Wall Street billionaire Steve Schwarzman gave a record-setting gift to his public high school — and it highlights the dire situation American schools face

Public K-12 schools are facing budget shortfalls amid reductions in government funding.
Steve Schwarzman, the billionaire founder of private-equity firm Blackstone Group, recently gave a $25 million donation to his public high school.
Such donations to public K-12 schools are rare, especially compared with their private counterparts.
Given the budget shortfalls, Schwarzman recently told a group of 3,000 superintendents that public schools need to start privately fundraising the way universities and private schools do in order to stay competitive.
Many educators were enthusiastic, but others worried it would exacerbate inequality and said it was no replacement for state and local government funding.

Roughly an hour before Steve Schwarzman, the billionaire founder of private-equity giant Blackstone Group and occasional adviser to President Donald Trump, was set to deliver a speech in Nashville to a crowd of 3,000 at the National Conference on Education, he bemoaned the state of public education in the US.

"The world keeps moving faster and faster and the US is falling behind," Schwarzman told Business Insider, calling out the country's deficits in arming students with computer literacy, coding, and other skills that have grown increasingly important in the modern job economy.

Money, naturally, is a hurdle in remedying this, as Schwarzman readily acknowledges. Funding for K-12 education, which is provided mostly by state and local governments, plummeted after the recession in 2008 and in many locations still hasn't bounced back to pre-recession levels.

"The middle class economically has shrunk. The monies aren't there in the same way," Schwarzman said. "I think we have to recognize that and figure out what to do about it."

One solution, as Schwarzman told some 3,000 school superintendents in his speech, is to start wooing successful alumni like himself to donate.

It's a commonplace practice in higher education and in private K-12 schools, but it's rare in public school systems, as Schwarzman learned in the process of providing his own high school in Abington, Pennsylvania, a $25 million check to help modernize their campus and ramp up digital and STEM learning.

It's a record donation for the school, and among the largest ever individual donations to a single public school.

After recounting the story of his donation to the audience of superintendents, and providing practical advice for fundraising, Schwarzman called for a paradigm shift.

Rather than accepting the fate of inadequate financial resources, Schwarzman says, schools should take matters into their own hands and start raising money from alumni the way a private school would.

Private sources of funding account for just 2% of all public elementary and secondary school revenue in the US, according to the National Center for Education Statistics.

"I think the roadblocks are basically just tradition," Schwarzman told Business Insider. "What I'm talking about is just typically not done."

He continued: "Sometimes in life you just have to adapt."

The crowd's response to the speech was ebullient.

"People stood up and clapped and gave him a standing ovation," Amy Sichel, the superintendent of the Abington School District, told Business Insider. "It was fabulous."

"You have to be psychologically prepared to just keep asking"

Many schools would likely benefit from the low-hanging fruit of this largely untapped resource, and it's not all that complicated to get started, Schwarzman and Sichel pointed out.

In his speech, Schwarzman gave the school administrators a practical tutorial, laying out the steps: set up a

"Part of it is, if you've never done this type of work in terms of raising money, it's preparing people psychologically for the difficulty of asking," Schwarzman said. "You

While Schwarzman's gift, which will fill the shortfall in Abington's ambitious $100 million high school renovation project, will have a tremendous impact on the roughly 8,100-student school district, is it a realistic model for solving funding gaps on a broader scale?

Not every school has a billionaire alumnus

Regardless of fortitude and determination, some districts will have more potential funds to mine than others. Not every school has an alumnus like Schwarzman, who has deep pockets and an enduring commitment to education — he has donated hundreds of millions to a variety of education causes.

Such a model has the potential to exacerbate school inequality, according to Sean Corcoran, who studies education financing issues as an a

It's worth noting as persistent achievement gaps between black and Hispanic students and their white peers exist, private funding has the potential to deepen racial divides as well. Abington School District is 64% white, according to enrollment data from the Pennsylvania Department of Education, roughly in keeping with overall US demographics.