Money Talks

In an exclusive interview, press-shy Republican power broker James Leininger explains his support for school choice and defends his big-bucks intervention in the 2006 primaries.

June 2006By Comments

It’s rare for you to talk to the press, yet your office approached Texas Monthly about doing this interview. Why now?
The issue at hand, which is school choice for poor children in the inner cities in Texas, is much more important than my personal preference.

Is there anything about the timing of your decision to be interviewed that’s related to the publicity you got during the most recent election cycle, in which you were criticized for your expenditures in five Republican primary races in an effort to defeat legislators who opposed school vouchers? Do you feel a need to answer some of the people who spoke up about you?
No. For me the issue is getting a good education for poor children. It doesn’t have anything to do with what someone said about me during the election cycle.

How did you come to school choice in the first place?
Almost twenty years ago, our director of human relations at KCI [Kinetic Concepts Incorporated, the San Antonio hospital-bed company that Leininger founded] came to me and said, “We’re going to have to change the way we interview prospective employees, because we found that we have three employees who are totally illiterate. We’re going to start having them sit there and fill out the application as opposed to letting them take it home with them.” I was shocked by that—that people could graduate from local high schools and get a job and be completely illiterate. So we got them into adult education classes and got them reading, and I said, “You know, we have to do something to help improve the schools.” And I got involved in every type of school program for the public schools that was out there. We did mentoring programs that all of our employees participated in; at the time, we were right up the road from Sam Houston High School, and we’d have fifty or sixty kids in here eating lunch with their mentors. We helped found a health careers magnet school and on and on.

The money came from KCI or from you personally?
Me personally. It was [an attempt] to solve the problem for everybody. Obviously, if you have a working population that is undereducated or, in the worst case, can’t read at all, it bodes very poorly for your company, for your city, and for your state.

At what point did you get involved in the political arena as an advocate for the issue?
[Initially] I didn’t see it as a political problem. I saw it as an educational problem, so we set about working locally with the public schools and with anybody who had an idea or claimed to have a program to improve the public schools. After five years of doing that, the schools hadn’t improved. In fact, a lot of people were arguing that they were worse. At that point, I read an article in the Wall Street Journal about Pat Rooney, who had started a private school voucher program, a scholarship program for children from low-income families in Indianapolis. And I said, “That’s the answer. We’ve got to get competition to work, and that will improve the public schools and will certainly improve the lives of the kids who choose to go to the school they want to go to.”

How much money do you estimate that you spent during those first five years?
Probably a couple hundred thousand dollars.

Which is not inconsequential.
Yeah. Things were a lot less expensive back then, shall we say, and our company wasn’t doing as well as it is now, so it was a large effort.

I can imagine the public school folks saying, “Here’s this guy who thinks we’re not doing a very good job and wants to put in his own money.” Were you warmly received?
Very warmly. And frankly, even then, when we started the private school scholarship program, we had a very warm relationship. Because, number one, we’ve never attacked the public schools; we’ve always tried to help them. And number two, we announced that the scholarship was to [allow children to] go to any public school or private school of their choice. It’s about a choice; it’s not about private schools. We actually did have people go from a poor-performing school district to a better school district—to, say, Alamo Heights.

Isn’t public school free? How did the scholarship work in the case of a transfer from one public school to another?
At the time, you could pay, I think, an additional $3,000 [per student per year] to transfer to Alamo Heights. We provided them the means to pay part of the [transfer fee], and the family was responsible for the rest of it. The very first year, for instance, we got a call from a principal of a middle school over on the east side. He said that he had two boys—twins, very good kids—who didn’t want to be involved with gangs, but the gangs were after them, and the school couldn’t protect them. And we had to give them a scholarship or they were going to get killed. So we did. We gave those two boys a scholarship, and they both went to another school and did very well. So from the start, we’ve had a good working relationship with the public schools.

Give me a sense of the magnitude of the scholarship program and how much money went into it.
We started off with one thousand scholarships at $750 apiece. We surveyed every private school in San Antonio at that time, and the average tuition was $1,500. We set our scholarship at half.

So the price tag would have been $750,000?
Exactly. That was the 1992—1993 school year—the first year. It was a revolutionary idea at the time. There was skepticism. Frankly, I wasn’t sure it would work. I thought, at the very worst, that we were helping poor children who felt like they were in a bad situation or who felt unsafe—who were being beat up or bullied or whatever the individual circumstance was. We were helping those students get to a school that they wanted to go to. And then a phenomenal thing happened. We put one ad in the San Antonio Express-News one day, and we were inundated with six thousand applications. We were just overwhelmed. And from that day on, we never, ever have had to publicize the program.

What happened next?
Later on, in 1998, we started the Children’s Educational Opportunity Foundation’s Horizon Program, which offered a scholarship to any child in the [low-performing] Edgewood district. It was a $3,600 scholarship, and the idea was to pay the full tuition [or transfer fee]. Again, we really didn’t know what kind of response we would get, and the first year we had, like, three thousand applicants. It was amazing, really, the number of students who wanted to take part. We announced it as a ten-year, $50 million program, so obviously that cost us a lot more.

The results of these programs have been unbelievable. In inner-city districts across the state, the dropout rates are approaching 50 percent. We’ve never had a single student drop out in fifteen years. One hundred percent of these scholarships are for economically disadvantaged kids. Ninety-seven percent of them are minorities. Ninety-five percent have gone on to college. There is nothing comparable in educational circles anywhere in the world.

Can the kids who receive these scholarships also elect to go to public schools?
Absolutely. We have never gone after the public schools. It’s about choice. We’re very generous here in Texas. If a child is poor and needs health care, we give him Medicaid, and he can go to any doctor he wants, at any hospital he wants, not just the doctor down the street. And if he needs food stamps, he can go to any store he wants, not just the store down the block. So it’s an archaic, outmoded, and ridiculous system that says that whether the school in your neighborhood is good or bad, safe or failing, you have to go. That’s the mold that we have to break.

Let’s assume that you give scholarships to one thousand kids. What percentage leaves the public schools?
At the peak of the Edgewood program, 12.5 percent left.

The critics of voucher programs insist that they’re an incentive for kids to flee public schools. That’s not a fair criticism?
No, it’s not. We offered a scholarship to every child in Edgewood. It was among the poorest-performing school districts. More than 90 percent of its students were classified as economically disadvantaged. Its dropout rate exceeded 40 percent. And it had a high teen pregnancy rate. Any way you look at it, it was the worst school district around, and still, only 12.5 percent of the students chose to leave. And the ones who stayed benefited greatly, because the public schools so dramatically improved. Let me tell you what happened in Edgewood. In 1996 they had two schools that were ranked “low performing” [the lowest classification by the Texas Education Agency], and the district had the next-to-lowest classification, which is “academically acceptable.” Two years after our program started, they had no failing schools, and they were a “recognized” district for the first time in history.

Other people worry that if tax dollars fund a voucher program and kids elect to go to a parochial school, that means, in effect, that tax dollars would be supporting a religious education.
Well, no, because the tax dollars don’t go to the parochial school; they go to the parents who choose the school.

That’s true but not accurate. Those dollars literally do go to the parents, but if the parents turn around and use the money to send their kid to a parochial school, those tax dollars are supporting religious education.
I would argue that the statement is both true and accurate, because it’s the linchpin that the U.S. Supreme Court decided the Cleveland cases on; it’s perfectly legal under our Constitution for those tax dollars to go to a private or parochial school, or whatever type of school, as long as they don’t go directly to the school. They have to go to the parent, and then the parent chooses.

Which is what keeps it from becoming a church-state issue.

At the moment, though, it’s a moot point. All of this is done through private philanthropy. No tax dollars are involved. And I’m wondering why that is. Presented with your set of statistics and anecdotal evidence and recognizing that Texas schools are ranked somewhere in the low middle and understanding that we have some real challenges on school finance, why wouldn’t the Legislature jump at the opportunity to board that train?
What we’re talking about here is the status quo. We’re talking about a very powerful, entrenched bureaucracy and special interests that don’t want to see any change.

The education community.
Yes. The information, or I should say, the disinformation that is given to the legislators by hundreds of lobbyists paid for by our tax dollars is just wrong.

Your attempt to get the Legislature to deal with this issue began when?
Nineteen ninety-three, I think.

That was your entry point into politics?
Yes. I just went up there. You talk about naive. I just had no clue what was going on. I talked with [then-Speaker] Pete Laney and [then—lieutenant governor] Bob Bullock.

What did they say?
Basically, they told me, “You need to get a lobbyist.” At the time, I thought, “Man, these lobbyists are just ridiculously expensive. And anyone who looks at this issue and is intellectually honest is going to say, ‘This will help everybody.’ So I’m not going to waste any money on lobbyists; I’m just going to appeal to whichever legislators I can and see if we can’t win this on the merits.”

So what happened?
It became politicized.

By whom?
By the Democrats.

I seem to remember some rural Republicans not being in favor of vouchers either.
Oh, sure. Yeah.

But in your mind it was the Democrats, as opposed to the Republicans, who blocked this?
Here’s the thing. In 2003, two legislative sessions ago, we had four Democrats who were in favor of a voucher program. The education establishment went after all four of them, and they beat three of them. Not too remarkably, the fourth one is not willing to vote for vouchers anymore. So it became very political.

Certainly somebody who put as much money into the past election cycle as you did can’t be shocked to discover that if you have a position you want to support, you finance the campaign of the opponent of the person who is not supporting your issue. And, lo and behold, if you’re successful, that opponent goes away.
That’s the way the system works.

So why is what the Democrats did in that case politicizing it, but if your side does it, it’s not politicizing it?
I didn’t say that it’s not politicizing it if someone on the other side is doing it. You know, it was clear to me after that happened that if I was going to have any success in helping these children get a better education, I was going to have to get more votes. And that’s what we set out to do this last election cycle.

There are differing opinions out there about how much money you spent on the recent primaries. I’ve heard as much as $3 million.
I never added it up, but that’s a little high. It’s more like $2.5 million.

How did you come to feel it was necessary to be in individual legislative races in such a big way?
Since 1993 we’ve been trying to get school choice passed. In that time, an entire generation of kids has gone through schools that certainly haven’t improved much, if they’ve improved at all. Lives are being lost every day with the delay. We felt an urgency to help these kids. So we said, “What can we do? Who can we support who’s in favor of this? Who can we oppose who’s against it? What can we do to try to move the needle?”

All your activity in the primaries this spring was directed at defeating Republicans. If, as you said earlier, the Democrats are the problem, why not spend your money to defeat Democrats?
That’s something we’ll have to consider. But that’s in the general election, not in the primaries.

So you’re not done spending the sort of amounts we’ve just seen in this election year?
There is no amount of money that I wouldn’t spend to help these kids. I’m willing to spend whatever it takes.

You’ve been very successful in business, so you understand the concept of return on investment. If you’re Jeff Bagwell of the Houston Astros and you hit .400, that’s pretty good. But if you’re James Leininger and you spend $2.5 million in hopes of defeating five incumbent Republicans, as you just did, and you only defeat two, which is what happened, that’s not good. Do you consider your return on investment to have been sufficient?
I’d say that that’s an awful lot of money to spend to win two races.

No regrets?
I have no regrets. As we all know, it’s very difficult to beat an incumbent. That we were able to beat two out of five speaks to the fact that there is a lot of discontent in those districts and with those incumbents.

People wonder when these things happen if there was coordination. Were you acting in these primaries completely independently of the leadership? Did you coordinate your efforts in any way with either Speaker of the House Tom Craddick or Governor Rick Perry?
Absolutely no coordination in any way.

Any conversations with anybody else in the leadership encouraging you to do what you did in those five races?
A lot of legislators encouraged me to do it.

In the past few years, there’s been quite a bit of intraparty fighting that cuts against the spirit of Ronald Reagan’s famous eleventh commandment of politics, “Thou shalt not speak ill of a fellow Republican.” Can your party accommodate both of its wings?
The party does accommodate both wings. I don’t think there’s a need for a purge of any kind; we’ve already seen that in the Democratic party, as I’ve pointed out. Anybody who helped with tort reform was summarily dismissed, just as those who were in favor of school choice were beaten in the primaries.

A couple of pro—tort reform Democrats managed to get reelected.
Very few. And it was tough, and they were punished.

So your efforts don’t amount to an attempt to cleanse the Republican party of moderates?

But if a moderate Republican doesn’t support school choice, that person becomes a target of your efforts.

If a conservative Republican doesn’t support school choice but is right on the other issues—
They would be just as much a target of my efforts as liberal or moderate Republicans.

In the most-recent primaries, the money you spent in support of those efforts was essentially handed over to the campaigns. You did not get personally involved in the details of how the campaigns were run.
Yeah. For the most part I didn’t give to the campaigns at all. I gave to a consultant.

With the idea that the consultant would put money into the races that you specified.
He would decide what races needed what resources.

And at that point, you were out of it.

In the Longview race, the incumbent, Tommy Merritt, has sued his challenger, whose campaign was largely financed by your contributions, over statements he alleges were defamatory. In the New Braunfels race, the incumbent, Carter Casteel, insisted to me that there were lies told about her by the challenger’s campaign, which was also largely funded by your contributions. Do you feel in any way responsible for the conduct of those campaigns?
Well, obviously, when I make a donation, I don’t have control over the conduct of the candidates. I would certainly care if there were inaccuracies or distortions. But let me say that I don’t believe the conduct was inappropriate in either of those races.

Let me ask a big-picture question about you. If somebody from another planet read the press coverage of your activities during the past few months—read the mainstream media and the blogs in particular—he would think you had cloven hooves and a pitchfork. What’s fueling that perception?
A lot of people just don’t understand the issue [of school choice]. And the reason they don’t understand it is because there’s been a lot of misinformation spread by our opponents. I was told by candidates in this last cycle, “I know you want to have vouchers in every school district all over the state and you want to start a whole chain of for-profit schools to make millions of dollars.” That’s ludicrous.

Nothing you’re advocating could even be fairly mischaracterized as for-profit?
No! No! And that’s my point. Our opponents have gone out of their way to demonize me. It’s the old communist [approach]: If you can’t kill the message, kill the messenger.

You know, of course, that that’s what they say about you—that you can’t kill the message of the other side, so you spend all your money to defeat them.
I’ll let you decide that one for yourself.

What else don’t we understand about you?
Originally, I was supposed to be a recluse who lived in a cave, and then I was an absolute right-wing zealot, and now I’m this rich tycoon who’s trying to buy democracy. None of those things are true. I certainly don’t need to make any more money, and I’m not trying to make any money out of this; I’ve probably given $100 million away, so that’s a totally false accusation. What I’d like to say is that I think the lives of every one of these little kids who are trapped in these unsafe and failing schools are too important, and I’m willing to take the abuse in order to help them. And that’s my only motivation.

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