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Charter School crossing beware of armored trucks

By Bill Britt
Alabama Political Reporter

MONTGOMERY—The Local Control School Flexibility Act of 2013 is one of those bills that hinges on how you interpret the details.

To supporters, it gives creative control to local school systems to tailor an education plan that works for them. Detractors see it as a backdoor to charter school, stripping teachers of tenure and other things.

While I am not certain about all the aspects of the bill, I believe the intent is to weaken the Alabama Education Association and to introduce charter schools in Alabama.

I will not argue the merits of those issues. However, I fear that if charter school are opened in our state they will develop through the type of political cronyism that is a leach on our state.

Charter Schools are big business. As a matter of fact, they are a growth industry.

“Well I think it’s a very stable business, very recession-resistant. It’s a very high-demand product. There’s 400,000 kids on waiting lists for charter schools … the industry’s growing about 12-14% a year. So it’s a high-growth, very stable, recession-resistant business. It’s a public payer, the state is the payer on this, uh, category, and uh, if you do business with states with solid treasuries. then it’s a very solid business.”

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Those are the words of David Brain, president and CEO of Entertainment Properties Trust, quoted in an interview on CNBC. Specialty real estate investment trust are just a few groups that are making big returns off charter schools.

It’s no secret that I believe the legislature of Alabama is led by men who seem to only care about conservative principles as they apply to “pro business conservatives.” So, it should come as no surprise that I fully expect  any charter school that comes to Alabama will be owned by corporatists and cronies of elected officials. Anyone who understands true conservative principles knows that the politics of crony capitalism is a threat to freedom, individual liberty and even education.

If politics is about who gets what and how, then the state legislative leadership is already loading up the armored cars for their buddies. In fact, it very well may be that charter schools will be the next growth industry for those in power at the State House.

One needs to look no further than a multi-million dollar venture called “Learning Through Sports” to see how investments by legislators can lead to lucrative deals for themselves and their cronies, while tapping the insufficient resource of the state’s Education Trust Fund.

Speaker Mike Hubbard’s ties to Learning Through Sports LLC, and how Learning Through Sports obtained more than $13 million from Department of Education via payments to the politically connected Council for Leaders in Alabama Schools (CLAS) organization, is such an example of deal making.

In the early days, Learning Through Sports LLC was a partnership between a Hubbard  and friend and former Auburn football player Brian Shulman.  Hubbard owned his share of the computer games and educational software company owned through Hubbard’s sports media company, Auburn Network Inc.

The company was originally incorporated in 2001 by Shulman as GameDay Traditions LLC. The stated purpose of the company was to produce and sell computer games and education software. In 2003, the company name was changed to Learning Through Sports LLC, according to Secretary of State records.

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It wasn’t until 2005 that Hubbard – a member of the Finance Committee – disclosed his ownership stake in Learning Through Sports.

In a June 9, 2005, “Extraordinary Filing” letter to Ethics Commission director Jim Sumner, Hubbard informed Sumner that he planned to sell his interest in Learning Through Sports.

What is most interesting is that Hubbard never previously found it necessary to disclose on his ethic forms that he was an owner in the company. So what changed? According to Hubbard, he suddenly felt it appropriate that June day to announce he “divesting” from Learning Through Sports because the company was on the verge of major contract with Alabama schools.

According to Hubbard, Shulman had began negotiating a deal in April 2005 with the Department of Education to bring Learning Through Sports software to Alabama schools.

The timing of Hubbard’s disclosure most certainly raises some questions into his actions.

Hubbard stated in the June 2005 letter to the Ethics Commission, that Shulman had informed him two months earlier that Learning Through Sports “had approached the Alabama Department of Education about utilizing its software program in some way.”

“Even though I have never used my position on the House Education Finance and Appropriations Committee to benefit Learning Through Sports in any way, I informed Mr. Shulman that to avoid any appearance of a conflict of interest I believed it best for me to sell all of my interest in Learning Through Sports.”

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Why did Hubbard feel it necessary to defend his actions in such a way?

If he never used his influence why he did not disclose the information earlier?

Hubbard also told the Ethics Commission that he sold all of his shares in the company at the then-current valuation of 55 cents per share, effective June 15, 2005.

One month later, the company sent out a press release announcing that it had launched deals that ultimately would mean millions of dollars for the company funded by Hubbard.

Hubbard stated in his letter to the Ethics Commission that he sold his holdings for 55 cents per share, but did not disclose how many shares he owned. To this day there is no way to know if there were additional agreements between the company and Hubbard regarding future revenue from deals struck when Hubbard was a partner.

What is known is that once a deal with the state was ostensibly in hand, Hubbard sold his interest in the company and, almost an after-thought, made a disclosure to the Ethics Commission in an “Extraordinary Filing,” a type of ethics filing released to the public if specifically requested.

Once again the timing of Hubbard’s actions raise questions about what was going on behind the scenes at the Statehouse and at the Department of Education.

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Was it a simple act of fate that a month after Hubbard  “divested” from Learning Through Sports that the company was sending out a press release boasting that six Alabama school districts, including the Auburn City and Opelika City school districts—which are in Hubbard’s legislative district— were under contract to use the program?

Was it purely by chance that in October 2005, the Associated Press reported that Learning Through Sports had struck a deal with the Department of Education to make the web-based program – a computer game called STAR Sportsmanship – available to every 4th grader in Alabama?

In November, it seems the stars were aligned when Learning Through Sports and the Alabama High School Athletic Association announced the use of a coaching software program to discourage use of steroids among our state’s high school ball athletes. The coaches’ version of the software was touted prominently by then Alabama State Superintendent of Education Joe Morton.

So much good fortune for a start-up company that was funded by Hubbard and ran by his “friend,” Shulman.

Hubbard said he never used his influence as a member of the House Education Committee to help the fledgling company, but can that be believed? Or is this a case of the politics of cronyism?

Some things we do know for a fact:

Beginning in the fiscal year 2008, the Council for Leaders in Alabama School (CLAS) group took millions of dollars a year from a Department of Education special grant fund for at risk kids and paid the money to  Learning Through Sports. Joe Morton, the state school superintendent at the time, had full discretion over the money and was required to obtain State Board approval to spend it.

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Since Fiscal 2008, CLAS has received more than $13.1 million in “state grants,” channeled through the state Education Department. The payments were identified via the state’s electronic records system. Unfortunately, those records do not provide detail about the purpose of the payments.

Equally interesting, or damning, perhaps, is the fact that CLAS was a client of the Swatek Abzell Howe Ross lobbying group.

Dax Swatek, as been a constant companion of Hubbard for years, and serves as a kind of enforcer and confidant. David Abzell, is paid a hefty salary from the Republican House Caucus and even co-wrote, Hubbard’s political memoir Storming the StateHouse. Tim Howe is featured largely in Hubbard’s book as his go to campaign guy, while John Ross was the Executive Director of the ALGOP under Hubbard.

So, it is that Learning through Sports became a multi-million dollar company, funded by a member of the legislature who happened to be on House Education Finance and Appropriations Committee.

It started as an idea of a former Auburn athlete who just happened to be a friend of Auburn’s state Rep. Mike Hubbard.

Then, by the shear roll of the dice, Hubbard’s political minions became high-paid lobbyists working for the organization that sent million in taxpayer dollars to a business …linked, of course, to Mike Hubbard.

Is it all a coincidence? Maybe? Maybe not. But at the intersection of politics and money, coincidences are rare. Very, very rare.

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I don’t really know if charter school would be good or bad for the state, but I am certain that with  charter schools come a lot of “friends.”

And they are going to need some armored trucks to haul off the cash. Just ask Mike Hubbard.



Bill Britt is editor-in-chief at the Alabama Political Reporter and host of The Voice of Alabama Politics. You can email him at [email protected] or follow him on Twitter.

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