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Education Reform Walton*

Wal-Mart heirs pour riches into education reform
By Jim Hopkins, USA TODAY
Wal-Mart's founders transformed U.S. business. Now they are taking on a very different subject: the nation's public schools. The Waltons — the USA's richest family — have quietly become top philanthropists in education reform, including controversial charter-school and school-voucher causes.

A shopper outside a Wal-Mart in Rolling Meadows, Ill.
By Tim Boyle, Getty Images

They have donated at least $701 million to education charities since 1998. (Flash graphic: Wal-Mart execs' philanthropy)

That pales beside the $1.05 billion given to education by the Bill & Melinda Gates Foundation. But the Waltons' giving could soar to as much as $1 billion a year as they shift more riches to charity. How much more? John Walton, one of founder Sam Walton's four children, says the family expects to donate as much as 20% of its $100 billion in Wal-Mart stock.

The shift could spur far-reaching education reform, say experts on philanthropy and education. "That could totally transform public education in this country. It's a mighty thumb on the scale," says Chuck Collins, co-founder of Responsible Wealth, a group critical of the influence of the megarich.

Helen Walton, 84.
Home: Bentonville, Ark.
Occupation: Retired.
Family: Widow of Sam Walton; four children.
Alice Walton, 54.
Home: Mineral Wells, Texas.
Occupation: Horse ranch owner.
Family: Divorced; no children.

Jim Walton, 55.
Home: Bentonville, Ark.
Occupation: President, Arvest Bank.
Family: Married, four children.

John Walton, 57.
Home: Bentonville, Ark.
Occupation: Wal-Mart director; Chairman, True North Partners, a tech investment firm .
Family: Married; one child.

Rob Walton, 59.
Home: Bentonville, Ark.
Occupation: Wal-Mart chairman.
Family: Divorced; three children.

Source: USA TODAY research, Forbes magazine

The Walton giving is another example of how Wal-Mart, the nation's biggest company, is shaking up fields far beyond retailing. It also illustrates how new entrepreneurial fortunes — like Bill Gates of Microsoft — are redefining philanthropy and charity.

Already, Walton money has helped pay for 62,000 scholarships for needy children in private schools across the USA. Gifts in 2002, the most recent year for which public information is available, range from huge — $300 million to the University of Arkansas — to not as huge: $7,549.71 to the Colorado League of Charter Schools.

Walton money also extends to education politics. John Walton gave $100,000 to an election campaign in 2000 to support back-to-basics education reform in San Diego.

Walton, 57, who is leading the family's giving, says improving education could have the broadest impact on the most pressing problems. "Everything from poverty to productivity to crime to standard of living," he says.

Allies say the family's giving is injecting competition between public and private schools that will produce better-educated children, and so reduce unemployment, crime and other social ills. "There are so many great things that can happen when someone is well-educated," says Tim Draper, a prominent Silicon Valley investor who has spent millions to promote school vouchers.

Critics say the Waltons could do the opposite: weaken public schools by encouraging the flow of tax dollars to less-regulated charter schools and to religious and other private schools through vouchers. The prospect of the Walton billions is "alarming," says Marc Egan, head of anti-voucher efforts at the National School Boards Association.

That worry comes partly from the Walton legacy at Wal-Mart. The retailer has reshaped commerce in the 42 years since it began as a five-and-dime in Rogers, Ark. Its demand for rock-bottom prices has forced suppliers such as Kraft Foods and competitors such as Kmart to revamp productivity and other practices.

The Wal-Mart way

That approach may now be brought to education reform. Indeed, Sam Walton, shortly before he died in 1992, spoke about linking the "Wal-Mart way of doing things" to philanthropy. He referred to education projects that challenge the status quo.

Education was his top worry regarding the USA's ability to compete globally. He said U.S. schools lagged behind those of other nations. "I'd like to see an all-out revolution in education," he wrote in his autobiography.

By Spencer Tirey, AP file
Jim, John, Rob and their mother Helen Walton at 1997 banquet in Little Rock, Ark.

He then pledged for the future as much as 20% of the family fortune — the share he owned with his wife, Helen Walton. It is an amount the family is still considering. "That's the most likely outcome," John Walton said in a rare interview last month.

The timetable has not been made final, Walton says. But the family will likely be forced to take action because of estate taxes potentially due when Helen Walton, 84, dies, leaving behind as much as 20% of the family's Wal-Mart stock.

The Waltons have long avoided publicity. Most details of their giving and wealth are revealed in public documents filed with the IRS and Securities and Exchange Commission. The documents show that nearly 12 years after Sam Walton's death, the family's role in education reform has grown as:

•The value of their Wal-Mart stock quadrupled — giving them a far bigger education war chest. Moreover, Helen Walton and the four children will earn nearly $890 million in Wal-Mart dividends this year vs. $342 million just five years ago. The company last week boosted the dividend 44%.

They have begun focusing more giving on private-school scholarships, charter schools and vouchers — revealing clues as to how they'll target giving as their family charitable foundations grow. With that shift, the Waltons are joining a hotly debated issue.

Charter schools, in 37 states and the District of Columbia, are public schools financed with tax dollars. Oversight may be given to colleges or other community groups. Critics, such as People for the American Way, say charter schools are sometimes weaker than public schools because they are less regulated in areas such as student testing and teacher certification.

Vouchers let families use tax dollars to pay tuition at religious and other private schools. They are available in Milwaukee, Cleveland and Florida. They are the subject of a legal fight in Colorado heading to the state's Supreme Court. Compared with charter schools, vouchers draw far more opposition from groups favoring strict separation of church and state.

The Waltons have become the biggest financial supporters of charter school and voucher programs, says Egan of the National School Boards Association.

Their giving to charter and voucher groups is dwarfed by the $320 billion spent annually in the USA on kindergarten through high school education. Still, voucher opponents say the Waltons could focus their patronage on advertising to sway public opinion, getting maximum bang for their bucks.

"A billion a year, if you used it wisely, can have an enormous impact," says Heidi Steffens, an analyst at the powerful National Education Association union. It has 2.7 million members, mostly teachers.

John Walton says his family's giving is not simply to create better-educated workers — a pressing need at Wal-Mart. "No doubt, productivity is a result of that, but it's sort of an ancillary benefit," Walton says. The company is the nation's biggest private employer, with more than 1.2 million U.S. workers.

The group's members support charter schools. But they haven't agreed on vouchers, Traiman says.

Walton says critics of vouchers and other "school-choice" programs aren't paying enough attention to dropout rates among inner-city high school students.

"They're choosing the streets over a school that apparently doesn't work for them," Walton says. "If choice destroys the public system, then why are we so sanguine about the choices those kids make?"

Attending public schools

Still, Walton notes that the family's giving also goes to other education areas — including public schools such as Florida's Miami-Dade County system, which got $100,000 in 2002.

Federal law limits foundation gifts to political causes — as in San Diego, where school board member Frances Zimmerman says John Walton's $100,000 contribution was aimed at ousting her.

His was part of an unprecedented $500,000 campaign by a business-led group called the Partnership for Student Achievement. "I was astonished," says Zimmerman, who was narrowly re-elected to the five-member board.

Zimmerman had opposed reforms by a new superintendent, Alan Bersin. He added coaches to help teachers conform to a new curriculum and tests. He also cut administrative staff and ousted principals.

Walton, a Wal-Mart director, attended public schools. His son attended public and private schools. Walton says his family had the resources, including money, to tap good schools. "The real challenges are the kids who don't have the resources to move to areas with good schools — or pay tuition," he says.

Some of the family's biggest giving goes to the Children's Scholarship Fund in New York. It started in 1998 with $50 million gifts from the Waltons and from financier Ted Forstmann. It gives scholarships to needy children to attend private elementary and junior high schools.

Among the beneficiaries: Genevieve Hernandez, 34, and her daughter, Genevieve, 13, who attends St. Joseph school in Queens. The fund pays 25% of Genevieve's $3,900 annual tuition. Hernandez, a single parent, pays the rest. Her daughter's reading suffered in public school but has improved at the private St. Joseph, Hernandez says.

Hernandez is more hopeful about her daughter's future. "I don't want her to be one of those statistics," she says. "I want her to be one of those leaders of tomorrow."

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