BUSINESSWEEK ONLINE : FEBRUARY 7, 2000 ISSUE
COVER STORY

John Walton: "Making a World-Class Education Available to Every Child"
In a Q&A, the billionaire talks about deeply held belief in public school reform

With his deep pockets and famous name, John T. Walton, son of Wal-Mart Stores' founder Sam Walton, has become a leading advocate for using "consumer choice" to reform America's schools. Last April, he committed $50 million to help create the $160 million Children's Scholarship Fund to allow 40,000 poor children to choose private schools. To the dismay of teachers' unions and some civil liberties groups, Walton is also a firm believer in the need for publicly funded vouchers, like those used in Milwaukee, Cleveland, and Florida. Critics argue that such programs violate the constitutional separation of church and state and undercut the public schools that Walton says he's trying to save.

In a rare interview, the shy Walton, who pilots his own Mitsubishi turboprop, discussed his wide-ranging school-reform efforts with Business Week Dallas Bureau Chief Wendy Zellner. The two met at the San Diego offices of Walton's School Futures Research Foundation, a nonprofit charter-school operator. Here are edited excerpts of the conversation:

Q: With your fortune [a stake in Wal-Mart valued at about $20 billion], you could be doing anything or nothing at all. So why are you so involved in school reform and taking potshots from the unions and others?
A:
Because I don't think our country faces a more important challenge than making a world-class education available to every child. I think it's critical for the continued health of our society, not to mention our economy. That's it in a nutshell.

Q: Do you feel like vouchers and charters have been proven yet? I see lots of contradictory studies.
A:
I think the studies are trending very strongly toward showing that there is a positive benefit for underprivileged kids when they have some sort of school choice, whether it's a voucher, as in Milwaukee or Cleveland, or charter schools that we have all across the country.... My personal experience with those models is that they are very effective and are increasing parental involvement and improving the general educational outcomes for those kids. It's the only reason I'm involved in this. I don't like to waste money. If these efforts were not effective, I would move on to something else.

Q: Publicly funded vouchers create the most controversy. Do you think the system could be reformed without those?
A:
I would like to think so. But after a lot of experience and consideration, I think that they are necessary for continued improvement. The basis for that conviction is that most of the serious reform efforts, including charter schools, were not implemented until voucher legislation became a serious prospect. I'm convinced that publicly funded vouchers and the prospect of publicly funded vouchers are catalyzing reform at all levels of public education across this country, even in areas that currently have very little choice in their systems.

Q: Critics say you should put the money to work in public schools on "proven" reforms. What's your response?
A:
In fact, I've also invested in public schools. [He points to investments in New American Schools, scholarships, teacher and principal training, and other programs that work inside traditional public schools.] I will say that we have had a much more difficult time evaluating the benefits of those investments than we have our [private voucher] investments, where the benefits are so clear and convincing.

Q: Do you see a need to be more in the "supply" end of the school business?
A:
At School Futures, we saw the charter school legislation here [in California] as a real opportunity to serve the urban, underprivileged kids who were not being taken care of when we started this organization. And at the time, most of the charter schools were single-site schools founded by educational entrepreneurs but with very little potential for serving more than just the kids in that one area. So we felt that an organization that would serve kids in the major metropolitan areas of our state and able to use the economies of scale you get from multisite operations could be a real benefit to these kids. Since then, of course, other education providers have begun to run multisite charter school operations, and we feel that model is strong, it's growing, and it has a lot of potential.

Q: How big do you see School Futures [which now operates 10 charter schools] becoming?
A:
We have demonstrated what we set out to demonstrate: that it's feasible to build a multisite organization serving children in the urban areas of our state.... Our staff has a tremendous desire to continue to grow the organization to serve more kids. The question we're facing is whether I should sort of turn them loose and let them go do that. I'm not going to be involved in a for-profit education effort. But our staff feels that by doing that they can access more capital.

Q: Why don't you want to be involved in a for-profit?
A:
I think for-profit education providers are a wonderful addition to the education reform movement because they bring operating disciplines as well as new capital that have not been available to education before. But because I am involved in supporting the things that I am, I think it represents a little bit of a mixed message, and it's easy for people to confuse my motives if I'm involved in a for-profit venture, as well as it's easy for opponents obviously to misrepresent my motives.

Q: Do you think there's money to be made in education?
A:
Absolutely. I think it will offer a reasonable return for investors.

Q: Critics of school choice say people like yourself really want to abolish public schools. Is that true?
A:
For myself, and I can't speak for anyone else, that is just absolutely ridiculous. If I were interested in abolishing public education, I wouldn't be investing in it. I honestly see empowering parents through choice as the salvation of public education. I'm convinced that if it does not begin to better serve those children who are currently being left behind, the people of this country are going to demand major changes in public education that will be far more severe than the adjustments it will need to make in a simple competitive system. I am convinced that because of the immense reservoirs of talent in the public education system, it will be very successful in improving its offerings and serving its kids once the incentives in the system are aligned with serving the customers.

Q: Has anyone in your family or at Wal-Mart ever said to you, we don't need this controversy, why don't you shut up about school choice?
A:
As a matter of fact, I have never once had anyone in the family or Wal-Mart encourage me not to do something I thought was right, not once. I don't know how excited they are about it.

Q: How willing is the public at this point to accept taxpayer-funded vouchers?
A:
There is a growing acceptance and interest in publicly funded school choice as a catalyst for education reform in general and a way to empower parents to be education reformers.... You know something that really bugs me, going back to A Nation at Risk in '83 [a critical report on the nation's schools], we have had expert after expert after new program after new reform introduced into the schools. And we are only now beginning to engage the two most potent reform agents in our country -- the most productive private sector in the world and the millions of parents whose kids are being served by the system.

Q: You've been labeled "right wing" politically and linked by some groups to the Religious Right. Why is that, besides your voucher efforts?
A:
Well sure, I support Planned Parenthood, the YMCA, all those right-wing organizations. My mother wishes I were more religious, I know that. Obviously any opponent is going to try to put some sort of pejorative label on you.... I don't feel overly persecuted. Maybe I should.



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