Eli's Experiment 

Meet Eli Broad, a SoCal billionaire who uses his cash and connections to groom Oakland school administrators and keep the district under state control.

Vince Matthews needed to rehabilitate his reputation. He had quit his post as an Oakland school principal after just a few months on the job, and a for-profit charter school he ran in San Francisco nearly lost its license after allegations of discrimination. With that kind of résumé, Matthews had little chance of ever fulfilling his dream of becoming a school district superintendent. That is, until he enrolled in the Broad Academy.

Indeed, Matthews was passed over for a midlevel management job with Oakland Unified not long ago due to lack of qualifications. But now he's pocketing $240,000 a year as the new interim state administrator of the district, one of the largest in California. He follows in the footsteps of two previous Broad graduates — Randy Ward and Kim Statham. And like his predecessors, Matthews now oversees more than one hundred schools and nearly forty thousand children with all the powers of both a superintendent and an elected school board.

The architect behind Matthews' sudden turnaround appears to have been Eli Broad — pronounced like road — a retired suburban homebuilder and life insurance magnate. With assets valued at $5.8 billion, Broad is the 42nd richest person on the planet, according to the September 19 issue of Forbes. Over the past seven years, he has quietly used his financial muscle to remake himself as an education reformer and political power broker who wields considerable clout with school districts around the state, particularly Oakland Unified.

An ardent charter-school supporter, Broad built his influence through his close ties with state Superintendent of Public Instruction Jack O'Connell, who also happens to be Vince Matthews' boss. O'Connell, in fact, owes Broad a debt of gratitude. According to campaign finance records on file with the secretary of state, Broad helped O'Connell capture the state superintendent's office in 2002 by cutting a check for $100,000, which put him among the campaign's top donors.

The billionaire's juice with California's highest ranked educator, in turn, has allowed him to operate what amounts to his own educational experiment behind the scenes in Oakland.

Broad believes the best way to fix troubled urban school districts is to employ the classic American business model in which a powerful chief executive runs roughshod over a weak governing board. Oakland, under state control, has provided the perfect laboratory. Since the state takeover in 2003, Broad has donated $6 million to the Oakland schools, and the district has been led solely by graduates of his leadership training academy. During that period, nine other Broad associates also have held high-level positions in the district.

Public records also show that Broad has helped finance an expensive lobbying campaign to prevent the return of local control to Oakland schools. He has donated more than $350,000 to EdVoice, a Sacramento nonprofit upon whose board he has served. EdVoice has lobbied heavily in recent months against AB45, a bill by Oakland Assemblyman Sandré Swanson that would gradually return powers to the Oakland school board.

Sources familiar with the situation say Broad fears the Oakland school board would replace Matthews with a non-Broad-graduate were it to regain its authority, thereby ending his experiment and possibly jettisoning the reform efforts he financed and helped engineer. "It's all about protecting his investment," one knowledgeable source says, who spoke on condition of anonymity because of the power Broad and O'Connell wield in California public education.

Broad's investment appears safe for now. Governor Arnold Schwarzenegger has until October 14 to either veto or sign AB45 into law, but it would be a major surprise if the bill gets past his desk. Broad, after all, ranks among Schwarzenegger's top campaign contributors since 2004. He has donated at least $710,000 to the governor and causes dear to his heart.

Broad isn't necessarily a bad guy. His critics and supporters both think he means well for the city's schoolchildren and for education in general, but his hefty campaign donations and close ties to some of California's most powerful men have essentially given his unelected private enterprise power over the Oakland schools. Which raises this question: What happens when his all-powerful CEOs are not up to the job?

Eli Broad has no qualms about using his wealth to stir up controversy and sway political campaigns. He has done it repeatedly in Southern California, where, in the 2000, 2002, and 2004 elections, he tried to defeat school board candidates who did not support his friend Alan Bersin, who was then superintendent of San Diego Unified. Bersin, who also believes in the corporate model as a way to turn around foundering school districts, had partnered with the Broad Center and hired several of its graduates.

Known as a control freak's control freak, the 74-year-old Broad has no patience for activist school boards. Prior to 2004, he already had spent nearly $5 million on Bersin's reforms, but by then, parents and teachers were leading a backlash against him. He responded by pumping $65,000 into school board campaigns intended to defeat Bersin detractors. But this time, money was not enough. "I was running hard against him and all these outside folks who had so much influence over our schools," recalled board member Mitz Lee, who trounced her Broad-backed competition. "People realized that he was trying to buy the election of the board. Then, once I was elected, the first thing we did was not renew his project in San Diego."

Several months later, Bersin followed Broad out of town to replace another of the billionaire's friends, Richard Riordan, as Schwarzenegger's education secretary.

Born in the Bronx and raised in Detroit, Broad seems an unlikely education reformer. He was a self-described "goof-off" in high school, who, in his early twenties, took a $25,000 loan from his father-in-law and cofounded Kaufman and Broad, which built and sold cheap tract homes in Detroit's burgeoning suburbs. In the early 1960s, he moved his company to Los Angeles — ground zero of suburban sprawl. He later renamed it KB Home and grew it into one of the largest homebuilders in the nation.

KB Home was just the first of two businesses that Broad built into a Fortune 500 powerhouse. In the early 1970s, he bought Sun Life Insurance Company of America, and in less than two decades, transformed it into one of the country's largest annuity companies. Along the way he renamed it SunAmerica, which he sold to American International Group (better known as AIG) in 1999 for $18 billion.

Before his foray into education, Broad also made a name for himself as a mover and shaker in Los Angeles. His philanthropic ventures have funded the arts and medical research, and earlier this year, he even tried to buy one of the city's leading institutions, The Los Angeles Times, along with friend and fellow billionaire Ron Burkle.

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