Indianapolis (and a few other places), Meet John Arnold

By Doug Martin 

With the Michael and Susan Dell Foundation, Bloomberg Philanthropies, the Walton Foundation, and others, the Laura and John Arnold Foundation is pumping millions of dollars into Indianapolis, and former Mind Trust executive vice president Ken Bubp now is the Arnold Foundation’s director of education.  For the 2016-2019 years, the Arnold Foundation plans to hand the Mind Trust $11,075,000 and the Indianapolis Public Schools Education Foundation, Inc. $1,256,250 for the “expansion and replication of high-quality schools.” 

As Lindsey Erdody and Hayleigh Colombo noted a few days ago, Arnold, the Texan and former Enron millionaire turned hedge fund billionaire, in a YouTube video says “If Indianapolis is successful in doubling the number of kids that are attending high-quality schools, it will be one of the best investments that the Arnold Foundation has made.” Arnold continues “Indianapolis has this great chance and opportunity to show the nation what can be done.”

It’s no surprise that Arnold is teaming up with the Dell Foundation in Indianapolis, for promoting edtech is one of his many favorite pastimes.  In 2012, the Arnold Foundation handed $10,000 to Innosight Institute, Inc. to promote digital learning, almost $600,000 to the North American Council for Online Learning Ltd. in 2011 and 2012, $6 million in 2012 to the PowerMyLearning, Inc. (Computers for Youth Foundation, Inc.) to support blended learning, $3.5 million to the American Institutes for Research in the Behavioral Sciences to “advance evidence-based policymaking and promote the use of longitudinal data in education research,” $60,000 in 2016-2017 to the Data Quality Campaign, Inc. to “support the development and distribution of materials that capture the growth of the current data systems in education and share lessons for other sectors,” and over $8 million to the edtech charter school investors NewSchools Venture Fund, whose CEO Ted Mitchell later went on to become Obama’s undersecretary of education, just to name a few.  The Arnold Foundation stresses so-called personalized learning, recently giving a $2.7 million grant to the personalized learning OpenStax College project that Rice University researchers are working on.  The Arnold Foundation is helping develop digital textbooks for college students, investing in EdX, an online platform for high school and college courses, and Arnold’s foundation has given $6 million to the Silicon Schools Fund, Inc over the last few years, “which is supporting the development of schools where face-to-face instruction is combined with online, self-guided activities, collaborative projects, and innovative classroom models.”  This is just a small fraction of the money the Arnold Foundation is pouring into corporate school reform.

Arnold is steeped in the school privatization movement.  In 2011, the Arnold Foundation gave (PFD) $100,000 to the hedge fund-operated Education Reform Now, $2.1 million to Stand for Children (who used hedge fund money that same year to buy Illinois Democrats, as I detail in Hoosier School Heist), $5 million to Teach for America, and $52,500 to the Thomas Fordham Institute, the rightwing organization whose quest with the fake liberal Center for American Progress is to entirely eliminate elected school boards across the country. 

Arnold, like all billionaires and edtech titans, hate publicly elected school boards.  Alongside Lauren Powell Jobs, Apple’s Steve Jobs’ wife, and billionaire corporate school reformer Eli Broad, and others, John Arnold in 2014 attempted to buy the California State Superintendent of Public Instruction race, supporting Democrat Marshall Tuck of Los Angeles, who was up against another Democrat.  Tuck, in favor of using test scores to evaluate teachers, had started L.A. charter schools and was the CEO of “the Partnership for L.A. Schools, a nonprofit he ran (created by [once-mayor] Villaraigosa) that is working to fix 17 failing schools.” The “Enron commodities trader and hedge fund manager John Arnold gave $300,000 to a pro-Tuck PAC” and “has jumped into California union battles before, donating $200,000 through his PAC to help place on the state ballot a government employee pension reform plan by San Jose's Democratic mayor, Chuck Reed,”  as L.A. Weekly’s Matt Fleming points out.  

Arnold has thrown money across the U.S. to influence the so-called pension reform of public workers, and a whole book could be written about that alone.  

PAY FOR SUCCESS, OR PROFIT FROM A RIGGED GAME 

The new and international corporate gimmick to wipe out public education and every other public investment that aids or monitors minorities and people from low-income households is known as “social impact investing,” and the Arnold Foundation is on the forefront.  One version of “social impact investing,” a scheme to invest private money in social programs for a profit, is known as Pay for Success, now written into the Every Student Succeeds Act.  

As researcher Alison McDowell writes:

The John and Laura Arnold Foundation has worked steadily to advance Pay for Success. A 2015 article from Inside Philanthropy notes, “The Arnolds and Bloomberg Philanthropies both recently received props from the Obama administration for being “essential partners” in government’s quest to surface the tools, programs and approaches that will help the country adapt to a changing educational and economic landscape.” Both are high-profile figures in the movement to privatize public education, and the Arnolds have also been at the forefront of pension “reform” efforts. Since 2013, the foundation has poured tens of millions of dollars into an “Evidence Based Policy and Innovation” initiative. In 2015, the Coalition for Evidence Based Policy wound down its operations after 14 years and merged with the Arnold Foundation. Among the coalition’s accomplishments were successfully lobbying for the creation of the Social Spending Innovation Research program in K12 education as well as Paul Ryan and Patty Murray’s Commission on Evidence Based Policy Making.

McDowell has posted a map of Arnold’s Pay for Success plan, noting the Arnold Foundation’s “strategic investments” for the national “adoption of Pay for Success and Social Impact Finance,” which includes “investments in funders, think tanks, lobbyists, data brokers, evaluators, as well as reform groups like KIPP and Teach for America suited to working within the constraints of data-driven educational environments.”

On the Arnold Foundation website, you can find many of these Social Impact/Pay for Success grants, which include:

New Profit, Inc.	2013 - 2014	$210,000
To help advance Pay for Success Financing.

Nonprofit Finance Fund	2014 - 2015	$343,660
To help advance Pay for Success Financing.
Nonprofit Finance Fund	2014 - 2018	$1,080,000
To help advance Pay for Success Financing.
Nonprofit Finance Fund	2016 - 2017	$350,000
To support the Pay for Success Learning Hub.

One Hope United	2015 - 2017	$672,848
To help advance Pay for Success Financing.
Partnership for Public Service, Inc.	2015 - 2017	$184,223
To help advance Pay for Success Financing.
Partnership for Public Service, Inc.	2016 - 2018	$800,881
To identify measures that can help to improve operations at the Office of Management and Budget in order to drive better decision making, resource allocation, and performance at federal agencies.

President and Fellows of Harvard College	2013 - 2015	$551,134
To support the Harvard Kennedy School’s Social Impact Bond Technical Assistance Lab.

President and Fellows of Harvard College	2016	$800,000
To support the Center for Public Leadership’s efforts to evaluate a series of low-cost, high-yield interventions and their impact on student outcomes.
President and Fellows of Harvard College	2016 - 2018	$2,141,762
To develop and support a network of government chief data officers that will collectively use data analytics to solve critical policy problems.

Roca, Inc.	2016 - 2023	up to $1,666,689
To support an extension of the Massachusetts Juvenile Justice Pay for Success Project.

Social Finance CT**	2016 - 2022	$1,000,000
To support the Connecticut Family Stability Pay for Success Project.
Social Finance NY State Workforce Re-Entry 2013 LLC**	2013 - 2019	$4,000,000
To help advance Pay for Success Financing.
Social Finance, Inc.	2014 - 2015	$148,598
To help advance Pay for Success Financing.
Social Finance, Inc.	2014 - 2017	$4,000,000
To help advance Pay for Success Financing.

Third Sector Capital Partners, Inc.	2014 - 2015	$159,000
To help advance Pay for Success Financing.
Trust for Conservation Innovation	2015 - 2017	$71,971
To help advance Pay for Success Financing.

University of Utah	2015 - 2017	$354,143
To help advance Pay for Success Financing.
Urban Institute			2015 - 2018			$8,433,895
To help advance Pay for Success Financing.
Urban Institute			2016 - 2018			$1,191,932
To support the development of an evidence-based policymaking collaborative, which will provide actionable strategies for using and building evidence in public policy.

Youth Services, Inc.	2014 - 2020	up to $3,344,350
To help advance Pay for Success Financing.

For the Pay for Success scheme to work, the billionaires need data--data, in fact, to manipulate for a profit, and edtech is ripe to create it.   In fact, we have already witnessed a scenario that will become way too common if John Arnold and the other billionaires get there way.  In a 2015 Salt Lake City preschool program with a Social Impact Bond (SIB) from Goldman Sachs and the Pritzker Family, we can glimpse where this road is heading.  Here is how education scholar Tim Scott narrates the story:

Through a $7 million investment from Goldman Sachs, J.B. & M.K. Pritzker Family Foundation and the United Way of Salt Lake, the SIB financed the expansion of an existing and highly regarded preschool program. The SIB was aligned with the program's goal of reducing the number of “at-risk” children identified to be on a path to special education services in subsequent grades. According to the Philanthropy News Digest, Goldman claimed, “that of the one hundred and ten four-year-olds who attended preschools in the program during the 2013-14 school year that were identified as likely to need special education, only one required special education services in kindergarten.” This outcome also guaranteed the first of many large payouts for the notorious investment bank. “It was, in the vernacular of corporate America, a win-win: a bond that paid for preschool for underprivileged children in Utah while also making money for investors.”

A month later, several early childhood experts interviewed for a New York Times article reported that they saw a number of substantial irregularities in how the program's success was measured, leading them to believe that Goldman Sachs and the state of Utah were able to exaggerate the outcome of the SIB:

...even well-funded preschool programs — which the Utah program was not — typically have been found to reduce the number of students needing special education later by 10 percent or 20 percent, and rarely by more than 50 percent… For example, the program screened low-income three- and four-year-olds using a picture-and-vocabulary test known as the PPVT and labeled all those who scored below 70, a very low score, as being likely to require special education. According to nine early childhood education experts who reviewed the results for the Times, however, the PPVT isn't typically used to screen for special education, especially on its own, and there was little evidence for assuming that all children who scored poorly on the test — 30 percent to 40 percent of the children in the program, many of whom did not speak English at the time of testing — would require special education after preschool.

The NY Times article went on to report how “Early-childhood education experts said that the results from Utah should have been viewed skeptically from the start, just based on the amount of money being spent on the program… the preschool that the bank had paid for cost $1,700 a year for every student, or barely enough to cover the cost of part-time day care. Some of the children Goldman paid for were sent not to preschool but to a local daycare center or Y.M.C.A.

Prior to making the investment, Goldman Sachs could see that the methodology was leading significant numbers of children to be labeled as at-risk; and therefore increasing the number of children that could later be identified as avoiding special education. Ultimately, according to the Times,

When Goldman negotiated its investment, it adopted the school district’s methodology as the basis for its payments. It also gave itself a generous leeway to be paid pack. As long as 50 percent of the children in the program avoid special education, Goldman will earn back its money and 5 percent interest — more than Utah would have paid if it had borrowed the money through the bond market. If the current rate of success continues, it will easily make more than that.

THE HEAD START SMOKE MIRROR 

 In 2013, the national news painted John Arnold as a Jesus figure when he and his wife announced they were going to cover the government costs of funding Head Start during the government shutdown.  The Arnolds dished out the couch-change of $10 million for Head Start as a loan to be paid back.  Actually, the whole thing was merely a publicity stunt meant to digress from  what Arnold had been up to lately. When the news broke on the Head Start funding, David Sirota, noting that John Arnold is worth $3.8 billion, saw through the smoke and mirrors:

What do you do after a week’s worth of embarrassing revelations about your craven effort to slash the pensions of unsuspecting middle-class retirees? If you are a billionaire former Enron trader, you manufacture a self-congratulatory spectacle by offering a bit of pocket change to low-income kids – and you get to rest assured that the national media will suddenly ignore your pension-looting ways and dutifully portray you as a benevolent hero.

Such is the breathtakingly cynical P.R. strategy of John Arnold. After a week of revelations about his scheme to help Wall Street and the conservative movement loot public pensions, the former Enron trader made headlines yesterday by handing over a rounding error of his billion-dollar fortune to the federal Head Start program ostensibly to help float it through the government shutdown.   

SPYING ON YOUR NEIGHBOR 

What else should Indianapolis parents, students, teachers, and citizens know about John Arnold? People in Indianapolis, first, might want to look toward the sky for any suspicious activity for an answer, for in Baltimore, with no public input, Arnold and his wife’s foundation recently paid $360,000 to Dayton, Ohio’s Persistent Surveillance Systems to fly a surveillance plane over the city for at least “314 hours, taking more than a million images,” according to the Baltimore police department which finally acknowledged the surveillance and Arnold’s role several months after, ironically, Bloomberg Businessweek ran a story.