Whitney Tilson <wtilson@kasecapital.

com>

to

1) This afternoon at the Value Investing Congress (the investment conference I co-founded) I presented the attached presentation entitled: An Analysis of K12 (LRN) and Why It Is My Largest Short Position. (If youre interested in investing, the next Congress will be in Las Vegas on April 3-4, 2014 (with my PreCongress Workshop on April 2nd). See www.valueinvestingvegas.com for more info and if want to attend, let me know and Ill send you our best discount code.) I know the company and the space well (K12s primary business is running online charter schools in 33 states and DC), and its a VERY high conviction short (meaning the funds I manage will profit if the stock price declines). I think that the company has run amok in many, many ways, inappropriately targeting the most at-risk students, with dismal academic results, off-thecharts student turnover, coming under increasing scrutiny. K12 reminds me of the subprime mortgage lenders and for-profit colleges when they were flying high and the ending will be similar I believe.

Heres the summary of why Im short K12s stock (page 8 of my presentation): K12's aggressive student recruitment has led to dismal academic results by students and sky-high dropout rates, in some cases more than 50% annually
o I wouldn't be short K12 if it were carefully targeting students who were likely to benefit from its schools typically those who have a high degree of self-motivation and strong parental commitment
But K12 is instead doing the opposite; numerous former employees say that K12 accepts any student and actually targets at-risk students, who are least likely to succeed at an online school One former employee said: "K12's recruitment of inner-city and at-risk "last resort" students had another benefit these students used up less of K12's educational and teaching resources while permitting K12 to collect full funding from the states."

o Like subprime lending and for-profit colleges, the business makes sense on a small scale but, fueled by lax regulation and easy government money, the sector has run amok

There have been so many regulatory issues and accusations of malfeasance that I'm convinced the problems are endemic o Enrollment violations, uncertified teachers, conflicted relationships with nonprofit charter holders

 I have been looking for years and have not found a single K12 school that is free of scandal and posting even decent (much less good) academic results States (and the IRS) are waking up to what K12 is doing and the company is coming under increased scrutiny, which is beginning to impair K12's growth and I believe this trend will accelerate Yet the stock, trading at nearly 50x trailing earnings, is priced as if K12 will continue to grow at high rates for the foreseeable future and also improve on its persistently low margins and free cash flow And lest anyone think Im opposed to for-profit or inline schools, I write (page 9): I think an online school can be a great option for some students and families, but an inappropriate and harmful option for others I am a champion of high-quality charter schools (including online and/or for-profit ones), but I think that low-quality charter schools give the movement a black eye To be clear: I am not bearish on K12 because I am short the stock. Rather, I am short the stock because I am bearish on K12

Its important to keep in mind that K12 is not at all representative of the charter sector. Approximately 70% of charter schools are nonprofit and K-12s 117,563 students are only 5.2% of all charter students nationwide. If you have had any dealings with K12, positive or negative, Id love to hear about them! 2) I just received in todays mail Ravitchs latest screed, Reign of Error: The Hoax of the Privatization Movement and the Danger to America's Public Schools. I already know exactly what it says, but I guess Im going to have to wade through it anyway oh, the brain damage Fortunately, other people are already tearing it to (well-deserved) shreds, so maybe Ill get lucky and wont have to invest too much time doing so myself. However, there is one thing Im certain that Ravitch and I agree on: K12 and other similar schools. I think the entire sector of for-profit online schools has run amok and is giving the entire charter (and reform movement overall) a bad name. 3) Heres a brilliant critique by Kyle Smith in the NY Post this week:
Public schools? Theyre fine. Teachers who cant be fired? No problem at all.

Our international competitiveness in education? Nothing to worry about. Too many kids dropping out of high school? Its a myth. And anyway, some kids are just poor, hence doomed, so what are schools supposed to do about that? Get ready for the worlds longest excuse note: Diane Ravitchs new book Reign of Error: The Hoax of the Privatization Movement and the Danger to Public Schools. Only this note is from the teachers unions (who have paid Ravitch for her flackery) to you. The dog ate your childs education. Ravitchs book purports to be a point-by-point destruction of the arguments for school reform, (a word she cloaks in scare quotes), choice and competition. She thinks that the local monopoly stranglehold of the average union-run public school is somehow a good thing and that parental choice and competition are bad. The book veers between argument and rant. Ravitch seems scarcely able to stop sputtering out meaningless and irrelevant buzzwords that she hopes will inspire ill will towards school choice. Again and again hundreds of times she tosses out words meant to stir up irrational hatred. I refer to words like privatization (which no one is proposing), entrepreneurs, corporations, profits and (most hilariously) creationism, which she claims is one of the hidden agendas of school reformists. Yet school reform and charter schools (which are generally just public schools freed from union red tape) are among the few political solutions floating around that are genuinely bipartisan.

4) Im not surprised to see Parent Revolution on the ball, creating a blog to rebut the book:
Dear Colleague, As many of you are aware, education pundit Dr. Diane Ravitch has written a new book scheduled for public release today, Tuesday, September 17. The title of the book is 'Reign of Error: The Hoax of the Privatization Movement and the Danger to America's Public Schools.'

Dr. Ravitch will now travel around the country promoting her book and providing her perspective on education reform and public schools in America. As you can probably gather from the book's title, she strongly opposes reform efforts to make our public education system stronger. At Parent Revolution we have, of course, a different perspective to that of Dr. Ravitch. Where she sees doom and gloom, we see opportunity. Where she sees deep crisis for the status quo, we see positive change for America's children. While there are many speaking out for various directions of education reform, Dr. Ravitch uses much of her platform to justify and protect the current broken and low-performing system. As such, she positions herself as one of the last bulwarks against the rising tide of reform and change. As you know, we fundamentally disagree with Dr. Ravitch on many positions she takes. We believe her work appeals more to a circle-the-wagons tribalism than a genuine endeavor to seek common ground around improving our children's education. That is why, over the next two weeks, we will be doing a 'deepdive' into her latest book. We will be analyzing each chapter of the book, summarizing her position, highlighting any inconsistencies, and providing our own perspective. At the same time, where we do agree with Dr. Ravitch on an issue, we will report that also. Our daily postings starting today will be on our 'Truth in Education Reform' website:www.truthinedreform.org/blog. We hope you will look at our analysis. Agree or disagree with Dr. Ravitch, her latest work deserves a thorough analysis. By doing it this way, we believe the discourse around education reform and, ultimately the kids -- will be better served. Sincerely, Derrick

P.S. Again, the site to find our analysis is www.truthinedreform.org/blog.

Derrick Everett Deputy National Communications Director Parent Revolution Cell: (213) 718-3217 | Office: (213) 6213052 | deverett@parentrevolution.org 315 W. 9th St. Ste. 904 Los Angeles, CA 90015

5) In fairness, I want Ravitch to be able to make her case, so for those of you who wont have the time to read the book, heres a lengthy excerpt from it that ran in Salon this week:
Of course some schools and districts have very low test scores and low graduation rates, and this has always been true. Most of these schools and districts have two features in common: poverty and high concentrations of racial minorities. The combination of these two factors is associated with low test scores. Children whose parents are poor and have low educational attainment tend to have lower test scores. Children who are poor receive less medical attention and less nutrition and experience more stress, disruption, and crises in their lives. These factors have an ongoing and profound effect on academic performance. That is why poor children need even more stability, more support, smaller class sizes, and more attention from their teachers and others in their schools, but often receive far less, due to underfunding. Unfortunately, many people are unwilling to address the root causes of poor school outcomes, because doing so is either too politically difficult or too costly. They believe it is faster, simpler, and less expensive to

privatize the public schools than do anything substantive to reduce poverty and racial isolation or to provide the nurturing environments and well-rounded education that children from prosperous families receive. Instead, the privatization movement nonchalantly closes the schools attended by poor children and destabilizes their lives. The privatization agenda excites the interest of eduentrepreneurs, who see it as a golden opportunity to make money. But it is bad for our society. It undermines the sense of collective responsibility for collective needs. It hurts public education not only by attacking its effectiveness and legitimacy but by laying claim to its revenues. The money allocated to privately managed charters and vouchers represents a transfer of critical public resources to the private sector, causing the public schools to suffer budget cuts and loss of staffing and services as the private sector grows, without providing better education or better outcomes for the students who transfer to the privatesector schools.

-----------------

Author shows how ridiculous arguments are against school reform

By Kyle Smith September 14, 2013 | 5:51pm http://nypost.com/2013/09/14/author-shows-how-ridiculous-arguments-areagainst-school-reform/ Public schools? Theyre fine.

Teachers who cant be fired? No problem at all. Our international competitiveness in education? Nothing to worry about. Too many kids dropping out of high school? Its a myth. And anyway, some kids are just poor, hence doomed, so what are schools supposed to do about that? Get ready for the worlds longest excuse note: Diane Ravitchs new book Reign of Error: The Hoax of the Privatization Movement and the Danger to Public Schools. Only this note is from the teachers unions (who have paid Ravitch for her flackery) to you. The dog ate your childs education. Ravitchs book purports to be a point-by-point destruction of the arguments for school reform, (a word she cloaks in scare quotes), choice and competition. She thinks that the local monopoly stranglehold of the average union-run public school is somehow a good thing and that parental choice and competition are bad. The book veers between argument and rant. Ravitch seems scarcely able to stop sputtering out meaningless and irrelevant buzzwords that she hopes will inspire ill will towards school choice. Again and again hundreds of times she tosses out words meant to stir up irrational hatred. I refer to words like privatization (which no one is proposing), entrepreneurs, corporations, profits and (most hilariously) creationism, which she claims is one of the hidden agendas of school reformists. Yet school reform and charter schools (which are generally just public schools freed from union red tape) are among the few political solutions floating around that are genuinely bipartisan. A chapter on tenure is particularly instructive about Ravitchs style. She says tenure means due process. There is no ironclad tenure for teachers. There isnt? Before the recent, mild tenure reforms in New York City, 97 percent of teachers were granted tenure in 2007. In the three years up to 2010, only 88 teachers out of about 80,000 city teachers were fired for any reason. Thats one-tenth of 1 percent. Sounds fairly ironclad to me, but Ravitch simply pretends such figures dont exist. What other profession is so

protective of poor performers? Getting rid of tenure is, to Ravitch, a secret plot hatched by school Savonarolas who want to burn all the interesting books. If teachers dont have tenure, writes Ravitch, They will think twice before assigning a novel that any parent might find offensive, such as Mark Twains Huckleberry Finn or Aldous Huxleys Brave New World or the Harry Potter books or a novel by John Steinbeck. So Mike Bloomberg, who has said his goal is to end teacher tenure, is a sort of Manchurian Candidate secretly directed by fundamentalist who think Harry Potter is teaching our kids to be Satanists? Ravitch told The New Yorker that without tenure, There will be huge parts of this country where evolution will never again be taught. Sure. Charter-school backers like Bloomberg, Bill Gates, Chicago Mayor Rahm Emanuel, Obamas Education Secretary Arne Duncan, the guy who directed An Inconvenient Truth theyre all closet creationists using school choice as a Trojan Horse to sneak their evangelical Christian views inside the castle walls. Other Ravitch critics espouse their views in the Bible Belt newsletter The New Republic (Ravitchs use of evidence to support her new positions is often dubious, selective, and inconsistent) or the fundamentalist outpost Time magazine (Aside from improving curriculum, she does not have a reform agenda or alternatives of her own). Ravitch thinks its just fine that the teaching profession pays according to seniority and irrelevant outside credentials rather than skill. So what if studies show that whether your teacher has a masters degree has nothing to do with whether she can teach? This is one of those instances where the findings of economists do not concur with the wisdom of teachers, she writes. So if a scientific study conflicts with teacher wisdom, we should simply toss out the former and defer to the latter. Why bother doing any educational studies whatsoever if thats the case? Instead we could just take a poll of teacher wisdom made up of questions like, Would you rather have to prove your worth like virtually every other worker in America, or would you prefer to have guaranteed employment for life?

Public schools are supposed to serve the interests of students and their families, not teachers. Heres a reform agenda: Stanford economist Eric Hanushek has calculated that if we could raise our overall education standard to that of Canada (a pretty high bar Canada ranks just below Massachusetts, which is the No. 1 US state in education performance), that one factor would increase the pay of US workers by 20 percent (in inflation-adjusted dollars) over the next 80 years. That windfall would mean a lot less pressure on liberal social programs, or on defense cuts, or on the upward trajectory of tax rates, or however you want to envision it. See the bipartisan appeal here? Hanushek has further shown that if we replaced the bottom 5 percent to 8 percent of teachers with merely average ones precisely the kind of reform teachers unions hate and make impossible via tenure regulations we could catch up to Canada in the rankings charts. If there are 35 teachers in a school, that means telling two or three of them to find another line of work. Ravitch questions the worth of testing teachers, but is there a principal in this country who couldnt identify a couple of teachers shed gladly unload if it werent for tenure? At times, Ravitch, a former neoconservative who used to say the exact opposite of everything she says now (the amusing Twitter feed Not Diane Ravitch is a fount of quotations from her earlier, sensible self) sounds like a hair-shirt wearing zealot who has to scourge herself to punish any dissent from teachers union dogma. Even retroactively. Was I weak? Yes, she told The New Yorker about her choice to send her kids to private schools. Sure, she it would have been a much stronger move to sacrifice her sons education for the sake of making a political point. Today she delivers tub-thumping anti-reform speeches to the assembled teachers union faithful. At one union rally in Washington, she was introduced with these words: Like Britney and Cher and Gaga, in the education world, all you need to say is Diane.

Ravitch certainly can be gaga. New Yorker writer David Denby said that when he left her apartment after an interview, she sent him 16 emails in the 45 minutes it took him to get home. After the Newtown Massacre, she wrote, in a bizarre nonsequitur, Let us hope [Connecticut] Governor Malloy learned something these past few days about the role of public schools in their communities. Newtown does not need a charter school. What it needs now is healing. Not competition, not division, but a community coming together to help one another. Together. Not competing. The New Republic suggested a possible motive for her political conversion from conservatism to her current belief that even President Obama is a tool of the nefarious corporate reformers. She began publicly attacking then-New York City schools chancellor Joel Klein (currently the CEO of Amplify, which like The Post is a News Corp. company) shortly after her girlfriend Mary Butz, a longtime school principal, failed to get a job heading up a New York City principals-training program. According to The New Republic, Ravitch aggressively lobbied Klein to hire Butz to lead the new program and reacted with anger when he didnt. (Ravitch denied this, telling TNR that she merely urged Klein to call upon Butz for her deep knowledge and experience, the magazine stated). After that, Ravitch would then obsessively turn every conversation toward her grievances with Klein as he cleared the way for hundreds of charter schools, a school reformer told the magazine. Her grievance-laden book simply ignores facts that teachers unions would prefer you not to know. Though there is nothing magical about charter schools that guarantees their success, the good ones have achieved such spectacular results that it would be gross educational malpractice to ignore them. A Stanford study of New York City charter schools found that 50 percent of them outperformed the union-run public schools, as against 16 percent that did worse. Twenty-two of the top 25 public schools in the state are now city schools (which boasted zero of the top 25 before Mayor Bloomberg jump-started the charter movement). Of those 22, 18 are schools of choice (such as

charters and magnet schools) instead of geographically zoned ones. In 2002, the city had 9 percent of the states top-ranked schools and 62 percent of the lowest-ranked. Those numbers are now up to 22 percent on the high end and down to 30 percent on the low end. What would happen to all those charter students if Ravitch destroyed the charter movement in the name of community, i.e. local monopolies? Answer: More fragmentation of the community. More separation of rich and poor, white and black. We already have privatized education in a sense: Your childs education is simply part of the price of your home, which costs more in a good school district than it would in a neighboring one where the school is a dropout factory. Charters are severing that link between the value of your home and the value of your kids education. Poor kids may never achieve at the level of rich kids, but poverty is no excuse for defending the status quo of terrible schools in the least affluent neighborhoods. Rich people already have school choice they can move to another neighborhood and the indigent ought to have more options than the citizens of some thug dictatorship where theres only one name on the ballot. Class Warfare author and reformist Steven Brill has compared Ravitch to the amoral tobacco lobbyist in Thank You For Smoking. Education Secretary Duncan has said, Diane Ravitch is in denial and she is insulting all of the hardworking teachers, principals and students all across the country who are proving her wrong every day. Bloomberg View columnist Jonathan Alter wrote that she uses phony empiricism to rationalize almost every tired argument offered by teachers unions. Undeterred, Ravitch keeps the excuses coming: * We would know more if the reformers took over an entire low-performing district, like Newark or Detroit. Theyd love to, but guess who is blocking them? * The four-year graduation rate is one way to measure graduation rates, but it is not the only way. Many young people take longer than four years to earn a high school diploma. As if kids who take six years to graduate high school have it made. * Poor children . . . are more likely to be hungry or suffer from anemia

because of a poor diet. So Americas new crop of spherical kids are flunking out because theyre . . . underfed? Those hulking Augustus Gloops you see rolling off to school every morning are actually spindly Oliver Twists? I dont think Ravitch is listening to them. What these kids are saying is, Please sir, I want some more . . . education.

--------------------SUNDAY, SEP 15, 2013 07:00 AM EDT

Diane Ravitch: School privatization is a hoax, reformers aim to destroy public schools
Our public schools aren't in decline. And "reformers" with wild promises don't care about education just profits
By Diane Ravitch

www.salon.com/2013/09/15/diane_ravitch_school_privatization_is_a_ hoax_reformers_aim_to_destroy_public_schools

Excerpted from "Reign of Error: The Hoax of the Privatization Movement and the Danger to Americas Public Schools" As long as anyone can remember, critics have been saying that the schools are in decline. They used to be the best in the world, they say, but no longer. They used to have real standards, but no longer. They used to have discipline, but no longer. What the critics

seldom acknowledge is that our schools have changed as our society has changed. Some who look longingly to a golden age in the past remember a time when the schools educated only a small fraction of the population. But the students in the college-bound track of fifty years ago did not get the high quality of education that is now typical in public schools with Advanced Placement courses or International Baccalaureate programs or even in the regular courses offered in our top city and suburban schools. There are more remedial classes today, but there are also more public school students with special needs, more students who dont read English, more students from troubled families, and fewer students dropping out. As for discipline, it bears remembering a 1955 film called Blackboard Jungle, about an unruly, violent inner-city school where students bullied other students. The students in this school were all white. Today, public schools are often the safest places for children in tough neighborhoods. The claim that the public schools are in decline is not new. In his Pulitzer Prize-winning book Anti-intellectualism in American Life, Richard Hofstadter characterized writing on education in the United States as a literature of acid criticism and bitter complaint . . . The educational jeremiad is as much a feature of our literature as the jeremiad in the Puritan sermons. From the 1820s to our own time, reformers have complained about low standards, ignorant teachers, and incompetent school boards. He noted that anyone longing for the good old days would have difficulty finding a time when critics were not bemoaning the quality of the public schools. There is a tendency nowadays to hark back with nostalgia to the mythical good old days, usually imagined as about forty or fifty years ago. But few people seem to realize there never was a time when everyone succeeded in school. When present-day critics refer

to what they assume was a better past, they look back to a time when a large proportion of American youths did not complete high school and only a small minority completed four years of college. In those supposedly halcyon days, the schools in many states were racially segregated, as were most colleges and universities. Children with disabilities did not have a right to a free public education until after the passage of federal legislation in 1975 and were often excluded from public schools. Nor did schools enroll significant numbers of non-English-speaking students in the 1940s and 1950s or even the 1960s. Immigration laws restricted the admission of foreigners to the United States from the early 1920s until the mid-1960s. After the laws were changed, the schools began to enroll students from Latin America, Asia, the Middle East, Russia, Africa, and other parts of the world that had previously arrived in small numbers. Thus, those who now sharply criticize the public schools speak fondly of an era when most schools were racially segregated; when public schools were not required to accept children with physical, mental, and emotional handicaps; when there were relatively few students who did not speak or read English; and when few graduated from high school and went to college. Indifferent to history, todays corporate reformers insist that the public schools are in an unprecedented crisis. They tell us that children must be able to escape their failing public schools. They claim they are for the children, unlike their teachers, who are not for the children. They would have the public believe that children and their teachers are in warring camps. They put children first or students first. Their policies, they say, will make us competitive and give us great teachers and great schools in every community. They say they know how to close the achievement gap, and they claim to be leading the civil rights issue of our time. Their policies, they say, will make our children into global competitors. They will protect our national security.

They will make America strong again. The corporate reformers play to our anxieties, even rekindling dormant Cold War fears that we may be in jeopardy as a nation if we dont buy what they are selling. The critics want the public to believe that our public schools are a clear and present danger to our society. Unless there is radical change, they say, our society will fall apart. Our economy will disappear. Our national security is in danger. The message is clear: public education threatens all that we hold dear. Recognizing that most Americans have a strong attachment to their community schools, the corporate reformers have taken care to describe their aims in pseudo-populist terms. While trying to scare us with warnings of dire peril, they mask their agenda with rhetoric that is soothing and deceptive. Though they speak of reform, what they really mean is deregulation and privatization. When they speak of accountability, what they really mean is a rigid reliance on standardized testing as both the means and the end of education. When they speak of effective teachers, what they mean is teachers whose students produce higher scores on standardized tests every year, not teachers who inspire their students to love learning. When they speak of innovation, they mean replacing teachers with technology to cut staffing costs. When they speak of no excuses, they mean a boot-camp culture where students must obey orders and rules without question. When they speak of personalized instruction, they mean putting children in front of computers with algorithms that supposedly adjust content and test questions to the ability level of the student but actually sacrifice human contact with a real teacher. When they speak of achievement or performance, they mean higher scores on standardized tests. When they speak of data-driven instruction, they mean that test scores and graduation rates should be the primary determinant of what is best for children and

schools. When they speak of competition, they mean deregulated charters and deregulated private schools competing with highly regulated public schools. When they speak of a successful school, they refer only to its test scores, not to a school that is the center of its community, with a great orchestra, an enthusiastic chorus, a hardworking chess team, a thriving robotics program, or teachers who have dedicated their lives to helping the students with the highest needs (and often the lowest scores). The reformers define the purpose of education as preparation for global competitiveness, higher education, or the workforce. They view students as human capital or assets. One seldom sees any reference in their literature or public declarations to the importance of developing full persons to assume the responsibilities of citizenship. Of equal importance are the topics that corporate reformers dont talk about. Seldom do they protest budget cuts, no matter how massive they may be. They do not complain when governors and legislatures cut billions from the public schools while claiming to be reformers. They do not protest rising rates of child poverty. They do not complain about racial segregation. They see no harm in devoting more time and resources to standardized testing. They are not heard from when districts cut the arts, libraries, and physical education while spending more on testing. They do not complain when federal or state or city officials announce plans to test children in kindergarten or even pre-kindergarten. They do not complain about increased class size. They do not object to scripted curricula or teachers loss of professional autonomy. They do not object when experienced teachers are replaced by recruits who have only a few weeks of training. They close their eyes to evidence that charters enroll disproportionately small

numbers of children with disabilities, or those from troubled homes, or English-language learners (in fact, they typically deny any such disparities, even when documented by state and federal data). They do not complain when for-profit corporations run charter schools or when educational services are outsourced to forprofit businesses. Indeed, they welcome entrepreneurs into the reform community as investors and partners. If the American public understood that reformers want to privatize their public schools and divert their taxes to pay profits to investors, it would be hard to sell the corporate idea of reform. If parents understood that the reformers want to close down their community schools and require them to go shopping for schools, some far from home, that may or may not accept their children, it would be hard to sell the corporate idea of reform. If the American public understood that the very concept of education was being disfigured into a mechanism to apply standardized testing and sort their children into data points on a normal curve, it would be hard to sell the corporate idea of reform. If the American public understood that their childrens teachers will be judged by the same test scores that label their children as worthy or unworthy, it would be hard to sell the corporate idea of reform. If the American public knew how inaccurate and unreliable these methods are, both for children and for teachers, it would be hard to sell the corporate idea of reform. And that is why the reform message must be rebranded to make it palatable to the public. The leaders of the privatization movement call themselves reformers, but their premises are strikingly different from those of reformers in the past. In earlier eras, reformers wanted such things as a better curriculum, better-prepared teachers, better funding, more equitable funding, smaller classes, and desegregation, which they believed would lead to better public schools. By contrast,

todays reformers insist that public education is a failed enterprise and that all these strategies have been tried and failed. They assert that the best way to save education is to hand it over to private management and let the market sort out the winners and the losers. They wish to substitute private choices for the publics responsibility to provide good schools for all children. They lack any understanding of the crucial role of public schools in a democracy. The central premise of this movement is that our public schools are in decline. But this is not true. The public schools are working very well for most students. Contrary to popular myth, the scores on the no-stakes federal tests the National Assessment of Educational Progress (NAEP) are at an all-time high for students who are white, black, Hispanic, and Asian. Graduation rates are also at an all-time high. More young people than ever are entering college. Even more would go to college if the costs were not so high. Of course some schools and districts have very low test scores and low graduation rates, and this has always been true. Most of these schools and districts have two features in common: poverty and high concentrations of racial minorities. The combination of these two factors is associated with low test scores. Children whose parents are poor and have low educational attainment tend to have lower test scores. Children who are poor receive less medical attention and less nutrition and experience more stress, disruption, and crises in their lives. These factors have an ongoing and profound effect on academic performance. That is why poor children need even more stability, more support, smaller class sizes, and more attention from their teachers and

others in their schools, but often receive far less, due to underfunding. Unfortunately, many people are unwilling to address the root causes of poor school outcomes, because doing so is either too politically difficult or too costly. They believe it is faster, simpler, and less expensive to privatize the public schools than do anything substantive to reduce poverty and racial isolation or to provide the nurturing environments and well-rounded education that children from prosperous families receive. Instead, the privatization movement nonchalantly closes the schools attended by poor children and destabilizes their lives. The privatization agenda excites the interest of edu-entrepreneurs, who see it as a golden opportunity to make money. But it is bad for our society. It undermines the sense of collective responsibility for collective needs. It hurts public education not only by attacking its effectiveness and legitimacy but by laying claim to its revenues. The money allocated to privately managed charters and vouchers represents a transfer of critical public resources to the private sector, causing the public schools to suffer budget cuts and loss of staffing and services as the private sector grows, without providing better education or better outcomes for the students who transfer to the private-sector schools. Reformers in every era have used the schools as punching bags. In one era, progressives complained that the schools were obsolete, backward, mindless, rigid, and out of step with the demands of the modern age. Then, in their turn, came anti-progressives or essentialists who complained that the schools had grown soft, standards and curriculum had collapsed, and students were not learning as much as they once did. At the beginning of the twentieth century, reformers lambasted the

schools, saying they were too academic and ignored the economys need for trained workers. In 1914, Congress passed the first federal legislation to encourage industrial and vocational education so that schools could prepare young people for jobs on the nations farms and factories. In the 1930s, with millions of people out of work, reformers blamed the schools for their inability to keep students enrolled and out of the ranks of the unemployed. Reformers called on the schools to be more attentive to the needs of adolescents so as to entice them to stay in school longer. The New Deal created the Civilian Conservation Corps and the National Youth Administration to provide education and training for young people during the Depression. In the 1940s, reformers complained that the schools were obsolete and were failing to give students the skills they needed for life and work; life adjustment education became the reformers battle cry. In the 1950s, reformers said that the schools had forgotten the basics and needed to raise academic standards and return to timehonored subject matter disciplines. In the 1960s, reformers said that the schools were too academic and that students were stifled by routine and dreary assignments; the reformers wanted more spontaneity, more freedom, and fewer requirements for students. At the same time, the civil rights movement achieved major gains, and the schools became the focus of national legislation and Supreme Court rulings that required desegregation. In the late 1970s, a backlash against the reform ideas of the 1960s and early 1970s led to the rise of minimum competency testing and, once again, a return to the basics. Despite the pendulum swings, despite the critics and reform movements, the American public continued to be grateful for public education and to admire its community schools. Then came the 1980s, with a stern warning in 1983 from the National Commission on Excellence in Education that we were a

nation at risk because of the low standards and low expectations in our schools. Our national slippage was caused, said the commission, by a rising tide of mediocrity that threatens our very future as a Nation and a people. This mediocre educational performance was nothing less than an act of unthinking, unilateral educational disarmament. The alarmist rhetoric was excessive, but it was enough to generate media attention and caused many states to raise their graduation requirements. In response to the dire warnings in the 1983 report, standards, testing, and accountability became the national agenda for school reform. Many policy makers agreed: set higher standards; test to see if students have mastered them; hold back students or prevent them from graduating if they dont pass. There was no research to support these strategies, but they were widely accepted anyway, as were proposals to reward the schools that succeeded on state tests and penalize those that did not. The first Bush administration embraced these ideas, as did the Clinton administration. The second Bush administration made testing and accountability the federal agenda with passage of its No Child Left Behind legislation. Somehow, in the midst of all this nonstop controversy and criticism, the public schools continued teaching generations of students. And somehow, despite the endless complaints and policy churn, the American economy continued to be the largest in the world. And somehow, American culture continued to be a creative and vibrant force, reshaping the cultures of other nations (for better or worse). Our democracy survived, and American technological innovations changed the way people live around the globe. Despite the alleged failures of the schools that educated the vast majority of them, American workers are among the most productive in the world.

After the publication of A Nation at Risk: The Imperative For Educational Reform in 1983, public discourse about the nations educational system settled on the unfounded belief that Americas public schools were locked into an arc of decline. Report after report was issued by commissions, task forces, and study groups, purporting to document the crisis in American education, the crisis of student achievement, the crisis of high school dropouts, the crisis of bad teachers. News magazines like Time and Newsweek published stories about the crisis, television networks ran specials about the crisis, editorialists opined about the causes of the crisis. The steady drumbeat of negative journalism had its effect: Public opinion about the quality of American public education dropped from 1973 to 2012. In 1973, 58 percent of Americans felt confident about the public schools, but by 2012 their approval rating had dropped to only 29 percent (which still was higher than public confidence in banks and big business, which stood at 21 percent, or Congress at 13 percent). In striking contrast, Americans whose children attended public schools continued to have a very high opinion of their own schools. In another Gallup poll in 2012, only 19 percent of the public gave an A or a B to the nations public schools, but 77 percent of parents awarded high marks to their own public school, the one they knew best. Two-thirds of respondents said they read mostly bad stories in the media about public schools. So, the parents who had the most direct experience with the schools thought well of them, but the relentless negative coverage by the media very likely drove down the general publics estimation of American public education. More recently, the Bill & Melinda Gates Foundation dedicated its considerable energies to persuading the public and policy makers that the nations public schools are failing. In 2005, Bill Gates told

the nations governors that the nations high schools were obsolete and broken. At that time, he wanted to redesign the American high school by making schools smaller, with the goal that every student would be prepared to enter college. Three years later, his foundation abandoned its small-school initiative, having spent $2 billion to persuade districts to replace their comprehensive high schools with schools too small to offer a balanced curriculum. Despite this setback, Gates remained certain that the public school system was obsolete and broken. The solution, his foundation now believed, was to develop new evaluation systems that could identify ineffective teachers so that there would be an effective teacher in every classroom. In 2012, Melinda Gates was interviewed on the PBS NewsHour. When the interviewer asked her what was working and what can scale up, she responded: If you look back a decade ago, when we started into this work, there wasnt even a conversation across the nation about the fact that our schools were broken, fundamentally broken. And I think that dialogue has changed. I think the American public has woken up to the fact now that schools are broken. Were not serving our kids well. Theyre not being educated for the for technology society. The Gates Foundation and others financed a lavish, wellcoordinated media campaign to spread the word about our broken public schools; its leading edge was a documentary film called Waiting for Superman. The film, which included interviews with Michelle Rhee, Bill Gates, and the economist Eric Hanushek, among others, made the central points that public education was failing, that resources dont matter, and that the best ways to fix the national crisis of low test scores were to expand the number of privately managed charters, fire ineffective teachers, and weaken

the unions that protected them. It was released in September 2010 with an unprecedented publicity campaign, funded in large part by the Gates Foundation, and was featured on the cover of Time magazine. The film was also the centerpiece of a week of programming on NBC, which the network called Education Nation, as well as the subject of two programs on Oprah Winfreys popular television show. The film told the story of five children who were desperate to enroll in privately managed charter schools and whose hopes depended on winning the lottery to gain admission. Each child was adorable, and the viewers emotions became engaged with their plights and their dreams of escaping from awful public schools (and in one case a Catholic school). The film painted public schools as failures whose teachers were self-centered, uncaring, and incompetent. The statistics in the film about poor educational performance were misleading and erroneous, as was its idyllic portrait of charter schools. Yet the producers and promoters of the film made sure it was viewed as widely as possible, giving free screenings throughout the country to parent groups, state legislatures, even to the national conference of the PTA. Waiting for Superman provided the charter school movement with a degree of public visibility it had never had. It also gave the movement a populist patina, making it seem that if you were concerned about the plight of poor inner-city children, you would certainly support the creation of many more charter schools. The film burnished the claim by charter advocates that they were involved in the civil rights issue of our time, because they were leading the battle to provide more choice to poor and disadvantaged children trapped in low-performing public schools. The films narrative, as well as the larger public discussion, was directed away from the controversial issue of privatization to the ideologically appealing concept of choice. Reformers dont like to

mention the word privatization, although this is indeed the driving ideological force behind the movement. Choice remains the preferred word, since it suggests that parents should be seen as consumers with the ability to exercise their freedom to leave one school and select another. The new movement for privatization has enabled school choice to transcend its tarnished history as an escape route for southern whites who sought to avoid courtordered desegregation in the 1950s and 1960s. To advance the privatization agenda, it was necessary never to mention the P word and to keep repeating the C word. After all, the public had no reason to be enthusiastic about the takeover of one of its essential public institutions by private financiers and entrepreneurs. Privatization of libraries, hospitals, prisons, and other basic services had long been hailed by those on the political right, but how could one persuade entire communities to hand over their children and their public schools to private sector corporations, some of which hoped to turn a profit off their children, in order to reward their shareholders? The only way to accomplish this sleight of hand was to pursue a skillful public relations campaign that drummed in the message, over and over, that our public schools are failures, that these failures harm our children and threaten our nations future prosperity. Repeat it often enough, and people would come to believe that any alternative would be better than the current system. Once that message sank in, Americans would be ready for the antidote: eliminating the public schools they had long known and cherished as the centers of their communities. The prestigious Council on Foreign Relations issued a report in 2012 intended to provoke fears that the public schools not only were failing but endangered the future survival of our nation. Joel I. Klein, former chancellor of the New York City public schools, and Condoleezza Rice, former secretary of state in the

administration of President George W. Bush, were co-chairs of the task force that produced the report. The report warned that the nations public schools were a very grave threat to national security. It recited doleful statistics showing that students in the United States were not leading the world on international assessments but scoring only in the middle (but not mentioning that this was the same complaint that had been expressed in A Nation at Risk thirty years earlier). It asserted that employers could not find qualified workers and that the schools were not preparing people to serve in the military, the intelligence service, or other jobs critical to national defense. On and on went the bill of indictment against the public schools. The task force offered three recommendations. One was that the states should adopt the Common Core standards in mathematics and reading, already endorsed by forty-six states. Since the Common Core standards have never been field-tested, no one knows whether they will raise test scores or cause the achievement gap among different racial, ethnic, and income groups to narrow or to widen. One study, by Tom Loveless of the Brookings Institution, predicted that the standards would have little or no effect on academic achievement; he noted that from 2003 to 2009, states with terrific standards raised their National Assessment of Educational Progress scores by roughly the same margin as states with awful ones. Loveless reported that there was as much variation within states, even those with excellent standards, as between states. The task forces second recommendation was that the schools of the nation should have a national security readiness audit to see if they were doing their job in preparing students to meet the nations economic and military needs. This seemed like a hollow attempt to revive Cold War fears, given that there was no military adversary comparable to the Soviet Union. The report did not suggest what agency should conduct this audit, what it would cost,

and what would happen to those schools that failed it. The key recommendation of the task force, whose members included leading figures in the corporate reform movement, was that more school choice was needed, specifically the expansion of privately managed charter schools and vouchers. If it were true that the nation faced a very grave security threat, this was not much of a call to arms to combat it, since most states had already adopted the Common Core standards and were increasing school choice in response to the Obama administrations Race to the Top program. Perhaps the most curious development over the three decades from A Nation at Risk to the 2012 report of the Council on Foreign Relations was this: what was originally seen in 1983 as the agenda of the most libertarian Republicans school choice had now become the agenda of the establishment, both Republicans and Democrats. Though there was no new evidence to support this agenda and a growing body of evidence against it, the realignment of political forces on the right and the left presented the most serious challenge to the legitimacy and future of public education in our nations history. Excerpted from Reign of Error: The Hoax of the Privatization Movement and the Danger to Americas Public Schools.