L.A. Students Get Offer of Private-School Vouchers

A Wall Street banker plans to donate millions of dollars to help thousands of poor Los Angeles children attend private schools of their choice in the fall of 1999, mirroring a similar philanthropic effort in the nation’s capital.

Corporate takeover specialist Theodore J. Forstmann said the Los Angeles project would be a larger version of the one he launched last fall with Wal-Mart heir John Walton, in which the pair donated $6 million to give vouchers to 1,000 Washington children.

Forstmann would not commit to specific numbers, saying he is still in the process of lining up local partners. But he said he expects his group to provide at least 5,000 Los Angeles children with $1,000 vouchers annually for four years, which would total $20 million.

Mayor Richard Riordan, visiting Washington as one of 20 leaders handpicked by President Clinton for an education summit, called such vouchers a “worthy experiment,” and said he will help Forstmann round up donors, perhaps even tossing in money himself.

“Anything that promotes competition is a good idea. There are all these kids that aren’t being served . . . because of the monopolistic characteristics [of the public school system]. That’s not fair. That’s not right,” said Forstmann, 58, whose company, Forstmann Little & Co., has been one of the leading players in the so-called leveraged buyout business in the past two decades. These firms use mostly borrowed cash to buy corporations, fix them up and then eventually resell them with the hope of reaping enormous profits after paying back the debt. Forstmann Little has invested $15 billion in 24 acquisitions since its founding.

Los Angeles Unified School District Supt. Ruben Zacarias declined to comment on the proposal until he saw it in writing. School board member David Tokofsky worried that the program was based on an unspoken assumption that all private schools offer better education than district campuses. “Some of them are probably a David Koresh Junior High, or some other marginal entity that L.A. Unified schools could outdo any day of the week,” he said.

The growing movement of privately funded vouchers comes amid debate in Congress over a proposed $75-million government program to offer vouchers in two dozen cities. Many educators bitterly oppose vouchers for fear they could decimate public schools as people flee troubled systems. Californians debated this issue in 1993, ultimately rejecting a ballot initiative that would have given each child a $2,600 voucher.

Riordan, who has tried to make education the centerpiece of his second term, acknowledged Monday that Forstmann’s voucher program would be “too small a thing to say it is really going to change the schools.” But the mayor, a persistent critic of the Los Angeles school district, nonetheless said it is worth a try.

“We need revolution now,” he said. “We cannot ask a parent to wait five to 10 more years for the federal government to test their kids and find out they’ve failed. It is evil to ask a parent to send a child to a school that is a disaster.”

Riordan--who provoked anger from several school board members last month when he said they lacked “the mental equipment” to run the district properly--said he has been talking to education experts and expects to soon offer his road map for reform.

Forstmann, who had an estimated net worth of $400 million in 1995 and owns an 8,000-square-foot home in Coldwater Canyon, says he is simply trying to give poor parents options like the ones people with money can buy.

“Everyone from housewives to economists at Harvard will agree, when thinking about it, that monopolies produce bad products at high prices,” Forstmann said. “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.”

A Republican who provided the seed money for former Housing and Urban Development Secretary Jack Kemp’s Empower America and donated more than $100,000 to a foundation created by former Sen. Bob Dole, Forstmann is famous in business circles for rejecting junk bonds as an investment technique in the 1980s. He and Walton previously donated to a New York scholarship program, but last fall’s Washington effort is the blueprint for the Los Angeles project.

In Washington, 7,573 people--representing about 10% of the total public school enrollment--have applied for the 1,000 available vouchers. There will be a lottery April 29 to determine who gets funds.

To qualify, a family of four must have an annual income of $35,802 or less. The voucher payment cannot cover more than 60% of tuition, so parents must be willing to kick in some money themselves.

“The entitlement syndrome is not a good thing,” Forstmann said. “It’s unbelievable. . . . These mothers are all at the poverty level, or beneath. They have no money. They get what they get for nothing, and yet they’re opting, they’re asking, they’re begging to pay $500 a year for our program.”

In Los Angeles, Forstmann expects the scholarships to be smaller--$1,000 per child rather than Washington’s $1,500--because he says the tuition, particularly at Catholic schools, is lower. But with 681,000 public-school students, the demand is likely to be much greater.

The parameters are “bounded not so much by our generosity or our money, but by the appropriate capacity” of private-school classrooms, he said.

Though he discussed his plans over dinner three weeks ago with an enthusiastic Riordan--himself a multimillionaire who often views philanthropy as a solution to public problems--Forstmann said he has yet to broach the topic with anyone at the Los Angeles Unified School District.

Although vouchers have run into stiff opposition from teachers unions and the Democratic Party--President Clinton opposes the bill pending in Congress--private efforts such as Forstmann’s are harder for foes to stop and less politically troublesome.

Concerns about public money being used for religious education or other private schools are irrelevant when the vouchers are donations from philanthropists.

Still, critics remain concerned that even privately funded vouchers solve only a small part of an ever-growing problem, perhaps even leaving a weaker public system in their wake.

“There still is the basic issue: What are we going to do to make the schools better for everybody?” asked Deanna Duby, education policy director at the People for the American Way Foundation in Washington.

“No matter how many vouchers we have, we’re still going to have kids in these public schools,” Duby added. “We don’t fix it by taking a few thousand kids out. We fix it by making the public schools so good that everybody, including the rich people who could send their kids to private schools, sends their kids to the public schools.”

Times education writer Doug Smith and staff writer James Peltz contributed to this story.