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Education

Senate Misses First Deadline In Its Attempt To Rewrite No Child Left Behind

By Guest Blogger on Apr 22, 2011 at 5:05 pm

Our guest blogger is Theodora Chang, Education Policy Analyst at the Center for American Progress Action Fund.

The arrival of Easter marks the end of the Senate’s window of opportunity to meet its first Elementary and Secondary Education Act (known as No Child Left Behind) reauthorization deadline. Despite early enthusiastic statements on reauthorization as a top priority of the Senate Health, Education, Labor, and Pensions (HELP) Committee, the Committee’s actions to meet this first deadline have fallen short.

Senate HELP Committee Chairman Tom Harkin (D-IA) also set an ambitious target for completing a reauthorization that is more than three years behind schedule:

My goal is to have a bill ready for the president’s signature by late summer. Of course we have no control over the House, but I am hopeful that they will move expeditiously also in that regard.

There is still time for Congress to roll up its sleeves to meet President Obama’s goal of reauthorizing the nation’s main education law before school starts in the fall, but the clock is ticking. The federal government has a very important role to play on key issues like fiscal equity, accountability, teacher and principal quality, and school turnarounds, especially for students in states that are not taking aggressive measures to close the achievement gap.

Meanwhile, energetic reform efforts are underway in several states. Illinois, for example, just moved legislation through its State Senate that addresses the most contentious issues in education — seniority, tenure, dismissal, strikes, and longer school days. If passed in the House, the new law would streamline the current 27-step dismissal process and end the “last in, first out” policy of firing newest teachers first. Tenure would be based on performance, and teachers who earn excellent ratings during their first three years can actually earn tenure faster than they can now.

Congressional lethargy is taking a toll on states, schools, and students. New information released today shows that Secretary of Education Arne Duncan granted 315 waivers to ESEA requirements in 2009 — more than a nine-fold increase over the number of waivers issued by his predecessors. The waivers signal states’ need for flexibility under the current system, which Congress has been slow to reform. Even New Jersey Governor Chris Christie (R) is showing more enthusiasm for reform than our Senators are — which is all the more reason for the Senate HELP Committee to pick up its game and get reauthorization moving again.

Wall Street Front Group Loading Up Conservative Activists With Soft Ball Questions For GOP Town Halls

By Lee Fang on Apr 22, 2011 at 4:50 pm

As members of Congress return to their districts and conduct town hall meetings with constituents, lawmakers who voted for the Republican budget are facing a backlash from their constituents. The budget, written by Rep. Paul Ryan (R-WI), effectively ends Medicare, severely cuts Medicaid, cuts taxes on the rich, and lowers corporate tax rates. As ThinkProgress has reported, everyone from Ryan, to Rep. Pat Meehan (R-PA), to Rep. Lou Barletta (R-PA), to Rep. Charlie Bass (R-NH), and others have faced heated questions about the GOP plan.

Slate’s Dave Weigel reports that American Action Network, a relatively new conservative front group founded by a group of Wall Street bankers, is loading up conservative activists with softball questions and talking points to bolster Republican lawmakers on the Ryan plan:

Meanwhile, the American Action Network, the think tank and campaign shop run by former Republican Sen. Norm Coleman, is making Ryan budget talking points and questions available for conservatives who want to buck up their members.

American Action Network did not return ThinkProgress’ request for more information on the budget talking points. As we reported last year, the group was founded by investment banker Ken Langone, former Goldman Sachs executive Robert Steel, and investor and former Nixon official Fred Malek.

As the Wonk Room’s Pat Garofalo has explained, the Republican budget also contains provisions to unwind new regulations imposed on major financial services corporations. The Ryan plan repeals provisions in the Dodd-Frank Wall Street reform law that allow “the Financial Stability Oversight Council (FSOC) to designate some firms as systemically significant and subject them to stiffer regulation” — a major reform Wall Street has lobbied aggressively to stop. The American Action Network board features a number of executives and lobbyists with a potential interest in rolling back financial regulations:

– American Action Network board member Fred Malek is chairman of the investment firm Thayer Capital Partners.
– American Action Network board member Isaac Applbaum the founding General Partner of Opus Capital.
– American Action Network board member Dylan Glenn is the Senior Vice President of Guggenheim Advisors.
– American Action Network board member C. Boyden Gray is a director of FreedomWorks and founder of a lobbying firm called Gray and Schmitz. Gray recently penned an article calling financial reform unconstitutional.
– American Action Network board member B. Wayne Hughes Jr. is the founder of American Commercial Equities Inc.
– American Action Network board member Ken Langone is the chairman of investment banking firm Invemed Associates LLC.
– American Action Network board member former Sen. Mel Martinez (R-FL) is an executive at JPMorgan Chase.
– American Action Network board member Vin Weber is a lobbyist for a number of banks and insurance companies.

During the debate over health reform legislation, health insurance companies contracted a number of lobbying firms to bring people to congressional town halls and ask industry-friendly questions. Similarly, banks like JP Morgan and Bank of America worked through fronts like the U.S. Chamber of Commerce to battle financial reform during the legislative debate last year.

Update

Here is a copy of one of the Paul Ryan budget talking point lists distributed to conservative activists by the American Action Network.

Education

Leading Subprime School Dumps Its Loan Program Due To ‘Credit Risk,’ Wants Taxpayers To Shoulder Risk Instead

By Pat Garofalo on Apr 22, 2011 at 2:35 pm

Yesterday, I explained how a coalition of for-profit colleges — led by the private equity owned Education Management Corporation (which runs a handful of for-profit schools) — is trying to preempt new Education Department regulations by promising to develop standards and self-regulate. For-profit colleges have launched a lobbying war in Washington to block these regulations, which would prevent higher education programs from collecting federal dollars if too many of their students can’t find jobs and default on their student loans.

These subprime schools depend on the federal government for up to 90 percent of their revenue (89.3 percent in Education Management Corps.’ case), through the various avenues of federal aid their students use. But the students at these schools often can’t find good jobs and the federal government shoulders the loss when they default. Nearly one-quarter of students at for-profit schools default on their loans within three years.

And Education Management Corp. knows that these loans are risky and end up in a significant number of defaults. In fact, the company used to run an in-house loan program for its students, and in its December 2010 filing with the Securities and Exchange Commission, the company explained how that in-house program was a huge credit-risk:

The Education Finance Loan program adversely impacts our liquidity and exposes us to greater credit risk because we own long-term loans to our students. This financing program provides for payments to us by our students over a term as long as 20 years, which could have a material adverse effect on our cash flows from operations. In addition, we have the risk of collection with respect to these loans, which has resulted in an increase to our bad debt expense as a percentage of net revenues compared to prior fiscal years.

According to the Pittsburgh Post-Gazette, “In June 2010, EDMC held $85 million in loans but estimated that it would lose 41.2 percent of its investment to defaults.” Education Management Corp. sold its in-house loan program off on April 14.

But at the same time that it’s dumping its own loan program because not enough students can pay back their loans, the company is lobbying in D.C. to continue having the federal government hold onto risky loans. Instead of cleaning up its product and ensuring that students have some avenue to repay, the company is hoping to insulate itself from the risk.

Unless these programs can prove that they are providing an education that doesn’t leave their students crippled with debt and with bleak job prospects, there’s little justification for having them continue to leech off of the taxpayer for close to all of their revenue. Incidentally, the CEO of Education Management Corp was paid nearly $4 million in total compensation in 2010 (inclusive of a performance bonus).

For more background on subprime schools, read our report, “For-profits, not students.”

Wall Street Spending As Much To Undermine Dodd-Frank Regulations As It Spent Trying To Block Dodd-Frank

By Pat Garofalo on Apr 22, 2011 at 11:40 am

Last year, as the Dodd-Frank financial reform law was being crafted and debated in Congress, banks and other financial firms threw millions of dollars into lobbying and campaign contributions. These dollars bought the banks some significant victories, including watering down key provisions aimed at reducing risky trading.

And President Obama signing Dodd-Frank into law did not stop the banks from spending. In fact, they’ve kept their lobbying expenditures fairly constant, in an effort to influence the regulators charged with implementing the law. According to an analysis by the Wall Street Journal, the banks’ spending on lobbying in the first quarter of 2011 was actually higher than it was in the first quarter of 2010, when Dodd-Frank was actively being debated:

Wall Street and the financial industry spent more to lobby Washington in the first quarter of this year than a year ago when Congress was writing sweeping financial-overhaul legislation, according to a Wall Street Journal review of lobbying reports released Thursday. [...]

The disclosures show that 26 of the financial firms and trade associations that spent the most in 2010 collectively spent $27 million in the three months ending March 31, a 2.7% increase from the $26.3 million spent in the comparable period in 2010.

When the height of the Dodd-Frank debate was going on last summer, the banks spent $27.3 million over three months, barely more than they spent in the first three months of this year.

One of the main knocks against Dodd-Frank is that it left too much discretion to the federal regulators, who work in a way that is much easier for special interests to influence. Rulemaking by federal agencies, which is slow and involves extensive open comment periods, is the perfect arena for lobbying shops to work their magic. The banks clearly realize this, and have been attending a host of meetings with the regulators, as well as submitting extensive comments on proposed rules.

The financial services industry is seeking to influence several issues when it comes to regulatory reform, including derivatives reform, consumer protection issues, and trying to do away with a rule capping the amount they can charge for debit card transactions. It’s fairly clear that the banks think they can still blunt the effect of Dodd-Frank on their bottom lines.

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