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United Way: BCG funding arrangement messy, but no conspiracy

By Benjamin Herold on Jul 9, 2012 01:21 PM

by Benjamin Herold for the Notebook and WHYY/Newsworks

 

Private philanthropists have been using a complicated series of pass-throughs to fund the Boston Consulting Group’s far-reaching work to help overhaul the School District of Philadelphia.  

But where critics see a coordinated back-channel effort to privatize the city’s public education system, Jill Michal sees evidence of an unusual consensus among Philadelphia’s civic leadership to actively engage in the city’s troubled school system.

“We’re all kind of rallying around each other,” said Michal, executive director of the United Way of Southeastern Pennsylvania, which has served as a fiscal conduit for $2.7 million in private donations earmarked for BCG.

“From [William Penn Foundation president] Jeremy Nowak to Rob Wonderling at the Chamber of Commerce to [School Reform Commission Chairman] Pedro Ramos to other leaders throughout the region, we’re all finally sitting in a room together saying, ‘How can we help?’”

Friday, the Notebook/NewsWorks obtained under state Right to Know law previously unreleased “statements of work” (Phase II, Phase III) outlining BCG’s extensive assignments, as well as two memoranda of understanding (Phase II, Phase III) detailing the financial relationship between BCG, the United Way, and William Penn.

To date, according to the documents, three payments have been made to BCG:

  • $750,000 for Phase I of the firm’s work, completed March 29
  • $700,000 for Phase II, completed April 27
  • $1,250,000 for Phase III, completed June 11

From the beginning, Michal said, the arrangement has been “fungible.”

In Phase I, William Penn made a grant to the United Way, which then passed a portion the money on to the District, which then paid BCG.

“The first time around, we wanted to make sure everybody had skin in the game,” Michal said.  “But it was just too complicated.”

In Phase II, United Way directly paid BCG the balance of the initial William Penn grant after the District and then Nowak had approved BCG’s work.

And in Phase III, Nowak arranged for a number of private donors to contribute to the United Way, which then pooled the resources and made a single payment to BCG after the District and Nowak had approved the firm’s work.

The complicated arrangements have been successful, contended Michal, because all the involved donors agreed to support BCG’s “entire project.”

“Jeremy [Nowak] was intentional in saying, ‘This is not something [donors] can have a lot of strings attached to. It has to be in the best interests of the work, not any individual contributor,” Michal said.

For his part, Nowak, who is now trying to raise more money to pay BCG, said he has been “very impressed” with the blue-chip consulting firm’s work.

“That’s why we continued to find additional funders so they could continue working for the District and SRC,” Nowak wrote in an email Friday.

And as for the grassroots concern that BCG is working behind closed doors to privatize the city’s public education system?

“It’s the dark place that everybody goes to right away, thinking that we’re trying to dismantle the District,” Michal said.

“I just wish we would let the conversation play out longer and actually look at the alternatives in an objective way.”

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Comments (41)

Submitted by Anonymous (not verified) on July 9, 2012 2:16 pm

From Nowak to Wonderling to Ramos. Those are the "leaders" now. Once again, parents, teachers, students, neighbors have no place at the table.

Teachers should STOP giving to the United Way. They are part of the destruction of public education.

No what do we do about it?

Lisa Haver

Submitted by Anonymous (not verified) on July 9, 2012 3:11 pm

I'm with you, Lisa. The United Way will no longer receive a penny from me. I know that it won't mean much to them, financially, but it's symbolic.

Submitted by anonymous (not verified) on July 9, 2012 4:30 pm

I am hoping that as this unfolds both the United Way and the William Penn Foundation will be negatively affected by their participation in this unsavory business. This dismantling of public education in the name of "reform" is ugly. It's undemocratic. It's wrong. It's elitist. How many different ways, how many different times do we need to keep saying this. Fund public education equitably for ALL with taxpayer money.

Submitted by Maurice (not verified) on July 9, 2012 6:38 pm

Lisa--That 's what I've been asking for 2 years now. I say it's time to mobilize and fight back. Jerry apparently thinks not.

Submitted by phillyparteach (not verified) on July 11, 2012 6:32 pm

Didn't know of the link. I no longer will donate money to the United Way. I will however donate time, which is more valuable than money.

Submitted by Anonymous (not verified) on July 9, 2012 2:44 pm

Why is it necessary for the "philanthropists" to go through United Way? Why aren't these funds given directly to BCG or the District? Is this to make sure none of the money goes to the District? Is this to get some kind of tax write off? Or what?

Submitted by anonymous (not verified) on July 9, 2012 4:52 pm

I believe this adds a layer of anonymity so the donors names aren't made public.

Submitted by Concerned Philadelphian (not verified) on July 9, 2012 4:11 pm

Therefore, the philanthropists have a vested interest in the outcome. Then, they are not philanthropists but opportunists.

Submitted by Anonymous (not verified) on July 10, 2013 4:54 am
as share good stuff with good ideas and concepts, lots of great information and inspiration, both of which I need, thanks to offer such a helpful information here.
Submitted by Timothy Boyle on July 9, 2012 2:02 pm

There is a consenus that those outside the District know what to do and those inside the District don't. Left out of that consenus is the people who provide hundreds of millions of dollars of funding to the District, the taxpayers of Philadelphia. Left out of deciding anything about school policy are also the taxpayers of Philadelphia because we do not have an elected school board. Nor did the public decide that it wanted a Chief Recovery Officer. 

Without William Penn Foundation there is no BCG plan. The public is being told by the William Penn Foundation and the rest of the "consensus" (that does not include the public) that without the BCG plan there is no SDP. Oddly enough, the public has a problem with this

 

 

 

Submitted by Philly Parent and Teacher (not verified) on July 9, 2012 3:15 pm

Thanks for your post. Nowak is elected/appointed by no one other than a private foundation Board. Why does he have so much input (e.g. BCG plan had to be approved by Nowak an dthe SRC).

Michal (United Way) claims they are "rallying around each other?" Who? Not the parents/guardians, school staff, taxpayers, etc. It is an insider group (Nowak, Ramos, Nutter, Shorr, Knudson, and now Hite, etc.) that apparently rally around each other.

Submitted by Anonymous (not verified) on July 9, 2012 4:12 pm

Hear hear!

And, why are we still paying big 6 figure salaries to people like Nunery, at the same time we are being told not to trust them and that they are incompetent?

Submitted by Senky (not verified) on April 25, 2013 8:17 am
Agree with a strong view point.
Submitted by Seth Kulick on July 9, 2012 5:40 pm

Two clarification questions for Benjamin Herold:

1) In the title, where did the word "conspiracy" come from? Did one of the subjects of the article refer to the opposition as viewing the BCG funding arrangement as a "conspiracy"?

2) Did Jill Michal actually use the phrase "civic leadership" to describe the rather limited number of people talking to each other?

Thanks. Just trying to find out what they actually said and what got inserted as a paraphrase.

Submitted by Benjamin Herold on July 9, 2012 5:35 pm

Seth,

Thanks for the questions.

Jill Michal of the United Way referenced "conspiracy theories" about BCG's involvement in the DIstrict during our interview.

During the same interview, I first introduced the second term you referenced, suggesting in a question that it seemed there was an unusal level of support from "civic leaders" for the direction the SRC is trying to take the District.  In her response to that question, Michal referenced the individuals included in the quote used in this story.

Hope this helps clarify.

Ben

 

Submitted by Maurice (not verified) on July 9, 2012 6:48 pm

Nowak et al are just trying to make money. Period--end of story. He doesn't give a rat's ass about ghetto kids except for the dollar signs on their backs. As dumb as I am, even I know that.

Submitted by anon (not verified) on July 9, 2012 6:35 pm

from now on, i will give directly to the free public library (or my charity du jour of choice) and eliminate united way as middleman. i will urge family, friends and coworkers to do the same. jill michal is swimming with the sharks. there is no room for such in your face blatant political bias from a charity such as united way that traditionally has been more apolitical, at least in theory. i hope others with deeper pockets than me register their disgust at the company this charity's upper echelon management is keeping and the undemocratic decisions they are fostering and enabling.

Submitted by Anonymous (not verified) on July 9, 2012 11:57 pm

Perhaps it is time that the PFT and AFT and SEIU Local 32 BJ District 1201 members ,families and friends refuse to donate to The United Way.

Submitted by Anonymous (not verified) on July 10, 2012 7:05 am

Think of the school district as a mafia pizza shop. The money goes to United Way for a tax write off (charitable?) donation. the contracts for these schools go to friends. It is money laundering. Tax breaks for the rich. A lottery system for the kids' education

Submitted by Anonymous (not verified) on July 10, 2012 8:09 am

This explains why they used United Way to fund the Boston Consulting Group. So they can hide their dirty deed!

"Two years after the Supreme Court’s Citizens United decision opened the door for corporate spending on elections, relatively little money has flowed from company treasuries into “super PACs,” which can accept unlimited contributions but must also disclose donors. Instead, there is growing evidence that large corporations are trying to influence campaigns by donating money to tax-exempt organizations that can spend millions of dollars without being subject to the disclosure requirements that apply to candidates, parties and PACs."

Tax-Exempt Groups Shield Political Gifts of Businesses
from the New York Times
http://www.nytimes.com/2012/07/08/us/politics/groups-shield-political-gi...

Submitted by Anonymous (not verified) on July 10, 2012 9:44 am

Paying off city councilman to raise taxes on other people so you and your friends can make $50mm a year extra on a rigged no-bid contract is democratic politics in Philly...

But donating ones own money to do what one believes will help the insolvent school district try improve its chronic mismanagement is a "dirty deed".

This is a perverse view of the world. But I guess you need that perverse worldview to justify taking a $50mm a year bonus paid from an impoverished school district as the "just" thing to do.

Submitted by Anonymous (not verified) on July 10, 2012 9:46 am

Please! This is not about improving the School District. This is about giving private companies access to tax payers dollars. If it is such a noble deed, why do they need to hide?

Submitted by Anonymous (not verified) on July 10, 2012 10:39 am

Funny. Where does taxpayer money come from but from private companies and individuals? The magical money fairy left Philly long ago.

But we should be appalled, appalled I say, if these private companies that support the district with their taxes do the same support job as the SEIU at $50mm a year less. Maybe the PSD should also write its own textbooks and print its own books?

Why anonymous? For one, the effort which should focus on the merits of the study rather than falsely disparaging and personally impugning the motives of the donors, making up bs conspiracy theories, etc.

You are creating a strawman. If it is anonymous, then it is a conspiracy. If it is public, the donor is a private profiteer. If it is a foundation, then it is elitist and attack the chairman of the foundation. We get the gist. No change or outside input is necessary despite the PSD's 2nd insolvency in 10 years. Your solution: just STFU and send us more money.

Submitted by Anonymous (not verified) on July 10, 2012 10:49 am

The School District has been managed by the state for eleven years. This insolvency occurred under their watch and by Superintendents that the SRC appointed. The SRC is an outside entity which has no vested interest in the education of the children of Philadelphia except as a market to exploit for private companies.

Submitted by Anonymous (not verified) on July 11, 2012 2:00 am

That would make some sense if Rendell had not been governor for 8 of those 11 years.

He had no interest in Philadelphia? Please. If anything, he deferred too much to the swarmy Philly politicos he knew. And funding increased substantially during that period.

I can remember the PSD before the SRC. Though it is probably difficult to imagine, it was worse.

I also remember the parking authority which was taken over the same time. Everyone hates the parking authority, but it performs a necessary role. Before state takeover, they issued their thousands of tickets and then collected 20% of them, not enough to fund their own operations let alone contribute revenue to the city. I NEVER paid a parking ticket until state takeover. Just switched my license plate every year. This is the way Philly's pols run things w/ gross incompetence. Now the parking authority contributes something like $30mm a year and I don't park on the sidewalk anymore.

Submitted by Rich Migliore (not verified) on July 11, 2012 8:50 am

I worked in the district for 34 years. I remember what it was like on the inside before the state takeover. I also witnessed first hand, from the inside, what transpired upon the takeover right up until 2009, when I had to retire because I had seen enough. Before I retired I participated in all of the district's initiatives and actively studied intently what was going on. Since then, I have continued to intensively study everything that is going on with the district.

I continue to do so because I am so alarmed by what is happening to our once child centered and caring school district.

The state takeover, and those were empowered by it, destroyed the district and decimated our student centered programs. It turned a caring community of professionals into an organization that is characterized by meanness and nastiness.

I do not agree at all that the district was worse before the takeover. It was far better. Then, we argued passionately about the best pedagogy and support for our students and what programs we could institute which would help them. We taught the whole child. All we argue about now is who is going to profit off of our schoolchildren and who is going to have power and control. We have an assessment system that totally lacks credibility and has turned our schools into test preparation factories.

Hornbeck, Vallas and Ackerman decimated our school district and destroyed our sense of community. Everything the teachers and community call for today in the way of student centered teaching and learning was being done prior to the state takeover.

I assure you that the majority of teachers and administrators who gave their lives to our school district do not think that anything has improved since the state takeover. Most of us think the SRC, not this one particularly, and our leadership of the Outsiders, has destroyed the school district.

Thank God there are still many many teachers and administrators who lay their hearts and souls on the line for the children and each other. Both in regular public schools and in charter schools.

I could, and maybe I will, write a book entitled "The Death and Life of the Great Philadelphia School District."

The school district is far worse off today than it ever was before the state takeover of our schools. Just look at what is going on around us and behind closed doors. Nothing of it is about improving the American schoolhouse for the best interests of the children. It is all about the propaganda of privatization and who wants to profit off of the intentionally created "crisis."

To me, as I watch it unfold, It is just sad to watch.

I dream that this SRC and its current members look deeply at what is really going on and look deeply into what the privatization of the American schoolhouse really means for the future of education and welfare of the public good and America itself. I dream that they look deeply into their hearts and act on the best interests of the children and their communities, and separate themselves from those who want to play the games of the power politics and profit motives that surround them. I dream they stand up for children and their communities -- and the community of us all.

Our new superintendent says that he believes in "servant leadership." We shall see if he serves our students and our community, or whether he serves the interests of the outsiders who wish to privatize our public schools for their self interests and personal ideologies.

The "imperative of democracy" will never go away -- It is time for all of us who care to rise and be heard loudly, clearly and powerfully.

Submitted by Philly Parent and Teacher (not verified) on July 11, 2012 9:14 am

While I agree with much of what you've written, including the devastating impact of the Commonwealth of PA takeover, we can't ignore the impact of No Child Left Behind and Race to the Top legislation. The Commonwealth "take over" was right before winter break in December, 2001. No Child Left Behind, passed by the U.S. Congress in May and June 2001 with wide bipartisan support and almost universal approval (384 - 45 in the House of Rep. and 91 - 8 in the Senate), was signed into law by George W. Bush in January 2002. Race to the Top was a creation of the Obama/Duncan Department of Education. The neoconservative and privatization approach to education, under the guise of increasing student "achievement" (not learning) has also negatively transformed education. As you know, everything evolves around a high stakes test which measures limited reading, writing, and math skills. "Outsider" influence goes beyond Harrisburg... Obama's selection of Duncan, versus someone like Linda Darling-Hammond, to head the Department of Education has entrenched the neoconservative/privatization agenda over education.

Submitted by anon (not verified) on July 10, 2012 12:05 pm

for all you haters out there from the pft who don't think charters pull their own weight:

"...and Mastery Charter Schools will pay $12 for Cleveland."

there. now shut the hell up.

Submitted by anon (not verified) on July 10, 2012 12:10 pm

jeremy,
WTF? you told me we wouldn't have to pay a dime!
scott

Submitted by LS Teach (not verified) on July 10, 2012 10:25 am

“It’s the dark place that everybody goes to right away, thinking that we’re trying to dismantle the District,” Michal said.
“I just wish we would let the conversation play out longer and actually look at the alternatives in an objective way.”

If there was more transparency and actual community involvement, people would not jump to these conclusions.

Submitted by Anonymous (not verified) on July 10, 2012 1:29 pm

Here's how the conversation is going to play out with me, Michal. I'm going to tell EVERYONE who I know who I think might even have the slightest inclination to send money your way, to send it elsewhere. Let's talk with our money, folks. There's a saying that goes something like this- From a little acorn, a mighty oak tree grows. It's time to grow an oak tree!

Submitted by Watching this closely (not verified) on July 10, 2012 6:50 pm

The title of this article plays into the idea that those of us who oppose the plan are fringe conspiracy theorists.

The information that has come out about the centralization & consolidation of money and power by Nowak, William Penn, BCG, PSP & Knudsen (with the United Way & Ramos playing essential roles), shows strategic coordination and an intentional lack of transparency. These people have a coordinated agenda and a detailed plan, which is not in the best interest of the public. They are doing a great deal to keep their coordination hidden and out of the public eye.

Education stakeholders have the right to be critical and oppositional without getting painted as conspiracy theorists.

'Conspiracy' is a loaded word. It is part of a narrative that says parents, teachers & students who oppose this plan are blowing things out of proportion; that we are overreacting. We are not.

Submitted by Seth Kulick on July 10, 2012 7:12 pm

yes, that is why I asked (see earlier comment) about who actually used the term "conspiracy theory". See also the other article, with:

"In separate interviews Friday, top leaders from William Penn and United Way lauded BCG’s work and dismissed as “conspiracy theory” the claims by some critics that the firm and the private philanthropists supporting its work are part of a coordinated effort to privatize the city’s public education system."

There is no "conspiracy" going on here, except in technical sense of some people talking to each other to accomplish specific goals. Some details aside, it is the same thing as happening elsewhere in the country, as the austerity program gets pushed down to the local level, to make the majority of the country pay for the crimes and greed of the 1%, of a malfunctioning system (or more properly, a system that is functioning well for the 1%). It is entirely natural that it be done in a way that shows contempt for basic democratic values.

Personally, I tend to think that the use of the term "conspiracy" is another indication of Nowak, Knudsen, Ramos, and so on being unable to understand why people are opposed to what they are doing. It sometimes happens that those in a position of power repeat their own propaganda so much that they come to believe it. They may actually believe that the opposition is all because of people paid off by the unions, or we're just pathetic supporters of the status quo opposed to the Boston Consulting Group's "cost effective innovation" (such as using online lectures from the Khan Academy - my god, they are brilliant). Look at the bizarre comments from Jiill Michal. How could somebody in touch with what those of us raising concerns are saying talk like that? Or Knudsen's comment:

“What was necessary for us to do was develop the alternative to the current business model,” Knudsen said.
“If we are going to end up privatizing, we needed an ironclad case that it was the logical conclusion to reach.”

So because the BCG located a way to privatize the transportation and facilities, it becomes an "ironclad" case and the "logical" conclusion? Never mind the apparent total lack of interest in following up on the offer from the schools that voted no confidence, asking for


"An opportunity for parents to meet with budget staff to review and offer an alternative list of cuts, such as private contracts, consulting costs, and other options."

and

"A process to engage parents, District leaders and the City in seeking alternative funding sources including a collective effort for additional state revenue, Payment In Lieu of Taxes (PILOTS), and other sources of revenue."

http://pa-sos.squarespace.com/storage/No%20Confidence%20vote-FINAL%20SRC...

Never mind the lack of interest in pursuing the kind of efforts that other municipalities are, around debts to the banks, such as in Oakland:
http://www.democracynow.org/2012/7/9/oakland_city_council_seeks_to_cut
http://www.nakedcapitalism.com/2012/07/are-the-mice-starting-to-roar-mun...

and for which groups are already working on right here in Philly, including with civil disobedience
http://fightforphilly.org/bigbanks/

It's still an ironclad case, because all other options, such as working in a manner respectful of the parents, teachers, employees, and students in the district, are eliminated from consideration, by definition. Wow.

Submitted by Ken Derstine on July 10, 2012 7:43 pm

The underhanded, stealth way that this "reform" is being implemented should raise alarm for everyone.

Ackerman's bizarre behavior during her tenure as Superintendent was straight out of the Broad Foundation playbook http://tinyurl.com/3s683nc, yet who knew that she was serving on the Board of the Broad Foundation the most of the time she was Superintendent? http://www.broadeducation.org/asset/419-tbc_board_announcement.pdf

A conspiracy is "any concurrence in action; combination in bringing about a given result" (dictionary.com) Just look at how the Superintendent was chosen. Parents and teachers who attended the series of meetings were broken up into small groups to prevent any group opposition from being voiced. http://chalkandtalk.wordpress.com/2012/07/05/was-philadelphias-superinte...

This is a method being used all over the country by "reformers". They want to give the appearance of democracy while actually doing the opposite.

How to Run a Meaningless Meeting
http://dianeravitch.net/2012/07/09/how-to-run-a-meaningless-meeting/

How to Marginalize Dissent While Pretending to Listen
http://dianeravitch.net/2012/07/10/how-to-marginalize-dissent-while-pret...

Submitted by Pseudonymous (not verified) on July 10, 2012 10:47 pm

The Notebook is owned by William Penn. So.

Submitted by Anonymous (not verified) on July 10, 2012 10:32 pm

So I wonder how long William Penn will leave the Notebook alone?

Submitted by Anonymous (not verified) on July 11, 2012 4:33 pm

I have always thrown my United Way Fund letter from payroll right in the trash. Why would I allow an organization to empower themselves with my hard earned money? The goal of the SRC is to eliminate 80% of the public school system in Philadelphia. Charter schools are not public. They are not public because they pick and choose who they take.They throw out the students who they do not want. They place a third of their families and friends on their payrolls. I know this to be true because I worked at a charter for several years.Also,the typical way to deal with a problem student was to inform them "if this behavior continues, you will be returning to public school". These schools are taking public funds and behaving as though they are private institutions. It would be nice to see an advocate group formed for individuals who have their right to a free and appropriate education violated by charter schools. Also,it's going to get really interesting when the state tries to audit all of these charter schools. They're going to have to create an army of auditors to keep up with the widespread corruption these new "enterprises" will create.

Submitted by Mick (not verified) on July 13, 2012 8:35 pm

Corbett has no business checking up on Charters because he's behind the whole farce. This corruption will come to an end but not until WE force it to stop !!

Submitted by Anonymous (not verified) on July 26, 2012 12:19 am

"You don't need a formal conspiracy where interests converge."
- George Carlin

Submitted by Aquiss (not verified) on April 18, 2013 3:31 am
It is rally something which is to be known by all people out there. It is wonder to eyes.Agree with Michael response.