Education in the Media
Hedge Fund Manager Readies for Battle with NJEA to Reform NJ SchoolsOctober 23, 2011
Imagine you are David Tepper, a 54-year-old guy with $5 billion in the bank. You’ve played the Wall Street game all your adult life, and you’ve scored huge wins, over and over.
Tepper, a hedge fund manager who lives in Livingston, has found his answer: He is jumping into the political game in New Jersey, promising to spend huge bucks over the long term to change the state of play on school reform, starting with tenure.
“I’m tired of making money and am now trying to figure out the best way to give it away,” he says.
Tepper’s views on education put him on a collision course with the state’s teachers union, the New Jersey Education Association. And that’s why his entry could reshape state politics in this decade as much as Jon Corzine did in the last decade.
The NJEA has been bloodied by Gov. Chris Christie, but not bowed. Its officials are shifting tactics now, trying to sound more conciliatory. And the bottom line is they still put more money and volunteers in the field on Election Day than anyone else. The governor may win the YouTube fight, but legislators are still scared of the union.
Corzine spent $62 million on his U.S. Senate race in 2000, and another $69 million on his two campaigns for governor, in 2005 and in 2009. He also donated roughly $7 million to Democratic organizations from 1999 to 2009.
The donation from the co-founder of Facebook is a matching grant, so it’s hoped this gift will generate another $100 million. At last count, the matching grants amounted to $48 million. The money will be devoted to school programs in Newark.
Tepper won’t be pinned down on how much he’s willing to spend, but he and other wealthy donors say they won’t hesitate to match spending by the New Jersey Education Association, which totaled $25 million the past few years. If the union keeps its promise to stay at it through several election cycles, the total could top $100 million.
Now, Tepper is promising to match the NJEA — at least. Not just with an air war in the media, but with a grass-roots network in cities with failing schools.
Already, his group has handed out 40,000 backpacks stuffed with school supplies, a move that lets them collect names and build good will.
He’ll need that good will. The mood now is resentful of big money in politics, especially here, after New Jersey’s sour experience with Corzine.
“With all due respect to Mr. Tepper, I am not interested in what he thinks,” says state Sen. Richard Codey, an Essex County Democrat. “I don’t think he has any clue what’s going on in the classrooms. Other people should be making these decisions, not hedge fund people. We’ve seen too much of this. It’s like buying public policy. Enough is enough.”
Tepper is like the cocky new kid on the playground, picking a fight with the bully on his first day.
“I’m committed to getting this done,” he says. “And we have some other folks on board, all of them pretty substantial people.”
His co-pilot on this is Alan Fournier, of Far Hills, another hedge fund manager who used to work for Tepper.
“We will spend as much as necessary for as long as necessary to help the kids in New Jersey,” Fournier says. “The NJEA is focused on protecting the status quo for adults. Our effort is to help the kids. We do intend to be a counterweight.”
Which party will benefit? That depends on how Democrats respond to this.
Tepper’s views ?at a glance
Tenure: This is his priority by far. “Most teachers are good teachers. But if 75 or 80 percent are good, that’s not enough.” He wants struggling teachers to get help and bad ones to get pink slips. His main concern: Tenure Light, a reform that only nibbles at the margins.
Charter schools: “I am not, and never have been, a huge charter person. They can be good. But people kid themselves if they think they can change the system with just charter schools. The solution is in the regular public school system.”
Vouchers: He supports a pilot program in failing districts, as envisioned in the pending Opportunity Scholarship Act, but believes it should be tried in only a few districts at first. “It’s a good idea that got out of hand.”
Merit pay: He supports extra pay for great teachers and principals, but not if that means good teachers and principals get less. “You have to be very careful how you put it into practice,” he says.
Parent power: Parents should have access to teacher evaluations, and pretty much any data the school has. “What I’d really like to see is what they have in Florida, where you have to get permission from the parent to put their kid in a class with a (poorly rated) teacher.”
Tepper is a Democrat, but his school agenda lines up neatly with Christie’s. He wants tenure reform first, but also supports merit pay, more charter schools and small pilot programs in failing districts that would let parents use public money for tuition at private schools.
Here’s the twist: President Obama backs all of that, too, except the idea of vouchers. The broad areas of agreement make education reform the only ripe ground for bipartisan agreement in America today.
“How is this not a Democratic issue?” Tepper asks. “It really is a civil rights issue. And I think there are a lot of Democrats in the state that know things have to change.”
* * *
Let’s talk numbers. Tepper won’t be pinned down, but he says he’s willing to keep pace with the teachers union, at least. That’s about $25 million over the past two years, all in. He and Fournier promise more, if it’s needed.
And the teachers union, of course, will punch back.
“We don’t rattle too easily,” says Vince Giordano, executive director of the New Jersey Education Association. “I hate to make it a dollar-for-dollar duel in the middle of Dodge City, but they’re not going to outspend us.”
The chest-thumping has begun. But the fact is that the NJEA can’t keep pace if Tepper opens the spigot.
And so far, he’s making smart moves. He’s hired a dream team of top political consultants from both parties who are advising him on the best time and place to start this fight.
Judging from the questions he’s asking, he’s an alert student of the Jersey game.
“Can I trust people when they tell me something, or are they just going to screw me?” he says. “We want to play this like Muhammad Ali, dancing and jabbing. But I assure you, if people promise us and don’t deliver, we won’t be Muhammad Ali; we will be General Patton in the next election. That will be that. I’ve committed to getting this done.”
So who is David Tepper? What does he really want? And should he be taken seriously?
* * *
Tepper works in a nondescript brick office building across the street from the Mall at Short Hills. It’s nice, but not billionaire-fancy.
What strikes any visitor is the Pittsburgh Steelers helmet that greets you when you walk in.
Tepper grew up in a middle-class family in Pittsburgh, attending a city public school that was half-black and half-white, a place where the dirt playing field had to be oiled down to prevent dust clouds.
His extended family was full of public school teachers, including his mother, who taught in a city school that served the housing projects.
“When I say I love teachers, I mean I love teachers,” he says.
This is not a child of privilege. After working his way through college and business school, he went to Wall Street with the ambition of becoming a millionaire by the age of 30. He was late, but he got there, and then some.
His style is to take huge risks. His firm, Appaloosa Management, made a killing after the financial crash by investing billions in failed banks. After the government bailouts, the value of the shares skyrocketed and his firm made $7.5 billion.
One of his prized possessions today: an oversized set of brass testicles given to him by Fournier.
When Tepper hit it rich, he bought a share of the Steelers, his team since he was a boy.
“What would every middle-class kid who becomes a billionaire want?” he asks. “There it is.”
Another indulgence: He bought a $50 million house on Long Island that had been owned by Corzine, then razed it to the ground and replaced it. Corzine had been in charge when Tepper lost his shot at a partnership at Goldman Sachs, and the wound is still visible.
So did tearing down the house help? “He was not exactly a fan of mine at Goldman,” Tepper says. “But did that make a difference? No. The house was dated. But does it bother me that I knocked it down? No.”
* * *
Tepper and Fournier’s first big decision is how to handle this year’s election. Republicans, many of them former allies of the NJEA, are all supporting his reform agenda because Christie, their lord and master, is on board.
So while Tepper and Fournier want to signal their arrival with a bang, the only way to do that now is to kill Democrats in the few swing districts. And the last thing they want to do is infuriate Democrats, who control the Legislature, and be seen as a surrogate for Christie.
“We may want to fire a warning shot,” Tepper says. “We’re trying to decide that.”
One possible target would be Sen. Robert Gordon, a Democrat from Bergen County, in one of the only competitive districts. His views line up with the NJEA’s almost exactly, and he sounds nervous.
“I would think they’d want a legislator who would be ready to sit down with them and hear them make their case, as opposed to just opening up with heavy artillery and carpet-bombing,” Gordon says. “I take pride in being that kind of legislator.”
More likely, the reforms will come up in the lame-duck session after the election, and Tepper and Fournier will launch a media blitz in support, while engaging the grass-roots operation to pressure legislators.
The bigger fight could come in two years, when Tepper can avoid the partisan problem by sponsoring primary challenges to Democrats who are not on board. That could loosen, or even break, the NJEA’s grip on the party. And it could change the Democratic Party by knocking out incumbents who oppose these school reforms.
* * *
In the meantime, Tepper faces a growing resentment against the outsized power of the rich in our politics. Some of the reception, from Democrats at least, has been hostile. And it’s not just Codey. Assembly Speaker Sheila Oliver (D-Essex) is suspicious as well.
“This is about urban districts that are primarily black and Latino,” she says. “And from the 1960s until the present, there has been suspicion on the part of disadvantaged communities when people who are not from their community seek to impose, in a very paternalistic way, some sort of social engineering.”
Leaders of the teachers union are doing what they can to fan these suspicions. And true to form, they are swinging wildly, suggesting that Tepper is pushing for private control of schools so he can make money.
“The real purpose is to turn New Jersey’s public schools over to private companies and corporations,” says Giordano. “I guess $5 billion is not enough, and he wants to make more money.”
But NJEA officials seem to realize they blew it by taking a hard line against Christie’s call for a pay freeze and benefit reforms. They can read the polls. And they promise a reform agenda of their own, including tenure.
“This label that we are the organization of ‘no’ I don’t think is accurate,” Giordano says. “We’ve turned a corner. We understand our role. We want to be part of the solution.”
After the decade of Corzine, Tepper understands that people are wary of a big-money guy tromping into state politics.
But he sees the NJEA’s money as corrupting the process now, blocking tenure reform despite overwhelming public approval.
“This is just charity, only I don’t get a deduction,” he says. “And there really is no other way. If there is, tell me what it is.”