On a recent afternoon at an elementary school on Chicago's South Side, eighth grader Victoria Bills is sitting in the boardroom. A rendering of the New York Stock Exchange dominates one wall, fronted by a bear and a bull. On another wall are four clocks showing the time in London, Tokyo, New York and Chicago. It's the first day of school, and Victoria is considering potential investments. In particular: How Mattel's toy recall is impacting the company's stock price.
It's hardly a typical 13-year-old's concern. But then, Ariel Community Academy is unusual. Its 420 students, nearly all black and about 81% from low-income families, are testing an intriguing proposition: Can teaching urban black kids finance and economics help some of them escape poverty and shake African-American skepticism about Wall Street?
Despite the growth of the black middle class, the percentage of affluent blacks investing in the stock market is actually falling, while such investment by their white peers remains steady. That's partly because blacks have historically relied on real estate as a primary wealth builder. Plus, blacks save far less than whites for retirement. That's why John W. Rogers Jr., CEO of the company that backs the academy, says, "The issue of financial literacy in our schools will hopefully avert a crisis."
The experiment began in the early 1990s. A young Chicago executive named Arne Duncan, then running the foundation of the investment firm Ariel Capital Management, rallied a group of business and education leaders to create a public school whose students could compete with kids from any elite private school. Many deemed public education hopeless. By the mid-1990s, Chicago's mayor seized control of his city's failing schools. So the idea of creating a predominantly black school with an emphasis on finance and economics in one of the city's most bullet-pocked neighborhoods was viewed by some as preposterous.
In 1996, Ariel Community Academy opened in a building inside a Chicago park. In 1999, it moved into part of the William Shakespeare School, a sturdy redbrick building that had been shuttered for years. The building underwent a multimillion-dollar renovation, mirroring the arrival of gleaming condos nearby. City officials encouraged the foundation to put its name on the school's building, partly to inspire others to follow suit. Ariel's executives were aware of the risks: The school's failure could hurt the company's reputation, and that of its founder Rogers, who grew up in the neighborhood with Duncan and had become one of the country's most successful black businessmen.
Each first-grade class is given $20,000, initially managed by Ariel Capital Management and Nuveen Investments. Starting in sixth grade, students join a "junior board" that invests that money. In recent years, students bought stock in companies like Adidas, Tiffany and Disney. After eighth-grade graduation, the seed money is cycled to the incoming first-grade class. Profit is split: half goes to a school improvement fund, the rest is divided among students. They choose between investing their share in a college savings program or receiving a check.
Earlier this year, Victoria, the eigth-grader, heard buzz about Apple’s iPhone, then lobbied the junior board to buy the company’s stock – just before its priced reached the $90s. “We caught Apple at the right time,” the honey-toned girl says, sitting in the school’s boardroom.
Nearby, Myles Gage, a 13-year-old eighth-grader, flipped through annual reports of Toyota and Smucker companies in which the junior board has invested. When it picked Google, the stock was hitting $400. "It was worth paying for," he says. Now, the aspiring investment banker says he follows Google's performance (its stock is now over $500) on Yahoo Finance and CNBC.
Ariel's school day starts earlier, and ends later, than most public schools. Some students voluntarily show up for Saturday morning tutoring. Ariel's foundation picks up much of the tab for extra teaching staff. It also pays for security, even ties for the boys, which are required for sixth, seventh and eighth graders. "It sets the tone for success," says Matthew Yale, 29, the head of Ariel's foundation.
It’s rare for elementary schools to teach economics or finance. Just seven states have made taking a personal finance course a high school graduation requirement, and only 17 have made economics a high school requirement, according to the National Council on Economic Education, a New York advocacy group. Conventional wisdom holds that black youth in many urban public schools aren't academically competitive with their white peers, especially in math. Ariel punctures those assumptions: Last year, 88% of Ariel's students met or exceeded Illinois' math standards, compared to 67% of Chicago public students overall. Ariel's students are being recruited by top private schools. Parents are having frank conversations with their children about finance even asking them for investment advice.
Corporate investment in public schools is hardly new. But experts say the depth of Ariel's involvement is striking. The irony is that Duncan, one of the school's key architects, is now CEO of the Chicago's public school system. He's been among the most aggressive in the nation in promoting corporate investment in public education. "It's the way of the future," says Duncan, 42, "I've not yet seen a company in the financial arena step forward to replicate what's happening at Ariel," he adds. "That's what we'd love to see happen."