HALEY DRAZNIN: Over the last few decades, charter schools have grown in popularity for parents who seek greater educational opportunities for their children. The demand for charter schools is very high. Thousands of students are put on waitlist each year, and students are even outperforming their district school counterparts. Today we are joined by Success Academy founder and CEO Eva Moskowitz. Success Academy is the largest and highest performing Public Charter School Network in the New York City area.
Charter schools receive less public funding from local and state taxes and federal programs than district schools. They also seek private funding and efforts for them to be able to operate to their fullest capacity. Are charter schools a wise investment for your portfolio? Programs like the new market tax credit, and opportunity zones provide great incentives for investments in charter schools. This type of impact investing also pays back as a good deed. Investors have that satisfaction knowing that their investments are better educating America's children. Let's jump right in.
Eva Moskowitz, the founder and CEO of Success Academy, is here with us today. Thank you for being here.
EVA MOSKOWITZ: Thanks, Haley, for having me.
HALEY DRAZNIN: You founded Success Academy in 2006 with 165 students in Harlem, New York. Today, now you operate in 47 schools with around 20,000 students across different boroughs of New York, just was hoping you could share with all of us what your educational philosophy has been that has made Success Academy so successful over these years.
EVA MOSKOWITZ: Sure. Well, I founded Success Academy with my founders, Joel Greenblatt and John Petrie, who were the founding board chairs, really to solve an educational crisis that exists in New York City, but it actually exists around the country in many, many urban areas. If you are poor, and black or brown, you most likely are assigned to a failing district school. If you're white and affluent, you might move to the suburbs, or you might go to an independent school. If you're poor, you get assigned by government to a school and most likely, that is a failing school. We opened Success as a way out.
How could we make sure that poor people also get choices and can kick the tires on a school and decide if they want to send their children to a particular school just like affluent people do. That's the whole concept behind charters. When I started, we started with one school in Harlem. Ironically, it is located on 118th Street, which is where I happen to grow up as a child, I grew up in Harlem. We started with 165 kindergarteners and first graders with the idea of creating a replicable model that not only closed the achievement gap but reversed it.
I'm very proud to say that based on the external measures, our poor black and brown kids are outperforming kids in Westchester, in Scarsdale, believe it or not, an affluent suburb. Our kids are getting admitted to college. 100% of them go to college. We've received millions of dollars in financial aid for them. We're now 20,000 kids K through 12.
HALEY DRAZNIN: You have said, rather than fixing something that's broken, you really wanted to create something new. How do you reduce this stigma that low income students don't have that same education potential as maybe more high income communities and families and students?
EVA MOSKOWITZ: Well, I think you prove that that is a bias that is unfounded in our kids are poor and yet they're achieving at higher levels. Whether you look at state tests, or whether you look at APs or whether you look at SATs, all the external measures indicate that there's nothing wrong with the children. There's something wrong with a broken system that doesn't deliver on their behalf, and we can talk if you're interested in why the system is broken, but it's not an idea, it's an empirical reality that the vast majority of schools that poor black and brown children are forced to go to, kids are not leaving on the most basic level.
HALEY DRAZNIN: You are seeking to shrink this achievement gap?
EVA MOSKOWITZ: Could we not simply close that achievement gap, could we surpass it and set a fundamentally new standard for what all children can achieve, but particularly our poorest, most vulnerable children? Just so you understand, we're doing this not only with children who get free and reduced lunch, but we're doing it with children who are living in homeless shelters. 9% of our kids live in homeless shelters.
We have English language learners, about 15% of our children are special needs children. Our special needs children are outperforming Gen Ed children in the city of New York. It's a pretty game changing results and we not only are obviously extremely happy for the children and families who are beneficiaries of that results, but we think that it has lessons for reimagining public education more generally. You should know that while public education in America is particularly bad for our poorest children, it's not as if affluent children are doing super well internationally.
We're in the middle to lower third of the pack internationally and yet in America, we spend more money than any country on the planet on educating our children. For those resources, you would think we would be number one, number two, number three, top 10 countries in the world. Yet, we're in the bottom half that best in math and science, we're actually doing worse than the bottom half.
HALEY DRAZNIN: You're really proving that a child's zip code should not determine their educational destiny. You mentioned that this is personal for you. You grew up in Harlem, you went to school there. You have had a storied career in education reform. Can you take us back to how you got here today and a little bit more about your background?
EVA MOSKOWITZ: Sure. Just personally, I grew up in New York City in the late 1960s and 1970s. I went to, frankly, some pretty bad schools, but my parents were educators and they would teach my brother and I, and the kids that I went to school with who were not largely black and brown, but all were black and brown. I had parents who worked three jobs, who didn't necessarily weren't able to get an education from 6pm to 9pm. My parents did homeschooling before that was a thing but they sent us to school, and then they taught us at night. School was free babysitting from their perspective.
The kids that I went to school with were just as smart as my brother and I. They just were dependent on this broken system. I remember, even as a kid, feeling that that's just so unfair, the American way is to everybody gets an equal opportunity, they get to start at the starting line. It clearly was not the case, we had a deeply segregated school system that had very unequal results. I was motivated to change that.
I took variety of paths. I got a PhD in American History, but I really wanted to be a change agent. After having an academic career for a few years, I decided to run for office. I lost the first time, I won the second time, and I became chairwoman of the Education Committee. I was a part of the legislative body of the City Council, which is, by the way, the second largest legislative body in the country, slightly smaller than Chicago. I was chairwoman at the Education Committee and I studied every aspect of schooling. I held 125 hearings on every topic under the sun.
How do we do arts education, sports, science, math? How does the budgeting work? How do we do procurement? I came to the conclusion that it was going to be very hard to fix this highly, highly dysfunctional system. The most famous hearings that I held that garnered international attention was I held hearings on what is considered the third rail of Democratic politics, and I'm a Democrat. I call myself a Democrat who's read Adam Smith, but I am a Democrat.
I held hearings on the Teachers Union Contract, the Custodians Union Contract, and the Principals Union Contracts. It was the first time in my life that I ever felt that I was living a Godfather movie, because there were threats and people canceled because they were threatened in terms of testifying. I really came to appreciate the stranglehold that the unions had on the governing of the school system, and how that governance structure was really oriented towards adult interests, and not the interests of children.
HALEY DRAZNIN: How did this idea of Success Academy come to be? When did you have this aha moment that now was the right time to start this network of schools in New York City? We saw the inception of charter schools in the 1990s. Today, I think there's nearly 7000 charter schools across the country. Just can you explain a little bit about what inspired you to launch Success Academy?
EVA MOSKOWITZ: Well, truth be told, when I decided to hold those hearings, the Teachers Union in particular said they would take me out of office, and they did. I was okay with that. Because I thought you don't always want to postpone being a profile encouraged until you get your next office, I felt that these contracts were public documents, publicly funded, publicly signed, and that it was appropriate to do oversight and investigation into them. I also knew the political consequences of doing that.
When that happened, I really thought about what could I do that would most materially impact children? I got offers from foundations. I really didn't think while those are very worthwhile activities, I concluded that it was really hard to fix the broken urban school district, and that rather than trying to fix what was broken, it might make sense to start anew and see what you could do for children if you had the freedom to get it right. Charters don't mean you will get it right but they give you quite a bit of freedom to get it right.
Could you design a school system that was nonselective? Because we accept our kids by random lottery.
HALEY DRAZNIN: Every April, right?
EVA MOSKOWITZ: Every April, that's correct. Our demand far outpaces our supply. No matter how many schools I open at one year, I did crazy thing and I opened 10 schools at once. I'm not sure I'll ever do that again, but I kept trying to open as fast as I could and the more schools I open, the more demand there is, which is really quite tragic, because it means that there isn't apathy, there's actually a supply problem. In any case, I was really intrigued by the challenge of could you get it right?
To me, getting it right is something very particular. It is giving parents and families a choice. It is educating the whole child and the mother of three and while academics is incredibly important to me, so is art and music and chess and dance and so is my kids' emotional health and social capacity. That's also part of schooling. Could you do everything? Could you educate the whole child in a way that was rigorous and joyful for kids and families? That was the challenge that I set for myself. Could you do it 40 times over?
HALEY DRAZNIN: Take us back to those early conversations with Joel Greenblatt, with John Petri. The three of you talking about this freedom that you had mentioned that you see with the launch of a new charter school network.
EVA MOSKOWITZ: Well, it was really exciting. I first met Joel and John when they were supporting a district school, and I went to that district school, and I saw the work that they had done with that district school. They asked me for some advice. They're hedge fund guys, not necessarily schooling folks. I was just really taken with Joel's vision, he wanted a replicable model that was going to be done for the same or less money than the district and he wanted to get profoundly better results. I thought that is a vision that should be, and so I was really interested in that.
Now, there were a whole bunch of things that I wanted that were, I think, initially on his agenda. When I negotiated the job, I said, I wouldn't take it unless I could offer every child chess. I wouldn't take it if we didn't have science five days a week and it had to be discovery oriented science, because I really believe in experiments and kids learning by doing, and Joel and John said, sure. Their requirements were really replicable model, something that's sustainable on public dollars and that could do significantly better for the same or less money. We have delivered on that promise.
HALEY DRAZNIN: When you look at charter school funding, it's a public-private relationship, charter schools are funded by local state and federal tax dollars. Similar to district schools, the funding is really based on student enrollment but charter schools receive about 70% less funding than district schools.
EVA MOSKOWITZ: Yeah, when it started, it was 75 cents on the dollar. Now, it's actually 63 cents on the dollar. We get somewhere between four and $5,000 less per child, and you have to understand, Haley, that's in the context of a longer school day and a longer school year. That lack of funding parody makes it particularly challenging. We are largely doing this on the public dollar but we raise about $40 million a year in innovation funding. They believe in the American dream, they believe that public education is a right and they give us money in order to innovate.
For example, I have now digitized all of K12 education. It's hard to do a project like that just on your operating dollars. I have rewritten five to 12 mathematics that requires capital outside of your operating to create that intellectual property, which by the way we share with the country, so we don't treat it as proprietary but I do raise money in order to create the content and design. For the facilities of the 47, all but four are in public facilities and we get rental assistance from the government to lease building space for the others.
HALEY DRAZNIN: What do you make of claims that charter schools are like a backdoor privatization, this idea that they're diverting money away from school districts?
EVA MOSKOWITZ: Well, I'm really glad you asked that question because I think it's a really important one. I would say a few things. First, I think people are a little confused about privatization, meaning charter schools are publicly created, publicly regulated, and publicly funded. It's not so much privatization as independent of the big bureaucracy and management on the one hand, and the labor contracts on the other.
District schools are not all public, they have vendors for almost everything under the sun. That's not us, we're a 501(c)(3), we've been given authorization by the state to set up a school with a charter with the state in terms of what we're accountable for, and we get less money than the district, so far from taking money, every time a student comes to us, the system has more money. I don't think it should, I think the money should follow the child, but that's not actually how it works.
HALEY DRAZNIN: How do you ensure accountability at your individual schools, bringing this management style to ensure accountability?
EVA MOSKOWITZ: Well, we have a charter with the state, it's a compact, if you will, where we say if you let us open a school, we will get minimally these results. We have overpromised and overdelivered every single year we've been in existence. There is a high level of accountability through the charter but one of the things that is different about Success than other schools is that we believe in close management. Managing anything is a little bit of a dirty word in education circles. We believe that just letting 1000 flowers bloom doesn't work as well, and that you need to have KPIs and people need to know what they're shooting for both quantitatively and qualitatively.
Then people need to be held accountable for those results. Of course, our principals are accountable for results. We also have school managers who are like mini superintendents, and they're accountable for results. Of course, I am accountable for results as the CEO, the board, I have bosses, the Board of Trustees, and I must deliver on the results enterprise wide. Those results are academic, they're financial. They're sometimes social and cultural. We have a DEI agenda that I need to deliver on. It's a highly accountable far more so than the district where there's a lot of blame going on the principal's union blames the chancellor, and the chancellor sometimes blames the parents. We don't have that pointing of fingers, it's a highly accountable system.
HALEY DRAZNIN: What role do the charter boards play in this?
EVA MOSKOWITZ: It's a governance. They have governance. There are bylaws. There's a finance committee that has to oversee the finances. There's a curriculum and talent committee, and they have to make sure that we have a principal for every school. The governance structure, there's the Board of Trustees, we actually have two boards. There's a governing board that focuses more on the schools. There's a network board that focuses more on this overall enterprise strategy.
I have to say, Haley, I am very blessed with a very smart, dedicated, courageous board because as you know, the charters can be controversial when you join a charter board. Not everybody likes charters. You have to be courageous that this is the right thing for the kids. I have wonderful board shares, wonderful board members. I feel very, very fortunate and they're thought partners, obviously on management and they oversee but they're really in it with me to guide and steward the ordinance for the highest possible performance.
HALEY DRAZNIN: Are a number of donors to Success Academy sitting on board or it's a wide variety of different folks?
EVA MOSKOWITZ: Oh, yeah, I would say the vast majority are donors. We do have parents on the board as well, on the governing board, but it's diverse. We do have a lot of hedge fund, finance people on the board, but we look for operational experience in real estate and human capital and education so that management can get the most wise counsel possible.
HALEY DRAZNIN: There are opportunity zones and new market tax credits that these programs are incentives for people to donate, and I would say invest as well in charter schools. Have you seen that these US tax credits, in some way, help you find appropriate funding for charter schools?
EVA MOSKOWITZ: Well, you are right that there are some mechanisms that are specific to facilities, we haven't taken advantage of those. The opportunity has not presented itself. Most of our donors are really doing charitable work, there's no gain at all. It's just, they really believe that it's a moral imperative that we have opportunity for our poorest youngest children. I'm sure you know this, but if you have the haves and have nots, and that gulf gets wider and wider, that puts a tremendous cap on opportunity, it will stretch the civic fabric of our country.
The educational crisis that we are facing in this country has to be solved and taken seriously. Our board members deeply believe that this is about doing right by our most disadvantaged citizens. It is about the global