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Friday, August 26, 2011

UCLA Professor has the courage to question the moral appropriateness of a gift.

Last week the New York Times reported that Lynn A. Stout, a top business law professor at UCLA Law School, wrote a letter to the University Chancellor expressing her concern that a $10 million gift to the school from former UCLA graduate and Vice President of the Milken Family Foundation, Lowell Milken, would compromise her and the school's reputation. The hefty donation created the Lowell Milken Institute for Business Law and Policy. Stout, a specialist in corporate governance and moral behavior, is one of only a very few university staff who have voiced concern about the source of the money.

The problem the University faces is typical. The state has had to make dramatic cuts in education funding so schools must rely more heavily on private and alumni donations in order to continue to operate at their current level. It should be noted that law schools are typically among a state school’s most profitable graduate programs, so there should be less concern about funding than in other state school programs. Still, to turn down such a large donation to their capitol improvement drive would take morals of steel.

Ms. Stout wrote,

“The creation of a Lowell Milken Institute for Business Law and Policy will damage my personal and professional reputation, as I have devoted my career to arguing for investor protection and honest and ethical behavior in business,”
In response, a statement from the MFF said,
“Basic fairness requires that individuals be evaluated solely on the basis of their own conduct... the foundation respect(s) the fact that U.C.L.A. understands that in the United States of America, its citizens are presumed innocent until proven otherwise.”

Within the strict confines of the legal system a person is presumed innocent until proven guilty, but that does not preclude the private citizen or even public administration from scrutinizing future business contracts with people who have, through their past actions, proven themselves less than completely honest. There is a vast difference between what the court can do and what the general public can do. But since the foundation says we should consider a person's conduct, let us look at Lowell Milken.

While it is true that Michael Milken paid the debt to society determine by the legal system for his involvement in the 1980's in illegal activity in the high yield ( junk bond) division of Drexel Burnham Lambert, his brother Lowell, who was Sr. Vice President of DBL at the time, was not tested in court. Charges against him were dropped in a plea bargain by his brother. Lowell was not a trader at that time, so we can reasonably question what role he may have had in the scandal. Some contend that Michael's actions were not illegal at the time, but they do concede that they were in violation of DBL's internal regulations, something his brother should have been aware of or acted upon at the time, given his role within the company. The court of public opinion is still very divided on this issue.

In 2003, Lowell and Michael Milken became the sole owners of Knowledge University, a company they co-founded with Larry Ellison (whom you may recognize as the founder of Oracle whose flagship product was a database produced for the CIA, and is 5th wealthiest person in the world), soon after Michael was released from prison. In the United States, Knowledge Universe is the largest early childhood education company and operates under the KinderCare® Learning Centers, Knowledge Beginnings®, CCLC®, The Grove School®, Champions® and Cambridge Schools™ brand.

What does seem apparent is that Lowell Milken has entered into the latest lucrative field, that of education. He wants to impact children from the moment of birth, by introducing them to KinderCare, to their final job and role in the community through the Law Center which,
"provides expanded studies on business law and policy, clinical experience, additional research opportunities for faculty, along with student fellowships. The knowledge, skills and experience available through the Lowell Milken Institute will help ensure that students are prepared to not only assume leadership roles in the practice of law, but also in the areas of business, government, and philanthropy."
The MFF also stands to make money through government grants that support its TAP program. A 2010 study of the TAP program in Chicago found
"no evidence that the program raised student test scores. Student achievement growth as measured by average math and reading scores on the Illinois Standards Achievement Test (ISAT) did not differ significantly between TAP and comparable non-TAP schools. We also found that TAP did not have a detectable impact on rates of teacher retention in the school or district during the second year it was rolled out in the district. We did not find statistically significant differences between TAP and non-TAP retention rates for teachers overall or for subgroups defined by teaching assignment and years of service in CPS. The findings of no significant impacts on student achievement or teacher retention are robust to the use of different samples and estimation methods."
After working on the program for 12 years, Milken's Foundation still cannot demonstrate significant progress on its stated goal. Perhaps the 13 school districts that applied for and received TIF (
Teacher Incentive Fund) grants to expand their TAP programs didn't read the report.

It is a statement from Lowell Milken, on his Lowell Milken Center website, that clearly demonstrates that his ideology is in line with those developing RTTT, CCS and even the Gates Foundation,

“Believing that people make the difference in every endeavor, Lowell has directed the Foundation's efforts to focus on developing the valuable resource, “human capital." Over the past three decades, Lowell's work to inspire and produce exceptional educators — the human capital that produces human capital — has been unwavering in its commitment, unending in its endurance and unbending in its goals.”

Our children are not “capital” that can be accounted for on business ledgers, shoved where they are needed, warehoused when not needed, or whose value is depreciated over time. When we reduce people to commodities we degrade the value of the individual and of life itself.

Lowell may have a lifelong dedication to teaching, good education and philanthropy, but not without an eye to making a profit. He is not precluded from doing so in this country, but those who choose to become entangled with him should do so only with eyes wide open. His TAP program is only one example that he may share more than a last name with his brother. While technically not illegal to pedal a product that is paid for by government money, but produces little if any benefit, it is highly morally questionable. Those out there ringing the warning bells about doing business with him should be applauded for their courage to speak out.


  1. Lynn A. Stout herself benefited from Lowell Milken's donations to UCLA in the past. Where was all her courage then.

    Also why did you not bother to quote all the other States that clearly benefited from the TAP programs.

  2. Whether or not the TAP program is a success or not depends on whose research you are reading. Milken’s research claims it was a success in the Columbus (OH) Public Schools. Easthaven Elementary school, they claimed, went from "academic emergency" to "continuous improvement" after only one year of TAP implementation. http://www.tapsystem.org/action/acti...naction_unions). But this report does not mention that most of the teachers and the principal from that school were replaced the year they looked at scores. Giving the majority of the credit to TAP for this turn around ignores the efforts of the school and new teachers. They also use South High as another example of a school that improved as a result of TAP, but the truth is that South High's scores have bounced back and forth from year to year. And Champion Middle School, which has the highest concentration of poverty in the district, still failed to meet ANY of the state standards after a year of TAP implementation, and test scores actually declined.

    Another school district in Meridian MS reported a 10% bump in composite scores the first year of using TAP, but if you go back to the second year, they actually had a drop of 35%. As mentioned, the Chicago school district that was evaluated by Mathematica who found no improvement in either test scores or retention. Keep in mind, this is after 10 years of supposed tweaking and improvement to the TAP program. They have had plenty of time to demonstrate it’s effectiveness. They take a lot of credit for results that seem to have little to do with TAP.

    It should also be noted that the TAP requirements add a lot of time to teacher’s prep time, but there is no equivalent payoff for that additional effort. One teacher wrote, “Being able to make lesson plans look good on paper and actually being able to teach are two completely different things.”


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