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Tom Luna's education reform plan was a long time in the making

posted Jan 14, 2012, 6:43 AM by Common Sense

Tom Luna's education reform plan was a long time in the making

How Tom Luna’s co-workers from the Bush administration — and the private education companies they now help run — positioned Idaho’s schools chief to make changes that the for-profit education industry may cash in on

STORIES BY DAN POPKEY - dpopkey@idahostatesman.com

Copyright: © 2011 Idaho Statesman, Published: 02/20/11 1020 Comments

HOW ‘STUDENTS COME FIRST’ CAME TO BE

Idaho schools chief Tom Luna bristles at critics who suggest he cribbed his “Students Come First” plan. “Do you think I can’t have an original thought?” he said. “That I’ve been spoon-fed this information and I’m incapable of doing any of this on my own?” Luna and Gov. Butch Otter had a post-election epiphany in November when they sat down to talk about the 2011 budget. They both ruled out tax increases and cuts on the order of the $128 million trimmed from the 2010-11 K-12 budget. “We both decided that the best option was to change the system,” Luna said. Both staffs worked on the job, Luna said.

“Students Come First” was drafted without input from the usual stakeholders, including associations representing school administrators, school boards and teachers, the PTA and the State Board of Education. Luna campaigned last year without mentioning a reform plan, focusing instead on how student achievement rose in his first term and how he wheedled $22 million for schools from a reluctant Idaho Land Board. Luna briefed Republican leaders in the Legislature the week before unveiling his plan Jan. 12. House Speaker Lawerence Denney, Senate President Pro Tem Brent Hill and Senate Education Committee Chairman John Goedde are co-sponsors of Luna’s bills. The State Board of Education voted unanimously to endorse the plan. On Thursday, the plan cleared its most significant hurdle, the Senate Education Committee, which recommended passage of Senate Bills 1108, 1109 and 1110 three days after they were printed.

The package would eliminate about 770 jobs for teachers and another 230 jobs held by other professionals. It would raise class sizes, mandate online education and other technology, add pay incentives for teachers and end tenure for new teachers. Years of spadework prepared the ground for reform, Luna said, including a deal with teachers on pay-for-performance; the work of the Idaho Business Coalition for Education Excellence; goals agreed upon by the Education Alliance of Idaho; and Idaho’s application for a federal Race to the Top grant. The effort also is grounded in a close relationship between Otter and Luna. Otter shared his Washington, D.C., condo with Luna from 2003 to 2005, while Otter was in the U.S. House and Luna worked as an adviser to U.S. Education Secretary Rod Paige. “We would not be where we are with this plan without a governor that was willing to lead the charge,” Luna said.

The plan’s focus on technology has elements in common with the Dec. 1 “Digital Learning Now!” proposal by former Florida Gov. Jeb Bush. Luna was to have met with Bush in October when he was in Boise for a speech, but the meeting fell through because of a late plane. Luna did meet with Bush at his national summit of the Foundation for Excellence in Education, Nov. 30-Dec. 1. In a statement, Bush said he supports the Luna plan. “Superintendent Luna is working to improve student achievement by refocusing Idaho’s education system on the students. With his Students Come First, Idaho has an opportunity to transform education for 21st century learning.” Luna did not include Students Come First when he submitted his budget to Otter in September. On Nov. 2, Luna and Otter both won their second terms.

Luna said reform was born of necessity as state revenue failed to rebound and lawmakers in November estimated a shortfall of up to $340 million. Otter declined an interview request, deferring to spokesman Jon Hanian. Hanian said Luna and Otter met after the election, beginning with budget discussions that led to an agreement to propose reform to the 2011 Legislature. Said Luna: “We had the goals of the Education Alliance and we had Race to the Top as a blueprint. So, there’s the plan. How do you fund it?” Luna said he and Otter agreed to increase class size to achieve the savings necessary to shore up state support for 115 school districts, buy technology and fund pay-for-performance. Making a laptop available to every high school student will mean long-term efficiencies, Luna said. “So we’re not spending money on textbooks and math calculators and word processors. It’s all in one device.”

By late November, Luna said, he and Otter had decided to go forward. “We knew what the bones of the plan were, and then we started putting meat on the bones.” Luna said staff met frequently to complete the job by late December. Luna said he did consult some outsiders, but wouldn’t name them. “They’re people that are leaders in education here in Idaho that I trust, have confidence in and bounce a lot of ideas off of. And I’m going to keep that confidential.”

In October 2009, Idaho Superintendent of Public Instruction Tom Luna held a re-election fundraiser in the Capitol Hill offices of Dutko Worldwide, one of America’s top lobbying firms. Sponsors included two leading voices in the Republican education re-form movement: former U.S. Education secretaries William Bennett and Rod Paige.  The event marked an important moment in Luna’s re-election bid, as he won support from education technology companies interested in changing state policy to boost their business. If Luna’s “Students Come First” proposal passes the Legislature, online education will be mandated in Idaho and a laptop will be available to every high school student. That means 115 school districts, with 82,000 high school students, will be in the market for computers, software and online courses.

Among Luna’s contributors in October 2009:

- K12 Inc. of Virginia, an online company with 81,000 students and operator of the Idaho Virtual Academy. In Idaho, IVA enrolls 2,930 students and received $12.8 million from the state in fiscal 2010. K12, its employees and major stockholders spent about $44,000 supporting Luna; $25,000 of that was funneled to an Idaho interest group for independent advertising on Luna’s behalf.

- Apollo Group of Phoenix, the parent company of the University of Phoenix, an online university with more than 400,000 students. Luna’s plan would allow high school students to earn college credits at state expense once they complete high school requirements. Apollo Group gave Luna $5,500.

- Executives of Scantron Corp., a Minnesota-based leader in testing technology that is aggressively expanding into online education. Scantron employees and family contributed $7,450.

PASSION FOR REFORM

The for-profit education industry has warmed to Luna since his first campaign in 2002, when his only industry contribution was $1,000 from Bennett, the co-founder of K12 and the Education secretary under President Reagan. In Luna’s 2010 campaign, about $37,300 came from out-of-state contributors in the education business. In-state industry contributors added another $10,250. Altogether, Luna received 19 percent of his funds from the for-profit education sector. Luna said the contributors will get nothing in return from his “Students Come First” reform bills. School districts, not the state, will decide on technology purchases, he said. “There’s nothing in this plan that gives me the ability to provide any kind of influence or open doors for any of these individuals to increase the amount of work they do in Idaho,” Luna said. “They have to compete.”

Luna said he learned from his two-plus years as an adviser to Education Secretary Paige — and from the contacts he made in Washington — but his passion for reform dates to his experience on the Nampa School Board from 1995 to 2002 and service on state commissions on standards and assessment. Luna said he discusses reform endlessly. “ I think it disinvites us to some dinner parties because of it.” For a decade, Luna has advocated competition in education. In 2002, he supported $3,000 vouchers and tax credits for private schools, saying the state must focus its resources on teaching kids effectively. “Where they learn should be secondary,” he said.But the issue cost him support from some Republicans, and Luna lost — the only Republican to lose a statewide race that year. In 2006, he backed away from privatization, saying he’d given up on changing the Idaho Constitution to permit vouchers. Instead, he focused on public charter schools as an instrument of school choice. And he won.

FINDING A MENTOR

Among the D.C. donors to help Luna’s 2010 re-election run was Pocatello native Bill Hansen, who’d met Luna during his pro-voucher days. Hansen gave $1,000 on Oct. 27, 2009. His son, Taylor, added $100. A year later, Hansen gave $2,000 more, as did Madison Education Group, a Washington consulting business founded by Hansen.  Hansen suggested the 2009 event in Washington, scheduled while Luna was in town for a meeting on student assessment. But Hansen did far more than write checks: He put Luna in a position to propose one of the most significant reforms in Idaho history. Hansen, who declined comment for this story, is the son of former Idaho GOP U.S. Rep. George Hansen. He was an adviser to the 2008 Romney campaign. In 2002, Bill Hansen befriended Luna, introducing him to President George W. Bush. Bush endorsed Luna over incumbent Superintendent Marilyn Howard, but it didn’t keep her from securing a second term.

SOFT LANDING AFTER A HARD LOSS

Within days of that defeat, Hansen urged Luna to take a job in Bush’s Education Department, where Hansen was deputy secretary, Paige’s No. 2 and the department’s chief operating officer. Luna was a special assistant to Paige from 2003 to 2005, gaining experience and building relationships vital to his winning the 2006 superintendent’s race. Photos of Luna with Paige and Hansen are prominently displayed in his office. Luna says Hansen is the connection he counts on from his days in Washington, and warmly recalls Paige’s appraisal of Hansen: “He said, ‘He’s the kind of guy you can turn your back on, and there’s not too many people like that in Washington, D.C.’ And that sums it up. I admire him and respect him as much as any man and friend that I have.” Luna said he and Hansen discussed broad elements of Students Come First — pay-for-performance, a laptop for every student, expanding school choice — but that Hansen did not vet the proposal.

He and Hansen talked about “bits and pieces,” Luna said. “But it wasn’t something I sat down with and said, ‘Bill, help me put together this plan.’ Or it wasn’t even, ‘Let me explain this plan to you before we roll it out.’ We never had that conversation. He’s a very busy man. He runs a huge company now.” Like many former Education Department officials Luna served with, Hansen left government for the education business. Luna said he hears from those former colleagues, but he said Hansen was the only contributor, company lobbyist or corporate executive he spoke with about crafting the plan. “There were others, once I was elected, that definitely made contact with me because now they’re in the private sector and they had different ideas, different things they wanted to bounce off me that they would like to see happen in Idaho.”

Beginning in July 2003, Hansen held these high-profile jobs: senior vice president and managing director of Affiliated Computer Services’ education business; CEO of Chartwell Education Group, an education consulting firm whose clients have included student lending companies; and co-founder of Madison Education Group, with clients including Apollo Group and Scientific Learning, an education software company. As a director of First Marblehead Corp., a student loan company, Hansen earned a total of $535,000 from 2007 to 2010. In July 2009, three months before the Capitol Hill fundraiser Hansen suggested to Luna, Hansen became president and CEO of Scantron. The company says its assessment products are in 80 percent of U.S. schools. Many may recall the Scantron fill-in-the-bubble test forms students have used for decades, but the company aspires to much more.

Hansen has overseen two key acquisitions — Spectrum K12 School Solutions and GlobalScholar — that the company says will prompt “rapid expansion of web-based education solutions.” When the GlobalScholar deal was announced in December, Hansen said: “There is a growing sense of urgency to provide solutions that will help bring a new level of excellence to education systems. Scantron and GlobalScholar’s combined solutions will provide powerful tools for teachers, administrators and parents, in schools and districts of any size, as they work to improve the achievement levels for all students.”

K12, MIKE MILKEN AND ALBERTSONS

Luna has another bullish friend, K12 CEO Ron Packard, who co-founded the company with former Secretary Bennett and backing from Michael Milken in 1999. The Milkens’ privately held Learning Group LLC is the largest shareholder of K12, owning 24 percent of the company. Another Milken employee, Nina Rees, gave Luna $500. Rees and Luna worked together in the Education Department, where Rees led innovation efforts. Rees also advised Vice President Dick Cheney and the Romney campaign. She now is a senior vice president at Knowledge Universe Education, a California-based holding company chaired by Milken, with stakes in more than 50 education companies, including K12. Rees declined comment. Luna said he knows Rees well and also knows Milken and his brother, Lowell. Both are strong advocates of pay-for-performance for teachers.  “I don’t want to be boastful, but they know me, I know them,” Luna said. “I like to get their data and discuss it with them.”

K12 also has financial ties to the J.A. and Kathryn Albertson Foundation, which ran full-page newspaper ads Jan. 30 in support of the Luna plan. Thomas Wilford is CEO of the Albertson Foundation. He was on the board of K12 Inc. for eight years before stepping down in December. Wilford also is president of Alscott Investments, a longtime major shareholder in K12. Alscott Investments is the real estate and investment firm of Joe Scott, grandson of Joe and Kathryn Albertson. Since 2007, Scott has sold more than $15 million worth of K12 stock. As of 2009, the last time Alscott’s ownership had to be disclosed, K12 reported Alscott had 355,000 shares. K12 stock closed at $33.77 Friday. Scott’s Idaho Land Fund contributed $10,000 to Luna and $7,500 to Otter. Alscott Farms gave Otter $4,933. Wilford gave Luna $250 and Otter $550.

K12 SPONSORS OTTER’S GOLF TOURNAMENT

Luna said he convinced K12 to sponsor Gov. Butch Otter’s Governor’s Cup Scholarship tournament. “I know Ron (Packard) well,” Luna said. “He comes to the Governor’s Cup and we play golf. Sometimes he comes to Idaho and maybe we’ll go to dinner.”

On Feb. 9, Packard told Wall Street analysts that the combination of Republican victories in November, wider acceptance of online learning and tight state budgets promise high growth. “I’ve never seen an environment with so many opportunities,” Packard said. “Our commitment to innovate in education is stronger than ever as we pursue our manifest destiny of making a K12 education available to every child.” Packard added that legislation is already pending to boost business. “I don’t want to get into specific states because I don’t talk about that until it actually happens.” Packard declined comment, but K12 spokesman Jeff Kwitowski said of Luna’s plan: “(I)t’s unclear how it could impact us, if at all.” Kwitowski echoed Luna’s point that providers will have to compete for business, and decisions will be made by 115 school districts, not the state.

$1 TRILLION BUSINESS?

Rupert Murdoch, chairman and CEO of News Corp., is also high on education technology. In November, News Corp. paid $360 million for Wireless Generation, a Brooklyn-based education reform company. Said Murdoch: “When it comes to K-12 education, we see a $500 billion sector in the U.S. alone that is waiting desperately to be transformed by big breakthroughs that extend the reach of great teaching.” But the newsman may be low-balling the potential, according to the trade group representing more than 400 education companies, the Education Industry Association. “The education industry is poised for explosive growth in all of its segments from pre-K-12 through post-secondary education,” says EIA. “In fact, education is rapidly becoming a $1 trillion industry, second in size only to the health care industry, and represents 10 percent of America’s GNP. Federal, state and local expenditures on education exceed $750 billion.”

EDUCATION-INDUSTRIAL COMPLEX?

In all 50 states, elementary and secondary education is the largest budget item. Idaho ranks 49th among the 50 states in education spending per student, based on 2007-08, the last year available from the Census Bureau. Still, Idaho taxpayers will spend $1.2 billion, or 51 percent of state general fund revenue, on K-12 education this year. Former Sen. Laird Noh, a Kimberly Republican who retired in 2004 after 24 years in the Legislature, said he fears privatization will twist policy to the detriment of students. “It reminds me very much of President Eisenhower’s warning to beware of the military-industrial complex,” said Noh, who clashed with K12 Inc. while in the Senate. “It seems to me that what we’re seeing here is the educational-industrial complex that’s operating behind the scenes, with people like Rupert Murdoch. They are interested in the millions of dollars, frequently taxpayer dollars, which they can glean through the political process.”

LUNA UNTROUBLED

Luna said he has no concerns about the financial interests of important backers of his reform plan, including K12, Wilford, Scott, the Albertson Foundation and the Milkens, K12’s biggest shareholder. “I own no stock in K12, I don’t know what their portfolio looks like or what their company does,” Luna said. “I don’t know what the stock lists at. I have no knowledge of that, and I’ve never had any knowledge of it.” Luna said he has no investments in any education companies. “Look at the way we’ve designed this,” he said. “The only way that any provider can have access to any opportunity that’s found in Students Come First is if they work with local school districts.” The state’s only role, he said, will be assuring that online teachers are certified and coursework aligns with state standards.

Luna noted that he’s had support from K12 since 2002, when William Bennett was his first industry contributor. “They supported me four years ago, and I’ve never done anything to give them an inside track, or any opportunity to expand their business — none,” Luna said. “So I think that speaks volumes for anybody that thinks there’s some financial connection for people that have supported me.”

Dan Popkey: 377-6438

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