School Voucher Fund to Be Unveiled

Two wealthy supporters of private school vouchers are scheduled to announce today in New York the creation of a $200-million fund to help low-income families in Los Angeles, Chicago and other cities pay tuition for their children.

The fund, set up by venture capitalist Theodore J. Forstmann and heir to the Wal-Mart store fortune John T. Walton, would far exceed the amount now being spent on such scholarships nationally, school choice advocates said. Eventually, as many as 100,000 children could leave public schools to attend parochial schools or inexpensive private schools with assistance from the fund.

In an interview with The Times in March, the 58-year-old Forstmann--founder of the pioneering leveraged-buyout firm Forstmann Little & Co. and chairman of Gulfstream Aerospace--extolled the virtues of extending the competition that’s taken for granted in business to the world of education.

“Everyone from housewives to economists at Harvard will agree, when thinking about it, that monopolies produce bad products at high prices,” said Forstmann, whose worth is estimated at $400 million. “If you are a rich person in America, this doesn’t really apply to you. . . . If you are not a rich person, you are at the complete mercy of the education monopoly.”

Forstmann and Walton, America’s 12th-richest individual, already have underwritten similar voucher programs in Washington and New York. They personally will put up $100 million to expand those efforts nationally, with a similar amount to be raised in participating communities.

In Los Angeles, what is being called the new Children’s Scholarship Fund aims to hand out $16 million, a spokesman said, for 4,000 four-year scholarships, each paying about $1,000 annually.

Heading the effort to raise the $8-million local share of the money in Los Angeles will be former super-agent and former Disney President Michael Ovitz, who said he has already lined up several well-known business leaders to assist him. Another high-profile supporter is Mayor Richard Riordan, a vocal critic of the Los Angeles Unified School District.

Although voucher programs are often accused of seeking to undermine public education, Ovitz--a graduate of Birmingham High in Van Nuys--said his involvement did not imply any such criticism.

“I went to public schools my entire life and I think I got a good education,” said Ovitz, who co-founded the highly successful Creative Arts Agency in 1975. “Every kid who gets one of these scholarships is getting an additional helping hand, that’s all it is. This is simply about giving underprivileged kids a shot.”

Ovitz said he did not anticipate having any problem raising the matching funds. Indeed, some of the area’s leading philanthropists have signed on to help him, including Ronald W. Burkle, chairman of the board of Food 4 Less Holdings Inc., and Eli Broad, co-founder and head of SunAmerica Inc.

Riordan’s backing prompted the decision to launch the program in Los Angeles, an official of the fund said. In a letter to Forstmann last week, the mayor wrote: “This unprecedented initiative will bring hope and opportunity to tens of thousands of low-income . . . students across America and change the educational landscape from this day forward. The children and parents of Los Angeles will be grateful for years to come.”

Among those to be beneficiaries of the program are Susanna Espinoza and her children, Diana, 16, and Ricardo, 12, who traveled to New York to appear with Forstmann and Walton at a news conference to be conducted this morning at the landmark New York Public Library on 42nd Street.

Espinoza, who lives in South-Central Los Angeles, is a single mother and a teacher’s assistant at the Catholic Ascension School on 111th Street in Los Angeles. She would not have been able to send her children to that school except for a smaller scholarship program operated in 40 cities by the CEO Foundation, which serves about 500 children in Los Angeles and Orange County.

That program’s Los Angeles branch will become part of the new Children’s Scholarship Fund and will be expanded from elementary and middle schools to include students through high school, officials said. Because the program did not extend to high school, Diana had to attend a Los Angeles public school after graduating from Ascension’s junior high last year--but now hopes to transfer back to private school.

“Without this help, I cannot make it,” Espinoza said. “I’m glad because my children can go to a Catholic school to get a good education.”

A spokesman for the scholarship fund said families will be picked by lottery next January among those eligible--meaning they earn $18,000 annually or less--so they can be used for private school tuitions beginning in September 1999. Each family will have to contribute $500 to $700 a year in addition to the money they receive.

Such privately funded voucher programs are operating in about 50 cities, including Indianapolis, San Antonio and Milwaukee, Wis.

In Washington this spring, 7,600 families applied for 1,000 vouchers. In New York City, the Choice Scholarship Foundation has received 20,000 applications each year for 1,000 scholarships.

After the Children’s Scholarship Fund starts up in those two cities, Los Angeles and Chicago, the fund plans to spend the summer identifying other cities to include.

Although such programs are popular with parents who receive them, they generate intense opposition from teachers unions because, although they are paid for from private funds, they divert students from the public schools.

“We can split hairs all day long but these parents, if you said to them, the program is over . . . they’d be at their wit’s end,” said Jeanne Allen, president of the Washington-based Center for Education Reform, a school choice advocacy group.