MIAMI – Florida's state pension-fund managers aren't investing retirement money wisely, say union leaders and some Democratic politicians. Others counter that the dispute over a planned transaction is more about politics than mismanagement.
The state wants its worker retirement to invest in Edison Schools (search), the nation's largest "for profit" public-school operator. Florida's investment would enable Edison, whose stocks have dropped from about $19 in November 2001 to $1.74 in October 2003, to become a privately-run company.
The plan — to invest $80 million, or less than one-tenth of 1 percent of the state's $90 billion fund, into a debt and stock arrangement — would merge Edison with a company owned by the state's fund managers, Liberty Partners (search).
About half of the state's retirement-fund members are teachers, who strongly object to the type of business Edison operates, and the transaction has earned rebuke from at least one highly-placed state legislator.
"I would argue with you that a company that has lost 75 percent of its value in the last two years would be a questionable investment under any circumstances," said House Democratic Leader Doug Wiles (search), a staunch defender of and friend to the state teachers' unions.
Some financial analysts disagree with Wiles, arguing that Edison's shares are undervalued, the stock strengthening and the company poised for a rebound.
Founded in 1992, Edison operates 130 full-year public elementary schools in 23 states and another 200 summer schools. The company provides resources and curricula to more than 132,000 students.
In September, Edison's management announced that the company's financial viability was strong, pointing out that debt had been reduced by $27 million in less than a year, and that they had "turned our first profit — fulfilling guidance made to investors."
The company listed its profit as $10.2 million for the last quarter of its fiscal year, ending June 30.
"That's good for kids, and the only people who seem to have a problem with it are those who feel like their jobs are at stake," said Jeanne Allen, director of the Center for Education Reform (search), which supports alternative solutions for improving education.
Teachers' unions and critics admit they just don't like Edison, saying it offers no "academic advantage" and threatens jobs. They add that they consider the investment proposal insulting.
"It's our money, we earned it, and we don't want it invested in a failing business, let alone a business that eroded or attempts to erode support of public employees," said Mark Richard, administrator for the American Federation of Teachers (search).
Edison shareholders will vote this month on whether to accept the state's multimillion dollar buyout, but state lawmakers told Fox News it's a done deal, barring last-minute legislative action.
Fox News' Orlando Salinas and Peter Brownfeld contributed to this report.