Fwd: McKay Scholarships in Florida

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Here is some more on the McKay Scholarships

Investment firm sees profit in disabled students By

Palm Beach Post Staff Writer

Tuesday, February 22, 2005

A private investment firm that owns the largest ice manufacturer in the United

States, makes plus-sized clothes and oversees a leading cabinet company has been

educating Florida's disabled students — and doing it with taxpayer dollars.

In October, Trimaran Capital Partners purchased a chain of Florida private

schools that cater to children with special needs, capitalizing on a loosely

managed school voucher program that uses government dollars to pay for their

education.

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The New York-based company bought 84 percent of Educational Services of

America and took control of the company's board of directors.

Trimaran now owns 17 private schools in Florida, including The Progressive

School in West Palm Beach, and pulls in nearly $6 million in tax dollars through

the McKay voucher program for disabled students.

With about 1,300 students using McKay vouchers to attend its schools, Trimaran

is teaching 8 percent of the 15,500 McKay students in the state, and intends to

add more.

Trimaran's purchase of Educational Services of America follows several

high-profile education purchases by private investors — a trend that education

watchers say isn't likely to slow, given President Bush's pro-voucher and

pro-charter school leanings.

Critics say companies whose ultimate goal is to make a profit will cut corners

on education, especially in the McKay voucher program, which has been a victim

of scam artists and does not operate under the same standards as public schools

that teach disabled children.

" This program was always rife to be a profit-driven program as opposed to a

program that will improve education for children with disabilities, " said U.S.

Rep. Debbie Wasserman Schultz, D-Pembroke Pines, who as a state senator sat on a

board charged with making suggestions to improve the McKay program.

" Obviously, a private investment corporation has decided that this law was

designed to help people make money, " she said. " It should have been designed to

help kids. "

Unlike public schools, private schools taking McKay vouchers do not have to

hire certified teachers, or even teachers with college degrees. The only

requirement is the teacher must have " special skills " as defined by each school.

In fact, only one of Trimaran's Florida schools — Atlantis Academy in

Tallahassee — filled out a state-requested form that describes teachers'

experience and whether employees underwent criminal background checks. Private

schools also do not have to give tests to prove students are succeeding

academically.

Florida Education Commissioner Winn said he has no problem with

Trimaran's purchase because Educational Services of America has experience

running private schools, even if Trimaran doesn't.

And former state Senate President McKay, who lent his name to the McKay

voucher law and championed its passage, said he's not rushing to judgment on

Trimaran schools.

" It would be wrong to conclude just because they want to make a profit that

they would deliver an inferior product, " he said.

In the October issue of the trade magazine Buyouts, Trimaran Managing Director

Jay Bloom said he wants to buy 10 more schools to achieve " critical mass. " He

also touted the lack of significant competition in teaching disabled students as

one of the reasons the purchase would be a profitable move.

" He doesn't say anything about providing children a quality education, "

Wasserman Schultz said of Bloom's comments, which were linked from Trimaran's

Web site to a Buyouts article.

Bloom refused a request for an interview and did not reply to questions

e-mailed through his public relations firm. Messages left at Educational

Services of America were not returned.

About 26,640 students attend private and religious schools through one of

Florida's three approved voucher programs: McKay vouchers for disabled students,

Opportunity Scholarships for students in failing pubic schools and Corporate Tax

Credit vouchers for poor students.

Push for accountability renewed

Lawmakers are renewing a push this year to add more accountability to the

voucher programs. A bill proposed by Sen. Jim King, R-ville, would force

private schools taking vouchers to give students standardized tests, and would

require schools to hire teachers with a bachelor's degree or three years of

teaching experience.

The proposed law, and the question of whether Opportunity Scholarships for

students in failing public schools will ultimately be deemed unconstitutional by

the Florida Supreme Court, leaves analysts skeptical of investing in schools

that rely on vouchers.

" The pro-voucher philosophy on a political level is one thing, but I don't see

the public rushing out in local elections and advocating a voucher education

system, " said Mark , education analyst for Boston-based Eduventures Inc.

Although there is still an investment risk, analysts say there has been an

increase in for-profit companies taking over specialty schools that serve

disabled children or those with behavior problems. Parents of disabled students,

they reason, may be more willing to make sacrifices to send their children to

special programs. They also acknowledge that when the government is paying the

tuition, the value to investors could be greater.

" It's a double-edged sword, " said Trace Urdan, an education analyst at the

Milwaukee-based brokerage firm W. Baird & Co. " It's nice when the

government steps in, but sometimes that money is more trouble than it's worth. "

Former U.S. Education Secretary and drug czar learned that

last year when Florida lawmakers criticized him for enrolling ineligible

students in his taxpayer-funded virtual school. The state contract

splits with Sylvan's Connections Academy was reduced from $4.8 million to $3.8

million because of the error.

Edison Schools, one of the better-known for-profit education management

companies, began picking up contracts to run public schools years ago. But when

the company went public, it started losing money.

Once again privately held, Edison Schools received an investment boost in 2003

when Florida's public pension plan, which holds the savings of the state's

public school teachers, invested $182 million.

Aspen Education Group, based in Cerritos, Calif., has bought numerous schools

and camps for disabled or struggling students throughout the country.

Also making an education investment is Milken, who pleaded guilty to

six counts of securities fraud in 1990 and served nearly two years in prison.

Milken recently made a $1.1 billion acquisition of the private company

KinderCare Learning Centers, which operates pre-kindergarten and day-care

centers.

" It's not brand new with this administration, but there is no question that

education is seen by some entrepreneurs as the next frontier, " said Elliot

Mincberg, vice president of the People For the American Way Foundation. " When

there is an opportunity for profit with minimal accountability, private

enterprise will see education as a cash cow. "

Trimaran is largest provider in field

Trimaran Capital Partners' holdings include Reddy Ice distributing, Urban

Brands clothing company, Village Voice Media and Norcraft Cos., which makes

kitchen cabinets.

The $21 million purchase of Nashville-based Educational Services of America

also included Spectrum Center, a San Francisco-based provider of special

education services. Trimaran says on its Web site that the combination of

companies makes it the largest provider of classes to disabled students in the

United States, with about 2,300 students and 27 schools.

Last year, Educational Services of America faced criticism for hiring

Stansfield, a former charter school operator with a record of financial

mismanagement and a 2001 felony charge of child abuse, to run a ville

private school.

Supervisors said they checked Stansfield's criminal record before hiring him.

Stansfield entered a pretrial diversion program to avoid a criminal prosecution

in the child-abuse case and was not convicted. His closed ville charter

school, however, still owes $500,000 to the Duval County School Board.

" We need to make sure these children are in safe environments and that there

is some type of level of success, " said Sen. Ron Klein, D-Delray Beach, who has

fought for more oversight of Florida's voucher programs. " The real question is

accountability. "