Ohio House Avoids — So Far — Serious Attempt to Regulate Charter Schools

Last week Dave Yost, Ohio’s state auditor, a Republican in an all-Republican state government, wrote a fascinating op-ed piece in the Columbus Dispatch, a commentary that explores the kind of accountability his office is supposed to monitor.  He reflects on accountability for public and private agencies:

“There’s a messy place where the public and private meet, and the old ideas about accountability aren’t good enough to sort it out… Lawmakers here and elsewhere are deliberately blending the two—and it seems to be the trend, not the exception.  So, when an entity is a little private and a little public, which rules apply?”  Yost describes simple contracting-out—of janitorial services, for example—and continues, “On the other hand, if Brave New World, Inc., contracts to be the police department for your town… well, that’s a different story.  Brave New World is no longer simply selling services; it is functioning as the government… it is exercising the sovereign power of the state—and Brave New World probably ought to be subject to the traditional transparency requirements we impose upon our government.” Yost is a Republican who strongly endorses what he calls the efficiency of private companies, and he concludes: “The ongoing debate over charter-school reform is going to happen smack in the middle of this disorganized space in our pubic life.  How do we protect the public interest while harnessing the best qualities of a mostly private-sector actor?”

I am delighted to know that our state auditor is so deeply reflective about his responsibilities.  My concern, however, is that he neglects to consider an important factor at work in our state’s charter sector: the most powerful charter interests are operating for-profit, and they are heavily investing in buying influence among the legislators who are responsible for writing the laws to regulate their for-profit operations.  Bill Batchelder, term-limited out at the end of December after serving as the speaker of the Ohio House, for example, turned up by February as the lobbyist for William Lager, founder of Ohio’s most notorious virtual charter school, the Electronic Classroom of Tomorrow (ECOT), a charter school whose operations are contracted out to two private firms owned and operated by William Lager. Lager is known to have been contributing generously to Republican legislators’ campaign coffers for years now.

It is partly due to Dave Yost’s influence as a conscientious auditor that the Ohio House Education Committee has been considering a bill to improve and increase public oversight of Ohio’s “wild, wild West of charters,” and it is probably due to the influence of William Lager and David Brennan of the equally notorious White Hat Management that the bill as it was amended this week by the House Education Committee fails to impose the kind of oversight the public deserves.

Yost’s concerns, as the state auditor, are primarily about financial transparency and oversight.  The bill coming out of the House committee this week will make some strides toward the most rudimentary transparency.  Stephen Dyer of Innovation Ohio reports, for example, that if the bill passes as amended, contracts between charter school boards and the management companies they hire will now be required to be  posted on the website of the Ohio Department of Education.

There are some significant improvements in the bill as it was passed out of committee this week.  According to Patrick O’Donnell of the Plain Dealer, “Poor charter schools can’t ‘hop’ from one sponsor to another if a sponsor, the organization responsible for making sure they do a good job, cracks down on them…. To make conflicts of interest known the bill requires members of charter school boards to disclose if they have any family members or business associates doing business with the school.  Charter School sponsors receive three percent of a school’s revenue to monitor the school, advise it and make sure it meets standards.  The bill would require sponsors to report annually how it spends that money.” “The bill prohibits charter school sponsors from selling goods or services to the schools they oversee.”

The bill originally required the charter school’s board to hire the treasurer and prohibited permitting the sponsor to hire the treasurer.  Unfortunately, an amendment accepted by the committee permits the school’s board to vote annually to waive this requirement, which was inserted in the original bill to prevent the kind of conflicts of interest that currently exist when treasurers represent the interests of the management companies.

The amended bill, according to the Legislative Services Commission, “Requires monthly financial and enrollment reports to be sent to school operator as well as sponsor and school’s governing authority.”  Why the legislature would not require these reports to be sent to the Ohio Department of Education and posted on the Department’s website remains deeply troubling.  Another important amendment would permit the Ohio Department of Education to close the sponsors whose schools continue to fail year after year.

But many specific reforms recommended by state auditor Yost in testimony before the committee (A link to Yost’s testimony appears in this Plain Dealer article.) in February were not included in the new regulations that appear in the amended House bill passed out of committee this week.  Yost suggested that charter schools must have the kind of attendance requirements that prevent the state’s paying for students who fail to show up.  He asked that there be some kind of oversight to ensure that students in “blended learning” situations where they study on computers are really experiencing guided learning and not just spending time on computers.  He strongly recommended that students enrolled in on-line schools must be identified by name, not merely by ID number, to prevent one student’s being counted by several on-line schools by being assigned several ID numbers over the years and the state’s paying for that student to attend all of the schools at which the student appears to be registered.  He recommended that the state prohibit the upfront investment of state dollars in a school building by a charter management company; realty companies owned by charter management companies, he said, should not be using tax dollars to acquire real estate.  Finally, Yost suggested financial operations of charters must be made transparent, especially in schools now operated through broad “sweeps contracts” by which a charter school board turns over 90 percent of a school’s revenue to a management company without any public record of how the money is spent.  Records of charter school expenditures of public dollars, he said, must be made available to the public.

In the past couple of weeks reports have continued to surface about Ohio charter school abuses that would not be touched by the new regulations.  Plunderbund released dropout data for the state’s public and charter school districts.  While the overall Ohio high school dropout rate has been reduced from 24,564 students in the 2010-2011 school year to 15,857 in the 2013-2014 school year, the dropout rate at ECOT has grown from 3,143 in the 2010-2011 school year to 4,367 in the 2013-2014 school year.  “For the 2013-2014 school year, the number of dropouts from ECOT represents 27.5 % of the total number of dropouts in the entire state of Ohio.”

And the Columbus Dispatch reports that last year charter schools across the state spent tax dollars adding to more than $5.6 million to advertise.  “The Dispatch reported last week that the state’s largest charter, the online Electronic Classroom of Tomorrow, spent $2.27 million last school year on ads, or about $155 per enrolled full-year student.  That accounted for about 40 percent of the total charter-school ad spending reported to the Ohio Department of Education, dwarfing what any other individual school or district spent.”

The regulations being considered by the Ohio House don’t touch the kind of abuse of the public interest described in these two reports.  Neither has any public body in Ohio considered regulating the quality of educational programming in our state’s charter schools.

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