If we are to believe Jonathan Alter and others, hedge funds like loaning to charters because it is just the right thing to do and they have big hearts. I took issue with this off-stage at MSNBC’s Education Nation and Alter was dumfounded that hedge fund managers might actually be investing in charters because they can make some serious $. On camera, he said he was concerned about “the profit motive,” but off-camera he still disputed that hedge fund managers have a vested interested in fleecing the public (again!) in the education sector.
In a meeting with the Texas Charter School Association this morning, they related that the average rate that charters in Texas are paying for bonds is about 8% compared to about 3% for traditional public schools. That can mean the difference between debt service of $19 million and $29 million dollars over a 20-year term— ~$10 million. Now if you were a hedge fund manager, would you find that level of return inviting?
The New York Times further underscored this concern:
Wall Street has always put its money where its interests and beliefs lie. But it is far less common that so many financial heavyweights would adopt a social cause like charter schools and advance it with a laserlike focus in the political realm, The New York Times’s Trip Gabriel and Jennifer Medina write.
Hedge fund executives are thus emerging as perhaps the first significant political counterweight to the powerful teachers unions, which strongly oppose expanding charter schools in their current form.
Is it just me or does that second line eerily align to Alter’s comment right before I spoke about charters on the MHP show?
Here is what the Huffington Post had to say about Wall Street “profiteering” and charter schools:
There is clearly money to be made here. And where there is money to be made, we can be sure that there will be money to finance political campaigns, to support career ladders that move between government and business and to bribe the media into ignoring the data. So the war on public education will continue. All of course “for the sake of the children.”