Still in the news this week: Florida public pension buys Privateer Edison

[salin]

Schools.

First read this two or three weeks ago - here at DU. So here are the updates and items on this story from this week:

Pension buy leaves critics seeing red

By Noelle Haner-Dorr
Orlando Business Journal

Oct. 6 — TALLAHASSEE -- A pending $174 million investment made on behalf of Florida's public employees has come under fire.

Late last month, New York City-based money management firm Liberty Partners announced it was investing the money from Florida's $92 billion state pension fund in Edison Schools Inc., a controversial company specializing in private management of public schools.

Word of the investment has educators and unions fighting mad.

"Florida's state employees should be looking very hard at where their pension money is being invested," says Nancy Van Meter, director of the American Federation of Teachers' Center on Privatization.

"Liberty Partners also bought up shares of Enron before it went into a death spiral. One has to wonder at the soundness of the judgment being made here."

---------snip

"We are perfectly satisfied that this is one heck of an investment opportunity," says Stipanovich. "We believe Edison's model is working."

---------snip

Whittle will get a lucrative deal. His salary will rise to not less than $600,000 from its current level of $345,000, with a potential annual bonus of 275 percent.

If the deal is approved by shareholders later this year, Florida's state pension fund will own 96 percent of Edison Schools. Whittle will retain 4 percent of Edison's outstanding equity.

-------- snip

Between November 1996 and March 2003, Edison had an accumulated deficit of $291.8 million. For the nine months ended March 31, revenue for the company fell 11 percent to $291.1 million. It posted a net loss of $6.4 million.

so much more: http://famulus.msnbc.com/famuluscom/bizjournal10-04-010410.asp?bizj=ORL

I found a few more stories and will link below... wonder if Whittle gives to Jeb! or George...

[salin]

1. This school investment isn't so sound

This school investment isn't so sound

Posted on Mon, Oct. 06, 2003

When it looked like Florida voters were going to mandate caps on class size in public schools last year, Gov. Jeb Bush joked that he had some "devious plans" - which turned out to be simply asking voters to repeal the costly constitutional amendment.

Bill McBride and the teachers unions that had made him the Democratic nominee against Bush howled that the governor secretly was scheming to thwart the will of the people. But now the teachers, the public-employee unions and the Florida AFL-CIO are learning - not that they ever doubted it - how clever Republicans can be at post-election payback.

The state pension fund plans to sink $182 million into Edison Schools Inc., which operates 150 schools in 23 states. In addition to buying up more than 96 percent of Edison's stock, the money would pay off the company's debts and create a line of credit for operating expenses.

more: http://www.tallahassee.com/mld/democrat/news/local/6942100.htm

[salin]

2. National Education Association Warns Florida Retirement System About Risky

National Education Association Warns Florida Retirement System About Risky Investment in Edison Schools

9/30/03 2:23:00 PM

To: State and City Desk

WASHINGTON, Sept. 30 /U.S. Newswire/ -- Reg Weaver, president of the 2.7-million member National Education Association (NEA) sent the following letter today to Florida Governor Jeb Bush. The letter urges Governor Bush not to gamble with $182 million of teachers' retirement money. The retirement system, through one of its money managers, is poised to buy out Edison Schools Inc., a for-profit school management company which has had a troubled financial history. Edison's shaky finances are well known to those who follow the stock market. As Weaver points out in his letter, Edison's stock has plummeted from $36 a share less than two years ago to under $2 today. Weaver asks the Governor, as chair of the Florida Retirement System's Board of Administration, to reconsider investing in the shaky company.

The letter follows:

Dear Governor Bush:

It has been brought to my attention that the retirement funds of Florida's teachers and education support professionals may be used to finance the acquisition of Edison Schools Inc. If this transaction were to be finalized, the Florida Retirement System would own over 95 percent of the failing for-profit Edison Schools.

(more): http://releases.usnewswire.com/GetRelease.asp?id=140-09302003

[salin]

3. Oh MY! Look at this media smooch to JEB! Editorial: Smart deal

Editorial: Smart deal
Investor's bid for Edison Schools could pay dividends for Florida.

October 1, 2003

The political pot is boiling over with news that a firm with Florida investment ties is seeking to buy Edison Schools.

Public-employee unions blast the purchase deal, calling it a Gov. Jeb Bush-inspired scheme to promote the kind of privatized education provided by Edison. Bush says he has nothing to do with the pending sale, and just learned about it from a Wall Street Journal article last week.

The prospective buyer, Liberty Partners, manages Florida's $94 billion state retirement system. And, by all accounts, it's done a good job. In 11 years of handling the system's investment portfolio, Liberty has averaged an annual return of 12.1 percent, compared with a market average of 9.7 percent posted on the Russell 3000 index.

more: http://www.tcpalm.com/tcp/pj_editorials/article/0,1651,TCP_1125_2310529,00.html

[AP]

4. CA pension will be buying in soon too, I bet.

This is such bullshit.

Incidentally, this is what Camejo and Edwards are addressing when they say that shareholders need greater rights over voting their shares.

There is no way in hell that the people whose money is in those pension funds would by the snake oil Edision is selling.

it's outrageous that the governor has so much control over these pensions.

[salin]

5. Read Jeb's response... he is one of three who provides 'oversight'

over the firm and their investments (it is public money, after all). He said something along the lines of believing it was a hands-off role, and that he did not believe in being involved (eg NO OVERSIGHT).

Now think about the increasingly draconian Ed rules ... all in the name of "accountability". So public dollars only require scrutiny when used by governmental organizations. But public dollars, require zero scrutiny if spent/invested by a private entity with NO responsibility to the tax payer.

Up is down.

I would love to see the relationship between Whittle and the Bushboys. No one would make this awful investment: Give the charlatan a huge raise, pay off all debts, give him a break so they can get out from SEC scrutiny (which is why they want to go back to being private) and then take on 96% ownership - of an entity that has only turned a profit in one quarter of its 8 year (or so) history.

There is more to this story.

Mark my words.

[salin]

6. loose connection with Whittle and Lamar Alexander (back to 1992 election)

(deep into the article against NCLB)

If not yet in bankruptcy court, Chris Whittle and his Edison Schools Inc, will be waiting (Edison stock has been as high as $39 a share, but in February, 2003 it was hovering around $1.35; in ten years, the company has failed to show a profit in even one quarter). Recall that Whittle announced his plan for a national system of private schools in 1991 when President George Herbert Walker Bush was riding high after the Gulf War. So certain was a Bush re-election—coronation, actually—that the most likely Democratic candidates declined to run and left the certain defeat to the Governor of Arkansas.

Recall, too, that Whittle had paid Bush’s secretary of Education, Lamar Alexander, $125,000 as a consultant while Alexander was Governor of Tennessee (Whittle Communications was headquartered in Knoxville). Alexander also bought $10,000 worth of Whittle Communications stock. He transferred the stock to his wife when he became president of the University of Tennessee (for some reason, his wife also wrote a check to Whittle for the shares. Apparently, Whittle never cashed either one of them, but he later bought the stock back for $330,000<21>

Whittle's original grandiose plan prophesied 200 private schools by 1996 and 1000 by 2000 (he currently manages, not owns, about 130 public schools). He said it would require about $1 billion to create a prototype of his scheme and another $2 to ramp it up to a national scale. Where on earth would he get that kind of money? Whittle said from bankers and investors. Three billion from investors who had already lost about $400 million on his earlier adventure, Channel One?

Whittle actually needed Bush and Alexander to push their school voucher plan through Congress. Then children could use those vouchers to attend Edison schools.

When the unthinkable happened and Bush lost, Whittle had to fall back on managing a few public schools. Whittle no doubt already has an advertising campaign ready for when the failing grades start arriving. He will then portray the Edison "model" as the only means of consistently achieving AYP, even though evaluations have found Edison achievement results mixed at best and a dozen schools that Edison lists as showing "positive" trends have terminated their contracts.

But Edison has friends in high places. Lamar Alexander is now a Senator who managed, despite his freshman status, to wrangle a seat on the education committee. Another fan, Eugene Hickok, is Deputy Secretary of Education (Hickok was responsible for persuading then-Pennsylvania governor, Tom Ridge, to impose Edison on Philadelphia schools). And a third Whittle pal and voucher advocate, Lisa Keegan, heads the Education Leaders Council (in which Hickok was very active before taking his current appointment), which has received millions in no-bid contracts from Secretary of Education Rod Paige. Whittle will be ready to roll if the moment comes.

As will be former secretary of education, William J. Bennett. Bennett now heads K12, Inc. After decades of warning people that computers offer no educational advantages, Bennett converted and is now CEO of this company that produces on-line curriculum materials. The "supplementary services" provisions of NCLB offer Whittle, Bennett and other private companies opportunities after the public schools "fail."

more: http://www.america-tomorrow.com/bracey/EDDRA/EDDRA32.htm