How a Democratic PAC Is Channeling Out-Of-State Dark Money to Enshrine Corporate Education Reform
DFER may sound generic, but its aim is to amplify the voice of huge Wall Street players and other corporate interests within the education world.
What Is DFER, Really? Hedge Funders for "Education Reform"
DFER is a PAC, a Political Action Committee, which means it can (and does) play a direct role in state and local elections. Public school advocates like Diane Ravitch have been spotlighting concerns about DFER since its beginning.
Because DFER is not a charity, money given to it does not result in a tax write-off but--if successful in changing laws--that money could get the hedge funders who back it a return on investment through politicians and policies that redirect tax dollars from truly public schools to "education reforms."
Ed reform is fueling non-profit corporations paying lucrative for-profit style salaries to their executives and for-profit firms, such as the controversial K-12 Inc., which has made hundreds of millions while traditional public schools have faced budget cuts.
The Center for Media and Democracy has calculated that the federal government alone has spent more than $3.7 billion in U.S. tax dollars propping up the charter school industry, in addition to enormous amounts spent by states.
DFER has supported a number of Democrats in elections but its name could have been "Hedge Funders for Education Reform" (HFFER)--in much the same way that David Koch's Americans for Prosperity could have been called "Billionaires for Prosperity," or Americans for Greed, names with less popular appeal.
That's because DFER is backed by billionaires and millionaires representing well over $20 billion, at least, in investor money.
It was co-founded by hedge fund managers, even though DFER's board has been chosen to show the faces of a diverse group--of former or failed Democratic politicians. In fact, "former" is the first word in each of their bios on the DFER site.
(For example, DFER Board Member Adrian Fenty lost his bid for second term as DC mayor; Ken Chavous lost his bid for re-election to the DC Council; Craig Johnson lost his bid for re-election to the New York state senate; Maureen Stapleton lost her bid for re-election to the Michigan state house; Mary Ann Sullivan lost her bid for the state senate; and the others left their elected positions.)
DFER's new national president is Shavar Jeffries, a former and failed DFER-backed candidate for Mayor of Newark, New Jersey. He is the leader of the "national staff" of DFER, which is located in Washington, DC, and he is also a partner at a big law firm, Lowenstein Sandler, which has offices in Rosewood, NJ, as well as DC and four other cities.
Not only is DFER led by Democrats who have failed to win their last elections, a number of DFER-backed candidates have lost in recent elections, as with the Colorado school board races in 2015.
On the other hand, DFER spent more than $4 million on TV ads in 2010 that attempted to blame New York teachers’ unions for problems caused by the disastrous federal "Race to the Top" program. Among other things, DFER also spent $1 million on ads attacking the Chicago Teachers Union and supporting Rahm Emanuel in 2012.
Who Funds DFER? "Education Reform Now Advocacy" and Its (Hedge) Funders
DFER is actually the more well known PAC arm of Education Reform Now, Inc. (ERN), a 501(c)(3) charitable nonprofit, and Education Reform Now Advocacy, Inc. (ERNA), a 501(c)(4) social welfare group. Their acronym not only sounds like the word "earn," but also it has the backing of some really huge earners.
DFER co-founder (and founder of the T2 Partners hedge fund) Whitney Tilson explained the hedge funders interest in education noting that “Hedge funds are always looking for ways to turn a small amount of capital into a large amount of capital.”
The Board of Directors for ERN consists almost entirely of Wall Streeters who made their fortunes through financial groups and hedge funds, such as Sessa Capital, Gotham Capital, Covey Capital, Charter Bridge Capital, Maverick Capital, Cubist Systematic Strategies, and Sanford C. Bernstein.
As the New York Times reported: DFER's supporters have included "the founders of funds like Anchorage Capital Partners, with $8 billion under management; Greenlight Capital, with $6.8 billion; and Pershing Square Capital Management, with $5.5 billion."
However, ERN and ERNA do not disclose who its major donors are and how much those big donors give to fund its operations and ambitions.
It is known, though, that FOX's Rupert Murdoch gave at least $1 million to ERN. Murdoch has expressed his desire to get in on education "reforms," stating "When it comes to K through 12 education, we see a $500 billion sector in the U.S. alone...."
The most recent federal tax filings of ERN/ERNA show that it had more than $12 million available to push education reform ($7.4 million for ERN and $5 million for ERNA) in 2013. Its non-profit filings from the most recent major election year, the 2014 mid-terms, or last year are not available.
What is known from the 2013 is filings is that, in that year, ERNA disclosed that it spent $1.7 million in political expenditures, nearly all of which went to DFER. These funds were used for expenditures, like mass mailings or ads supporting particular politicians but that were "independent" and not to be coordinated with the candidates' campaigns.
ERN/ERNA's leader Joe Williams has been paid a for-profit like salary as its executive, with $398,500 in total annual compensation in 2013. He's also listed as "Executive Director Emeritus" for DFER and on DFER's board. Williams stepped down from his staff position at DFER in 2015 and also became a director at the Walton Education Coalition that year. That's Walton as in Walmart's Walton family.
Because non-profits like ERN/ERNA do not have to disclose their major donors to the public, even when ERNA is active in supporting electoral activities the public is left in the dark about which hedge funder is actually helping to fund state and local ads and mailers during the election.
Even though privately held corporations and hedge funders do not have to disclose their donations to operations like ERN/ERNA, a CEO's charitable foundations do have to disclose whom they give grants to.
That's how it is known that the Walton family, of Walmart fame or infamy, has backed such efforts. In 2011, for example, ERN/ERNA received $1.1 million from the Walton Family Foundation. The total amount from all such CEO-controlled foundations given to ERN/ERNA to date is not known.
As Matthew Fleischer noted in the Frying Pan News (reprinted by the Huffington Post) that hedge funder Tilson has followed the Waltons' lead: "in a 2010 documentary, A Right Denied, Tilson suggested that DFER was created because of Walmart patriarch John Walton’s support of vouchers and "school choice.'"
It has been investigative journalists who have helped expose the billionaire network behind ERN/ERNA/DFER, despite the opacity on the surface, as noted by George Joseph in the Nation:
"[A]ccording to Steven Brill in his book Class Warfare, around this time [in 2010] the hedge-fund alliance for education reform really began to take off. That April, for instance, Education Reform Now’s Joe Williams and Bradley Tusk schmoozed over drinks with Paul Tudor Jones II and other hedge-fund billionaires at Home Depot founder Kenneth Langone’s Five Avenue apartment, where they planned a successful campaign to secretly spend millions through a 501(c)(4) political action fund and win the charter cap increase [in New York]. As with Families for Excellent Schools’ mostly secret financing today, Brill notes that Education Reform Now’s donations never became public, and that in May a room full of eager billionaires was able to push the legislature to authorize increased charter-school expansion."
(The Nation's exposé on ERN/ERNA/DFER in New York includes emails and a slide deck about the billionaires and foundations behind such efforts that were leaked to the magazine.)
Despite or perhaps because of this reality, the DFER arm in a state where ads are run merely discloses to the state authority that it received contributions from ERNA, not the hedge funders.
So, the ERN/ERNA/DFER operation is like a shell game when it comes to the public being able to pierce through the layers of non-profits to find the name of a particular billionaire or uber-rich hedge funder whose money is propping up a particular electoral candidate being backed by DFER.
Similarly, DFER in the states has been known to partner with other groups that have similarly murky or occluded funding sources.
Take California and Colorado, for example.
DFER's Gloria Romero Joined with Koch-Connected Groups to Attack Unions
In the last presidential election year, DFER got heavily involved in pushing a California state proposition that would have undermined the power of workers' voices in elections, Proposition 32.
DFER's California arm was led by Gloria Romero, a former state legislator from Los Angeles, who was termed out from running for re-election after leading the state senate.
Romero failed in her bid to become the state Superintendent of Public Instruction in 2010, and then, like so many other failed politicians, she was welcomed as a leader for DFER.
DFER began filing election disclosure forms in California in 2012. Some of its most high-profile activities under Romero were in partnership with other Read More at:How a Democratic PAC Is Channeling Out-Of-State Dark Money to Enshrine Corporate Education Reform | Alternet: