WEEKLY NEWS DIGEST (September 26-October 2, 2011)

EDUCATION

CHARTER SCHOOLS

Cobb board rejects charter school’s application for renewal.” By Ty Tagami. Atlanta Journal-Constitution. September 30, 2011. A vote by the Cobb County school board Thursday evening sent 11-year-old Armani Singh out of the meeting room with tears in her eyes. The board had just rejected her impassioned plea to save her charter school, voting down its application for renewal. The 4-3 decision ended a weeks-long emotional trial for Armani and more than 500 other children at the Imagine International Academy of Mableton. Parents rallied earlier this month after the staff of Cobb school Superintendent Michael Hinojosa recommended denying the 5-year-old school’s application for a new two-year charter. Their emotional case, including speeches by Armani and other students, swayed some board members. But others held their ground, saying they had a responsibility to safeguard public money. Charter schools are supported by taxpayer dollars, and several board members said they were influenced by financial problems at the school and by unimpressive test results. “When we issue charters, they actually cost our system more money,” said school board Chairwoman Alison Bartlett, before casting her vote with the majority. She criticized the school — and by extension the parents — for a lack of leadership over past years. “Your passion’s great at the charter time, but we have to see your commitment for the length of it.” Afterward, Armani’s mother, Holly Bridgewater, a former parent-teacher organization president at the school, said parents would appeal the decision. She said Armani thrived at the school by comparison with her previous experience at her neighborhood elementary school.

FOR-PROFIT COLLEGES & UNIVERSITIES

Holly Petraeus: For-Profit Colleges Misleading Soldiers.” Morning Edition/National Public Radio. September 28, 2011. For-profit colleges have been under fire for graduates’ high loan default rates. Now the industry is accused of targeting members of the military with aggressive and often misleading marketing. David Greene talks with Holly Petraeus, director of service member affairs at the Consumer Financial Protection Agency and the wife of General David Petraeus, who recently wrote about the issue in The New York Times.

HIGHER EDUCATION

Pittsburgh Native Invests in Hometown.” By James R. Hagerty. Wall Street Journal. September 26, 2011. William S. Dietrich II has led a quiet life since selling his family’s steel business, writing about economic history and managing his family foundation while living in a downtown apartment. In the past three weeks, the 73-year-old has made an uncharacteristic public splash by pledging a total of $390 million to two local universities. The University of Pittsburgh said last week that Mr. Dietrich had promised a $125 million donation. Two weeks before, Carnegie Mellon University announced a $265 million gift from him, the 14th-largest on a global list of private gifts to higher education compiled by the Chronicle of Higher Education. Mr. Dietrich is a former chief executive of Dietrich Industries Inc., a maker of steel-framing products used in construction. He sold that company, founded by his father, to Worthington Industries Inc. for $146 million in 1996. Since then, he has built those proceeds into a $515 million foundation by investing in hedge funds, emerging-market stocks and private-equity funds. In an interview Friday, Mr. Dietrich said he pledged most of the foundation’s money to CMU and Pitt because they are among the most durable institutions in his native Pittsburgh and among the main drivers of the local economy.

Yale-NUS endowment is in the works.” By Alison Griswold. Yale Daily News. September 27, 2011. Yale-NUS College, the joint liberal arts college Yale is founding with the National University of Singapore, is starting from scratch in almost every respect — including its endowment. As Yale and the National University of Singapore continue to hammer out details of Yale-NUS, such as plans for its faculty and curriculum, the two institutions have begun a major fundraising push to ensure its financial stability. The new liberal arts college will have an endowment that operates independently of Yale’s and is handled by managers overseas at NUS, not by Yale investment guru David Swensen or members of his team, University President Richard Levin said. Donated funds and money put into the endowment will supplement the budget finalized by the Singaporean government in March, which is intended to finance the majority of the college’s expenses. Yale will not fund the institution, as per its agreement with NUS. Levin declined to comment on the size of the Yale-NUS operating budget in March. “The hope is that you build up a large endowment so that you have funding that is truly under the direct control of the college,” said Charles Bailyn, the inaugural dean of the faculty at Yale-NUS. “I know they’re trying to do something pretty substantial in that regard.” NUS is primarily funded by the Singaporean government, and also has an endowment that was valued at 2.01 billion Singapore dollars, or roughly $1.55 billion, in March 2010. Yale’s endowment was valued at $16.7 billion as of June 30, 2010. Though the Yale-NUS endowment managers will not have the renown of the Yale investments team behind their major decisions, Levin said he believes the NUS investments committee is “very capable.” He added that numerous financial firms have transferred their continental headquarters to Singapore, making the country a “major financial center” in Asia.

Purdue Scraps Bid Plan.” By Joseph De Avila. Wall Street Journal. September 27, 2011. Purdue University has dropped its bid to build an applied-science campus in New York City, citing what it calls insufficient financial backing from the city. The Indiana-based university was one of 27 institutions from the U.S. and abroad that have showed early interest in building an applied-science campus in the city. City officials say the campus will make New York more competitive with tech hubs in the Silicon Valley and Boston. “The financial support outlined by the New York entities was not sufficient to offset the university’s projected expenses,” said Richard Buckius, Purdue’s vice president for research, in a statement. The Bloomberg administration has said it is offering as much as $100 million for infrastructure at the approved site. A new school will likely cost hundreds of millions of dollars. “We had made a pledge that we wouldn’t use any state tax dollars or student tuition to fund this,” said Chris Sigurdson, a spokesman for Purdue. “The money needed to come from other sources, including New York. The money didn’t look like it was going to add up.” Purdue is the first school to formally announce that it won’t submit a response to the city’s call for proposals. Universities still in the running include Cornell, Stanford, Columbia and New York University. City officials said it was expected that some institutions would drop out of the process, and that more would be weeded out during the bidding process.

Signs point to rosier endowment.” By Alison Griswold. Yale Daily News. September 28, 2011. Three years after the recession tore a $350 million hole in Yale’s budget, Provost Peter Salovey says University finances are finally stabilizing. Yale has been in rough financial straits ever since the endowment dipped nearly 25 percent during the 2008 recession. The University nearly depleted its rainy day funds to close gaps in the annual budget and offset slow economic recovery and endowment growth over the next few years. But now that the budget cuts University administrators called for last winter are in place and positive endowment reports are in at other colleges and universities, Yale seems headed for more solid financial ground. The stability has come in part from an unexpected budget surplus left over at the end of the 2010-’11 academic year, Levin said. Though administrators allotted approximately $2.8 billion for University-wide expenses that year with the hope of breaking even, Levin said they ended the fiscal year on June 30 with a “considerable surplus.” Salovey said the surplus partly came from returns on Yale’s cash holdings, which the University did not anticipate because interest rates were so low throughout the year. At least some of the spare funds will go toward replenishing the University reserves — money that Yale sets aside to be used when other revenue sources shrink. Though the University always aims to build its reserves, Levin said it was “somewhat of a surprise” that Yale could afford to funnel funds into those stores when fiscal year 2011 closed. While beginning to replenish University reserves is one sign that Yale has made it through the worst of the 2008 recession, it is not the only one. Salovey said that, after the campuswide budget cuts he and Levin called for in January, he thinks the University will not need additional reductions in the near future.

Analysis: Despite Strong Performance, HMC Portfolio To Be Tested Over Next Fiscal Year.” By Gautam S. Kumar and Zoe A. Y. Weinberg. Harvard Crimson. September 28, 2011. Harvard’s endowment returns of 21.4 percent in fiscal year 2011, announced last week, beat benchmarks and were the highest in recent memory. But since the close of the fiscal year on June 30, the markets have shown extreme volatility, with some indices moving 4 percent daily. While analysts applauded the recent returns of the Harvard Management Company, which manages the University endowment, the portfolio’s significant holdings in public equities expose it to these market swings. Harvard’s gains in the past year represent the first major step in recovering losses that resulted from the 2008 financial crisis, when the endowment’s value plunged by nearly 30 percent, from $36.9 billion to $26 billion. Since then, HMC has been reestablishing the value of the endowment—which yielded an 11.4 percent return in the 2010 fiscal year. It has done so while adopting a more conservative risk management structure to weather volatile markets. Analysts agree that the current year will begin to test the new risk structure as HMC fights to regain its pre-crisis endowment value.

College Offers Top Applicants Two-Thirds Off.” By Richard Perez-Pena. New York Times. September 28, 2011. For students with their sights set on a private college, the anxiety comes as a one-two punch: first from competing with thousands of others for a precious few spots, then from trying to scrape together up to $50,000 a year to foot the bill. Starting next year, Seton Hall University will try to ease that follow-up blow for early applicants with strong academic credentials, giving them two-thirds off the regular sticker price for tuition, a discount of some $21,000. For New Jersey residents, who constitute about 70 percent of Seton Hall’s undergraduates, that would make the cost equivalent to that of Rutgers University, the state’s flagship public institution; for those from out of state, the private school would be much cheaper than the public one. National experts on admissions and financial aid said the policy was the first of its kind. Seton Hall officials said they hoped it would provide clarity and certainty up front to the most desirable applicants, easing the weeks and months of stress that admitted students face as they wait to hear how much financial aid they might get from different campuses. “The primary motivation has been that as we go through what looks like a double-dip recession, we wanted to help our students,” Seton Hall’s president, Gabriel Esteban, said of the new approach. But in addition, he said, “it probably will help us in attracting a certain quality of students.” To qualify for the discount, which would equal about two-thirds of this year’s $31,440 tuition (room, board and other fees add about $13,000 to the total annual bill), students must graduate in the top 10 percent of their high school classes and have a combined score of at least 1,200 on their math and reading SATs — but no less than 550 on either — or an ACT score of 27 or above. Though experts said they knew of no college providing such a blanket discount for top-flight students, other institutions have similarly tried to distinguish themselves in this ailing economy by appealing to students’ bottom lines.
Related story:
Seton Hall Cuts Cost For High Achiever.” Wall Street Journal. September 29, 2011.

Harvard Executives Earn More Than Their Massachusetts Counterparts.” By Mercer R. Cook. Harvard Crimson. September 28, 2011. Harvard executives and employees received far higher salaries in 2009 than their counterparts at the 19 other wealthiest universities in Mass., according to a study released Tuesday by the Center for Social Philanthropy at the Tellus Institute. The average of the top eight Harvard employees was more than three times the average of the top eight employees at the nearest runner-up—Boston University. The study follows a two-year investigation that used public tax records to deduce the salaries and benefit packages of the top executives at the universities, which included MIT, BU, Tufts, Wellesley, and Boston College. Study authors worked closely with unions in the Massachusetts area in creating the study, including SEIU Local 615, the union that represents. The study showed that Harvard executives’ salaries topped the list in all categories except for president’s income: BU President Robert Brown’s $1.04 million package edged out University President Drew G. Faust’s salary of $822,000. Harvard’s top paid executive, Harvard Management Company Managing Director Stephen Blyth, made $6.4 million in 2009, nearly three times the salary of the next highest earner. Joshua Humphreys, the primary author of the study, said that the motivation for the investigation was to increase transparency in universities across Boston.

Endowment posts high return.” By Alison Griswold. Yale Daily News. September 29, 2011. Though Yale posted the worst endowment return in the Ivy League during fiscal year 2010, the University’s latest report has boosted it back up in the performance rankings. Yale’s endowment returned 21.9 percent on its investments in the fiscal year that ended June 30, Chief Investment Officer David Swensen announced Wednesday. University investments gained a total of $3.6 billion in the 2011 fiscal year to boost the current endowment value to $19.4 billion. But the latest increases still have not returned Yale’s endowment funds to the high-water mark of $22.9 billion they reached before the 2008 recession. “We were very pleased to learn of the endowment’s gain of nearly 22 percent during the 2010–’11 year,” Provost Peter Salovey said in a Wednesday email. “The Investments Office has done exceptionally well over the past 10 and 20 years, despite some very difficult years.” Yale’s 21.9 percent return is a drastic improvement from the endowment’s performance in fiscal year 2010, when the University posted an 8.9 percent return, last among its Ivy League peers. Yale’s most recent performance has already edged out that of Harvard, which returned 21.4 percent in the 2011 fiscal year. The double-digit jump in returns may indicate that University is finally recovering from the 2008 recession, which caused Yale’s endowment to fall nearly 25 percent that year. After multiple rounds of budget cuts across the University and gradually improving investment returns, Salovey said Tuesday that he believes University finances are finally stabilizing. Buoyed by the strong endowment performance announced Wednesday, the University will siphon more funds from the endowment toward its 2011–’12 operating budget than in the previous year, allocating $992 million for campus-wide expenses. In fiscal year 2010, the University put $986 million aside for the same purpose.
Related story:
Yale Endowment Posts 22% Gain to End Fiscal Year at $19.4 Billion.New York Times. September 28, 2011.

The Endowment and Africa; HMC should disavow investments that disenfranchise the world’s poor.” By The Crimson Staff. Harvard Crimson. September 30, 2011. Harvard’s endowment recently posted an impressive 21.4 percent growth to $32 billion in fiscal year 2011 thanks to investments made by the Harvard Management Company, the University’s asset management firm. Although the fund underperformed the S&P 500 index, HMC’s returns were 1.2 percent ahead of the portfolio benchmark. However, in June, the Oakland Institute, an independent California-based policy think tank, released a report alleging that HMC and other university endowment managers had invested in Emergent Asset Management. Emergent, an alternative investment fund comprised of private equity and hedge fund strategies, often makes agricultural and real-estate investments in developing regions such as Africa. The Oakland Institute report alleges that Emergent takes advantage of arbitrage opportunities in Africa such as buying land and selling it at a higher price when demand is increased or by cultivating crops solely for export. Oakland Institute Director Anuradha Mittal has claimed that such strategies result in food shortages and ultimately utilize lax property laws to exploit indigenous farmers. At the current stage, we do not have adequately available evidence to consider either HMC or Emergent at fault for the purported economic wrongdoings outlined in the Oakland Institute report. Without substantial proof that Emergent’s investment strategy results in land grabbing, we have no basis to condone the criticisms made by the Oakland Institute and Mittal. We must acknowledge, however, that as Harvard’s endowment manager, HMC is responsible for both the financial and social implications of their investment decisions. HMC must always be cognizant of the impact of their asset allocation, and as Harvard students, we have the right to hold them to high ethical standards. HMC, a fund connected so deeply with the basic operations and maintenance of Harvard, should not uphold a practice of facilitating economic abuse in developing nations. Harvard’s research facilities, extensive financial aid, prolific faculty, and vast resources should not come at the price of third-world exploitation. One of Harvard’s core purposes is to ensure the betterment of society by creating the leaders necessary to enact social change. HMC should thus be wary of reversing the strides that we have made to promote positive growth and economic advancement in historically disadvantaged countries.

PRIVATE & PAROCHIAL SCHOOLS

Los Angeles Archdiocese hopes to raise $100 million for Catholic schools; The initiative, headed by former L.A. mayor Richard Riordan, will ask supporters to make provisions in their trusts or wills for the Catholic Education Foundation.” By Carla Rivera. Los Angeles Times. September 26, 2011. Dwindling enrollment and other challenges have decimated urban Catholic schools nationwide, but a high-profile initiative to raise $100 million in tuition assistance may allow thousands of children to continue attending schools in the Los Angeles Archdiocese and save those schools from extinction. The initiative, headed by former Los Angeles mayor Richard Riordan, will ask supporters to make provisions in their trusts or wills for the archdiocese’s Catholic Education Foundation, which already awards thousands of grants annually to needy students. Riordan was the founding president of the foundation in 1987 and is a longtime supporter of education-related causes. It is estimated that the two-year campaign will aid an additional 5,000 students annually, said Kathleen Anderson, the foundation’s executive director. “We have so many kids that need to be supported in our Catholic schools, and they don’t have the financial means because their parents are living below the poverty line,” Anderson said. The foundation awarded 7,300 grants for the current academic year, but there are 9,000 students on waiting lists, Anderson said. Catholic schools nationally are facing declining enrollment, with shifting demographics and parents’ inability to afford tuition among a number of factors. Over the last 10 years, Catholic school enrollment in the Los Angeles archdiocese has fallen 20% to about 79,400 from nearly 100,000, according to a recent study by Loyola Marymount University.
Related story:
Saving Catholic Education; Over 50 years, the U.S. Catholic school population has dropped by almost two-thirds.” Wall Street Journal. September 30, 2011.

El Cerrito’s Windrush School faces seizure by bank.” By Jill Tucker. San Francisco Chronicle. September 30, 2011. If the families and staff at Windrush School manage to come up with the cash by the Oct. 7 deadline, there is no guarantee they will be able to keep the doors open after this academic year. And if it closes, despite a legacy of 35 years serving middle-class families, Windrush would land on a long list of private schools to fall victim to the lingering economic crisis. The weak economy has hit private schools hard, because they are run as businesses that rely on income rather than public funding. In 2001, California had about 625,000 students in 3,100 private schools. By 2010, two years after the recession began, there were 2,565 schools serving 507,000 students. Windrush, a K-8 school on the El Cerrito hillside, has lost about 100 students since 2008 as out-of-work parents pulled their kids out and nonprofit funding for scholarship students dried up. With an annual tuition of about $20,000 per student, depending on the grade level, that’s a loss of $2 million annually. The school can no longer make payments on a $13 million bond used to build a new middle school, a project initiated before the recession. The new building, with a stunning bay view, was meant to accommodate an expected influx of new students. Many schools across the state have found themselves in the same boat, believing in 2006 data that said the demand for private schools would increase, said McManus, whose organization has 203 member schools statewide. They bought into buildings accordingly and then the bottom fell out of the economy.

PUBLIC SCHOOL PHILANTHROPY

TFA: A Corporate Approach; Why 18 percent of last year’s graduating class applied to teach in America’s worst schools.” By Michelle B. Timmerman. Harvard Crimson. September 29, 2011. Eighteen percent of the Harvard class of 2011 applied to Teach For America. It’s not a hard statistic to find; a quick search yields results from The New York Times and The Washington Post, among other sources. Harvard, according to Teach For America’s website, contributes more students than any other college of its size. This surprising statistic is the result of Teach For America’s aggressive recruitment strategy here: five individuals—a recruitment manager, a recruitment associate, and three student campus campaign coordinators—are responsible for TFA recruitment at Harvard. This recruiting team forms a tight unit, rigorous and thorough. They aren’t on the “front lines” of the fight against educational inequality, but they are essential to TFA’s operation. Per size, Harvard has more recruiters than any other college in the area but for MIT, which has an equivalently -sized team. TFA’s recruiting strategy is inseparable from its mission. In 1989, Wendy S. Kopp was a senior in college, unemployed and looking for work. Her campus was “swarming” with investment banks and management consulting firms, she later wrote, so in December, Kopp applied for five jobs, including two at consulting firms and one at an investment bank. She was rejected by all. Even then, Kopp was interested in teaching, but no one would hire her. (Most teachers without a degree in education were customarily hired after Labor Day.) Kopp became increasingly “convinced of the need for a teacher corps that would recruit as aggressively as the investment banks and management consulting firms,” she wrote in her book, “One Day, All Children…”. In April 1989, Kopp turned in her 177-page senior thesis to the Woodrow Wilson School of Public Service: “An Argument and Plan for the Creation of the Teachers Corporation.” The aim: the most gifted graduates in the country would dedicate their first two years out of college to helping the most under-resourced students. Some would stay in education; some would enter other sectors but remain agents for social change and education reform. But unlike other organizations with similarly lofty aims, TFA would make teaching in low-income communities attractive to the most distinguished college graduates by “surrounding it with an aura of status and selectivity.” Kopp once said she wanted admittance to the Corps to have the same cachet as a Rhodes Scholarship.

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