John Arnold: The King of Natural Gas Seeks A New Crown, over HISD

The nation's youngest billionaire, called “the king of natural gas,” former Enron trader and current hedge-fund manager, John Arnold, generally escapes negative publicity when it comes to his own controversial profession of energy speculation, but he is not so lucky when he goes house hunting.

While the  publicity shy Arnold generally refuses to talk about his own work and avoided the avalanche of bad press that befell other Enron energy traders, he encountered criticism in 2005 from River Oaks neighbors, preservationists and the press when he razed an historic home, known as "Dogwoods," once owned by the children of Texas Governor James Hogg.  Here is that article.

http://www.chron.com/CDA/archives/archive.mpl?id=2005_3867161

Now the Dallas-native and some fellow investors are buying a new house, and perhaps razing an institution vital to the community's interest.  While it is not as prestigious, elegant or fashionably located as the Hogg's Dogwood home, the Houston Independent School District has a past rich with service to Houstonians regardless of class or race, as well as a record of its own unique successes, including its neighborhood and whole-school magnet programs, which have been envied and emulated by major cities in Texas and across the country.

John Arnold, who has a total net worth of 2.7 billion dollars according to Forbes, and his wife Laura Arnold, who has a Yale Law Degree,  have been involved for several years in education philanthropy, sponsoring Teach for America and the KIPP and YES Prep charter schools through the Arnold Family Foundation, (over which Laura Arnold is the President.) The Arnold Family Foundation sponsors the KIPP/Yes Prep effort to recruit 21,000 of HISD's current public school students. A bold and appealing Houston school board member, Natasha Kamrani, talented wife of Yes Prep CEO Chris Barbic, serves as Executive Director of the billionaire's family foundation.

Mr. Arnold has joined other KIPP and YES PREP sponsors and Ms. Kamrani in running a slate of candidates for the school board. Though Ms. Kamrani decided not to run for reelection, she has been active on behalf of another Dallas-native, Anna Eastman, who is seeking her north-side seat. The charter-school slate also included Mike Lunceford in the west-side and George Davis for the south-side.

Mr. Lunceford won the west-side seat. Mr. Davis lost. Ms. Eastman is in a runoff against career educator and inside-innovator Alma Lara on December 12, 2009. With Mr. Lunceford's victory, at least three of the nine seats on the new school board are held by KIPP/YES PREP supporters. One board member, Mr. Harvin Moore IV,  was founding secretary of local KIPP charter school board of directors.

Its not clear what Mr. Arnold, KIPP and YES PREP want to do with influence over the Houston school board, since KIPP and YES PREP are state charters, and since they are entirely separate from HISD.  The leaders of KIPP and YES PREP, respectively, Mike Fineberg and Chris Barbic, speak of their organizations as competitors with the Houston public school system. What do you gain by controlling the leadership of your competitor? Do you try to improve your competitor and its best programs such as HISD magnet and vanguard schools? Do you raid it for resources?

Ms. Eastman and Mr. Lunceford have downplayed the role of charters in presenting their platforms to the voters. In her laborious fifteen-point platform, Anna Eastman does not discuss charter schools, does not even mention them.  

Like Mr. Arnold's silence when asked about his work in the private sector, these school board campaigns, driven by charter sponsor money, have not involved substantial public discussions about the future of KIPP and YES PREP in local public education.

The role Mr. Arnold has found himself in is not entirely unique among billionaires nationally. Eli Broad and Don Fisher, recently deceased, have become heavily involved in California "school reform," employing philanthropy and political contributions.  Michael Bloomberg has used his influence to a lesser extent in New York City and Washington D.C. The two unique Houston factors are: the size of the planned charter school expansion; and the fact that Houston schools are considered to be in better shape than New York and District of Columbia public schools were when reform began there.

John Arnold's philanthropic agent, Natasha Kamrani, has praised highly the superintendency of Michelle Rhee recently during the time HISD was searching for a new superintendent. In her first two years, Ms. Rhee fired over 1600 teachers and teachers' aides, leaving their families without health insurance or livelihoods, and its not clear whether the public here would accept such gut- wrenching reforms guided by a billionaire speculator during insecure economic times.

Ms. Rhee has received criticism because her plans have had limited impact outside of the elementary schools. DC standardized test scores have improved just slightly in spite of the cost in jobs in a district that continues to spend more per pupil than any school district in the nation.

The two school districts with the largest proportion of students in charter schools are Washington D.C. and New Orleans, and neither appear to be models worthy of emulating by HISD, or even by schools in Afghanistan.

KIPP and YES PREP function at a high level by skimming off the more willing--not necessarily the smartest, but the more dedicated--inner city students. I have been an ardent admirer of their work for years, but I have not been naive about how they accomplish their relative success, and neither should the voting citizen.

On controversy surrounding John and Laura Arnold's home, see...

http://swamplot.com/big-and-modern-on-lazy-lane-john-arnold-tries-house-trading/2008-03-11/

New York Times article describing the resurgence of energy trading after Enron's demise.

http://www.nytimes.com/2006/01/15/business/yourmoney/15traders.html?ex=1223701200&en=6b0d2c03cd871b41&ei=5035&partner=MARKETWATCH

Forbes on John Arnold

http://www.forbes.com/lists/2009/10/billionaires-2009-richest-people_John-Arnold_2ATC.html

http://www.forbes.com/lists/2009/54/rich-list-09_John-Arnold_2ATC.html

On John Arnold as the “king of natural gas.”

http://money.cnn.com/2009/11/23/news/companies/centaurus_john_arnold.fortune/

John Arnold's testimony before regulatory commission.

http://money.cnn.com/2009/11/23/news/companies/centaurus_john_arnold.fortune/