Program Ownership
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We will use this space to describe concerns about program ownership and why it must be transparent.  We are concerned that owners including absentee owners, investors, creditors, parent companies, otherwise unrelated programs with links through investors in common are all subject to influences from those sources which have not been sufficiently transparent in the past.  Our guidelines call for a kind of transparency that without precedent, to our knowledge.  We have also found misleading use of "for profit" and "not-for-profit" terminology. 

For profit vs. not-for-profit does not determine whether a treatment or education service offers a quality advantage for special needs students and clients.  In particular it does not determine whether or not the program is "dollar driven" -- putting emphasis on financial issues over the best interests of students and clients.  It sometimes masks complex financial arrangements that result in a "not-for-profit" facility being operated for the profit of certain people or organizations.  There are many variations on this -- the most frequent being a not for profit corporation is formed to run a school or program on real estate owned by a person who also exercises de facto control over the governing board of the "not-for-profit." In addition, the same person might have formed a for profit "contract management" company to manage the affairs of the "not-for-profit" with hefty "management fees" and lease payments going to the coffers of the person behind the entire operation.  We don't suggest that this is improper but when a facility promotes itself as not-for-profit and there are these kinds of arrangements, it should be transparent.

Several programs have closed not because of internal problems with those programs but because of financial manipulation -- and in some cases the incompetence  and even corruption -- of the owners.  We need to look at the competence, commitment, and integrity of the owners.  Even more, we want to know that when a school or program closes, the lives of students participating in that school or program will be impacted.  If the closing is particularly sudden, the impact can be quite damaging.

When a holding company (parent company, umbrella group) owns a program that is "underperforming" and needs to close while the holding company remains solvent, we expect that holding company to take responsibility to be sure that the closing protects the people in the program from negative consequences.  This means that short term programs stop intake and let the consumers complete the program with full promised services and the holding company absorbs any losses. Longer term programs need to allow a long period of time, at least 90 days, for participants to effect a planned, orderly transition.  We saw Bain Capital, owner of Aspen Education, take this very responsible step and behave professionally when it closed Excel Academy.  We think that is good reason for confidence in Aspen and CRC, which are Bain subsidiaries.   

On the other hand, circumstances surrounding the Cedu Brown Schools bankruptcy makes us reluctant to recommend any provider in which either McCown De Leeuw or TIAA-CREF  was a significant investor or creditor.  According to published reports,  McCown De Leeuw was the owner and TIAA-CREF was the principal creditor.   Although two of their facilities survived the bankruptcy as a result of the creative action of the on-the-ground management, the order was given to close schools and get all students off campus with only twenty four hours notice, and a number of families lost thousands of dollars in advance paid tuitions. We hasten to add that we accuse neither of behavior that violates any law or codified ethical standard of conduct.   But we encourage families utilizing these kinds of resources to choose those that have created a safety net that will prevent this kind of scenario.  Our guidelines call for the kind of transparency that will allow consumers to know how far programs and their owners have gone to  create that safety valve.

The identity, values, mission, goals, and over-all agenda of any major investor, owner or umbrella group should be transparent.  Investors, parent companies and silent partners are never really silent and will affect the operation of the program.  It is even more important that there is reason for confidence that the students/clients of the school will be protected in case of a major financial collapse.

Financial provisions need to be made to ensure a "soft landing" for students / clients affected, and refund of any tuitions paid in advance in case of insolvency.  This might be accomplished through escrow or insurance or another means we have not contemplated.

Feedback is invited. We will  publish selected feedback.  Email

Disclaimer: No  program review, no matter how positive, is a blanket endorsement. No criticism is a blanket condemnation.  When we express our level of confidence in a school or program, that is our subjective opinion with which others might reasonably disagree.  When we assert something as fact, we have done our best to be accurate, but we cannot guarantee that all of our information is accurate and up to date. When we address compliance with our guidelines, you need to remember that these are only OUR guidelines -- not guidelines from an official source.  We have also set the bar very high, and do not expect any school or program to be in total compliance.  It is not appropriate to draw a conclusion of impropriety (or even failure to live up to conventional wisdom) from our lack of confidence in a school or program or from less than perfect conformity to our guidelines.  Some will say we expect too much. Readers are responsible for verifying accuracy of information supplied here prior to acting upon it. We are not responsible for inaccuracies.

Last Update  March 9,  2008

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