Business News - Local News
From the June 24, 2005 print edition

VC cash aids East Bay push for charter schools

David Goll

Armed with $5 million in venture capital, a new army of "social entrepreneurs" with backgrounds in business, education and nonprofits will launch two more charter high schools in the East Bay this fall.

Leadership Public Schools, a three-year-old San Francisco-based nonprofit organization, creates schools for students of color from disadvantaged neighborhoods.

Already running high schools in Richmond and San Jose, it will use the $5 million over a four-year period to establish schools in Oakland and San Lorenzo, with another scheduled to open next year in the San Jose suburb of Campbell.

The Oakland school is ready to go, joining two other charter academies in the Castlemont Community of Small Schools, formerly Castlemont High School. The San Lorenzo program was planned for the Hayward Unified School District, but opposition from district officials has delayed its entry into Hayward. Depending on the outcome of potential lawsuits, the school may open in the Hayward district in time for the 2006-2007 academic year.

"Generally speaking, elementary and middle schools tend to perform better because they are smaller environments," said Mark Kushner, founder and CEO of Leadership Public Schools. "Standard comprehensive high schools work for some students, but not a lot of them. We are taking our schools into communities that don't have widespread access to small public high schools."

Kushner is a former Los Angeles public school teacher who became an attorney before deciding to return to the world of education in the early 1990s. After earning a master's degree in education from Harvard University, he made his first foray into charter schools, combining a love of teaching with a budding interest in this burgeoning field by establishing a small urban public high school in San Francisco in 1995.

Nimble flexibility

"What I love about charter schools is they combine the nimble flexibility of the business and nonprofit world with the values of public education," said Kushner, who serves as chairman of the state Advisory Commission on Charter Schools. "It's definitely not like a private school because we cannot discriminate against or turn away students."

Kushner said anywhere from one-third to 90 percent of the student body at his schools come from low-income backgrounds, based on whether they fit criteria for the federal free and reduced-price lunch program.

So named because they are created by a legal charter, charter schools typically have focused academic programs that are controlled in-house rather than by school districts - a trait they share with private schools.

Established with the idea they push district-run schools to perform better because of the competition, their numbers have mushroomed, now totalling 510 in California and enrolling 170,000 students.

Charter schools in California, funded by both public and private sources, have mushroomed from 85 in the 1993-1994 school year to 510 in 2004-2005.

Observers attribute their growing popularity to continued frustration among some educators and members of the public over chronic financial problems and poor student performance at many of the state's conventional public schools.

A report compiled by EdSource, a Palo Alto-based independent educational research organization, found that in 2004, the state's classroom-based charter schools were 33 percent more likely to meet student performance goals than district-run public schools. It found that 64 percent of classroom-based charter schools met their performance targets last year, compared with 48 percent of non-charter schools.

One of the keys to his schools' success, Kushner said, is their comparatively small size: After an initial freshmen class of 100 students is admitted, the schools grow to a maximum of 500 once that pioneering group reaches their senior year. Many comprehensive public high schools have 1,500 to 2,000 students - even more in some communities.

Smaller schools and class sizes have become a movement over the past 10 to 15 years, with many educators contending students greatly benefit from more one-on-one attention from teachers. But California's class-size reduction efforts, which mandated classes of no more than 20 pupils in the primary grades starting in 1996, have never moved beyond third grade because the state's budget woes became especially acute after the economic downturn of 2001.

Solid performance

The $5 million to launch the East Bay programs came from NewSchools Venture Fund, a venture philanthropy firm with offices in San Francisco and Boston that has backed similar schools nationwide. Joanne Weiss, NewSchools' partner and chief operating officer, said her organization's sizable financial vote of confidence is based on what she considers Leadership Public Schools' solid performance in its first two secondary schools. The Richmond program has been operating since 2003.

"We have a very high opinion of what they have accomplished in the past and great expectations about their future," Weiss said. "They have high expectations of their students and a good track record of success as compared to neighboring (public) schools."

That includes test score results, she said. Borrowing the for-profit venture capital model, Weiss said her company conducted extensive research on Leadership Public Schools and evaluated its business plan before writing the check.

"As entrepreneurs, our view is that venture philanthropy should do the same thing as venture capital does in the for-profit world, which is to transform industries," Weiss said. "But instead of it being high-tech or biotech, it's public education, which we feel needs the same level of attention as those industries. Maybe more, because we feel the health of our public education system is crucial to the future health of our economy."

Weiss said a major difference between the business and educational models, however, is that instead of judging results solely on bottom-line results, her organization also takes into account the somewhat more nebulous concept of "social return on investment," or a school's impact on students' chances for success and whether it improves the surrounding community.

dgoll@bizjournals.com | 925-598-1436