UPDATED FROM MARCH PRINT EDITION

Last spring, as the Texas Legislature debated massive cuts to public schools-one of many desperate measures to close a $27 billion biennial budget deficit-10,000 protesters massed in Austin for a "Save Our Schools" rally. In the end, the damage to the state's already-underfunded schools added up to $5.4 billion, forcing districts to lay off tens of thousands of teachers and staffers. In the city of Austin, public schools with rapidly growing enrollment found themselves facing a 5.5 percent cut in the 2011–2012 school year and 8.5 percent the next year. The quandary was far from extraordinary-37 states spent less on education in 2011 compared to 2010. Neither was one of the Austin schools' solutions: seeking grant money from the world's largest philanthropic organization, the Bill and Melinda Gates Foundation.

One of Gates's latest education projects is called the District-Charter Collaboration Compact. When school districts sign a pledge to collaborate and share resources with local charter schools, Gates awards the districts-14 so far-$100,000. These districts also get a shot at another $40 million worth of grants. Last fall, the Austin school board signed such a pledge with local charters. The agreement, Superintendent Meria Carstarphen said, would make Austin eligible for grants "from people and places that otherwise would not have given us the time of day." A month later, the city again became a venue for protests-smaller, but equally vociferous-arguing against a new partnership. Austin already had 25 charter schools, but all operated independently of the district. Now the board wanted to take collaboration to the next level, letting a private charter-school operator take over an elementary school and a high school as "in--district charters." While some argued that the charter schools could serve students whose needs weren't being met in traditional schools, many parents and teachers (as well as three board members) worried that the charters would take good students out of traditional schools and questioned the track record of the charters. When the board debated the in-district charters in December, protesters chanted outside; inside the packed hearing room, arguments for the charter arrangement were hissed and booed. The board still voted yes (After this story was published in print, the Gates Foundation awarded Austin ISD $100,000 for its charter compact, which also makes the district eligible to compete for millions more in grant dollars).

It's a story being repeated across the country. With most states cutting school funding, Gates and other private foundations are wielding outsize influence over public education, using their much-sought-after millions to fund and shape a top-down reform agenda. Like the other major (but smaller) players, the Eli and Edythe Broad Foundation and the Walton Family Foundation, Gates uses its funds to encourage public schools to adopt a more corporate approach. The three foundations, which in 2009 gave around $560 million in education-related grants, support creating charters to foster competition between local schools, rewarding or punishing teachers for their students' performance on standardized tests, and replacing local curricula with national standards.

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"The danger is that philanthropic investments will drive education policy to a greater degree than might be healthy or democratic," says Aaron Dorfman of the National Committee for Responsive Philanthropy, which recently commissioned a study on how philanthropies can be more effective in improving public schools.

Gates and Walton have invested heavily in charter schools-and in advocacy groups that push state lawmakers to remove limits on the number of charters. "Before you can fund the charter school, you have to fund an advocacy organization that can create a climate for the charter school to exist," says Debbie Robinson, a spokesperson for the Gates Foundation's education efforts. The organizations also advocate for school choice-letting parents decide where their children go to school rather than letting zip codes dictate, as supporters of neighborhood schools prefer. They have pushed to make schools run more like businesses; Broad funds two programs that turn business executives into school administrators. And all three foundations encourage performance-based pay for teachers, arguing that this rewards the best.

The foundations' push to base teacher pay on students' test results has put them at odds with teachers' groups. "No other industry or profession is treated in this kind of disrespectful, simplistic way," says Randi Weingarten, president of the American Federation of Teachers. "Nobody would do this to doctors and say 'if all your patients don't get well, we're going to fire you.'" Weingarten has worked with Gates on creating different types of evaluation systems and says its emphasis on testing has softened slightly. But, she notes, more qualitative evaluation systems cost more money than a simple test-another problem in an era of austerity.

It's easy to see why the money is tempting; since 2009, state budgets, the primary source of education funding, have been ravaged. Compared with the pre-recession funding levels of 2008, 30 states now provide less money to public education, according to an October report by the Center on Budget and Policy Priorities (CBPP). California spends $1,400 less per student; South Carolina has cut school funding by a whopping 24 percent. As the CBPP report notes, the loss of dollars has led many school districts to abandon locally based attempts at reform. But many are still willing to adopt the policies and approaches promoted by foundations like Gates, Broad, and Walton.

The push for charter schools and standardized curricula and testing comes at a time when more and more experts are questioning their efficacy. "There's really an extremely thin evidence base that any of this reform package-increased testing and common core [curricula]-will increase learning," says Ed Fuller, a Penn State associate professor of education whose research has cast doubts on the highly touted results of charter schools.

The most prominent critic of the foundation-funded reforms, former U.S. Assistant Secretary of Education Diane Ravitch, was once a leading advocate for them. But in her 2010 book, The Death and Life of the Great American School System, Ravitch points out that the foundations have based their push for charter schools on the high-performing ones, which accounted in 2010 for about only 300 of the nation's 4,600 charters. While charter proponents say that the schools get better results with less money, Ravitch and others note that charters take many of the best students out of neighborhood schools. Ravitch also believes that a teacher's performance should not be measured solely on the basis of student test scores. She points to great English teachers whose results in the classroom are harder to measure. Ravitch argues that classroom observation and peer review should be a big part of teacher evaluation. Meanwhile, with their reform agenda, she writes, the foundations "seem determined to privatize public education to the greatest extent possible."

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Critics also point out that relying on foundation money can be an uncertain proposition. The Gates Foundation's first major school initiative, launched in 2002, was a $2 billion effort to fight high dropout rates by funding small high schools with no more than 400 students. By 2008, the foundation had walked away from the effort, determining that change wasn't happening fast enough-and leaving school systems like Milwaukee's, which had opened 42 small schools with Gates money, struggling to keep the relatively expensive schools open. Twenty have closed, and many of those that remain are struggling. "It was a good thing," Gates's Robinson explains, "but it didn't produce the types of groundbreaking, earth-shattering outcomes that we might have expected."

Will Gates's current agenda produce "earth-shattering outcomes"? Nobody can say. But the lure of grant money is hard to pass up-even if it means significantly altering the way schools operate.

University of Colorado education professor Kevin Welner, who co-authored the National Committee for Responsive Philanthropy study, worries that because a few foundations have a significant amount of money, they're squeezing out other voices-namely, those of local parents and educators. He compares the situation to Citizens United, the 2010 Supreme Court case that gave corporations enormous political power by overturning limits on corporate political spending. Welner says education could face a similar threat, in which those with the most money have the most say on policy matters. "Is there a danger that those with greater [funds] will drown out the voice of those who are less wealthy?" he asks.

Robinson says no. "We don't tell people what to do," she says, pointing out that grantees voluntarily apply to the foundation. She also argues that Gates is not as powerful as some claim, because it gives a small proportion of total education spending. In 2009, Gates put more than $373 million into its education initiatives; total government spending on schools was $850 billion. The purpose of the foundation's efforts, she says, is to encourage experimentation-charters, partnerships between community colleges and high schools-to see if they deserve to become large-scale reforms. "Because

our money is so small, we can never ever take the place of what the public sector does," Robinson says. "Our model has never been to sustain public education."

But increasingly, the U.S. Department of Education is sustaining Gates's priorities. Many of those Arne Duncan hired at the Education Department had worked in education-reform organizations funded by Gates. The department's own grants program, Race to the Top, offers more than $4.4 billion in grants to states that adopt policies pushed by the foundation-implementing national curriculum standards known as the Common Core, collecting data to track each student's test performances over time, and providing test-based performance incentives to teachers.

The grant amounts are scaled, with the largest states competing for up to $500 million. While Duncan has spoken out against state budget cuts to education, his initiatives have nonetheless benefitted from desperation for more cash. Given their dire need of funds, many states have adopted the policies that the U.S. Department of Education-and the foundations-have been pushing. For instance, to be more competitive in Race to the Top, Wisconsin passed laws allowing the state to use student test performance for teacher evaluations. Illinois lawmakers raised the state's cap on the number of charter schools, while Massachusetts made it easier for students to switch from a low--performing traditional school to a charter school.

Gates liked the federal program so well that it offered $250,000 grants to help states complete the laborious application process. Broad also offered financial assistance to applicants.

Some educators worry about the close connections between the foundations and the federal government. "Everything that comes out of the Department of Ed," says Fuller, "is very tightly aligned with Gates, which is aligned with Broad, which is aligned with Walton." Together, their reform agenda is dictating a new direction for public education-one that is driven more by grand theories than by grassroots realities. "If there's one common thread in the history of education reform, it's that top-down policies do not work," Fuller says. "We're putting all our eggs in one basket. If it works, great. If it doesn't, our education system is down the toilet."