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Command Performance 

From vouchers to White Hat: Steve Schuck's and the new D-11 board's plans to privatize public education

click to enlarge Colorado Springs real estate developer Steve Schuck, who serves on the board of an approved White Hat for-profit charter school, was a key organizer behind the pro-voucher takeover of the District 11 school board last November.
  • Colorado Springs real estate developer Steve Schuck, who serves on the board of an approved White Hat for-profit charter school, was a key organizer behind the pro-voucher takeover of the District 11 school board last November.

Editor's note: This story, detailing efforts to privatize education by the new Colorado Springs School District 11 school board, is the second in a two-part series. Last week's installment, about the takeover of the board by school-voucher advocates, can be read online at www.csindy.com.

A year ago, Jesus Nuez was on a track to nowhere.

A student at Denver's Abraham Lincoln High School, the 17-year-old Nuez was two years behind academically when he dropped out of the public school system.

"I wasn't doing nothing," he said.

But since last August, things have turned around for Nuez. That's when he enrolled at the Life Skills Center of Denver, a brand-new charter school that offers dropouts a second chance.

Nuez's older brother also enrolled and earned his diploma in just a few months, graduating last December. He's the first member of his family to receive a high-school diploma, a success Jesus hopes to duplicate.

"I'm on track to graduating in June," said the younger Nuez, who eventually wants to work with computers.

Nuez might be the perfect poster child for White Hat Management, the Ohio corporation that runs the Life Skills Center in Denver and 31 other charter schools nationwide -- a number that's growing fast. Beginning this year, the for-profit company hopes to rack up similar success stories in Colorado Springs, where the newest Life Skills Center is scheduled to open in School District 11 this fall.

But not everybody in the district is excited.

Some view the D-11 school board's decision last December to let White Hat run a local charter school as a sign that the board's new majority, elected the month before, is hell-bent on privatizing public education, regardless of the implications.

It didn't matter to the board that the school could cost the district up to $1.5 million dollars, money that could have been spent to boost existing programs for dropouts. It didn't matter that, despite individual success stories such as that of Nuez, almost all of White Hat's schools in Ohio have been rated by the state's Education Department as academic failures. And it didn't matter that both D-11's own charter-school experts, and Colorado's foremost pro-charter organization, have expressed doubts about Life Skills' effectiveness.

Moreover, four of the school-board members who backed the application saw no potential conflicts with the fact that they had received major campaign contributions from one of Life Skills' local board members and proponents, Colorado Springs real-estate developer Steve Schuck.

In focusing on its pet project -- privatized schools -- the board could end up shortchanging the 30,000 students enrolled in the district's 58 existing schools, critics fear. This could lead to "the demise of the district," warns Robert Beers, who serves on a district advisory committee that recommended rejecting the Life Skills application.

Concerns about the board's actions recently sparked the formation of a network of D-11 residents called the Alliance for Quality Public Schools, which has been meeting with school board members and holding public meetings to discuss the district's direction. The Alliance now claims to have more than 800 people on its e-mail list.

"Our school district is in danger of slipping into chaos as a result of the anti-public school agenda that seems to be driving the decision making," said Megan Day, a member of the Alliance.

Follow the money

The D-11 board's new majority -- Sandy Shakes, Craig Cox, Willie Breazell and Eric Christen -- was elected with significant backing from a group of wealthy Colorado businessmen that have long promoted "school choice," a euphemism for school vouchers and charter-school expansion.

The core group consists of Schuck and Denver businessmen Alex Cranberg, John Saeman and Ed McVaney. Last year, the group successfully lobbied the state Legislature to pass a voucher program. The program directed 11 school districts in the state, including D-11, to issue taxpayer-funded vouchers to students wanting to leave the public school system and attend private schools instead.

click to enlarge Steve Schuck
  • Steve Schuck

The four businessmen then turned around and pumped money into the campaigns of four pro-voucher candidates in last November's D-11 elections. Together, Schuck, Cranberg, Saeman and McVaney contributed a total of at least $82,000 to the campaigns of Shakes, Cox, Breazell and Christen, who won office and seized control of the seven-member D-11 board. (See related sidebar, page 18).

Shortly after the election, a Denver judge suspended Colorado's new voucher program, ruling that it violates the state Constitution. But that hasn't deterred the new D-11 board majority from taking other steps to privatize schools.

One of the new majority's first actions was to eliminate the district's cap on charter-school enrollment, which had been set at 7 percent of total district enrollment.

Previous D-11 boards had supported the idea behind charter schools -- allowing local community groups to run their own schools, free from many government regulations -- to see if they could do a better job than regular public schools. But at the same time, for each D-11 student who attends a charter school, the district must provide the charter school with the estimated $5,700 in per-pupil funding that's allocated by the state. In order to limit the financial impact, the district had capped its total charter-school enrollment.

On Dec. 17, in a 4-3 vote, the new board majority tossed out the cap. Later during the same meeting, the board approved the application to open a Life Skills Center in a location yet to be determined. Life Skills' local board of directors includes Schuck, as well as several prominent local Hispanics.

Though Shakes, Cox and Christen all refused to be interviewed for this article, they've said previously that Schuck's campaign contributions didn't influence their votes [see "Paying the Way," Dec. 25, 2003, at www.csindy.com]. Schuck also refused to discuss his involvement in the board takeover.

Breazell said neither he nor his board allies felt indebted to Schuck.

"We don't feel like we're bought and paid for," Breazell said.

Meanwhile, more for-profit schools could be coming down the pike. Along with Life Skills, the board also evaluated applications from two other charter schools that would involve private management companies -- the STAR Academy and the Colorado Premier Academy.

Like Life Skills, the STAR Academy was also subject to conflict-of-interest concerns because Cox served on the proposed charter school's board. To address the concerns, Cox resigned from the STAR Academy board and recused himself from voting on the proposal. His allies Shakes, Breazell and Christen proceeded to vote for the school, while board members David Linebaugh, Mary Wierman and Karen Teja opposed it. With a 3-3 tie, the proposal failed. However, the board subsequently voted 4-3 to enter into a "facilitation" process with the applicants. This time, Cox voted in the school's favor.

And while the board rejected the online learning-based Colorado Premier Academy, the school has signaled it may appeal the denial to the state Board of Education.

Failing test scores

The push to open a Life Skills Center in Colorado Springs originated last spring, when several prominent local Hispanic officials began sharing their concerns about high dropout rates among Latino students. The group would eventually include Colorado Springs Police Chief Luis Velez, Fire Chief Manuel Navarro, Hispanic Chamber of Commerce President Gene Sanchez, Pikes Peak Library District Director Jose Aponte, Pikes Peak Community College President Joseph Garcia, Hispania News publisher Bob Armendariz, and Brenda Quiones, an economic development officer for the city.

The group's members decided to seek out a way to deal with the problem and eventually broadened its approach to look at all dropouts, not just those who are Latino. When Schuck learned of their efforts, he offered to help and wound up joining the group.

Though Schuck knew White Hat's founder, David Brennan, it wasn't Schuck's idea to approach Life Skills, said Velez, the police chief.

At Life Skills, students spend three hours a day on computers, practicing to pass proficiency tests. They spend a fourth hour in a classroom learning "life skills" -- from setting an alarm clock to interviewing for jobs. Students are also required to work at least one hour per day, either in paid positions or as volunteers. Most work at fast-food restaurants.

The part-time schedule is designed to give students flexibility. Many need to work to support their families, and a significant number have their own children to look after, White Hat officials say.

Velez says he was quickly impressed when he began researching the company. "They have been very successful in their other schools," he said.

Official data, however, suggests otherwise.

Six years after White Hat opened schools in Ohio, test scores there indicate they're failing.

For the 2002-2003 school year, eight of nine White Hat schools rated by the Ohio Department of Education earned the classification "Academic Emergency." The ninth was rated "Academic Watch." None met the state's minimum requirements for making "adequate yearly progress."

Nonetheless, company president Mark Thimmig defends White Hat's performance. The test scores "are not as relevant" for the company's schools, he says, because students typically come to White Hat lagging years behind academically.

click to enlarge Students at the Life Skills Center in Denver spend three hours each day in front of computers. - TERJE LANGELAND
  • Terje Langeland
  • Students at the Life Skills Center in Denver spend three hours each day in front of computers.

Using another assessment method known as the Iowa Test, White Hat has found that its students make significant academic progress, Thimmig said.

Tom Mooney, president of the Ohio Federation of Teachers and an outspoken critic of White Hat, calls that argument "garbage."

Mooney notes that state proficiency tests -- much like the system set in place by the Colorado Legislature and Gov. Bill Owens -- are the official measure of success and accountability for Ohio's schools. "They can't just pretend those tests don't matter."

Mooney said it's baffling that Coloradans want to import White Hat schools.

"I don't think they could have chosen anyone worse," Mooney said. "Somebody out there's been hoodwinked."

Not a new idea

Several groups in Colorado are also unimpressed by Life Skills.

The Colorado Children's Campaign, which helped write the state's charter-school law, rejected a grant application from the Life Skills Center of Denver. Van Schoales, the organization's vice president for education initiatives, said he doubted White Hat's claims that it could help dropouts earn diplomas in record time.

"It was unclear to me how you can take kids who are already behind and get them a degree in an accelerated fashion," Schoales said.

In Colorado Springs, D-11's District Accountability Advisory Committee (DAAC), which is set up by law to review charter-school applications, also rejected Life Skills. The committee has historically looked favorably upon charter schools; of six applications submitted in the past, it had only recommended against two. One of the two rejected applications was subsequently reworked and approved.

But in the case of Life Skills, the committee panned the school proposal, identifying numerous weaknesses. A separate, internal assessment by a district administrative team echoed most of the committee's criticisms.

The school would add nothing new, the accountability committee found, because D-11 already has several programs for dropouts -- including two night schools and an existing charter school, Community Prep, housed in the former Garfield Elementary School north of downtown.

"This isn't a new idea, to target dropouts," said Trish Nixon, the D-11 committee's chairwoman.

The DAAC also viewed Life Skills' projected startup enrollment of 300 students as being unrealistically high. The committee found no evidence that demand for existing dropout programs is exceeding the programs' capacity, and the Life Skills proposal contained no signatures from parents saying their children would attend the school.

"The data just wasn't there to support it," said committee member Beers.

Another concern was Life Skills' proposed budget. The projected administrative costs, including a profit margin, were deemed unusually high. Meanwhile, teacher salaries, which would begin at $28,000, were considered low. D-11's average teacher salary is $43,350, though averages in existing district charter schools range from $22,000 to $34,000.

Low salaries could be a problem in a market that has a teacher shortage, committee members worried. And if enrollment doesn't meet projections, the school might not be financially viable, they reasoned.

Moreover, the proposal didn't show how Life Skills planned to meet state standards for academic growth, the committee found.

"We felt that it was not a good thing for the district academically," said David Wagner, another committee member.

Finally, the committee was concerned that while a local board would officially be in charge, that board would only be required to meet four times a year -- suggesting the school would in reality be controlled by White Hat's corporate offices in Ohio, which wouldn't be accountable to the school district or its taxpayers.

Puppet boards

The question of who truly controls White Hat's schools has been a focus of criticism against the company elsewhere. When charter schools first emerged in the early 1990s, the idea was to get away from the "cookie-cutter" approach of regular public schools and encourage innovation, by putting local, community-based groups in charge.

click to enlarge White Hats founder, David Brennan
  • White Hats founder, David Brennan

But critics say White Hat has co-opted the charter-school concept by setting up local "figurehead" boards that may nominally be in charge, but in reality turn over the keys to the company.

"They're just puppet boards," said Bill Phillis, director of the Ohio Coalition for Equity & Adequacy of School Funding, which has long criticized White Hat and its founder, Brennan.

White Hat's arrangement, Phillis says, enables the company to earn a profit from taxpayer-funded schools without being accountable to the public. And as for innovation, the "one-size-fits-all" public-school curriculum is simply replaced with a corporate one, he says.

"It's all about making money," Phillis said. "[Brennan] has got a real scam going."

Representatives for Life Skills and White Hat, meanwhile, reject such criticisms.

D-11 may already have programs in place to help dropouts, but it continues to have a high dropout rate, noted White Hat's Thimmig. In fact, the district graduates only 61 percent of students who enter its high schools as freshmen.

"I think the community leadership feels that the dropout population is not yet being served effectively," said Thimmig from White Hat's headquarters.

Life Skills' projected enrollment in Colorado Springs the first year is based on White Hat's experiences elsewhere over the past several years, he said. And as for the concerns about fiscal viability, the company doesn't expect to make a profit right away.

"We're a large organization that can sustain the economic needs of this school for an extended period of time," he said. "We're not a mom-and-pop shop."

To track its progress toward meeting academic standards, Thimmig said Life Skills will make extensive use of assessment tests in a way that's "more rigorous and more consistent than what goes on in a traditional school."

Thimmig also rejected the notion that the local Life Skills board won't be in charge. "If you think the chief of police and the people that are involved in this board ... are 'figureheads,' that is an insult to these people," he said.

Colorado Springs Police Chief Velez also discounted the accountability committee's concerns, saying its members had an "agenda."

"For some reason, they believe that if something is for-profit in the public education system, that that's not only wrong, but also won't work," Velez said.

Unlike the committee, the members of the Life Skills board are committed to finding solutions, he said. "We have a passion to make this work. They don't."

Trusting the leaders

When considering the Life Skills proposal, the D-11 board was presented not only with the committee's objections, but also with a fiscal analysis that showed the program could cost the district millions of dollars.

District administrators didn't analyze the impact of approving Life Skills alone. But projections showed that if the school were approved along with two other proposed charter schools and a proposed expansion of an existing charter school, the total cost could run as high as $5 million a year, or 1.8 percent of the district's $283-million overall budget. Of that amount, an estimated $1.5 million would be due to Life Skills.

The district's five existing charters -- CIVA, Community Prep, Emerson-Edison, Globe and Roosevelt-Edison, currently account for $10.8 million, or 3.8 percent, of the district's budget.

Velez maintains Life Skills will cost the district nothing, because it's targeting students who have already dropped out. Those students will boost enrollment, which means the district will receive more money under the state's education-funding formula, Velez said.

"We're not taking a dime from the school budget," he said.

But in reality, due to a quirk in the complex state funding formula, a sudden increase in D-11's enrollment -- which has been dropping -- can temporarily lead to decreased funding, according to the district's chief financial officer, Glenn Gustafson.

Undaunted by that possibility, the board approved the Life Skills application -- with a few conditions, including a requirement that Life Skills prove by June 30 that it can enroll at least 200 students and that it reach an agreement with the district as to how it will measure academic growth.

click to enlarge Police chief Luis Velez - SEAN CAYTON

Shakes, Cox, Breazell and Christen all voted in favor, as did board member Wierman.

Wierman said that while she had misgivings about White Hat's record, she voted "yes" because she trusts the local leaders involved with the proposal.

"They're so vested in the community," Wierman said.

Board member Linebaugh, a former city fire marshal, abstained from voting, citing longtime professional relationships with Fire Chief Navarro and Police Chief Velez.

Teja was the only board member who opposed the Life Skills school. The accountability committee's report was a key factor in her decision, she said.

"These are people who actually sat down and read, word, for word, the application," Teja said.

"Money is not an issue"

Longtime members of the accountability committee say it's the first time, to their knowledge, that the D-11 board has rejected their recommendation on whether to approve a charter school.

By their own admissions, several of Life Skills' supporters were unconcerned with the proposal's details and possible costs -- choosing instead to accept it on faith.

Like Wierman, Breazell said he voted for Life Skills primarily because he trusts the people involved.

"Almost everybody who was on the charter board are people that I know around the community and have a great regard for," he said.

Costs and other details, Breazell said, mattered less. "To me, the money is not an issue," he said.

Velez also dismissed concerns over what he called "minutiae."

"There are times when you have to worry about details, and there are times when you have to dream," the police chief said. "This is a dream."

If the dream doesn't come true, "the worst thing that could happen is that my name would be attached to a failure," Velez said. "I'm willing to give it a shot."

But critics of the decision to approve Life Skills say that ignoring so-called "minutiae" can have heavy consequences.

The reality, they say, is that resources are scarce and should be used where they will have the greatest beneficial impact. The school board, which oversees the interests of all 30,000 students in the district, must always ask itself, "Are the children getting maximum benefit out of the money?" Wagner said.

Board member Teja noted that past proposals to improve the district's existing dropout programs have been rejected for lack of funds. Now, she said, money that could have been used for that purpose will instead be spent on a new, unproven program.

Nixon said it's great if Life Skills helps some students, but added, "If that's going to be at the expense of [thousands of] other students, then I've got to make sure it's the best thing we can do. We have only so much money."

Approving charter schools willy-nilly "could put the school district into a multimillion-dollar deficit," warned Day, of the Alliance for Quality Public Schools. "It's completely fiscally irresponsible."

And money isn't the only concern. If the local Life Skills Center performs as poorly as White Hat's schools in Ohio, it could drag down D-11's overall academic rating. Contrary to Velez's statement, the worst-case result of that could be more than just a loss of prestige for Life Skills' backers.

"It can make the difference as to whether the district stays accredited or not," Wagner said.

A loss of state accreditation, which can occur when a district fails to show academic progress, would have effects beyond the district's schools. It could also wreak havoc with local property values.

"No one will move into a district that's not accredited," Wagner said.

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