Civic Committee of the Commercial Club Credit: photo by John Booz

As Dave Ferrero remembers it, negotiations for the $12 million grant the Bill & Melinda Gates Foundation gave CPS in 2001 began about 15 months before Arne Duncan was promoted from deputy chief of staff to CEO.

The proposal for the grant to divide several high schools into “small schools” had moved along slowly, having a difficult time gaining support from both the mayor’s office and from CPS, then led by Paul Vallas, says Ferrero, Gates’ Midwest program manager and director of evaluation and policy research for the foundation’s education division.

“Those last two pieces started to fall into place right around the time [Duncan] was named,” Ferrero says. “Something clicked when that transition took place. We got from Arne an assurance that he was behind the idea.”

The burst of Gates money is emblematic. During a time of declining public funding and foundation grant-making, the dollar amount of competitive grants awarded to CPS nearly doubled during Duncan’s first year at the helm, then nearly tripled this, the following year.

“There’s been a huge, huge increase, which we’re thrilled about, obviously, especially given how tough things have been in terms of state and federal funding,” says Duncan, who created a new department to cultivate and manage funder relationships.

However, some worry that the boon in private giving to CPS is having a negative effect on the community’s role in school reform. Funding for last year’s local school council elections had fallen off compared to previous elections, and support for older school reform groups is declining. One of them, Designs for Change, cannot afford to fill two vacant positions; the other, the Chicago Panel on Public School Policy, ceased operations this winter.

Andy Wade, executive director of the Chicago School Leadership Cooperative, is not against CPS getting more money from foundations. “They should be putting money into CPS,” he says. “But you want to hedge your bets. What if someone came in who wasn’t so collaborative?”

Mixed funding bag

State aid to CPS soared almost 20 percent between fiscal 1998 and 1999 and then leveled off, inching up just 3 percent in fiscal 2002. It is expected to remain flat this year. Foundations and corporations have picked up some of the slack. According to CPS, competitive grant-making revenue grew from just over $2 million in fiscal 2001, to $3.6 million in 2002, to a hefty $10.5 million this year, due mostly to a $7.3 million reading grant from The Chicago Community Trust.

Those figures do not include nearly $20 million for small schools and charter schools from the Gates Foundation or $1 million given last month by former Walgreen Co. CEO Dan Jorndt, an alum, to rebuild Amundsen High’s stadium. CPS does not claim them because it’s not the fiscal agent for the grants.

Duncan’s collaborative style is often cited as a principal reason he has been able to raise more money than his predecessor, whose relationships with funders were prickly at best. “Vallas had terrible relations with the foundations,” says John Ayers, executive director of Leadership for Quality Education, a business-backed school reform group.

“He felt that they were foolishly funding the reform nonprofits well beyond the time that they were useful. The foundations are much more comfortable funding Arne, who is a softer, gentler superintendent.”

Terry Mazany, education director of the The Chicago Community Trust, recalls when Duncan and Chief Education Officer Barbara Eason-Watkins invited some 300 people, including a couple dozen foundation officers, to help think through their education agenda.

“When Arne and Barbara came on board, they just opened the doors and windows wide open,” Mazany says, noting that the Trust’s decision to boost funding to the district came before the change in administration. “The relationships between Vallas and the foundations were tense and strained, and the impression I got was that foundations were reluctant to fund directly into the system.”

Duncan has cleared the path for foundations to have a “seat at the table,” agrees Julie Woestehoff of Parents United for Responsible Education (PURE). “I see a much closer working relationship between people in foundations and the Duncan administration. There’s a sense that they were much less welcome under the Vallas administration, or that their ideas and input were less welcome.”

Also, many school reformers sense that the initiatives backed by Duncan, the former head of the Ariel Education Initiative, and Eason-Watkins, a successful school principal, are on track to improve schools. “We have a true reformer in charge, and they know how to talk to foundation people,” Ayers says. “Vallas was an ersatz reformer.”

Duncan’s early brainstorming sessions helped pinpoint and align funder and district interests, Mazany says.

“[The Duncan administration] came out of the gate with the reading initiative,” Mazany says. “Guess what? Our number one priority is literacy. Right after that, there was the human capital initiative focusing on teacher quality and recruiting and retaining better teachers. Once again, that lined up perfectly with what we were trying to do.”

“A lot of the things Vallas was promoting were harder for foundations to embrace,” says Anne Hallett, executive director of the Cross-City Campaign for Urban School Reform, who cited “high-stakes” testing and summer programs as top Vallas initiatives.

“Those aren’t things foundations typically weigh in on.”

Duncan suggests that the district’s key initiatives—reading, small schools and after-school programs—are straightforward efforts that funders support. “We’re not asking for money in 90 different ways,” he says. “We have a few key things that we’re maintaining a laser-like focus on.”

Gates has taken the lead on small schools and charters, donating nearly $20 million over the past two years, and sits on a board that supervises the funds’ expenditures. (Six local foundations kicked in another $6 million.) The John D. and Catherine T. MacArthur Foundation is focused on teaching and learning, and funds a menu of professional development activities. The Community Trust led the charge on the reading initiative, and has also funded programs to improve teaching and expand after-school programs. BankOne and the Polk Bros. Foundation are also supporting expanded community school programs. The Public Education Fund has set its sights on alternative certification, teacher recruitment and principal training.

Inadvertent side effects

With more money flowing to the school district, some worry about an ironic side effect: That in Vallas’s absence, foundations will unintentionally do his bidding by shifting donations away from school reform groups.

“The last thing we want to do is throw out the community engagement piece,” says Wade of the Leadership Cooperative. “It’s about building a robust structure, and by that I don’t mean a robust bureaucracy.”

Another reason foundations are investing more money in the district, Hallet surmises, is because they are “looking for measurable outcomes—tires they can kick and know they’ve made a difference.” But she cautions against doing so at the expense of other school improvement efforts. “It’s helpful for the public system to have a well-funded group of innovative problem-solvers that enrich the mix.”

Funders say they’re very much aware of these concerns and do not want to see the outside groups wither.

In spite of tough times for grant-making, money available for school reform “is not a finite pie; it’s been an expanding pie,” says Mazany. “We’re mindful of the challenging situation that Chicago’s nonprofits have. We are shaping some of our grant-making decisions around a concern to keep this nonprofit community viable [and] healthy.”

Meanwhile, the MacArthur Foundation, which launched many external reform activities in the 1990s, is zeroing in on instruction. Communications Director Ray Boyer says the foundation redirected its education giving following studies by the Consortium for School Reform Research that honed in on instruction as essential to educational success.

“When you’ve got limited resources, you’ve got to make choices,” he says. “Teaching and learning is where we’re putting our chips now.”

MacArthur program officer Connie Yowell says outside reform groups may consider defining their roles in relation to the district’s new priorities: teaching, learning and improving instruction.

The demise of a stalwart reform group, Chicago Panel on Public School Policy that closed earlier this year, is part of a natural evolution, says Ayers. “It’s not unlike in business, where the people with the ideas that seem relevant to the times gain the funding. It’s just that some of the old [reform groups] are falling by the wayside.”

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