chicago

Quazzo flies Byrd-Bennett out to Arizona for her annual ed investment conference

“It’s my belief I need to invest in companies and philanthropic organizations who improve outcomes for children,” Quazzo says.

Today's Sun-Times Reports:

Companies that Chicago Board of Education member Deborah Quazzo has an interest in have seen the business they get from the city’s schools system triple since Mayor Rahm Emanuel appointed her to the board last year, records obtained by the Chicago Sun-Times show.

Quazzo’s companies have gotten an additional $2.9 million in Chicago Public Schools business in the year and a half since the millionaire venture capitalist joined the board to fill a vacancy left by Penny Pritzker when President Barack Obama named Pritzker commerce secretary.

In all, five companies in which Quazzo has an ownership stake have been paid more than $3.8 million by CPS for ACT prep or online help with reading, writing and math. One of them stands to collect an additional $1.6 million this year from a district contract.

Quazzo says she has recused herself from school board votes on contracts with companies in which she has a stake, including a $6 million, two-year deal with one called Think Through Math. But, of course, nearly every vote of the board in unanimous.

On the website for GSV Advisors, Quazzo lists five companies she has invested in that do business with CPS — Academic Approach, Dreambox Learning, MasteryConnect, Think Through Learning and ThinkCERCA and touts her “dozens of personal investments in dynamic education companies, demonstrating her commitment while deepening her expertise and relationships in this important and fast-growing sector.”

Quazzo also co-hosts an annual education investment conference in April in Arizona with GSV Capital, which is owned by venture capitalist Michael Moe. Barbara Byrd-Bennett, CPS’ chief executive officer, and Quazzo’s fellow school board members Andrea Zopp and Mahalia Hines are among past speakers at the conferences.

Byrd-Bennett’s airfare and hotel bill were paid for by conference organizers, as were Hines’, according to McCaffrey.

Another reason for an elected school board in Chicago.