Tim Draper's Voucher Crusade

His bid to change California schools is sputtering

Timothy C. Draper is trying to bring a little cybersizzle to the business of government. The 42-year-old founder of a leading Silicon Valley venture-capital firm has spent $25 million, more than half of it his own money, to promote a school-voucher proposal in California. Draper's Proposition 38 would require the state to pay $4,000 a year for any child to attend private school. To get out the word, Draper is giving away iMac computers and a trip to Hawaii to those who refer the most supporters to his prop38yes.com Web site. Draper himself has been known to drop and do 38 push-ups at speaking engagements to promote the proposition. But it will take more than push-ups and free computers to get his proposal passed on Nov. 7. Polls show Prop. 38 lagging by as much as 36% to 52%, with even some voucher supporters opposed.

If Draper's proposal fails, he won't be the first Silicon Valley leader to stumble in the unfamiliar world of politics. Several high-tech execs have sponsored ballot initiatives, only to find that business acumen doesn't necessarily help solve social problems (table). "These guys are used to seeing everything they touch turn to gold," says Terry Moe, a professor of political science at Stanford University. "They think, `Why shouldn't it be that way in politics?"'

Draper's basic idea was simple enough: give parents a choice of where to send their kids to school. What fairer way, he thought, than to give every child an equal amount of public funds? Draper figured he would tap into the widespread interest in vouchers. Although Michigan is the only other state with a voucher proposal on the ballot, Presidential contender George W. Bush is a proponent, and the concept has proved popular in national polls.

But Draper may have gone too far. Existing voucher programs--in Cleveland, Milwaukee, and the state of Florida--are all narrowly targeted on troubled schools or low-income kids. This has helped them skirt political backlash and difficult financial questions that would surface in larger programs. Draper ran smack into both problems with his plan to make funds available to all of California's 6 million school kids.

Indeed, his sweeping approach has raised questions about cost. California spends $8,000 a year to educate a child. If a student leaves public school with $4,000, the school keeps the other $4,000. The problem: the $2.6 billion it would cost to pay for the 650,000 children now in private school. Draper wants to phase them in over four years to ease the fiscal strain.

Still, taxpayers would take a hit. Because no one knows how many kids would use the program, cost estimates vary widely. Draper says it would run $500 million in the first two years but save $2 billion a year after that. "As a venture capitalist, that's an investment I'd be happy to make," he says. But the nonpartisan California Budget Project puts the tab at $3.9 billion by 2004.

"ONLY FAIR." Such estimates have scared off conservatives and even private schools that would benefit from Prop. 38. Both the California Business Roundtable, a group of local CEOs, and the Howard Jarvis Taxpayers Assn., an antitax group, have recommended no votes. So has the largely black Christian Methodist Episcopal Church, which educates 500 kids in California. "I might have supported a pilot program, but we should take a look before we take it to the whole state," says Bishop E. Lynn Brown.

Draper says he wanted vouchers for everyone because "it's only fair that all parents have a choice." Giving money just to poor kids would create a stigma, he argues. Also, Draper's own polling showed that support for the proposal grew as it became broader.

But Draper didn't do his homework. He failed to consult with pro-voucher groups, "so a lot of people sat this out," says Jeannie Allen, head of the Center for Educational Reform, a Washington (D.C.) group that supports vouchers. Part of the problem may be the anything-is-possible attitude Draper learned as a Valley dealmaker. In 1985, Draper and partner John Fisher launched what would become Draper Fisher Jurvetson in Redwood City, Calif., an early investor in Internet companies. Two of its deals, Hotmail and f-o-u-r-1-1.com, were sold to Microsoft Corp. and Yahoo! Inc., respectively, yielding hundreds of millions of dollars for Draper and his investors.

Draper says he got involved in education after seeing the sorry state of the public schools his four children attended in the affluent Silicon Valley town of Atherton. They all now go to private schools.

Some of Draper's fellow Valley execs still back him, even if they think he bungled his foray into politics. "He may have overreached, but he put his money where his mouth is," says Gary E. Rieschel, executive managing director of Softbank Venture Capital in Mountain View, Calif. Draper may learn a costly lesson: The innovative bets that can make a hot success in high tech don't always translate in the consensus-building business of politics.

Before it's here, it's on the Bloomberg Terminal.