Media Watch: Catalyst and District 299 censor analysis of charter school bond scams

[Editor's note: at 4:30 on August 24, 2009, I tried to post the following to the District blog thread that was discussing how Chicago charter schools can float "bonds" for capital development. It was spit back and not posted by Catalyst's censors twice. Please comment here if you can locate the offensive language that causes the censorbots to spit the following out before allowing it to be posted at District]

A group shot of the "educational entrepreneurs" who were being awarded "new schools" at the October 8, 2008, media event sponsored by the Chicago Board of Education at the Chicago International Charter Schools (CICS) "Ralph Ellison Campus" at 80th and Honore in Chicago. During the media event, CICS director Beth Purvis told Substance that the expensive renovations CICS had done (visible in the glass facade in the school behind the crowd above) had cost $19 million and had been financed with "bonds" sold by CICS. Substance later learned that the bonds' payments are guaranteed by the Chicago Board of Education. CPS continues to expand the charter schools in Chicago, and the repayment of the bonds depends on the expanding number of CPS students supplied to the charter schools. Note: Not all of the "new schools" people above are charter school edupreneurs, just the majority. Other types of "new schools" are also being promoted under Chicago's "Renaissance 2010" program. One noteworthy person in the group is Taalib din-Ziyad, vice president of Local 73 of the Service Employees International Union, which is sponsoring a "contract" school in partnership with the Illinois Federation of Teachers and Marilyn Stewart. "Z" is standing at the back above, just below the person on the top of the pyramid. Substance photo by George N. Schmidt.Last October (October 8, 2008) at the announcement of the latest crop of "new schools" from Arne Duncan and the CPS "Office of New Schools," we (the press) were taken from the brand new CICS "Ralph Ellison campus" gym (NW corner, 80th and Honore) to the newly renovated school (SW corner, 80th and Honore) for the photo op taking pictures of all the latest group of "educational entrepreneurs" (which include SEIU Local 73 and the Chicago Teachers Union, by the way, under the smokescreen of the Illinois Federation of Teachers).

So we were standing on the sidewalk in front of the Chicago International Charter School Ralph Ellison "campus" (80th and Honore), I was taking photographs, and when I was done I asked Beth Purvis, CICS chief, who paid for the massive construction and renovation work I was looking at: virtually new school on the SE corner; parking lot on the SW corner; brand new gym on the NW corner, and new parking lot on the NE corner. She said, "We did." Meaning CICS.

"How much?" I asked.

"About $19 million," she said. She said they were very frugal.

"Where'd you get the money?" I asked.

"Bonds," she said.

That's just part of the tens of millions CICS got a year ago.

If it's not fully disclosed, someone should look further.

The $19 million renovation at the intersection of 80th and Honore on Chicago's south side that created the Chicago International Charter School (CICS) "Ralph Ellison Campus" was financed by bonds that are growing out of a semi-secret privatization partnership between Illinois, Chicago, and the city's charter school operators. When CICS was given control over the entire intersection where the CICS Ellison campus was to be located, CPS indirectly guaranteed the financing for the renovations by agreeing to provide CICS with a steadily increasing number of students (and hence, "tuition" for those students) out of the CPS annual budget. If CPS fails to provide CICS and the other charter schools that are floating capital improvement bonds, the bonds are in danger of defaulting. Chicago's public school system is thus on the hook to expand the city's charter schools enrollment into the indefinite future. Above, the brand new gym at CICS "Ellison" on October 8, 2008. No public school in the area was given as much capital development money during the time CICS was engaged in the massive construction project there. Substance photo by George N. Schmidt.Remember: the ability of CICS, UNO and the rest of Chicago's charter outfits is conditional on the expansion of the CICS, UNO, etc. income from students. What that means is, if you've been paying attention this far, is that every year CPS has to turn over more kids to the charter schools. Otherwise, they risk defaulting on the bonds.

Of course it's a Ponzi scheme and a bubble. These corporate types don't know how to operate in any other way. Their whole life has been hyping their magic from bubble to bubble, trying to stay one step ahead of the next collapse. If you sold your Enron stock at $60 per share -- as Jeff Skilling and others did in the months before the collapse -- you were rich. If you stuck in for the scam -- or were forced to stay in, like the Enron workers who were being paid partly in stock -- tough for you. Ditto all the other corporate scams, from General Motors and Hollinger International (now the bankrupt Sun-Times Media Group). You could have made money selling HLR (the Conrad Black version of the Sun-Times) at $15 per share, or held your shares and watched them go down to a penny a share (today) after the bankruptcy. That's the "business model" that all of these corporate types have actually praxised. The rhetoric about "markets," "choice," and "education" is for the rubes and marks. Like the majority of CPS parents, kids, and teachers. Everyone is supposed to line up and sing songs about the Miracle Management Team Richard M. Daley has had in power since 1995. They're in business, and their business is making money. Which, thanks to crony capitalism, they are very good at.

Hence the Ponzi scheme underlying the charter school bonds in Chicago.

But not all of the dollars subsidizing the charter schools come from the charter school bonds (which will probably become high risk within a year or two).

Big bucks (more than $100 million) have been spent directly out of CPS budgets to renovate the Morse (Polaris charter), Austin (Austin Entrepreneurship; Polytech; etc.), Calumet (Perspectives), and Collins (North Lawndale Drown 'Em Prep), to name just a few places where public dollars were poured in for renovations (which couldn't be afforded when the school was a public one) once the charter edupreneurs had grabbed the buildings after the Duncan administration played that real estate game of "flip this school" over the past eight years. Friday I walked outside Whittier Elementary School, which has a dangerous playground. Then over at the De la Cruz building, which CPS will give to UNO for a charter school "campus" this week.

CPS began sabotaging the city's true public schools (the ones that don't pre-select and then kick out kids) years ago, and expanded the hypocritical sabotage throughout the Duncan/Scott years (most of 2001-2008), while making sure that the charters had all the dollars they could possibly want to spiff up the buildings — once they'd been flipped and charterized.

One of the best books of the past decade is "A Colossal Failure of Common Sense" (the history of the Lehman collapse, by a true believer who worked in the "distressed assets" trading division of Lehman -- the ones who shorted stocks and bonds for companies that were heading into bankruptcy).

One of my favorite quotes:

If you sit down at the poker table and can't tell who the sucker is, it's probably you.

Next question? 

Final edited version of this article posted at August 24, 2009, 6:00 a.m. CDT. If you choose to reproduce this article in whole or in part, or any of the graphical material included with it, please give full credit to SubstanceNews as follows: Copyright © 2009 Substance, Inc., Please provide Substance with a copy of any reproductions of this material and we will let you know our terms — or you can take out a subscription to Substance (see red button to the right) and make a donation. We are asking all of our readers to either subscribe to the print edition of Substance (a bargain at $16 per year) or make a donation. Both options are available on the right side of our Home Page. For further information, feel free to call us at our office at 773-725-7502.


August 25, 2009 at 2:57 PM

By: Marybeth Foley

Retired teacher, Substance reporter

I can't find anything offensive in your article. However, I did come across a word I could not find the meaning of anywhere. Tell me, what does "praxised" mean, as in "That's the "business model" that all of these corporate types that have actually praxised." I can guess what it means from context, but, tell me, what is the actual meaning.

August 26, 2009 at 1:14 AM

By: alexander

misleading your readers

you're willfully misleading your readers with this censorship nonsense, george.

the spam filter at district 299 catches words you like to use, like "fraud" in the case.

i am on vacation and didn't see that one of your emails had gotten caught in the filter.

if this email doesn't go through, does that mean that *you're* censoring *me*?

all you had to do was send me an email.

-- alexander

August 26, 2009 at 3:40 AM

By: George N. Schmidt

Clarifying 'praxis' in the context of 'Race to the Top' and the history of Chicago Boys' charters

Praxis is the intersection of one's theory (ideology; set of beliefs) and what one does. It can range, in this definition, from simple routine devotional acts like "blessing" oneself when walking in front of St. Roman's Catholic Church or fasting during Ramadan to jihad or a nouveau Crusade (in the classical Christian versus Muslim sense).

In this context in Chicago today (for my purposes), the most important praxis we're facing is the relationship between a set of beliefs in the so-called "free market" and "innovation" — on the one hand — and public schools on the other.

Now that this praxis is national policy (if possible, everyone should read Arne Duncan's proposed guidelines on applying for the $4 billion federal stimulus grants) the Chicago Plan will go viral across the nation and into all colonies and "territories" where those federal dollars are wanted, needed or both. Given that Chicago (an my alma mater, the University thereof) has already failed in this experiment in "markets," "choice," and these other approaches to public policy (and public services), it's sad that the whole USA is now facing this economic fundamentalist jihad against our public schools. But that's what it is. The last time this praxis was orchestrated by a group of Chicago Boys was in Chile roughly from 1973 (after the first September 11 notable to history) and the early 1990s. Same script: the destruction of unions and the rights or poor and working class people; charter schools; massive privatization; the elimination of public policy expanding access to health care (except via "markets"), destruction of the public sector (and public schools for everybody), etc.

Of course, the ugly marker of history notes that the Chile experiment for the "Chicago Boys" was a terrible disaster, with "markets" freed behind the bayonets of the Pinochet dictatorship and the suffocation of most civil liberties (even for the most wealthy).

The education policy of the United States of America will be set across many years to come by a combination of the crazy "market-based" approach to economics preached by Ayn Rand (Milton Friedman wasn't this absolutist in his actual economic studies and writings) and the power of the federal dollars in a time of economic Depression. That's what Barack Obama's "Race to the Top" is. It's, as I've suggested elsewhere, worse than No Child Left Behind. It's No Child Left Behind on steroids, and with a much higher IQ pushing the propaganda.

Simply put, American education policy is in the hands of a cult. The praxis will be a jihad against public schools and on behalf of usually mindless assertions of "innovation" and "market" (choice) activities, most notably charter schooly thingies. Chicago's Renaissance 2010 and ruthless expansion of "new schools" (especially charters) is now the template for the praxis of the USA. A review of the historical failure of these doctrines (especially the Pinochet era) would help, but the main thing will be to see them for what they are right now. Ruthless teachers bashing. Infantile worship of "innovation" and the "entrepreneur." Union busting.

Hope this helps.

August 26, 2009 at 4:01 AM

By: George N. Schmidt

'Censorship' and robots that don't let you use "F" words like "FRAUD"

Our readers will get to decide whether what I posted after ate my notes on charter school capital development bonds was subjected to Catalyst censorship or not. It's a "free"country — Democracy and all that.

For those who don't hang out at, here is what I just posted there in response to Alexander's claim that I was 'misleading' readers in what I posted there (sigh... even writing the this that and theotherthing above makes it sound as it is)...

"...I just read something Alexander posted over at, and will leave it there. One of the things we learned when setting up "Comments" on that site is that we have different ways to deal with the potential for offensive, inappropriate, or illegal postings. One is to install robotic devices (such as work here at to hold (until when) comments that might be baddies. The other is to actively monitor. For now, we actively monitor, and the rare day goes by without something coming up noxious -- and being deleted by an editor.

"It's a trade off. Apparently, the piece I sent over (as part of the discussion on the mysterious "bonds" for CPS charter schools) set off an alarm and was held back. So I posted it to in the form it's now up.

"As anyone who's been kicked back knows, without a listing of the offensive words here, it's difficult to write. In the case of my recent posting, the offensive word was a five-letter word describing many kinds of deceitful activities (from Bernie Madoff to the CPS budget). Really? Along with the names of ED drugs, and @$%&! (etc.) -- "fr___"? So "fr__d" is now as back as "f__k" here?

"Hopefully, we can all flesh out this charter school bonds story some more. I've already filed a FOIA requesting some information that may help. It should prove very interesting..."

When a word like fraud is as obscene as the word fuck in a Web posting, we're in the realm of censorship in my book. Ultimately, such questions are decided in the court of public opinion. So for the time being, you can use the words "fuck", "fraud," and "Viagra" here but not at District

But remember: District 299 is not censored. Also, I urge out readers (including those from outside Chicago) to devote some time to following the blog and to reading Catalyst on line (especially those back issues). I'm glad Catalyst has documented and saved all those gyrations on behalf of Arne Duncan, Paul Vallas, and Chicago's version of corporate "school reform." We certainly never had access that would have enabled us to publish all those obsequious interviews with the "CEO" guys at CPS, to get the jump on the journalistic competition in each iteration of the Strange Career of Arne Duncan, or to routinely praises every teacher bashing external curricular innovation intended to "save" Chicago's high schools from its teachers (and of course not to make a fortune for the Washington Post Corporation, McGraw Hill, or the likes of William Bennett).

The corporate strings — from 'High School Transformation' to 'Instructional Delivery Systems' all the way to the testings themselves — have to be kept hidden from the public view. That's why some publications are so well subsidized by corporate Chicago, while other outfits (Cross City Campaign; Neighborhood Capital Budget Group) are "defunded" and destroyed and others (PURE; Designs for Change) are simply suffocated or put on a starvation diet.

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