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Michelle Rhee's Backers Include Obama Bundler Billionaire, Big Romney Backer

Posted: 02/24/2012 4:16 pm Updated: 03/ 9/2012 2:21 pm

Michelle Rhee Backers
Rhee with husband Kevin Johnson, the mayor of Sacramento, at the premiere of 'Waiting for Superman.'

Politics is once again making strange bedfellows. A top Mitt Romney supporter and one of Barack Obama's wealthier contributors have a common cause: They're both backing Michelle Rhee.

Until now, identifying Rhee's usually anonymous donors has been largely a guessing game. But recent lobbying filings in Pennsylvania name New Jersey hedge funder and Romney backer David Tepper and the Texas-based Laura and John Arnold Foundation as among the largest donors to StudentsFirst, Rhee's national lobbying and advocacy group that pushes for rigorous teacher evaluations and school choice. And though the filings don't give dollar amounts, a source close to the donor community said the Arnold grant amounted to tens of millions of dollars.

Rhee, one of the biggest names in the education reform movement, drew attention during her stint as chancellor of Washington, D.C., schools. There, her oft-lauded teacher evaluation system, teacher firings and bureaucratic shakeup landed a broom-wielding Rhee on the cover of Time magazine and made her the focus of the documentary "Waiting for Superman." Her critics point to allegations that her record in D.C. was inflated by cheating, a matter that has yet to be settled by an ongoing federal investigation (though its scope has been narrowed to 35 classrooms).

After Adrian Fenty, the mayor who appointed Rhee, was voted out of office, Rhee left to found StudentsFirst. SF has quickly become a big name in the education reform lobby, angering unions and working with legislatures that have altered their teacher hiring laws to the group's liking.

The nonprofit is notoriously tightlipped about its funding, which has aroused various and sundry rumors about the political leanings of its alleged backers, among them Rupert Murdoch. The American Federation of Teachers created RheeFirst, an opposition website that carries some of those rumors.

SF's spokesperson Hari Sevugan confirmed, "We do not comment on any individual donor."

But a Pennsylvania law requires lobbying organizations that spend over a certain amount to disclose any donor who contributes more than 10 percent "of the total resources received by the principal during the reporting period."

According to filings on the state's lobbying disclosure site, StudentsFirst has filed for two quarters, with the organization's over-10 percent funders listed as the Arnold Foundation and Tepper, who founded the organization's New Jersey arm.

Tepper, who heads Appaloosa Management, has a long history of political donations. According to FEC records, Tepper has given upwards of $23,000 to the Democratic National Committee; $5,000 to Glacier PAC, a backer of Democratic Rep. Max Baucus -- and $5,000 to Mitt Romney for President this December. This January, he gave $375,000 to Restore Our Future, a Romney PAC.

In March 2011, Tepper, who is estimated to be worth $5 billion, cofounded Better Education For New Jersey Kids, the New Jersey education reform group that eventually became SF's New Jersey arm.

Billionaire John Arnold, a former Enron trader and his wife Laura, were slated to host in their Houston home a $10,000-ticket Obama fundraiser to feature Michelle Obama last October (the event was postponed). Arnold describes himself as a libertarian, and his wife Laura identifies as a Democrat. Still, Arnold was one of Obama's top 2008 donors, a bundler who gave the campaign between $50,000 and $100,000. According to Huffington Post's FundRace, he has given $35,800 to the Obama Victory Fund 2012.

Both Arnolds have also contributed a few thousand each to Sen. Michael Bennet (D-Colo.) and hundreds of thousands to the Democratic Senatorial Campaign Committee.

Arnold is currently funding efforts to have legislatures convert the pensions of public employees, such as teachers, into 401k plans. According to the Arnold Foundation's most recent tax returns, it had $650 to $750 million in assets in 2010.

An additional donor to StudentsFirst is The Broad Foundation, the philanthropy run by Eli and Edythe Broad that puts billions into education reform causes such as charter schools and parent unions. Erica Lepping, a Broad spokesperson, confirmed that one year ago, the foundation contributed $500,000 in startup costs to StudentsFirst. "We've been in discussions with them since, regarding how we may be further able to support their work," Lepping added in an email.

As for who's not funding Rhee: A representative from the foundation of Julian Robertson, a rumored donor and Romney supporter, said he hasn't contributed to SF. And Murdoch's News Corp. Foundation's political funding disclosure does not list StudentsFirst as a grantee, although that does not preclude the possibility of a personal donation.

StudentFirst's IRS application sheds still more light on its finances. StudentsFirst estimates the organization will have $225 million in revenue between 2010 and 2013 -- and that's only its 501(c)3. StudentsFirst has used its revenues to set up shop in 16 states, where it's advancing legislation that abolishes or revises teacher tenure, opens the door for the creation of charter schools and parent trigger laws, which allow parents to take over management decisions at failing schools.

The group boasts over a million members, though Sevugan declined to specify how many of those are active. But he pointed to recent member activity around the Senate's reauthorization of the No Child Left Behind Act as proof that those who sign up for SF online are indeed involved.

"We sent an email to our national membership saying, 'We see some problems here ... and if you agree, let members of the HELP committee know,'" Sevugan said. "The number was 200,000 emails sent to HELP committee within two hours."

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