Category Archives: Education

Chicago Tribune scrutinizes CPS bond deal

The Chicago Tribune published an extensive, front page feature on the Chicago Public School District’s use of innovative borrowing strategies over the last decade, which appears to have backfired and inflated borrowing costs by $100 million.

Appearing in the Sunday print edition of the newspaper, the story centers around the district’s practice of issuing auction-rate bonds, paired with interest rate swaps, to reduce the cost of borrowing money. In contrast to more traditional, fixed-rate bonds issued by school districts and municipalities, the variable rate instruments were subject to future market conditions and in this case, ultimately moved against the district. Servicing the debt became more costly, and breaking out of the contract required large lump-sum payments.

Several academics, financial professionals and public officials contacted for the story said greater consideration should have been given to the potential risks involved. The district’s financial advisors who crafted the deals defended them, disputing the newspaper’s analysis that concluded that they cost the district $100 million.

A couple notes: first of all, reporters Jason Grotto and Heather Gillers did a great job with this story. It’s a serious, in-depth piece on a local topic of real civic importance, showcasing one of the strengths of newspaper journalism. That’s not to say I endorse every sentence or every shade of tone and nuance in the article, but that’s beside the point. The point is that this is important, engaging reporting. Definitely worth my Sunday subscription price.

Secondly, it should be noted that the district and its financial people weren’t crazy or irresponsible for considering the new type of deals that were being used more often during the early 2000s. Innovation occurs in the financial industry just like every other industry, and just because something is new and more complex, doesn’t mean it’s wrong or irresponsible.

Thirdly, that being said, I believe (and I think most reasonable citizens would believe), that a school district should generally take a conservative approach to resource management and financial planning. That might mean you don’t try to shake a point or two out of every deal, if it means incurring an unpredictable future liability stream.

Fourthly and finally, I thought that the reaction of the CPS advisors in response to this article was lacking, at least in terms of what was published. The competing analysis they submitted in response to the Tribune analysis omitted key information, leaving their defense of the deals less credible. Again, it’s not always wrong to take calculated risks, but if the deals don’t work out, just say that, rather than stretch or skew an analysis stating that they did.

But worst of all was Adela Cepeda‘s attempt to strike back at the newspaper for investigating the public school district’s finances. “I consider the slant of the reporters for this article to be absolutely biased and outright sexist,” she said in a letter to the Tribune. She also criticized the paper for consulting a New York firm to review their own analysis before publishing, only to then use a New York firm herself to submit her own analysis.

Cepeda earned an MBA at the University of Chicago, and was in banking for ten years, according to the article. She married into a politically connected family on the city’s South Side, and very shortly after forming her firm won contracts with CPS. Her partner, David Vitale, is a former Chicago Board of Trade president and currently serves as president of the school board.


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The rising cost of college

Excellent short documentary from the National Inflation Association, which notes that government’s increasing role in subsidizing higher education has contributed greatly to its rising cost over the years. The film also pokes holes in the conventional wisdom that a college graduate earns on average a million bucks more over the course of a lifetime than a high school graduate.

Very interesting stuff, and worth watching:

College Conspiracy

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The Kansas City Star reports on Teach for America’s role in city schools. Teachers with the organization clearly make contributions to schools in need, but also face a good deal of challenges and sometimes their presence generates controversy.

TFA has earned rave reviews and fierce criticisms during its still relatively short existence. On the whole, I’m strongly supportive of the organization and its efforts. Why wouldn’t we want to get some of the country’s best and brightest young people going into the classroom to teach?

Just because not all of them are going to stay, or because some of them are using the position to pad their resumé before going on to “bigger and better” things, doesn’t mean it’s not a good thing for the system. Some will stay, some will move on, but all will have brought energy, optimism and aptitude into struggling public schools for at least a season.

Sometimes you’ll hear education establishment types (veteran public school teachers, ed school professors, etc) bad mouth TFA and its young teachers who enter tough teaching posts across the country. They didn’t go through the right channels, they don’t belong to the union (some are, some aren’t, mostly depending on location, I believe), or some other myopic, petty grievance is sometimes behind the sniping. To me, this is the sort of backwards, tribalist approach that has eaten away at the system from the inside for many years.

Keep up the good work, TFA. Do all you can in the time you have to make a difference.

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Criticism of Sinquefield is insincere and unhelpful

Everyone’s concerned. Everyone’s offended. About everything. It’s part of the culture we live in today. And especially part of our pathetic, pedantic, political discourse. We can’t wait to jump on somebody’s comments to prove what a scumbag they are. I’ve probably been guilty of this at times in my life. I hope no more. We need a more reasoned discourse. But that would get in the way of scoring cheap political points when your opponent happens to stick his foot in his mouth.

Recently, retired investor and public policy advocate Rex Sinquefield referenced an old story about how the KKK came up with the idea of a public school system that would fail black children miserably. In video of the event, it’s plain Sinquefield was not relaying this story as historical fact but rather, like the author of the newspaper column he cited, pointing to a bitter irony of modern public education: rather than equalize opportunity, it has failed poor, minority students.

To school reform backers, that’s a moral problem of tremendous scope. Hence the KKK reference –  for a bit of contextual size and scale (and groups like the Black Alliance for Educational Options will absolutely tell you that school choice is a civil rights issue). Was it a poorly chosen illustration? Yes. We all know there are good people doing good work in public schools, and this kind of reference is too easily distorted into an attack on all of them, which is what we see happening now.

The point is that Sinquefield observed that today’s failed public school system and its effects on the vulnerable is a travesty of the first order. He’s to be tarred and feathered for that?

There’s one other piece to all this. Who are the people attacking Sinquefield right now? Public school people. Establishment education people with a vested interest in the status quo, or certain elected officials who depend on their support. Think about that. Aren’t some of these same individuals and organizations some of the worst offenders when it comes to hyperbole and morally-charged rhetoric when it comes to education debates? Aren’t they often the first people to claim you’re against kids if you dare oppose a tax increase or if you have the audacity to suggest a change to teacher personnel policy?

I remember living in Columbia a couple years ago when the late Rep. Ed Robb (R-Columbia) was still serving in the state legislature. There was a particularly intense debate over some education bill, and one day I was driving through town when I began to see signs loudly proclaiming that “Ed Robb Hurts Kids.” Apparently this father and educator was on the wrong side of the issue. So obviously he “hurts kids.”

I was blown away – but I was also young and naive. I think we’ve all come to expect that kind of rhetoric from the noble public school lobby. Now an off-handed barb comes their way, and they are rife with self-righteous indignation.

MNEA president Chris Guinther said Rex is “out of touch….[and] needs to explain himself and apologize to all students, parents and Missourians.” Missouri Association of School Administrators president Eric Churchill said that Sinquefield’s remarks were “offensive to every student, parent, employee, teacher, administrator, and school board member in a public school.” These two should be reminded that their organizations were principal members of the coalition that called itself “People for Public Schools,” which put the deplorable signs up about Ed Robb.

So enough with the phony outrage.

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Mayor James takes risks on KC schools

Steve Kraske of the Kansas City Star writes that Mayor Sly James is betting his future on the schools, as he vies to take control of the troubled district while the state considers a takeover. The columnist strikes a down note, noting that James is a Marine and a lawyer by training, not a school administrator (Is that necessarily a bad thing, considering many administrators’ track record in this district?). He can’t eliminate urban poverty and give every child a good home.

All that is true. If James gets the control he wants, it’s on him. He owns it. And it’s hard to see how even the most successful singular leader can make a major turnaround in just a few years. Nevertheless, without having followed every twist and turn of this latest crisis in the district, I like the fact that James wants to take control. To assume responsibility. It would be hard to do any worse than the current state of affairs.

The only question is, could the state do any better? That’s a matter of speculation at this point. A state takeover signals just how dire the situation is, and may offer some relief from local bickering over problems and solutions. Yet, we shouldn’t forget that management from above and layers of bureaucracy has helped create the mess seen today.

When state and federal policymakers want to “help” local school districts by “giving” them money, locals must remember there are always strings attached. That’s just common sense. Yet education types everywhere hoot and howl whenever someone attempts to micromanage them or restrict them. Usually it’s the same people who constantly clamor for more state and federal “aid.” Resources without responsibility, say some public education backers.

Do they also not expect that in the bizarre world of public education where human resource decision-making is so regimented and restrained, the inevitable alternative is micromanagement of personnel? Autonomy without accountability, cry the teachers unions. Myriad tests and measurements, and a battery of mind-numbing, soul-sucking regulation are the impotent, annoying substitutes for this refusal within public education to accept responsibility or accountability.

In the interest of local control, a mayoral takeover at the city level is probably superior to an education department takeover at the state level, in theory. Again, I don’t know all the specifics of the current situation, and I don’t know Sly James or what his learning curve would be like. But if he can convince DESE and others that he’s the man with a plan, then more power to him.

As for what he should do if and when that happens – or what the state or anybody else should do – that’s another discussion for another day. For starters, every student, parent, and especially every public educator can start by adopting James’s attitude when it comes to education: It’s on me.

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KCMO holds onto empty buildings

The Kansas City Star reports that the Kansas City, Missouri school district now owns thirty-eight empty school buildings. And they’re wondering what to do with them. Actually it’s a shell company that owns the schools,  not technically the district. That makes it harder for the board to act, but also gives the board some cover for anything that goes down.

Is Kansas City expected to gain a sudden influx of K-12 students in the next couple years? I don’t think so. It’s been hemorrhaging students for years. So it seems pretty obvious what to do here: sell the buildings and be done with it. Use the proceeds to shore up district finances and invest in the future, then focus on current students and the schools they actually attend!

Holding on to a couple extra buildings might make sense. But ultimately, this is a no-brainer. You’ve got to focus on what you’ve got, and cut loose of extra baggage. That’s what’s right for students and taxpayers, and that’s who the district serves.

Kansas City is not in a unique situation. Other cities have faced similar issues, and other school districts – just like Kansas City – have balked at selling the assets out of fear other, non-district schools might use them. The district would be better-off focusing on improving its own performance rather than worrying about potential competition.

If the district administration, the board, and other actors refuse to release their grip on empty buildings, it will start to look like desperate treasure-hoarding while the castle crumbles.


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Unions in higher ed

Yesterday I posted about the unionization of higher ed, at the National Association of Scholars blog.

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