Takeover Artist: from Wikipedia | http://bit.ly/QydlwF
“When [a] company gets bought out (or taken private) – at a dramatically lower price – The Takeover Artist gains a windfall from the former top executive's actions to surreptitiously reduce share price. This can represent tens of billions of dollars (questionably) transferred from previous shareholders to the takeover artist. The former top executive is then rewarded with a golden handshake for presiding over the fire sale that can sometimes be in the hundreds of millions of dollars for one or two years of work. (This is nevertheless an excellent bargain for the takeover artist, who will tend to benefit from developing a reputation of being very generous to parting top executives). This is just one example of some of the principal-agent / perverse incentive issues involved with takeovers.
“Similar issues occur when a publicly held asset or non-profit organization undergoes privatization. Top executives often reap tremendous monetary benefits when a government owned or non-profit entity is sold to private hands. Just as in the example above, they can facilitate this process by making the entity appear to be in financial crisis. This perception can reduce the sale price (to the profit of the purchaser) and make non-profits and governments more likely to sell. It can also contribute to a public perception that private entities are more efficiently run, reinforcing the political will to sell off public assets.”
Postscript: THE TAKEOVER ARTIST
A Q&A with Los Angeles Magazine writer-at-large (and the husband of the editor)Ed Leibowitz about his September feature on John Deasy
By Matthew Segal, Los Angeles Magazine Online Extra | http://bit.ly/SUdR7p
Ed, you opted to follow Los Angeles Unified School District superintendent John Deasy for an entire school year. What was the thinking behind that approach?
The first day of school is one of possibilities. All the days that follow, at least in a school district such as the LAUSD, are going to be about hard realities and minor miracles. For Deasy, the school year would test his optimism and his ambitions against these realities and give our readers a sense of how well they held up. Deasy himself has a formula for measuring academic progress over time—a teacher’s “value-added” influence on his or her students’ performance during a given academic year. I wanted to chart Deasy’s impact on the entire school system from that same perspective.
Deasy’s a busy guy—up at 3:30 every weekday, home by 10 or 11 at night, with half a Sunday to devote to leisure. What did he say when you proposed the story to him?
He was enthusiastic, although he was puzzled why I would want to devote so many months—and why Los Angeles magazine would allocate so many words—to such a story. He had commanded a lot of press during his meteoric career in education, but most of it in the form of newspaper articles and short TV segments.
How much access did he give you?
A tremendous amount. Over the school year I spent a good deal of time on the 24th floor of LAUSD headquarters, sitting in not only on sessions Deasy led but also on those led by his subordinates. Some of those meetings were filled with so much jargon and acronyms that I could have benefited from a decoder. The bureaucratic language of public education administration is something.
So Deasy says he wants to see to it that as of 2016, every single kid who graduates from a public school in Los Angeles is capable of getting into a Cal State or a UC school. Currently about 38 percent of LAUSD kids don’t even graduate, let alone meet the basic criteria to get into a state school. In a nutshell, what does he say to the many skeptics out there?
This moment didn’t make the article, but at one point, when I was in his office and asked him that very question, he pointed up to an axiom he’d scrawled on a whiteboard in his office that read, “If we appear to seek the unattainable, we do so to avoid the unimaginable.” It’s actually a truncated quote lifted from the Port Huron Statement, the founding document of Students for a Democratic Society that Tom Hayden wrote 50 years ago. The “unimaginable” isn’t just fully imaginable but the norm now at the LAUSD—thousands of poor students of color relegated to a life of continuing hardship through a substandard education. Of course, by the end of the ’60s, the SDS itself disintegrated after falling far short of the unattainable.
Right. But in terms of what is truly attainable, even when the district was flush with money before voters approved Proposition 13 in 1978, nowhere near 100 percent of LAUSD high school grads could have gotten into a Cal State or UC school. Do you think Deasy really believes this is achievable under any circumstances, let alone the ones he currently faces?
Deasy comes from a science background, which made it all the more surprising to me that his sense of moral right so often seems to trump clear and otherwise overwhelming evidence that works against his aspirations—not the least of which was that mandate for 100 percent four-year college readiness.
You liken his effort to the Apollo moon shot of the 1960s—setting lofty goals that might seem impossible but are ultimately achievable if we work hard enough. But there were resources with the Apollo mission.
Sure, there were unlimited funds for the moon shot. California doesn’t have deep pockets in this economy, and even in better times, any surge in home prices isn’t going to support the state’s schools to the degree it used to before the Prop. 13 anti-tax revolt virtually froze property taxes for most California home owners.
We should back up for a minute. I think people may have a general idea that the district is strapped for money. Objectively speaking, how bad are things in the district?
The LAUSD gets about $6,000 a year per student from the state to educate a student body that for the most part needs an enormous amount of extra support, especially at the middle and high school levels, because of poverty, because of the language barrier, because of external threats to their education from neighborhood violence to eviction from overcrowded apartments. There are many students who will attend two or three schools before the academic year’s over, just because their living situation is so tenuous. New York City’s public school students face similar challenges, but its school system receives $18,000 a year for each student from the city and state—more than triple what L.A. does.
So it’s the classic situation of trying to do more with less. Do you get the sense, then, that, to borrow from the Apollo analogy, he’s sort of aiming for the stars in the hopes that they might reach the moon? Aim for 100 percent college readiness and you might reach 70 percent?
I think he’d argue that being happy with a 70 percent success rate means you’re happy with consigning 30 percent of an entire generation to a life of poverty, with some even winding up homeless or in jail.
One of his critics in your story suggests that what he really seems to believe in is magic.
I don’t know if I’d entirely agree with that, but one thing that did become clear to me is that once you make a high-stakes bet like 100 percent college readiness for all students, you have to make other implausible assumptions in order to envision a big win in your favor. At one LAUSD meeting Deasy declared that based on his experience students don’t drop out because the bar is being raised higher but because they are bored or not challenged enough. He also said that the district already had enough resources to meet his goals. As for the money, the district has so much less this year than last year that it had to cut ten days off the academic calendar—I heard the cleaning fluid budget was cut at my son’s local elementary school for the summer to save a few bucks. Under Deasy’s college-readiness curriculum, students who fail algebra would have to take it again until they pass it. At one point during this same meeting, school board member Marguerite LaMotte asked what would happen if she took college-ready algebra semester after semester and kept failing. Would she be deprived of her diploma? Deasy didn’t have an answer.
A lot of people in L.A. just don’t care about the LAUSD. They don’t have kids, or the kids they have don’t attend a school in it. Casey Wasserman, the multimillionaire who runs a sports-management agency, has invested heavily in Deasy. He also had some strong words about L.A.’s wealthiest citizens.
Going back to the Apollo comparison, there was a national consensus after Sputnik that Americans had to be the ones to take that first step on the lunar landscape. Among L.A.’s civic elites, there’s little curiosity about the LAUSD’s students and their future, let alone concern. There was a real threat of humiliation—a potential loss of national or even international standing of L.A. civic leaders—if they did not band together to build Disney Hall. There’s apparently no comparable risk of disgrace for disregarding the city’s poorest, whether they’re school age or beyond.
The district covers an area far larger than the city itself—several hundred square miles, in fact—and has more than 660,000 students. Can you explain why it’s so big?
The LAUSD grew much like L.A. did, in fits, bursts, and seeping sprawl—without a granule of central planning. Communities that agreed to dissolve themselves and become part of the city became part of the LAUSD, so did unincorporated areas of the county. It was all a matter of absorption.
Is that why there’s been no serious effort to break up the district into smaller districts?
There actually have been efforts, although much of the impetus has come from areas like the West San Fernando Valley, which would depart the LAUSD with some of its best-off students and parents, leaving other pieces of the district the poorer. Can you make the LAUSD contiguous with L.A. city limits? Then what do you do with those unincorporated pieces of the system that might be hundreds of miles away from one another?
In a way the push for charter schools is one means of addressing the district size. What is Deasy’s overall view of charters, which operate within the district and receive some of the district’s funding but operate outside of it at the same time?
Deasy says he’s agnostic about charters, and at one point he told me that as many charters had been closed down during his administration for poor performance as had been opened. Under his local school initiative program, he did partner up with Steve Barr, who launched Green Dot, one of the better charter school operators, to develop learning academies that would be LAUSD schools but have charter-like independence. When I spoke with Barr, he told me that the district won’t be able to turn itself around until it can provide safe, effective middle and high school education for upper-middle class kids who now typically leave the LAUSD after elementary school. The idea is to broaden the parent constituency in the higher grades beyond the most disadvantaged to include those who have the kind of money and the political and public-opinion-making power to make the sort of ruckus that politicians and the press will have to listen to.
Because L.A. is so big, the city’s problems are almost by necessity large as well. So it’s always eye-opening when there’s measurable progress in any troubled area. The city used to have too few schools. A multibillion-dollar bond measure passed by voters almost a decade ago changed that. Now we have plenty of new schools, some of them quite fetching.
We love building things in Southern California, more than we do allocating funds that might actually allow those buildings to function as they’re meant to. So we have brand-new libraries with bare shelves that are closed a good deal of the time on weekdays, and beautiful new public school campuses where classrooms remain as crowded as ever, not for lack of space but for lack of available pay for teachers. I visited a history class with Deasy at a brand-new middle school that had one teacher in it and 50 students.
Nine months out of anyone’s lifetime—including yours, the writer’s—is significant. Then again, considering what Deasy is trying to achieve, it’s a sliver of time.
Given the shelf life of an LAUSD superintendent—less than five semesters—the 2011-2012 school year could turn out to be a large chunk of the time Deasy will have had to transform the district. I was researching other articles during the school year, but I rarely spent so much time on one subject as I did talking with Deasy, attending speeches, school board meetings, and strategy sessions, and visiting the occasional school site.
What do you think is going to stick with you most from this story?
What impacted me most is how the LAUSD is a system incapable of being moved, that if anyone tries to change it in any major way, it will budge just enough to crush the would-be change agent and then go back to being inert. And still, knowing the outcome, so many adults decide that, for their students’ sakes, they have to get in the way. Deasy is arguably the district’s leading change agent, and I admire his commitment and, to a degree, his impossible dreams as well. Still, there is another story that I wasn’t at liberty to explore as fully but that affected me at least as much—about remarkable teachers and principals who operate on quicksand, their livelihoods constantly under threat from layoffs, their salaries and instruction hours cut back by unpaid furloughs, their campus budgets constantly chipped away at. Yet they manage to pull resources out of nowhere and inspire kids who are counting on them not just for an education but for so many other things—support, encouragement, two solid meals a day, and a relatively safe haven from the violence and turmoil that’s often beyond the school gates. I do hope the superintendent will realize how much he and these adults who work under him have in common, even if they fall behind the 100 percent standard of excellence he has set as his own bar.
- To read "The Takeover Artist" by Ed Leibowitz, pick up a copy of the September issue on newsstands or subscribe NOW.
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