I will protect your pensions. Nothing about your pension is going to change when I am governor. - Chris Christie, "An Open Letter to the Teachers of NJ" October, 2009

Sunday, January 2, 2011

The Chris Cerf Story - Part II

Chris Cerf, president of Edison Learning, had just negotiated a deal with Liberty Partners to take his ailing company private. With the company's fortunes still on the decline, Cerf moved on to New York City and began working under another reform hero: Joel Klein. Appointed by Mayor Michael Bloomberg in 2002, Klein was brought in to run the NYC system after Bloomberg had wrested control of the schools from the city Board of Education. Klein and Cerf had already established a friendship, serving together as lawyers in the Clinton administration.

Bloomberg staked much of his reputation on the performance of the schools under his direct control: unfortunately, things have not gone wellKlein and Bloomberg were particularly slammed this past year when NY State revealed that its tests had become increasingly easier to pass. Klein has since left for a job at Rupert Murdoch's News Corporation, and is being replaced by Hearst Chairwoman Cathleen Black.

Given the proliferation of corporate leadership in the schools under Bloomberg, a company man like Chris Cerf must have felt right at home. Cerf had, in his capacity as president of Edison, already been working closely with the NYC system:  Edison provided "Supplemental Education Services" to the district as part of the No Child Left Behind act. Cerf was later in charge of the Public-Private Strategy Group for the district, helping to direct outside funds toward specific policy initiatives.

And to further prepare him for his new role, Cerf had graduated from the Broad Superintendents Academy in 2004:

The Broad Superintendents Academy is run like an executive training program. Participants attend extended weekend sessions over the course of 10 months while continuing to work in their current jobs. In addition to attending sessions, Fellows work with a faculty advisor who provides leadership development, coaching and support.

Cerf eventually became a Deputy Chancellor in late 2006, responsible for "all areas related to human capital." He certainly can share in the blame for the Bloomberg administration's poor school performance, as Cerf's role was directly related to the testing scandal: Cerf oversaw a program to measure teacher effectiveness using standardized test scores:
New York City has embarked on an ambitious experiment, yet to be announced, in which some 2,500 teachers are being measured on how much their students improve on annual standardized tests. 
The move is so contentious that principals in some of the 140 schools participating have not told their teachers that they are being scrutinized based on student performance and improvement. 
While officials say it is too early to determine how they will use the data, which is already being collected, they say it could eventually be used to help make decisions on teacher tenure or as a significant element in performance evaluations and bonuses. And they hold out the possibility that the ratings for individual teachers could be made public. 
“If the only thing we do is make this data available to every person in the city — every teacher, every parent, every principal, and say do with it what you will — that will have been a powerful step forward,” said Chris Cerf, the deputy schools chancellor who is overseeing the project. “If you know as a parent what’s the deal, I think that whole aspect will change behavior.” 
Randi Weingarten, the union president, said she had grave reservations about the project, and would fight if the city tried to use the information for tenure or formal evaluations or even publicized it. She and the city disagree over whether such moves would be allowed under the contract. 
“There is no way that any of this current data could actually, fairly, honestly or with any integrity be used to isolate the contributions of an individual teacher,” Ms. Weingarten said. “If one permitted this, it would be one of the worst decisions of my professional life.” [emphasis mine]

It's bad enough that many of those teachers didn't even know they were being scrutinized using a procedure that nearly every expert has said is riddled with inaccuracies (inaccuracies as large as 35%). What's worse is that these measurements were being made with tests that the state admitted were invalid and unreliable. And there is no evidence that Cerf even bothered to investigate the accuracy of the tests before he implemented this program.

Chris Cerf, the deputy schools chancellor who is a former president of Edison Schools Inc., the commercial public school operator, said yesterday that he held an equity stake in the company until Wednesday, the day before a citywide parents’ group planned to question him about his ties to Edison. 
Mr. Cerf, who was named a deputy chancellor in December after working as a consultant to the city’s Education Department for about a year, had owned Edison shares that could have been worth as much as $6.7 million by 2008, according to company filings with the Securities and Exchange Commission. Mr. Cerf described that figure yesterday in an interview as “1,000 percent speculative.” 
Mr. Cerf, one of a number of consultants enlisted by Schools Chancellor Joel I. Klein in recent years to help redesign the nation’s largest school system, did not disclose to parents that he had given up his shares less than 24 hours previously when he appeared yesterday before their group, the Chancellor’s Parent Advisory Council.
Asked by Tim Johnson, the group’s chairman, to describe his financial interest in Edison Schools, he replied, “I’d be delighted to do that,” adding: “I have no financial interest in Edison of any kind. Zero.” 
When Mr. Johnson persisted, asking, “Can we ask when you divested yourself of Edison stock?” Mr. Cerf said he would be “delighted” to give Mr. Johnson a copy of financial disclosure forms he said he was required to file as a public employee. “That will answer all of your questions, and that’s what I’m prepared to say today,” he added. 
Mr. Klein, who spoke at the meeting after Mr. Cerf, said simply that “he is divested.” [emphasis mine]
It's worth pointing out that Cerf held his interest in Edison several months after his appointment as a Deputy Chancellor, a clear conflict of interest. And it's obvious that Cerf only divested himself because he knew he was about to be questioned by the parents.

But, rather than make a clean break with Edison, Cerf would get himself into even more trouble:

The big news of the day is this story in today’s Daily News and Times, about Christopher Cerf, a deputy schools chancellor who is one of Joel Klein’s closest aides. The News reports that investigators last year concluded that Cerf had violated city law, by improperly using his position to extract a $60,000 donation from a company on contract with the city at the time, Edison Schools. The donation would have gone to a charity on whose board Cerf sat and which he told investigators he was trying to save. Ultimately, after being questioned by investigators, Cerf decided not to pursue the donation.
The violation is noteworthy, especially given the other conflict-of-interest imbroglio Cerf was wrapped up in at the time: After coming under fire for holding substantial stock in the same company, Edison, which he had been president of before coming to the department, Cerf released his holdings in the stock — but only 24 hours before being publicly questioned about it.
But it will become even more noteworthy in the days ahead because of this: The report was never publicly released. It’s only surfacing now because of a Freedom of Information Law request originally filed by Leonie Haimson, the executive director of Class Size Matters (and no friend of the Department of Education’s, to be sure). And even this copy — which I have and am trying to upload for everyone else to see — is heavily redacted, as you can see above.
The result is not only resurrected questions about Cerf’s propriety, but bigger questions about how sufficiently the Department of Education is held accountable. The DOE claims its current structure has more accountability than ever before, since, if the public isn’t happy with the schools and their officials, they can vote out the mayor who runs them. But advocates charge that the current structure allows school officials to hide from scrutiny. This report provides them some new ammunition. [emphasis mine]

Here's the page from the report:

The full report from the Special Commissioner of Investigation is here. Cerf solicited a contribution from an executive at Liberty Partners: the same firm that worked out the buy-out of Edison using the Florida teachers' pension fund.

Now, in fairness, the report also makes this point:
By subpoena, SCI obtained documents from Edison and Liberty pertaining to the
stock in the privately-held company. According to Edison's operating agreement and information provided to SCI by Edison's counsel, before Cerf could redeem his Edison shares, Liberty would have to sell the company at a profit. The attorney also asserted that Cerf's Class B shares were worthless. He explained that in the event that Edison was sold, the company's creditors and several categories of Class A shareholders would receive preferential payment before Cerf's Class B shares could be redeemed.
The report states, however, that Cerf knew his shares could have value in the future. It also describes a deal where Cerf would be paid as a consultant after leaving Edison as amends for not being paid when Edison was bought out by Liberty.

I'm hardly a financial expert, and it may very well be that Cerf's shares of Edison were as worthless as he claimed. What the report does make clear, however, is that Cerf considered the charitable donation to the Darrow Foundation - which supports a wilderness camp for children - to be a quid pro quo for giving up his interest in Edison.

It's also quite clear that Cerf gave up his interest only when it became evident that he was about to be publicly embarrassed. Unfortunately, given the large parts of the report that have been redacted, the entire matter is hardly clear-cut.

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