Desperate Public Schools Turn to Private Dollars
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The Fiscal Times
November 26, 2010

Facebook founder Mark Zuckerberg's unexpected $100 million gift to Newark, N.J.'s public schools, and his plans for a foundation to improve public education, are but one example of private funders ramping up their support of public schools. In the face of a nationwide funding crisis, public schools are becoming increasingly dependent on private donations.

Large foundations, businesses, school foundations, and other educational support organizations (ESOs) are all major players. "We've seen a huge increase in interest in raising private funds for school programs," Stephanie Dua, CEO of the New York Fund for Public Schools, said.

Private funding to improve schools, from PTA bake sales to corporate gifts, is not new, but never before has public education faced such severe financial pressure. At least 34 states cut public school funds last year, according to the Center on Budget and Policy Priorities, and nearly all face crippling budget deficits that threaten funding for public education. Hawaii cut the school year by 17 days, Arizona eliminated preschool for thousands of students, and states ranging from Colorado and Illinois to Michigan and Massachusetts have reduced K-12 spending by up to 5 percent in their 2011 budgets. Even in one of the nation's wealthiest counties, Fairfax, Va., per-student spending has been cut by $600, or about 5 percent, in the current budget. Public education is the single largest category of all state and local government expenditures. The average spent per student, $10,259 nationally in 2007-2008, according to Census Bureau data, is significantly more than in many other developed countries.

These budget cuts would have been more draconian if the Obama administration's stimulus package hadn't pumped more than $100 billion of federal funds into states to "backfill" their funding shortages. Next year, with stimulus funding running out and the new, Republican-controlled House of Representatives unlikely to approve additional support, states may face even greater education shortfalls.

"It's government's responsibility to fund public education," Pam Costian, CEO of Achieve Minneapolis, a nonprofit funding partner for the city's schools, said. "But money is tight and there's no way school districts can do a good job without private support."

Education — including colleges and universities — is the second-largest beneficiary of private giving in the United States, after religion, at more than $40 billion a year. Major foundations gave about $2.5 billion for K-12 programs in 2008, the Foundation Center reports. In 2007, according to the most recent data available, more than 19,000 ESO's (school foundations, local education funds and other parent-teacher organizations) provided $4.3 billion to schools, said Jim Collogan, executive director of the National School Foundation Association. While these additional funds are meeting needs and can leverage existing programs and school-reform efforts, there may be limits to what the private and nonprofit sectors can and should do for education. Some question whether teachers' salaries or school equipment should receive private funding, and what happens if conditions are attached to donations.

Some givers may have philosophical and marketing agendas when they seed new charter schools, supplement teacher pay, and donate goods, often with donors' names prominently featured. New Jersey is considering selling ads on its school buses, Office Depot used a small gift to the National PTA to use the PTA logo on a national back-to-school advertising circular, and several large retailers link money for schools to consumers buying more of their products.

"There is a continuum of disingenuous marketing schemes sold under the guise of charitable giving," said Arnold Fege, director of public engagement and advocacy for the Public Education Network and founder of Public Advocacy for Kids. "For many givers, their heart's in the right place, but it has become too much about publicity. And education becomes a charity, not a civic endeavor."

Of more than $600 billion spent on pre-kindergarten through secondary education in the United States, states and localities typically provide nearly 90 percent, although stimulus money increased the federal share from about 8 percent in 2008 to 13 percent this year. By contrast, all private support currently is estimated to account for barely 1 to 5 percent of the total. "Foundation support is a drop in the bucket compared to government spending," Steven Lawrence, director of research for the Foundation Center, said. "But foundations can make a big difference in public policy."

Large foundations are using their dollars to support college-readiness and teacher quality efforts in districts such as Washington, D.C., and by the U.S. Department of Education. Earlier this year, a dozen foundations announced that they would provide $506 million to "leverage" the Obama administration's $650 million Investing in Innovation (i3) initiative.