Hedge-Fund Founders Eye N.J. Schools

June 23, 2011

A new group backed by two hedge-fund founders is taking aim at New Jersey's largest teachers union.

Better Education for Kids wants to end the use of seniority in teacher-hiring decisions, implement an effective teacher-evaluation system and weaken tenure.

Much of this conflicts with the policies of the New Jersey Education Association, or NJEA, which represents about 200,000 teachers, retirees and education professionals.

Better Education for Kids was started by New Jersey residents David Tepper and Alan Fournier, who founded the Appaloosa Management hedge fund and the Pennant Capital Management hedge fund, respectively.

It's the first major foray from the hedge-fund community into New Jersey's education-reform scene. Hedge-fund managers and employees have been active in New York education circles for years, as support for charter schools came into vogue.

Better Education for Kids last week launched a $1 million ad campaign. In September, the group will evaluate its next steps, with an eye toward not only this year's November elections but also the 2013 legislative elections. In an unusual cycle, all 120 lawmakers are up for election in two straight cycles.

The group has hired two high-profile political consultants: Mike DuHaime, a Republican and top adviser to Gov. Chris Christie, and Fox & Shuffler, a lobbying firm whose founders were in top positions with former Democratic governors.

Mr. Christie spent much of his first year in office attacking the teachers union, bashing, among other things, the practice of automatically deducting dues to help fund the union's more than $100 million annual budget.

There's no set budget for Better Education for Kids yet. But its founders have plenty of money to spend if they choose. Mr. Tepper is said to have made more than $2 billion in some recent years.

This is the latest advocacy group formed in New Jersey pushing for issues that align with Mr. Christie's agenda.

Last year, a group called Reform Jersey Now, stacked with Christie advisers and associates, spent more than $500,000 on advertisements, direct mailing and phone calls in districts with lawmakers blocking or speaking against the Republican governor's goals.

At the same time last year, the NJEA went into overdrive, spending a record $6.6 million on ads targeting Mr. Christie's budget cuts, warning about layoffs of not only teachers but of police officers and firefighters. This year, the union has launched several ad campaigns, including one saying Mr. Christie is protecting millionaires at the expense of public schools. Mr. DuHaime calculated this year's spending so far at $7 million.

But the union's recent ad campaign was seen as a misstep in some Democratic circles. The unions laid out $1 million to attack Democrats—Senate President Steve Sweeney and George Norcross, a South Jersey political boss. Mr. Norcross, who usually remains out of the spotlight, went public against the ad.

"It appears that the NJEA is in a take-no-prisoners mode, so if this organization really engages in the issue, it could help Democrats who have sided with Christie on this issue," said Patrick Murray, director of the Monmouth University Polling Institute. "Those legislators will need a bulwark against outright challenges by the NJEA and sowing of internal dissension within the party."

NJEA spokesman Steve Wollmer said Better Education for Kids was trying to "buy votes" and, eventually, usher in a privatized education system. He pointed to the group's executive director, Derrell Bradford, who previously worked for Excellent Education for Everyone, which supports vouchers, including for private schools.

Mr. Bradford said the attack was "typical of the NJEA," saying Messrs. Tepper and Fournier hired him because "we all care about kids. Period."

Mr. Wollmer drew a distinction between the NJEA's spending and the potential spending of Better Education for Kids, saying the NJEA was just trying to "set the record straight" on the effect of Mr. Christie's policies, including more than $1 billion in cuts to education funding.