Who is Home-Rule Financier John Arnold?
Editor’s note: This story also appears in the April edition of Preston Hollow People.
By JACIE SCOTT/Special Contributor
Since Support Our Public Schools began making headlines on the first day of March, only one of the nonprofit’s financial backers has been identified: John Arnold, a 1992 graduate of Hillcrest High School.
The group is seeking to turn Dallas ISD into a home-rule district, thereby freeing it from some state oversight. Ideally, we would have asked Arnold directly what interest he has in such an effort. But the spokeswoman for the Laura and John Arnold Foundation declined our request to interview the Houston billionaire. So we turned to some of his Hillcrest classmates and previously published reports for background.
Little is known about the former hedge fund manager aside from his net worth, a whopping $2.95 billion according to Forbes. Those who knew him have little to say, and those who are closest to him are rather protective, opting to keep quiet.
Arnold grew up in a world far from the one he lives in now. Before he hit it rich as a trader for Enron — which paid him a reported $8 million bonus in 2001, only months before the company declared bankruptcy — Arnold was a shy lad, growing up in an upper middle-class neighborhood near the intersection of Preston Road and Forest Lane. His father, who died when Arnold was a teenager, was a lawyer; his mother was an accountant. Arnold is a product of Dallas’ public schools, from his days at Polk Elementary through his diploma from Hillcrest.
What do classmates remember most? His intelligence.
“I had two AP classes my senior year that he probably had as a freshman,” John Engleman joked.
Alex Rivera described his former classmate as a stand-up guy who was a bit of an introvert.
“He was definitely head-and-shoulders above most of our class,” Rivera said. “He was just that bright of a guy.”
Arnold didn’t run with any one crowd at Hillcrest. Although he has funded plenty of politicians on both sides of the aisle as an adult, student government wasn’t appealing at the time. He was a fabulous soccer player, former teammate Sylvan Bednar said, but Bednar wouldn’t go as far as to call him a jock. He was a well-liked guy, but no Mr. Popularity.
“He was just a genuinely good guy,” Bednar said. “Nothing crazy.”
Numbers were his thing. He was active in the math club, participating in competitions that tested his ability to work advanced problems under time constraints. Thus, his career choice was no surprise. Arnold graduated from Vanderbilt University, where he majored in math and economics, in only three years. He began his work with Enron in 1995.
In a 2002 profile of Arnold, The New York Times reported that he was personally responsible for $750 million in profits the previous year; a rival trader compared Enron to the Yankees and Arnold to Babe Ruth. By the time his Hillcrest class reunited in 2002, Arnold was launching his own hedge fund, Centaurus Advisors.
“He just kind of flew under the radar, so to speak,” Rivera said. “We had no idea until we all got together for our 10-year and found out he’s, like, worth a billion bucks. We were like, ‘Wait, what?’”
Because Arnold made a significant amount of money in the same year that Enron scandalously collapsed, he’s gone to great lengths to assure he had no involvement with the company’s illegal dealings.
“I cooperated in every one of those investigations,” he told The Sacramento Bee in an interview last year.
Arnold worked to distance himself from the shadow of Enron and build his fund. By his 20-year class reunion, which he did not attend, Arnold was retired. He announced his departure from the hedge-fund business at the ripe age of 38, a move that surprised many in the industry, and shifted his focus to giving.
Arnold and his wife, Laura, signed Bill Gates’ and Warren Buffett’s Giving Pledge, a promise to dedicate the majority of their wealth to charity. Their foundation was established in 2008 with the mission of producing “substantial, widespread, and lasting reforms that will maximize opportunities and minimize injustice” in society.
The Laura and John Arnold Foundation’s website lists a 10-point “Philosophy of Philanthropy.” The first point: “Philanthropy should seek transformational change, not incremental change.” The third one: “Philanthropy should think big, take risks, and be aggressive and highly goal-oriented.”
Those beliefs certainly line up with the initiative created by Support Our Public Schools. If the group gathers enough signatures, the DISD Board of Trustees would have to appoint a 15-member commission to draft a new charter. Pending approval by the Texas Education Agency and then voters, that charter could change everything from what the district teaches to how it is governed.
Arnold has made a lot of headlines — many of them above unflattering articles — because of his support for efforts to reform pension systems for public employees in California, Rhode Island, and other states. That may raise the eyebrows of Dallas teachers, whose union leaders are already wary of the Support Our Public Schools initiative. But the 1995 state law that allows the establishment of a home-rule district explicitly says that qualified employees shall still be covered by the Teacher Retirement System of Texas.
Pension reform is only one of the Arnold Foundation’s areas of focus. Another is K-12 education. The foundation’s website touts the “portfolio model school management structure,” which allows school leaders to “select their own curriculum and materials, hire teachers and staff, and control the campus budget.”
DISD Trustee Mike Morath, who says he encouraged the creation of Support Our Public Schools after researching the 1995 law, connected Arnold with the nonprofit’s five board members, despite never meeting the billionaire face-to-face.
“His organization has supported public-school reform initiatives in the past, and I knew he was a Hillcrest grad,” Morath said. “I knew he had deep Dallas roots. So, I thought the organization might be interested in that.”
If Support Our Public Schools is successful, the funding of this mysterious Hillcrest graduate will have played a key role.
“If he’s willing to back it, then he probably sees something that could work for the district,” Rivera said. “I just can’t see him giving money away blindly.”