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PAC shielded $2.3 million in donations by L.A. charter school backers

Nearly $2.3 million from wealthy charter school advocates fueled the nation’s most expensive school board elections in Los Angeles last spring, but those donors and their contributions were never disclosed to voters until months after the election, a review of records shows.

The contributions -- from philanthropist Eli Broad, heirs to the Wal-Mart fortune, former New York City Mayor Michael R. Bloomberg and others -- were made to California Charter Schools Assn. Advocates, a political action committee in Sacramento, before the May 19 election. That group then forwarded those funds to a local committee, which poured the money into the campaigns of pro-charter-school candidates.

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FOR THE RECORD

Dec. 2, 8:40 a.m.: An earlier version of this article attributed a statement from the Eli and Edythe Broad Foundation to Karen Denne, chief communications officer for the foundation. The statement was from Gregory McGinity, Eli Broad’s policy advisor. In addition, an earlier version stated that Wal-Mart heirs Carrie W. Penner and Jim Walton gave the charter association a combined $620,000 in 2014; they gave $720,000. 

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At stake were four seats on the seven-member Board of Education -- and the direction of the school system, whose leaders have been in a pitched battle over the growth and oversight of charters in the nation’s second-largest district.

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One result was the election of Ref Rodriguez, who received the lion’s share of the funding from the charter supporters’ PAC. He became the first charter school operator to join the board. Another charter-backed candidate lost her bid for reelection.

Under campaign laws, the Los Angeles-based political action committee was required only to identify the Sacramento PAC as the source of the funding, even though both are part of the same charter-school-advocacy organization.

As a result, the full list of donors remained unknown -- and was only revealed in September, when the state charter group disclosed its contributors in a California campaign finance report.

Though the practice appears to be within the law, state campaign regulators said they are concerned about how the contributions remained unreported for so long. In this case, state law required complete disclosure only twice a year. Had the contributions been made directly to the Los Angeles PAC, the donors’ names would have been revealed before the election.

Jay Wierenga, a spokesman for the California Fair Political Practices Commission, said the goal of state law is “to elicit and promote meaningful disclosure to the public when it counts -- before an election.”

A spokesman for the California Charter Schools Assn. said the group did nothing wrong in the way it handled the contributions. He emphasized that the group’s objective is to improve education opportunities for families.

The donors “see the value in our goals and mission to provide a high-quality educational option to parents and students,” said Richard Garcia, director of elections communications for the charter school association.

Garcia noted that charter advocates lack the extensive financial base of dues-paying members that unions can rely on. The L.A. teachers union was the main force opposing charter-backed candidates in the school board elections, which were widely recognized as the costliest in the nation.

Recently, the Broad Foundation spearheaded a proposal to enroll half of Los Angeles students in charters over the next eight years. Potential funders listed in a confidential June draft, obtained by The Times, included key donors to the charter PAC or the affiliated state charter association, which is a nonprofit.

Charters are independently managed, publicly funded schools that are exempt from some rules that govern traditional campuses. Most are nonunion.

Earlier this year, The Times asked the charter group for a list of donations made in 2015 in advance of the election. The group declined, but Garcia said in a recent interview that it was not trying to hide anything in setting up the local PAC to receive money from the state PAC.

“Local committees are established across the state to give a local flavor to each race, including [a] local name on disclaimers for campaign materials,” he said. “This is a common practice as campaign consultants believe it best to maintain local name ID.”

Voters following the election in Los Angeles knew only that the money flowing into the campaign during 2015 came from the state charter PAC.

Though the names of the donors were absent from L.A. records, some did appear in campaign reporting documents related to a
state Senate race in the San Francisco Bay Area. In that contest, the state charter group had not created a local PAC to channel the funding, so some contributors were revealed.

The name the charter group gave its Los Angeles PAC was Parent Teacher Alliance in Support of Rodriguez, Galatzan, and Vladovic for School Board 2015. Though Rodriguez won, incumbent Tamar Galatzan lost despite charter support. Richard Vladovic, who was supported by unions and charters, was reelected.

In terms of money, the charter PAC was the biggest player in these contests, spending about $2.7 million. The teachers union spent about $1.6 million, according to state and local records.

Among the charter donors not disclosed in L.A. filings was Bloomberg, who gave $350,000 in 2015. Bloomberg already had contributed $250,000 in 2014, an amount that was disclosed prior to the election because the funds arrived before the end of 2014.

Other undisclosed donors from 2015 included:

• Gap clothing co-founder Doris Fisher ($750,000). The longtime charter supporter also gave $550,000 in 2014.

• Wal-Mart heirs Carrie W. Penner ($150,000) and Jim Walton ($225,000). The two also gave a combined $720,000 in 2014.

• Barbara Grimm ($500,000), owner of one of California's largest farming operations, who started a charter school near Bakersfield. Grimm also gave $586,400 in 2014.

• Emerson Collective ($150,000), a corporation under the control of Laurene Powell Jobs, the widow of Apple founder Steve Jobs, which supports charitable and political causes.

• Investor John H. Scully ($100,000). He and his
wife also gave $400,000 in 2014.

• Broad ($50,000). He also gave $305,000 to the state charter PAC in 2014.

Broad contributed to the state charter PAC not to delay disclosure but “because he supported the organization's statewide election strategy,” said Gregory McGinity, who is Eli Broad’s policy advisor.

The issue of “dark money” has touched Broad and the Fisher family before. In the 2012 election, the Fishers gave $9 million and Broad $1 million to groups that concealed the sources of these donations. The money was used to oppose a tax increase to fund education and in support of a ballot measure to limit union participation in political campaigns. The tax increase passed, the anti-union measure failed, and the dark-money maneuvering led to fines for some of the participants, although not the donors.

Under the law, donors cannot direct a PAC to spend money in a particular election, and the charter group said it followed those rules. About three-quarters of its reported 2015 spending was in the L.A. board races. Nearly all the rest went to the Bay Area state Senate race.

Garcia likened the charter group's donations to funding that the local teachers union received from the California Teachers Assn. and the American Federation of Teachers.

Donations from those unions and others were disclosed prior to the election. Combined, the PACs from four statewide and national teachers unions provided $390,000, according to records filed with the L.A. Ethics Commission. The union also assembled its war chest through a $400,000 loan from the union's strike fund and $40,900 a month that is collected from voluntary contributions to the United Teachers Los Angeles PAC, which is called Political Action Council of Educators, the union said.

“In UTLA's case, many members voluntarily give $8.33 per month to our PAC,” union President Alex Caputo-Pearl said.

As in this year's elections, the mega-donors have not always carried the day. In the 2013 elections, candidates backed by wealthy donors lost two of three contests, including one in which incumbent Steve Zimmer prevailed. He used the identity of the donors as an effective counterpunch to their resources.

“They're truly funded by and accountable to the 1%,” Zimmer said of the charter advocacy group.

But that issue was not the linchpin of this year's election. The two defeated incumbents were successfully targeted for being in office during L.A. Unified's failed and costly effort to provide every student, teacher and campus administrator with an iPad. The charter group spent its money to use the iPad debacle against incumbent Bennett Kayser, who lost to Rodriguez. The teachers union used its dollars to do the same to Galatzan, who lost to challenger Scott Schmerelson.

Recent U.S. Supreme Court decisions have presumed that voters would have full knowledge of who was contributing to campaigns when it struck down many limits on the amount of donations, said Jessica Levinson, a Loyola Law School professor who specializes in election law and heads the L.A. City Ethics Commission.

“The purposes of the disclosure laws are to give the public information, which is much more useful the faster it comes,” Levinson said. “The concern is that you can use an intermediary and, essentially, legally mask who is behind a donation.”

The Times receives funding for its digital initiative Education Matters from the California Endowment, the Wasserman Foundation and the Baxter Family Foundation. The California Community Foundation and United Way of Greater Los Angeles administer grants from the Broad Foundation to support this effort. Under terms of the grants, The Times retains complete control over editorial content.

howard.blume@latimes.com

Twitter: @howardblume

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Copyright © 2016, Los Angeles Times
A version of this article appeared in print on December 02, 2015, in the News section of the Los Angeles Times with the headline "PAC shielded L.A. charter backers - Donations not revealed until after board election" — Today's paperToday's paper | Subscribe

UPDATE

8:49 a.m.: This article has been updated throughout with additional details and background.

This article was originally published on Dec. 1 at 6:24 p.m.

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