Tag Archives: Milken

Rep. Stewart Ties Pending Bill to Junk Bond King

News release from House Democratic Caucus:
Stewart: “Why are we proposing to turn over Tennessee education
tax dollars to convicted felon and junk bond king Michael Milken?”

NASHVILLE (May 18, 2011) – Legislation (HB1030/SB0874) would open up local school budgets to operators of so-called “cyber” schools – Internet operations that in other states have drained millions of dollars from local schools and given rise to allegations of fraud and mismanagement, said Rep. Mike Stewart this week.
One that stands to gain from this legislation is convicted felon Michael Milken, who became famous for leading the junk bond firm Drexel Burnham Lambert in deals that ultimately led to his guilty plea and jail time for fraud.
Because of his conviction, Milken is banned from Wall Street for life. His new plan for getting money involves “cyber” schools. Milken is the founder of and, through a web of holding companies, a major investor in the company K12, Inc., which is orchestrating a major lobbying effort to push for HB1030/SB0874.
K12, Inc. makes money by charging school systems for education materials delivered over the internet. At least one expert has recognized that, nationally, “cyber” schools receive the same amount of funding as traditional schools even though they don’t have to pay for buildings, ball fields and teachers in classrooms. This has allowed “cyber” schools to turn public money into private profits – the CEO of K12, Inc., for example, made over two million dollars last year.
Stewart noted that the Tennessee Department of Education already offers inexpensive, high quality internet classes.
“Why would we turn over hundreds of thousands of tax dollars to for-profit companies for something our state already provides at a low cost?” Stewart asked. “Turning over our tax dollars to a company founded by a convicted felon sends the wrong message. Tennessee voters should be very concerned that Michael Milken is not looking out for our schoolchildren and is just looking for another way to enrich himself at the expense of Tennessee’s taxpayers.”
Stewart questioned the math that permits “cyber” school operators to charge top dollar without investing in teachers and facilities on the ground in Tennessee.
“In other states, so called ‘cyber’ schools have drained funds away from real schools while providing no measurable education benefits. Common sense tells us that paying thousands of dollars per student for an internet based program with no buildings and no live interaction with teachers is a bad deal for taxpayers,” Stewart said