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Riding the 'Turnaround' merry-go-round in the continuing assault on Philadelphia public schools 
Part VI
Who is Afton Partners? 

by Ken Derstine
March 14, 2017

The previous article in this series was posted June 2, 2016. This series has detailed the assault on Philadelphia public schools by corporate education reform business and financial interests. At the last posting, the Philadelphia School Reform Commission had not acted on the non-renewal recommendation of its charter office for Aspira, Universal, and Mastery charters.

Pennsylvania law mandates that a charter term is five years and must undergo a renewal process after that. There is a stipulation in the law that the renewal process can be extended for one year, if there are mitigating circumstances.  That one-year extension can only be used one time. They have been postponing the renewals since April 2016. Aspira’s was postponed without the SRC even taking a vote in 2015.

Now, as can be seen in Part VI in this series, the privatization merry-go-round is spinning ever faster in the assault on Philadelphia public schools.

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In a recently released report by Afton Partners, the cost of students leaving Philadelphia public schools to transfer to charters was examined. The study had been commissioned in February, 2015 by the appointed School Reform Commission, which functions as a school board and makes all final decisions for Philadelphia schools.

Click here to read the entire Afton report.

In “is the glass half full or half empty” coverage, the Philadelphia Inquirer published Report: Philly schools still face costs when students go to charters vs. the Philadelphia Public School Notebook’s Students leaving Philly schools for charters less costly than once thought.

According to The Notebook article, the resolution calling for the contract with Afton said the analysis would take place between February 20, 2015 and May 1, 2015. SRC officials claim the report “got lost in the shuffle as old administrators left and new administrators replaced them.” The District’s Chief Financial Officer Uri Monson, appointed February, 2016, said he first got word of the report last summer and has been working with Afton “to make sure the report addressed all questions.”

Why is the report being released now? Could it have something to do with a bill in the Pennsylvania House introduced by Speaker Mike Turzai on March 6th which would require the Philadelphia School District to add 3,000 charter seats per year? This bill would undercut the charter oversight authority of the Philadelphia School Reform Commission (SRC). The establishment of the SRC in 2001, as part of the state takeover of the School District, abolished local control of public schools, along with any hope of any type of democratic process.  A 2014 bill passed by the legislature imposed a $2/pack cigarette tax for school funding; it included a last-minute provision that the SRC consider applications for new charters each fall.  Rejected applicants would be able to appeal to the state Charter Appeal Board.

Now, invoking the state rights’ provisions of the Every Student Succeeds Act (ESSA), Turzai wants to completely take even this oversight from any local influence. He has been aggressively intervening in the SRC’s charter approval process lobbying for approval of charters that the SRC has rejected. The SRC’s Uri Monson said the bill is unnecessary because in the SRC’s five-year financial plan presented last year there is an already projected annual growth of charter enrollment of between 2,700 and 3,000.

The headline of the Notebook article and the first paragraph are misleading. The disputed $7000 figure for transferring students is based on a 2010 analysis by the Boston Consulting Group that found that the cost resulting from one student leaving a District school to attend a charter was about $7000. In it opening the Notebook reports the Afton report figure is $4,824. Buried in the article, however (and highlighted in boldface in the Afton report), the Notebook contradicts its headline about student transfers to charters not being as costly as previously thought.  The contradiction is this quote from the Notebook article:

The Afton estimate of $4,824 per new charter seat does not take into account the district's debt service payments. If debt service were included, Afton found, the average cost would rise to $6,898 per seat — a figure remarkably similar to the one Philadelphia has long cited.

This double bookkeeping of giving cost analysis with and without debt service costs runs through the Afton report. This is no minor matter because the School District debt is a major impetus for the report. Currently debt service is 9.3% of the School District budget. (See the Budget in Brief FY 2016-2017, page 9) The steady accumulation of debt has been the practice since the SRC management of the District in 2001. As The Notebook article reports, the estimated long-term budget deficit for the District is $583 million by fiscal year 2021. As a result, the SRC is looking to cut costs in district schools even as its charter costs rise.  The district is also steadily outsourcing services to private vendors. There are currently 69, 502 students, 34% of all Philadelphia students, enrolled in charters--at a cost of $875 million. In fiscal year 2011, charter costs represented 18% of the district's budget; this year it is 31%. The District plans to shut three more schools per year. Turzai’s charter expansion bill would raise the charter student population to 80,000 in five years.

While the Afton report does not make specific recommendations, it does hint that the District could recoup stranded costs (costs that remain with a school even after a student’s transfers to a charter) by closing schools that are at less than 50 percent of capacity. The student enrollment in SDP has declined from 184,000 in 2005 to 135,000 in 2014. The Notebook article estimates that this would make 29 schools targets for closure. In 2013, the SRC closed 23 schools in low-income communities due to “low performance on standardized tests” and based on the 2010 Boston Consulting Group report. Currently there are 220 public schools in Philadelphia. According to The Notebook article, loss of 11,600 students this time would lead to the elimination of 530 public school positions, 300 of them teachers.

The figures of the student/classroom ratio of the Afton report are open to question. The Notebook article states of the report:

There is no back-of-the-napkin math showing how the consultant generated the numbers presented in the analysis. There are few citations, and there is no source material. The conclusions are presented in slide-show format without further comment.

As one person commented after The Notebook article:

Also, I remember when the SDP decided "building capacity" years ago they just counted classrooms (and other rooms like Cafeterias and Gyms) and multiplied by 33. They did not take into account Special Ed rooms--with a legal maximum of anywhere from 5-20 students. Neither did they correctly calculate rooms that house Art, Phys Ed, Music, Computers etc. Those rooms serve hundreds of kids a day, but do not "up" number of students in a school. They also counted some very tiny office rooms as classrooms when they clearly are not large enough to be classrooms. So, many of us think the school capacity numbers are inflated.

There is no indication in the report that Afton did any in-depth research with school visits or a detailed analysis of each school’s space utilization. As is the typical method of corporate reformers, the sources of information are spreadsheets and other data with students and teachers being mere data points. No survey of the impact of more school closures for a community is a consideration.

In reviewing the salary differences between public and charter schools, the Afton report says in 2014 the salaries and benefits for public school teachers were 42% higher than for charter teachers. (This was based, according to a footnote in the report on the only six charters that reported average salary.) Because these are fixed and semi-variable costs they cannot be reduced when enrollment falls unless school district employee salaries are lowered. The report concludes the section on staffing costs with this comment (Boldface and underline are in the Afton report.):

As more students migrate, the stranded costs per district pupil continually increase if the District does not take steps to mitigate the costs.

Ignored is the question of why students are leaving public schools in large numbers. It is not dealt with in either article or in the Afton report. Ever since the state takeover in 2001, the public schools have been under increasing siege as resources are steadily cut. This greatly accelerated under the Broad Academy-affiliated Superintendent Arlene Ackerman beginning in 2009 and has continued under the current Broad-trained Superintendent William Hite. When former Governor Corbett cut education funding in Pennsylvania by $800 million in 2011, schools lost school nurses, counselors, art and music. Only this year have they been restored with one nurse and counselor in most schools. Due to underfunding, teachers have been forced to buy supplies for their classroom. Only eight schools out of 220 have a certified librarian. School employees have been without a union contract for four years and have not received a salary increase in five years. At the same time charters receive millions of dollars in grants from the hedge fund-supported Philadelphia School Partnership. This has been a deliberate policy by the corporate education raiders who want to turn education into a profit-making enterprise.

So who is Afton Partners? It is clear they are yet another highly paid outside contractor like Cambridge Education. The School Reform Commission pays these businesses to rubber stamp a desired outcome to advance their privatization agenda under the guise of an independent report. The SRC has paid Cambridge Education $157,500 from the cash-strapped School District to give the appearance of objectivity in a report by an outside organization which calls for the turnaround of nine “Priority schools”. If the Afton report is used to close public schools and open more charter schools, teaching and learning environments in the public schools will be impacted creating even more impoverished schools, and creating the social climate for lowering the living standards of school employees which will effect the number and quality of teachers who apply to the district.

On its website, Afton summarizes its 19-page report on the School District of Philadelpia. It focuses on declining enrollment and hints at the need to close more public schools. On its homepage, Afton lists its purpose: Sustainability Planning, Funding Equity and Fiscal Transparency, Operational Efficiency and Effectiveness.  Afton is a financial management and consulting organization, not an educational one.  Nothing on its website addresses education as a civic endeavor for educating children. Afton follows the model of corporate raiders such as the Boston Consulting Group that have, for decades, downsized and taken over corporations only to serve the interests of shareholders while devastating the lives of countless workers. In the world of public education, that devastation extends not to the producers of consumer products but to students, families and communities, especially when neighborhood schools are closed and educational services to children are slashed.

Afton's website describes its management "team" as a "close-knit group of colleagues with significant collective experience in public education finance." Their biographies show that none of them has experience with public education. Most are from the world of business and finance or are reporters in business journals. The team members who have any experience in education only have experience with charter management. (A Google search for any of the companies referred to in the biographies below will demonstrate what Afton's true interests are.)

The bio of the Director, for example, Katie Morrison-Reed:

Prior to joining Afton, Katie spent several years in education management, including serving as founding Chief of Staff in the Office of Innovation and Incubation for Chicago Public Schools. This office supported all new school launches, and led authorization and accountability processes for Chicago’s charter schools. While at CPS, Katie led policy development for the conversion to student-based budgeting, an initiative that sought to ensure equitable and transparent distribution of resources to the district’s nearly 700 direct-run and charter schools. She also supported the district’s restructuring in 2013 in a temporary assignment leading overall project management of the largest single-year school consolidation initiative in U.S. history. Katie also served as Partnership Director at Discovery Education, working with large school districts on their journey to convert to blended and personalized learning.

The bio of Afton co-founder Carrie Stewart:

Carrie co-founded Afton Partners with Scott Milam in 2011, and currently serves as the firm’s CEO. Afton Partners’ mission is to support America’s public education organizations by aligning finance with organizational strategies – to sustain effective academic initiatives. To accomplish this mission, Afton collaborates with school districts, state and local education agencies, charter school operators, and social venture philanthropists and other reform-minded investors in public education.

Carrie is the founding Board Chair of EPIC Academy, a public charter high school in the South Chicago community of Chicago, Illinois. She served on the steering committee for New Schools for New Orleans (NSNO) during its founding year, and currently serves as Board Member of North Lawndale College Prep Charter High School in Chicago, Illinois.

Prior to establishing Afton, Carrie was a Senior Director at Alvarez & Marsal. From July 2005 to March 2007, Carrie helped in the rebuilding of the public school system in New Orleans after Hurricane Katrina. Carrie co-led the start-up and expansion of a CMO, the Algiers Charter School Association, as its founding Chief Operating Officer, establishing all of the network’s non-instructional operations and welcoming some of the first returning families home. While living in New Orleans, Carrie also served as Interim Treasurer of the New Orleans Public Schools. Prior to joining Alvarez & Marsal, Carrie spent five years in Arthur Andersen’s corporate restructuring group in Chicago. She earned her BBA in Finance magna cum laude at the University of Notre Dame, with a second major in French. Carrie is a CFA charter holder.

The bio of Co-Founder and Managing Director Scott Milam:

Most recently, Scott worked with a major urban school district to help transform its budgeting and finance operation to conform to a reform-oriented strategic plan, in which all schools are to be held to the same accountability standards, with similar flexibility for their design and resource allocation. Before that, Scott led an effort to provide technical assistance, guidance and evaluate the financial and operational plans for proposed “Next Generation” personalized learning K-12 schools for a major foundation and association, including developing a rubric to measure the quality and effectiveness of business plans developed and submitted by each applicant. Before that, he assisted a new school district establish its finance and operations function for year 1 (three schools) and scale through year 5 (over 35 schools). Scott also worked on behalf of a major philanthropic organization to evaluate the financial health of several major charter management organizations (CMOs), and provide recommendations to improve each organization’s ability to generate net revenue on public funds.

Prior to co-founding Afton Partners, Scott was a director at Alvarez & Marsal, where his experience focused on assisting commercial and public sector organizations to develop and implement performance improvement plans that resulted in drastic improvement in operational and financial results. His experience included working directly with four of the largest urban school districts in the US to identify and implement recurring, structural cost-savings initiatives; develop and implement plans for district-wide per-pupil student funding; and develop financial models to allow for rapid-fire scenario analyses.

Before joining Alvarez & Marsal, Scott worked with the CEO of Massport to restructure and transform the quasi-public agency. Before that, he was a manager in the corporate restructuring practice at Arthur Andersen LLP. He earned his B.A. in foreign affairs from the University of Virginia.

On its website Afton Partners boasts it is leading discussion on the new ESSA financial transparency requirements.

This report by Afton Partners takes the siege of Philadelphia's public schools to a higher level. The only way it can be fought is for teachers and parents to unite to defeat this assault on our public schools.