Job security

Mark posted about a piece by Barry Ritholtz that had some smart things to say about market timing.  However, I think I want to quibble with the end of his piece:

One last thought on this: The demographic group with the longest investing time horizon are the millennials now in their 20s. According to Patrick O’Shaughnessy, author of “Millennial Money: How Young Investors Can Build a Fortune,” despite their long timeline, members of that generation seems to be missing out. They are significantly underinvested relative to how much time they have until retirement.

Given the dramatic financial crisis of 2007-2009, O’Shaughnessy says it is no surprise that millennials as a group “don’t trust Wall Street.” They also rank “all four major banks among most hated brands.”

“The most basic (and important) decision you make as an investor is your allocation between major asset classes — primarily stocks, bonds and cash.” O’Shaughnessy observes that this cohort is wildly underweighted in equities at 28 percent and overweighted in cash at an astounding 52 percent.

Perhaps it is ironic: The group that has the longest potential runway for absorbing market volatility also seems to be the least interested in investing in stocks.

When it’s time to retire, these folks might be surprised that they cannot go back to live in their parents’ basements again.

So I have a couple of basic questions to ask here.  One, people who are honestly at risk of moving back into their parent's basement should have cash investments.  Nothing is worse than having an unexpected cash crisis (car towed, water leak) where you need money fast to prevent a greater disaster.  Isn't this just prudent?

Second, the leading edge of this group is 35 years old.  So they have to presume that the stock market will do well for another 30 years or so, if retirement is the goal.  That might not be a bad gamble, but we are in the era where the baby boomers may switch from net buyers of stock to net sellers.  That could be a long period of sub-optimal returns. 

But really, the first piece is the most important.  We have moved into a era of decreasing employment security: "at will" employment, attacks on tenure, reduction in unions, and so forth.  In aggregate, these factors make it impossible to plan over long time horizons.  And the lesson of 2007 is that major employment dislocations are often paired with stocks plummeting.  Why wouldn't you keep a lot of money in cash?  After all, ending up as a homeless person because you tried to invest for yield seems like a bad outcome. 

I am not sure that I have a solution, except to note that we are in precisely the sort of employment market where a 401(k) or IRA is least likely to make sense.  After all, they are an asset that can be claimed to handle an unexpected disaster. 

So I am not sure that I would make the snarky last comment.  People growing up in economically depressed periods often have a very different view of the world than those who have always had resources. 

The essential distinction between charter schools and charter school chains

Noah Pransky of TV station WTSP adds to the excellent coverage of Florida's charter school corruption scandal. The piece is well worth checking out. It is also a good place to emphasize a point I've made in passing before. The charter school sector is highly diverse. It ranges from literal mom and pop operations to nation-wide corporations. The best of these schools get good results, genuinely care about their students and can fill an important educational niche. The worst aggressively cook data to conceal mediocre results and gouge the taxpayers.

If current trends hold, I think charter schools will be nearly as diverse and I'm not optimistic about who the winners will be.

Charter Schools USA (CUSA) has been operating charter schools in Florida for 20 years, including recently-opened schools in Hillsborough County: Woodmont Charter, Winthrop Charter, and Henderson Hammock Charter. Although charter schools sometimes struggle financially at first, CUSA eventually collects a 5% management fee from each to provide administration and guidance.

But 10 Investigates found a much bigger pot of money CUSA has been able to tap into: rent. When the company helps open a new school, its development arm, Red Apple Development, acquires land and constructs a school. Then, CUSA charges the school high rent.

For example, Winthrop Charter in Riverview may struggle to balance its budget this year thanks to a $2 million rent payment to CUSA/Red Apple Development. The payment will equate to approximately 23% of its budget, even though CUSA CEO Jon Hage has been quoted as saying charter school rent should not exceed 20%.

...

Jurado adds that many new charter schools ultimately fail because they lack the stability or resources that Charter Schools USA provides. The company operates 70 schools in seven states.

But among CUSA's critics is the League of Women Voters, which recently released a study suggesting a troubling lack of separation between a charter school's advisory board and for-profit management companies. It also indicates charter school teachers aren't often paid as well and profits all-too-often play a role in educational decisions.

"That means that children aren't getting what they're owed by the public funding," said Pat Hall, a retired Jefferson High department head and Hillsborough County's education chair for the League of Women Voters.

The study also revealed school choice creates a higher risk of disruption to a child's education, as "statewide closure rate of charters is 20%" and "Charters are 50% of all F-rated schools in 2011." In the last week, last-minute problems displaced a hundreds of charter school students from St. Petersburg to Delray Beach.

Hall acknowledges many charter schools are teaching children in unique and successful ways, but says Charter Schools USA isn't offering students anything that's not available in public schools. She adds that the schools are so focused on FCAT fundamentals, they forego many traditional aspects of the school experience.

While many CUSA schools may not have amenities such as a library or cafeteria, a company spokesperson said moving those amenities to the classroom can improve a student's learning atmosphere.

...

SPENDING (POLITICAL) MONEY TO MAKE MONEY

Charter Schools USA, its executives, and its subsidiaries have also spent millions of dollars to influence how laws are written in Florida.

State records reveal CUSA has donated $468,850 to candidates and committees at the state level since 2010. Most went to the Republican Party of Florida and other candidates/committees who support school choice.

CUSA CEO Jonathan Hage donated $50,000 to Gov. Rick Scott's "Let's Get to Work" committee in 2013, as well as thousands of dollars to other Republican candidates and committees. That includes four donations to various Charlie Crist campaigns between 2000 and 2006.

Other executives, Red Apple Development, and affiliated board members have thousands more.

State records indicate CUSA has also increased its lobbying expenditures every year since 2010, nearing $2 million in Tallahassee lobbying alone.

Executive lobbying expenditures, by year (only ranges provided):

2010 – Between 60,009 and 189,987
2011 – Between 100,007 and 209,989
2012 – Between 120,004 and 219,990
2013 – Between 230,004 and 379,985
2014 (first quarter) - Between 80,000 and 109,997
TOTALS: Between 590,000 and $1.1 million
Legislative lobbying expenditures, by year (state estimates):

2010 – $165,000
2011 – $265,000
2012 – $270,000
2013 – $320,000
2014 (first quarter) - $95,000
TOTALS: Between 590,000 and $1.1 million
The League of Women Voters also identified numerous legislators with connections to Charter Schools (Read Page 13), but none associated with Charter Schools USA, although state Rep. Jamie Grant, R-Tampa, sits on the volunteer Bay Area Charter Foundation board.

Asked about spending money on politics instead of in the classroom, Jurado pointed to the hordes of happy parents and thousands on CUSA waiting lists in Hillsborough County.

"I don't think the parents are going to look at this as, 'that's too much money to spend,' when they see the results from the child," Jurado said.

Context is important.

As you probably know, the Detroit Free Press recently ran a multipart expose on corruption in Michigan's charter schools. (You can find my summary of the series in this Monkey Cage post). The reporting can stand by itself but you get a deeper appreciation if you consider how these revelations look to the people there. To do so, it helps to look at the other government and education stories that are currently in the news in Michigan.

From The Detroit News:

State education officials have approved a plan by Detroit Public Schools to slash pay 10 percent districtwide to help erase the district’s $127 million deficit.

...

The pay cut, which will impact all teachers and administrators starting Oct. 1, came after the district was forced to make budget cuts to offset expected revenue from a failed countywide tax millage. The wage concession for teachers would generate $13.3 million in savings. Districtwide, the savings will be $21.1 million.

...

Parents, educators and community stakeholders met Wednesday morning in front of Ludington Middle School to denounce the cuts, as well as the district’s previously announced plans to increase class sizes.

Brian Kindle has two children beginning Head Start in the fall, and a 15-year-old at Cody High School. He said he’s worried about how pay cuts will impact his kids.

“I say hands off first responders, kids and teachers,” he said. “I’m here to support parents and their children, and to ask Gov. Snyder not to vote for the proposal.”

Kindle said he fears additional cuts will result in further neglect of students in the classroom.

“We should have classrooms on every corner, instead of liquor stores,” he said. “That would be great, but we don’t have a society that encourages it. But I will remain on the forefront supporting our children.”

...

“This is going to affect my whole financial situation, and it’s going to have a huge impact on my family,” she said. “It’s also going to impact the way we teach, because all teachers go into their own pockets to spend for classroom supplies, and now that can’t happen.”

Cherri Calhoun, a secretary at Ludington, said if she did not have her mom living with her, she’d be homeless.

“As it is now, I’m already struggling to pay my mortgage and my mom helps me pay my bills,” she said. “I’m pretty sure I’m going to have to find a part-time job now.”

Calhoun said to make matters worse, she is in a financial bind from the recent flooding in Metro Detroit.

“I just bought a new furnace and the water heater was relatively new and I’m going to have to replace the water heater,” she said. “This is horrible. I’ve got all these bills and I can’t afford to do anything.”

Netflix and the big swinging check syndrome

Another post in what what was supposed be a fairly brief Netflix thread. I want to move on to other topics, but this latest news item was just too good an example of certain bad trends in journalism to pass up.

You may have seen the following news story earlier:

Netflix Acquires ‘The Blacklist’ For $2 Million An Episode

EXCLUSIVE: In what is believed to be the biggest subscription video-on-demand deal for a TV series, I’ve learned that Netflix has acquired the rights to hit NBC drama The Blacklist from Sony Pictures TV in a deal that will net $2 million per episode. I hear Season 1 of the series starring James Spader will debut on the streaming service next weekend. As for future seasons, Netflix usually makes them available shortly after the season finales.

Sony TV first tested the off-network market waters for The Blacklist in March. While other streaming services, like Amazon and Hulu, do joint syndication deals with cable networks, Netflix, which largely pioneered the series SVOD business, insists on getting first dibs. Twentieth Television just recently sold New Girl to TBS and MTV, more than an year after prior seasons of the Fox series landed at Netflix in a rich deal, said to be worth $900,000 an episode. Like was the case with New Girl, I hear Sony TV has the right to also sell The Blacklist in cable and broadcast syndication, with Netflix getting an exclusive first window. The $2 million per-episode fee is said to be the biggest for an off-network series paid by Netflix (or any others streaming company), eclipsing previous record holder, AMC’s The Walking Dead, whose sale price to Netflix is believed to be $1.35 million per episode.

For starters, you will notice that the headline is somewhat misleading. Netflix did not "acquire" the Black List in the sense that, say ABC would have. The show will still be running on NBC next year. Nor did it acquire the rights to stream the episodes during the regular season; those will presumably stay with Hulu. What Netflix did acquire was the right to stream the previous year's episodes.

Furthermore, if you hit a few relevant Wikipedia pages and do some quick back-of-the-envelope calculations, you will see it is difficult to see how Netflix can justify this price-per-episode to its shareholders or how Sony could have negotiated it.

It is the nature of television, whether broadcast or streamed, that while the quality has a way of tapering off after a few years, the commercial value tends to increased sharply once a show has established itself. As a rule of thumb, it is not until programs approach 100 episodes that you start talking real money.

Just to put things in perspective, while a long running, syndication friendly, proven hit like NCIS can bring in over $2 million a year. That is very much an upper bound. The Blacklist is years away from having a viable syndication package. Even when it gets there, its serialized elements will probably keep it from making the really big bucks. A forty-four million dollar deal one year into a series run is extraordinary. It is almost inconceivable that Sony would not have settled for much less.

I realize that the following point should be too obvious to bother with, but the object of business is to bring in as much money as possible while sending out as little as possible. If Netflix just paid $44 million for something which they could've gotten for 20 or even 10, this would indicate a fundamental lack of confidence by the management of the company.

Here though, we get into one of the great paradoxes of modern business journalism. From a strictly logical standpoint, the best run businesses are, almost by definition, those which do the most with the least. From an emotional standpoint, journalists are most impressed by those executives who spend extravagantly without apparent hesitation.

For lack of a better word, the willingness to sign large checks is seen as a sign of virility. The bigger the check, the more positive the impression it makes on the reporters covering the story. The soundness of the purchase does not matter, nor does its positive or negative impact on the executive's company.

Netflix has long been something of a joke within the entertainment industry for its tendency to pay more than top dollar for properties that have already been turned down by everybody else and yet Reed Hastings' reputation as a visionary business genius simply grows stronger.

Along similar lines, when Mark Zuckerberg paid an exorbitant amount of money for a company the New York Times simply gushed with enthusiasm, even though it was later revealed that the primary selling point of the company was the fact that the founder threw awesome parties.

Hastings and Zuckerberg may stand out but that doesn't mean they aren't representative. Executives, particularly tech executives, are routinely lauded for big, bold deals, even when those deals make no sense from a traditional business standpoint. Like so much business coverage we see these days, what is presented as rational analysis is a series emotional reactions to charismatic personalities, catchy narratives and the reflected glow of great wealth.

Netflix and the ethics of modern journalism

I had meant to drop this topic after the recent Emmys post, but one more issue got stuck between my teeth and I think it would be easier to write it away then to try to ignore it.



I recently heard an interview on public radio that bothered me quite a bit but before I get into the specifics I should probably lay some groundwork about the Netflix business model.

When Netflix first started as a DVD-by-mail service, perhaps its greatest selling point was selection. It couldn't offer every movie and TV show that had ever been released on DVD, but it could come surprisingly close. By contrast, selection was probably the worst thing about the streaming service. If you randomly pick a movie or TV show that you would like to see, the chances of finding it on Netflix are vanishingly small. (To get an idea just how limited, try comparing the classic movie section in Netflix with the Criterion Collection on Hulu).

Of course, retailers have been dealing with the problem of making small selections look big for decades, perhaps even centuries. Some stores get around this by putting mirrors on the wall. Others arrange their stock so that a few items will take a great deal of space and seem to fill the showroom. And of course, the tricks used by advertisers to achieve this effect are endless.

Netflix has come up with a number of online alternatives to the mirrors on the wall. They have found excuses for double, triple, and quadruple listing various titles. They have split single series into multiple listings. They leave titles in the new arrival category for a very long time. For a while , they were even offering the same public domain episodes of shows like Bonanza which you can find and download for free at the Internet Archive (the tip off is the title music).




Just to be clear, there is absolutely nothing wrong with a company doing this. If I were running Netflix, I'd be pursuing the same strategy (actually, I'd hire Neal Sabin and tell him to do it but that's another story). You always present the product in the best possible way then you present the presentation in the best possible way. When your merchandise is ugly, you dim the lights; when people ask why the lights are dim, you say it's artistic.

Where I do see a potential ethical problem is in the way journalists present these presentations, particularly when the journalists have a symbiotic relationship with the companies they cover.

The other day, I heard CBC's Jian Ghomeshi interviewing Atlantic writer/editor Alexis Madrigal and Netflix executive Todd Yellin. I in part way through and only heard some of the segment and I would have listened to even less if I hadn't been waiting to find out who was talking (I tuned in in the middle). The two of them were very much working as a team to the extent that, if not for the occasional pronoun ('our' vs. 'their, for example), I would not have been able to tell who was the journalist and who was the company spokesman.

Perhaps it got better, but what I heard was simply an uncritical recitation of the official company spin with the journalist stepping into the role of second company representative. This is doubly troubling because Madrigal appears to have benefited greatly from this partnership. Reporting on big companies is remarkably easy if you're telling the story the executives want people to hear (obviously the case here), so Madrigal appears to have gotten a major feature with minimum effort. What's more, he is milking this piece for all it's worth, getting interviews and being featured in other stories and building his media profile in general. He may even get a book out of this.

I realize there have always been symbiotic relationships between journalists and subjects, just as companies have always tried to shape their narratives, but if nothing else, I think it used to bother us more.

Barry Ritholtz on Market Timing, Wolf Richter on rigging the IPO market

I don't have the time to do anything more than pass these along (and Joseph has even less), but these are worth your time.

First, Barry Ritholtz  looks at the upper and lower bounds for returns on market timing strategies and comes up with some interesting conclusions.

Second, Wolf Richter shows how a carefully placed (and even more carefully leaked) investment of $20 million has caused the valuation of a company with no revenue and virtually no business plan to go from an unjustifiable $2 billion to a surreal $10 billion (and, more importantly, caused a ripple effect through the entire IPO market).

One of the most important aspects of Common Core gets relatively little attention

“No one ever went out to lunch with Mushari. He took nourishment alone in cheap cafeterias, and plotted the violent overthrow of the Rosewater Foundation. He knew no Rosewaters. What engaged his emotions was the fact that the Rosewater fortune was the largest single money package represented by McAllister, Robjent, Reed and McGee. He recalled what his favorite professor, Leonard Leech, once told him about getting ahead in law. Leech said that, just as a good airplane pilot should always be looking for places to land, so should a lawyer be looking for situations where large amounts of money were about to change hands.

”In every big transaction,” said Leech, “there is a magic moment during which a man has surrendered a treasure, and during which the man who is due to receive it has not yet done so. An alert lawyer will make that moment his own, possessing the treasure for a magic microsecond, taking a little of it, passing it on. If the man who is to receive the treasure is unused to wealth, has an inferiority complex and shapeless feelings of guilt, as most people do, the lawyer can often take as much as half the bundle, and still receive the recipient’s blubbering thanks.”
— Kurt Vonnegut, God Bless You, Mr. Rosewater

Between textbooks and testing and training and all the other things that will need to be replaced or revamped, the introduction of Common Core is going to cause billions upon billions to change hands. That doesn't make it a bad idea, nor does it make the people behind corrupt, but it is not something that can be ignored.

The billion-dollar LA iPad plan was primarily intended as support for Common Core. It has become more of a cautionary tale. From Steve Lopez of the LA Times:

And the emails really make you want to hold your nose.

"I believe we would have to make sure that your bid is the lowest one," now-departed Deasy deputy Jaime Aquino wrote to Pearson in May 2012, two years before the contract was approved.

Aquino, if you have forgotten, had been an executive with a Pearson affiliate prior to heading up Deasy's tech implementation plan.

Deasy — who graciously appeared in a promotional video for iPads before the contracts were awarded — later jumped in on that same email conversation.

"Understand your points and we need to work together on this quickly," wrote Deasy, later adding he did not want to lose "an amazing opportunity."

Deasy maintains that the emails were not about the larger, $1-billion tech plan but about "a pilot program we did at several schools months before we decided to do a large-scale implementation."

[The 'pilot program' is, by the way, a time honored work around. It is an excellent way of easing a preferred vendor into a position -- MP]

Even if you believe that, along with Deasy's claim that "nothing was done in any inappropriate way whatsoever," his contact with Apple and Pearson raises countless questions about whether a legitimate bidding process was ever an objective.

"You should make every bidder think they have a slim chance of getting the job," said Stuart Magruder, the school bond oversight committee member who briefly lost his post for asking too many questions about all of this. Deasy "didn't do that. He created an environment where Apple and Pearson probably didn't have to be as creative as they could have been."

Or as thrifty. As Magruder noted, the district agreed to a far higher cost per device than what other districts were paying. Magruder also argued that he believes the main objective with digital devices has always been to facilitate more test-taking rather than better teaching and deeper, more meaningful learning experiences for students.

Accountability at the LAUSD

“If we transform human capital by ensuring there are effective employees at every level of the organization focused on improving student outcomes, give our students and parents a portfolio of high quality school choice, and hold ourselves accountable through strong performance management, then every student in our schools will graduate college-prepared and career-ready.”

Dr. John E. Deasy, superintendent of the Los Angeles Unified School District

There is a heated debate going on over the role of the 0.1% in education reform (you can see my take in this Monkey Cage piece). It is also a fairly new one. For years, the reform movement portrayed itself in grassroots terms despite being fundamentally a top-down movement. This was possible for a while because virtually all major media players were openly supportive of the movement and almost never questioned the narrative.

These days, many journalists such as  Valerie Strauss have become much more critical of the movement and are much less inclined to ignore ubiquitous billionaires such as Bill Gates, Eli Broad and Alice Walton. The response from movement supporters has been to ask what's the problem with successful people being generous?

This is another case of short question/long answer, but part of the answer is that when a very small group of people have this much influence over something like education, winning the approval of these people becomes more important than competence or being responsive to the remaining 99.9% of the population.

For all the talk of tenure, connections are the ultimate form of job security. John Deasy is extraordinarily good at winning over the support of the rich and powerful (add Antonio Villaraigosa to all of the names mentioned earlier). He is also extraordinarily bad at running the LAUSD. The iPad fiasco is the best known example (and it keeps getting better) but that same kind of mismanagement is more or less the norm under Deasy.

Hundreds of students walked out of class at Jefferson High School on Monday morning, holding a sit-in to protest a host of issues at the South Los Angeles campus -- among them a scheduling snafu that has extended into the third week of school.

Students gathered in the quad after first period, sitting in a grassy area in a silent protest of what they contend has been weeks of mismanagement by administrators that has wasted their time and severely interrupted their education.

For the first weeks of school, many students were left without class schedules, others were given courses they did not need and some were without those required for graduation, students and teachers said.

Several Advanced Placement courses were scheduled at the same time, leaving students unable to enroll in all the college-level courses they desired. Students still learning English were unable to enroll in courses at their level, as they were scheduled during the same periods.

Problems were apparently intensified by a new computer database, known as the My Integrated Student Information System, which caused a litany of scheduling problems around the district in the first weeks of school.

Teachers have described over-enrolled classes, missing or inaccurate rosters, students without schedules and an inability to take attendance in the system.

Last week, district officials overhauled Jefferson's master schedule and removed the principal. The district then installed another principal, Jack Foote, whom the district described as an "experienced administrator who brings to his role a track record of success."

But the issues have persisted, students say.

Foote did not return requests for comment. Students returned to class Monday afternoon.

Buying a reputation

It is almost always a mistake to make too much of the Emmys. All awards are overrated but Oscars and Tonys do still bring a critical and commercial boost. The Emmys are little more than an expensive pissing contest between network executives.

 It is, however, a very expensive pissing contest. Lots of money goes into ads and PR accounts so some executives can feel better about themselves on Monday (or in this case, Tuesday) morning. West of the 110, those "For Your Emmy Consideration" billboards are pretty much inescapable.

Many of those billboards, perhaps a plurality, were from Netflix. Which makes it telling (though not important) that the company was completely shut out of anything bigger than outstanding guest actress. The company has spent a lot of money trying to snag these awards of questionable value and so far their return on investment has not been good.

Yes, this is another one of those Netflix-bashing posts, but I want to be clear about which Netflix I'm bashing.

I don't have a big problem with the service. Having a Netflix subscription is a bit like having a Kmart on the road you take to work. The quality can be iffy and the selection is bad but it's convenient and you can't beat the price.

As a business, it strikes me as very shaky but it is possible to imagine someone making a go of this. It's not a Groupon-style Ponzi scheme.

What bothers me is Netflix the narrative. More than perhaps any other company, the public face of Netflix is a PR creation. All of the recognized attributes of the company are either puffed-up or invented out of whole cloth. Other than one good, crowd-sourced model,  the company appears to be running on some really crude algorithms and doing little with its admittedly massive data set. Rather than creating an HBO-style content library in-house, it is simply paying exorbitant sums for exclusive first airing, after which the producers can do whatever they please. Reports of various successes all fade on closer examination: Netflix is overtaking competitors (but only if you ignore international markets or compare Netflix's revenues to other industries' profits); Netflix is solidly in the black (but only if you use just the right kind of accounting); Those exclusive shows are huge hits (but only according to vague statements about numbers the company refuses to release*).

The vast majority of the press, up to and including David Carr of the New York Times, is willing to believe an appealing narrative even when it is improbable, unsubstantiated, even contradicted by the facts. That's the part that bothers me.

* There is some external evidence that Orange may be doing quite well.

A joke but not a hoax

From Valerie Strauss

April 25, 2014

Dear Kindergarten Parents and Guardians,

We hope this letter serves to help you better understand how the demands of the 21st century are changing schools, and, more specifically, to clarify, misperceptions about the Kindergarten show. It is most important to keep in mind is [sic] that this issue is not unique to Elwood. Although the movement toward more rigorous learning standards has been in the national news for more than a decade, the changing face of education is beginning to feel unsettling for some people. What and how we teach is changing to meet the demands of a changing world.

The reason for eliminating the Kindergarten show is simple. We are responsible for preparing children for college and career with valuable lifelong skills and know that we can best do that by having them become strong readers, writers, coworkers and problem solvers. Please do not fault us for making professional decisions that we know will never be able to please everyone. But know that we are making these decisions with the interests of all children in mind.



Sincerely,

Ellen Best-Laimit

Angela Casano

Keri Colmone

Stefanie Gallagher

Martha DeMartini

Your first thought on reading this might be Daily Currant, but no...

All but one of the people who signed the letter were unavailable for comment. One asked me to call back but then didn’t answer the phone. District Superintendent Peter Scordo declined to discuss it. Michael Conte, a spokesman for Scordo, said in an e-mail on Saturday:

Yes, the letter is authentic. As it states, the Harley Avenue Primary School educators believe that this decision is in the best interest of students.

I don’t have anything more to add for your consideration. Thank you for reaching out.

This didn’t come out of the blue. Kindergarten (and even preschool) has increasingly become academic — at the expense of things such as recess and the arts — in this era of standardized test-based school reform. In most states, educators are evaluated in large part on test scores of students (sometimes students they don’t have) and on showing that their students are “college and career ready,” the mantra of the Obama administration’s education initiatives. Earlier this year, Rob Saxton, Oregon’s deputy superintendent of public instruction, and Jada Rupley, the early learning system director in the state’s Education Department,  wrote an op-ed in the Oregonian that was published online with this headline: Kindergarten test results a ‘sobering snapshot’. What was it about? Kids hadn’t done well on a standardized reading-readiness test.

Victimology

Karen Yi and Amy Shipley of the Sun Sentinel have a follow-up to their remarkable series on mismanagement in Florida charter schools.

At least seven groups of applicants with ties to failed or floundering charter schools are seeking second chances and public money to open 18 more.

Odds are, most will prevail.

School districts say that they can't deny applicants solely because of past problems running charter schools. State laws tell them to evaluate what they see on paper — academic plans, budget proposals, student services — not previous school collapses or controversial professional histories.

District officials are currently reviewing applications for next year.

Among those vying to open new charter schools, which are privately operated but publicly funded:

• A group that managed three new charter schools in Broward and Palm Beach counties that opened this year — and then shut down on the first day of school.

• The founder of two charter schools that failed in 2007 amid accusations of stolen money, shoddy record keeping and parent complaints, according to state and local records. A state investigation later chastised school directors for "virtually nonexistent" oversight, though prosecutors filed no criminal charges.

• An educator who was banned from New Jersey public schools, then consulted for two schools in Broward and Palm Beach counties that shuttered in 2013. The Palm Beach County school district closed one of the schools because of poor academics and financial difficulties; the Broward school chose to cease operations amid dwindling enrollment, according to school district reports.

The Sun Sentinel also found three applications from leaders at two charter schools that were ordered to close this year for poor academics. Another three proposals came from a director at an existing charter school chided for its deteriorating financial condition. An entrepreneur who has consulted for a handful of failed schools is also listed on an application.

"We're asking ourselves, 'How do we follow the law, yet make professional decisions in the best interests of students?'" said Jim Pegg, director of the charter school department for the Palm Beach County School district.

A Sun Sentinel investigation in June found state law allows virtually anyone who can fill out a lengthy application to open a charter school. If school districts veer too far outside the guidelines to reject applications, they risk having their decisions overturned by the state.

Broward Schools Superintendent Robert Runcie said he might be willing to take that risk given the range of applicants.

"If we have to, we'll deny some applications and bring them to the state and still fight," Runcie said. "We can't continue to go with the bad actors that are out there and have them to continue to operate."

Most of this is familiar territory for our regulars, but there is one aspect that I haven't discussed as much as I should. The education reform movement has gone to great lengths to play up its grassroots aspects but the significant components have always been top-down and technocratic. You often see this kind of local push back, particularly when the proposals coming from the state capital are as bad as this.

Here's one of the cases where a district tried to challenge one of these decisions. Note the result.

Eight hours before students were to report for classes at the new Broward County Charter High on the first day of school this year, Richard E. Durr emailed a Broward school district official saying the school would not open "due to circumstances beyond our control." Durr is a director at the school's management company, American Charter Schools, Inc.

By day's end, two more schools managed by that same company had shut down. One school in Riviera Beach failed to attract students; the other in Delray Beach enrolled only a few, a district official said. The applications for the two Palm Beach County schools were rejected by the school district in 2012, but those decisions were reversed by the state.

...

Yet Durr's company, American Charter Schools, Inc., is listed as the education service provider on applications for four proposed charter schools in Palm Beach County. An education service provider is often referred to as a school's management company.

As we've discussed before, these school closings can be extraordinarily tough on kids. This was a horrible way for the kids who had enrolled in these schools to start the year. It was perhaps even tougher on parents who had spent the weeks before getting their children excited about their new schools only to have to explain to them at the last minute that those schools simply aren't there anymore.

It is even worse when a school closes midyear. Unfortunately, Florida has seen plenty of that as well.

With the costs of failure largely ignored by the powers that be, it's easy to see how those trying to get into the charter school business can have such a nonchalant attitude.

"We are supposed to learn from our experiences," said [Ann-Marie] Manzano, who is applying for two new charter schools. She said that if applicants "haven't done anything intentional and if they have been a victim" they should be given another shot at opening a school.

Manzano has an interesting history -- the key phrase is arguably "declined to prosecute" -- but even if we assume the best of intentions, she was still not good at her job and the victims of her failures were the kids and families that trusted her.

Yes, people are now talking about flipping schools

I don't know that anyone saw this coming though, in retrospect, we should have. One of the recurring elements in a number of reports of the questionable management of many charter schools is the role of real estate, either as a way of turning a quick buck or of influencing local governments.

We've already discussed Florida and Michigan. Now investigative journalist Owen Davis has a remarkable account that add New Jersey to the list (via Edushyster)

Half a year after Newark Public Schools launched an "agenda to ensure all students are in excellent schools," the plan has come under a federal civil rights investigation to determine whether it "discriminates against black students."

The investigation centers on a cluster of school closings in Newark's predominantly black South Ward. Absent a consistent reason why the district targeted these schools - such as poor academics or declining enrollment - activists alleged discrimination. The "One Newark" reform plan, they wrote, would "continue a pattern of shuttering public schools in communities of color."

...

But an in-depth look into the district's ultimately unsuccessful attempt to close one South Ward school reveals how real estate concerns and facilities funding increasingly drive neighborhood school closings and the expansion of privately managed charter schools. By allocating millions of dollars in little-known bonds exclusively to charters while imposing austerity on public facilities, the state has quietly stacked the deck for charters, leaving neighborhood schools to molder in decline.

...

"The school went out of its way to accommodate DeVahna," their mother Jacqueline Choice says. Teachers visited the home to keep DeVahna abreast of material she'd missed. When she returned to school temporarily in a wheelchair, staff and students diligently volunteered to carry her books and bring her lunch.
At Hawthorne, DeVahna and Darius "were finally in a comfortable place," says Choice. "The teachers were very sympathetic to our situation."

A midday text message from DeVahna last December shattered that sense of comfort. "Mommy, they're closing the school!" Choice remembers reading. "I had to call her to find out what was going on. She was in tears."

At the next board meeting, Superintendent Cami Anderson announced publicly what DeVahna had learned from her math teacher: Hawthorne would be handed over to a charter school, TEAM Academy, in a so-called "charter launch." The staff would be replaced. All told, the district's plan would impact a third of Newark's schools.

...
In 2011, came the Booker-Zuckerberg philanthropic blitz and Gov. Chris Christie's appointment of Superintendent Anderson, all aiming to transform the state-run district into an educational free market. That means replacing "failing" district schools with charter schools, which are privately managed, publicly funded and freed from certain regulations.

...

Hawthorne hoped to ride out these reforms unscathed. Since Principal H. Grady James arrived in 2011, the low-income school has seen "an amazing transformation," says a Hawthorne teacher (who asked to remain anonymous). Though it falls short of state averages, Hawthorne posted test scores last year that put it in the 94th percentile statewide in terms of student growth, outstripping all its Newark peers.

"Hawthorne did everything required by the state to stay open," says Choice, including what she describes wearily as "a whole year prepping for testing." That concentration on test scores, though grueling and arguably not an ideal educational focus, bore fruit, in terms of external evaluation of the district. "But once that was done," says Choice, the district "came in and said: 'Well, we're closing the school anyway.'"

The district justifies the move in part by pointing to the roughly 40 percent of South Ward families who sit on the waiting lists for charter schools they've chosen. But on the whole, Hawthorne's parents chose Hawthorne. Families boycotted school applications, held weekly protests and fired off countless letters to state officials. Choice began speaking out at board meetings, eventually joining the civil rights complaint that spurred the federal investigation.

...

Though Newark Public Schools (NPS) claims to use seven criteria for school turnover decisions, "No one question pulled the lever" for Hawthorne, says Gabrielle Wyatt, NPS executive director of strategy. 

But it's clear that one factor played an outsized role: money. Given the state funding landscape, NPS saw moving a charter in as a way to secure pressing building repairs.

Hawthorne's spacious brick schoolhouse is crumbling. Thick layers of paint slough off in the stairwells. A browning hole in the third floor ceiling oozes over a water fountain.

Charters' access to bonds allows them to "improve these community assets" - that is, school houses - "and allows the district to continue to operate. And keeps the district viable." This saves the state, which controls Newark schools, from paying to fix the very schools it let fall into disrepair.

Defining "bad teachers"

One of the many bizarre elements of the wave of anti-tenure litigation is the apparent inability of the litigants to find teachers whom most of us would consider bad. That's not to say there aren't bad teachers out there -- we can all agree that there are -- but there is clearly something else going on here.

When you actually start digging into the details of these law suits, it soon becomes obvious that there is a serious disconnect between the way the people in these organizations think about teachers and the way most of us do. Not only do they hold up what most of us would consider reasonably good teachers as grossly ineffective; they do the same with teachers we would consider extraordinary.

[You'll notice I said 'organizations' and not parents. These initiatives start with well-funded organizations (usually affiliated with one or more billionaires) deciding on the lawsuit they want to file then seeking out parents to serve as litigants and, in some cases, spokespersons.]

We have already discussed Christine McLaughlin, “Rotary’s Pasadena 2013 Teacher of the Year,” Pasadena NAACP’s “2008 Star of Education.” McLaughlin is the kind of teacher that most peers respect and most kids and parents love. She is also, according to the Vergara suit, grossly ineffective.

And consider the standard being used in Wright vs. New York, as discussed here by Valerie Strauss.

Keoni Wright is the lead plaintiff  in a lawsuit organized by Campbell Brown’s education advocacy group that is seeking to overturn New York laws that provide tenure and other job  protections to K-12 teachers. Brown has appeared on a number of television shows explaining her new endeavor, which will involve filing lawsuits in other states, as well, in an attempt to have national impact on tenure laws...

Brown has said repeatedly that she is leading this effort because she  believes it is too hard for school systems to get rid of “bad” teachers and that it is union-negotiated teacher job protections that lead to poor quality education for many underprivileged students. Critics say this is nonsense and that giving teachers due process when they are accused of wrongdoing protects against patronage and other forms of administrative whim. They also note that many students get inadequate educations in non-union states where teachers have no job protections and that tenured teachers can be and are fired, despite conventional wisdom to the contrary.

Whatever you think of job protections for teachers, Wright inadvertently raised a separate issue during an interview he did with Campbell on NY1′s “Inside City Hall with Errol Louis”: What exactly is a “bad” teacher? Some answers are obvious, others less so.

During the interview with Louis, Wright discussed the education his young twin daughters are receiving at a New York public school, saying that one of them had a really good teacher and the other wasn’t so lucky. How did the lead plaintiff in the lawsuit explain this dichotomy? Well, it turns out, he said, that one daughter received homework packets from her teacher while the other daughter didn’t. Why? After talking to the offending teacher, he said he discovered the following:

... She didn’t have the supply, you know they were waiting for stuff to come. Meanwhile this other teacher was using her own money to buy these books to have supplies for her regular kids and an extra set for me.

Translation: The good teacher was spending her own money to buy supplies the school system should have provided to teachers in a timely fashion. The bad teacher didn’t.

Translation: The good teacher was giving homework to young kids. The bad teacher wasn’t.

Wright has said that he began to notice the homework discrepancy as soon as his daughters entered kindergarten a few years ago. One daughter had homework and the other didn’t. The one with homework was doing better academically than the one who wasn’t, he said, the suggestion being that a teacher who assigns kindergartners homework routinely is better than one who doesn’t.

It may well be that the teacher of one of his twins was superior to the teacher of his other twin. Yes, some teachers are better than others (as in any other profession), and, yes, some working teachers should be removed from the classroom because they are inadequate, and yes, teacher education should be continually improved to elevate the quality of America’s teaching force. I don’t know a teacher who doesn’t agree.

But in this interview Wright rested his claims about the value of his children’s teachers on the fact that one was spending personal money for supplies and that the same teacher assigned homework routinely. That’s hardly what you would call dispositive. It doesn’t even make sense.

Teachers shouldn’t have to spend their own money to buy supplies. Schools should have supplies ready for teachers at all times. Inadequate supplies is just one of the reasons that teachers in many schools have a hard time doing their jobs, which isn’t something that gets factored into many blame-the-teacher arguments. Teachers who care so much about their students that they buy student supplies with their own money are certainly dedicated, but no more so than those teachers who care greatly about their students but don’t spend their own money to buy what a school system should be providing.

As for homework in kindergarten, the research isn’t there to show that it helps academically. In fact, most of the research on homework in elementary school suggests that less is more and that reading is the best kind. Kids derive no real benefit from doing homework in kindergarten or, for that matter, up until fourth grade, some homework  researchers say, while others go further and say there is no benefit to homework in elementary school at all.

Strauss goes on to say that Wright sounds well-intentioned. I'm not so sure. He very much reminds me of a type of parent I ran into occasionally, first to complain, last to help.   For most parents, it's the other way around.

Back to the main question. One of the supposedly self-evident truths of education is that we all want better teachers in the classroom, but if we can't agree on what constitutes good and bad, the statement goes from self-evident to meaningless.

Terrestrial Superstation Watch

Yet another thread we've been on a long time. In case you are new to the party, there's a long running debate about the audience size of over the air television and its long term viability. Rajiv Sethi and I took the pro side; almost everyone else took the con.

One of the major points of contention came from the fact that the two major publicly available data sources had wildly different estimates of viewership. Nielsen had 9% and shrinking. GfK had 18% and growing. Back in April of 2013, we had a big debate with Felix Salmon over these numbers. I pointed to Fox's and NBC's then recent decisions to launch terrestrial superstations (the superb Movies! and the inept COZI respectively).

Let's assume Salmon's right and put ourselves in the position of a Fox or NBC executive who has to decide whether or not to create a new broadcast network. We can be reasonably confident that the executives have access to reliable data (particularly the Fox executive if the deal with Weigel included a look at some numbers from ThisTV and METV).

You find, given our premise, that the total over-the-air audience is, say, forty million, the technology is obsolete and entire medium will probably be gone in a few years. At this point, it's hard to imagine you'd proceed with an expensive, time-consuming project that is likely to be an embarrassing failure but the situation actually gets worse.

You are looking at launching an advertiser-driven, English-language station but the OTA market is disproportionately poor and immigrant (I get programming in over a half dozen languages); the maxim relevant audience for your station now drops to maybe thirty million and there's more bad news. You're going to have to share that thirty million with a crowded field of competitors. A major market will have dozens of OTA channels including multiple PBS channels, This, ME, Antenna, Bounce, RTV, three ION channels and various independents.

Given Salmon's assumptions about the size and trajectory of this market, there is simply no way NBC or Fox would have gone ahead with these channels. They couldn't possibly recoup their start-up costs before OTA is phased out. Put bluntly, both NBC and Fox are betting against Salmon's position.

Obviously this is not conclusive, but it's a strong piece of evidence and it's consistent with what we've seen elsewhere. It's also consistent with GfK's numbers. 

What's happened since then?

All of the terrestrial superstations mentioned above appear to be going strong.

Sony launched its own virtual clone of Movies!, GetTV.

And now

Exclusive: MGM Launches Digi-Net The Works

The Big Uneasy

“The best thing that happened to the education system in New Orleans was Hurricane Katrina”

Arne Duncan

As mentioned before, a lot of people in New Orleans -- parents, educators and students -- are very unhappy with the direction of the city's schools. They complain of draconian policies, firing of popular teachers and discipline policies that border on brutal.

The case that still breaks my heart involved a 14-year-old who kept getting demerits because his uniform shirt was too small and came untucked basically every time he moved. His mother was a veteran, well-educated, and had sold real estate but got divorced and ended up losing her job, and became homeless. They were living with friends and really struggling. The school expelled the child because he’d had three suspensions—the last one for selling candy to try to raise enough money to buy a new shoes and a new uniform shirt. I felt that if the mother went and told her story that the school would understand and wouldn’t hold up the expulsion. She didn’t want the school to know how impoverished she was but I convinced her to do it, so she came and told all of these people what she was going through—about her struggles. I thought for sure the board would overturn the expulsion, not just because her story was so compelling, but because there wasn’t actually anything in the school’s discipline book about selling candy. But they upheld it and it broke my heart that this kid was being put out of school because he was poor.

On the other of the debate, supporters (including the highly respected John Merrow) argue that New Orleans is a model of reform that gets results. They acknowledge that the programs are tough but they point to improving metrics and argue the pain is worth the gain. If we stop here, this would appear to be a classic good-of-the-many argument. Some kids suffer under the new system but if most are better, the system is certainly defensible.

But what if the rest aren't better off, at least not due to the reforms in the system? For years, we've been discussing the ways excessive discipline can distort the results from educational research and Bruce Baker has long questioned just how impressive the test results were. Now Jason France, a well-respected blogger and former analyst with the Louisiana State Department of Education, has made a pretty good case that some of those impressive statistics were the result of large scale fraud.

You see, under Paul Pastorek, Louisiana’s first Reformer de jour of a few years back, Louisiana stopped investigating and auditing data . . . especially data coming from charter schools and RSD [the New Orleans Recovery School District -- MP]. At the department we knew full well that the data was both crappy in quality and dreadful in composition. Incidentally Paul Pastorek is back in Louisiana to start a new education endeavor. At the Department we knew him as Little PP (he’s like 5 feet tall) to Paul Vallas’s Big P (Vallas is 6’5″) or sometimes as LDOE’s Napoleon due to his small stature and imperious nature.
...
When Bobby Jindal met John White I’m told Jindal thought he would have a more pliable and less volatile and willful minion than Paul Pastorek and almost immediately gave PP his walking papers. Fortunately PP went to school with Sean O’Keefe who is the current CEO of Airbus (they went to school together) and Paul was able to land on his feet as a useless random lawyer at EADS, a subsidiary of a European aerospace company.

So what does all this have to with dropouts you might ask? Well Paul had stopped auditing data during his tenure and he left under less than friendly terms. It’s quite likely he did not reveal all the skeletons shoved into LDOE closets. It appears that John White and his staff unwittingly stumbled across a walk-in closet loaded with them.
...
Recently LDOE did a partial audit of exit codes. In particular they were looking at some of the codes often used to hide “dropouts.” In practical terms, a student that does not graduate and stops going to school is a dropout. However, if the student, let’s say, transfers out of state, to a non-public school, goes the homeschool route, or dies. . .well we can’t really hold that school or any school we collect data on responsible for that, can we?

Exit codes were designed for schools to tell the state one of these situations has taken place. When this happens legitimately and is reported to the state in the form of an exit code, the state would no longer keep that student in the numerator or denominator. They are not a dropout. They are also not a graduate. They are a “legitimate leaver” in education parlance. When these legitimate leaver situations take place, records and documentation should take place. When a student transfers to a non-public school or homeschool the parents should fill out some withdrawal papers and the non-public school should make a “request for records.” Homeschooled students and parents also generate subsequent records, and students are required to take tests and provide updates about students’ progress. When a student transfers out of state the “receiving school” should have a record of the student, and that receiving school should make a request for records. These items go in students’ permanent files . . . if those documents are indeed generated, and really exist.

What often happens is this does not take place. What often happens is schools will “fix” their dropouts by simply coding all their dropouts as transferring out of state. They don’t graduate, although some districts simply code students with a graduate code too which really helps them out, but they don’t count against schools. Schools wanting to improve their images or escape accountability sanctions can freely “up code” their students from dropout to even graduates if they really want too, although the most common practice is to simply code them as “transferring out of state.” Historically this wasn’t a major issue, but as accountability has become more important, and as graduate cohort and dropout rates have become factored into as much as 25% of a school’s SPS score the incentive for up coding is enormous, the risk of getting caught or sanctioned very low, and this solution is easy breezy to do with plenty of people along the way able to claim ignorance and protected by plausible deniability if they ever do get caught.

What has happened to Louisiana and especially in RSD and probably charter schools and probably some traditional schools is that more and more schools have discovered the up coding secret and have used it to their advantage more and more every year. John White and LDOE made the mistake of actually doing a preliminary audit of these numbers and publishing them. Their “Reforms” are failures and their success is built upon lies. One of the metrics used to annually evaluate John White is the graduation cohort rate. Once LDOE realized just how bad this audit was his folks knew better than to turn over any more stones. But enough teasing, just how bad was it do you ask?

Try a 100% failure rate for RSD on for size.
I’m not kidding.

I think LDOE really felt all they needed to do was make the point that all direct run RSD schools will be closed this school year so it would finally be okay to release this type of info. Like, “hey, we know this is bad but we’ve released this report after closing them so there’s really nothing anyone can do and you should not waste your time worrying about them anymore.”

Believe me, this is not a one off, this is what all RSD info and stats look like when not masked or filtered. You might think hiding 14 dropout students is not a big deal, and you’re right in a sense. Of course LDOE should consider all students important, but RSD served thousands of students a year. . .what’s 14 out of 1400? The problem is this is just a very small sample that encountered 100% error rate. This is a small fraction of how many student RSD coded as transferring out of state without any documentation from this cohort. What’s more, this was done to make themselves look better than they were for many years, every year they were in existence, and they were always just about the worst in the state even with this help and the numerous instances of cheating I’ve gotten reports of and written about. Feel free to search my blog for examples.

If you have a chance, check out the full post.