School Privatization Means Loss of Public Investment to Profits and Sacrifice of Students’ Rights

Here is how political scientists Jacob Hacker and Paul Pierson begin their newest book, American Amnesia, that explores the subject of America’s capitulation to the belief that government is the problem, not the solution to our society’s concerns: “This book is about an uncomfortable truth: It takes government—a lot of government—for advanced societies to flourish. This truth is uncomfortable because American’s cherish freedom. Government is effective in part because it limits freedom—because, in the language of political philosophy, it exercises legitimate coercion. Government can tell people they must send their children to school rather than the fields, that they can’t dump toxins into the water or air, and that they must contribute to meet expenses that benefit the entire community. To be sure, government also secures our freedom. Without its ability to compel behavior, it would not just be powerless to protect our liberties; it would cease to be a vehicle for achieving many of our most important shared ends… Government works because it can force people to do things.” (American Amnesia, p. 1)

Exactly how our turning away from government has affected public schools is the subject of a fascinating analysis by Alex Molnar, Dismantling Public Education: Turning Ideology into Gold.  Molnar—a Research Professor and Publications Director of the National Education Policy Center at the University of Colorado—painstakingly traces the history of the development of public education as “an egalitarian institution that was redistributive in its effects… Public education in the United States has from its earliest days been structured to embody and strengthen representative democracy by inculcating democratic values….”  But, “The major education reforms of the past 35 years—education vouchers, charter schools, tuition tax credits, and education savings accounts—all seek to remove public schools from the control of elected bodies, to subject them to the ‘laws’ of the ‘market’; and to put them at the service of the economic elite.  The world being called into existence is based on the belief that anyone, but not everyone, can succeed—a world of winners and losers, each of whom has earned his or her fate.” It is also a world where “the progressive edifice that Roosevelt… constructed (in the New Deal) would have to be set aside, taxes on wealth and profits reduced, wages suppressed, and a greater share of government costs shifted to the working class.”

Molnar marks the beginning of our times with the economics of Ronald Reagan, which “replaced the citizen’s democratic right to a ‘voice’ in shaping their public schools with a consumer’s choice to ‘exit’ schools. Under the banner of ‘school choice,’ public education would thus be removed from democratic control and reformulated as a commodity to be ‘chosen.'” Our society has been wooed away from supporting public schools. “Under pressure from and with the aid of charitable foundations, wealthy philanthropists, and ideologues, government policy makers have steadily shifted control of the schools from locally elected school boards to appointed governing bodies. A for-profit school sector has emerged that depends entirely on taxpayer and philanthropic funds. Accountability has been shifted from government regulatory oversight mechanisms to ‘market discipline.’… Getting this myth ‘believed’ meant new opportunities to turn tax dollars into profits—profits from, for example, paying a few teachers more and many teachers less; profits from designing standardized tests; profits from renting school facilities; profits from managing schools; profits from data management systems and test scoring systems; and profits from selling software platforms and computing devices. Best of all, these profitmaking opportunities came with little or no government oversight to thwart self-dealing and ferret out fraud and abuse.  Oversight and regulation had by this time been successfully characterized as innovation and achievement killers.”

In his analysis Molnar highlights two prominent abuses that have emerged with the wave of school privatization—the removal of what Hacker and Pierson call “the coercive power of government”—regulation and oversight which are said by the privatizers to kill innovation, and the distortions that result when government funding flows to private profits. Conveniently, two exposes in the press this week—mere examples of the cascade of stories we are reading about abuses in charter schools and other privatized education ventures—exemplify the very problems Molnar highlights.

The first, These For-Profit Schools are ‘Like a Prison’, comes from Pro Publica and was jointly published at Slate.  It is an expose of staff abusing students in private, for-profit alternative schools run by Camelot Education. Camelot “contracts with traditional school  districts to run about 40 schools across the country—schools that serve kids who have gotten into trouble, have emotional or behavioral issues, or have fallen far behind academically.  In 2015, Camelot reported more than $77 million in revenue, more than a third from contracts with the school districts of Philadelphia, Houston, and Chicago.  The company also maintains a large presence in some heavily Hispanic old factory towns of Pennsylvania.” Pro Publica‘s story covers problems in York and Reading’s Camelot schools in some depth. “Some students are reassigned to Camelot because they committed serious disciplinary infractions at prior schools, such as possessing drugs or fighting. In other cases the reasons are more nebulous. In interviews, several families described feeling pressured by school-district officials to… (transfer their students to) Camelot-run schools simply because their children were far behind academically, couldn’t speak English fluently, or had special needs the district didn’t want to meet.” “Moreover, state officials in Pennsylvania have designed the accountability system in a way that obscures the academic results of the state’s alternative programs. Test scores of thousands of alternative students are never tagged to a school, instead counting only toward the district’s performance, making it virtually impossible to gauge and compare the quality of individual schools.” “Most Camelot students share two characteristics. They are nearly all poor. And they are overwhelmingly people of color.”  Pro Publica‘s report describes Camelot schools as resembling “the nation’s incarceration system: racially biased, isolated, punitive, unnecessarily violent and designed above all else, to maintain obedience and control.”

Because Camelot schools are privately operated, even courts investigating complaints of physical abuse of students have struggled to acquire evidence or get staff to testify after their schools threatened staff with job loss. Some parents describe being pressured to sign away their children’s due process rights at the schools.  The Pro Publica reporters describe a lawsuit brought against a Pensacola, Florida Camelot alternative school: “Pensacola’s school district stayed out of the Tillery cases. It let Camelot investigate and address them, said Vickie Mathis, the director of alternative education for the district. ‘They are Camelot employees,’ she said. ‘We expected Camelot to do the investigation and come to a finding and take action if there was a finding of wrongdoing.'”  The reporters do cite two school districts—Reading, Pennsylvania, and New Orleans—where, to protect students’ rights, public “school officials cut ties with Camelot as abuse allegations emerged.”

Then there is Ohio, where enormous profits from the online academies are being used to block the very regulations that would protect the state’s investment in its public schools. The legislature needs to increase oversight to prevent massive over-payments by the state for students the e-schools claim are enrolled, but who do not participate actively in online education.  Over-payments for phantom students in Ohio’s electronic schools have been regularly reported in the state’s newspapers, but this week the story made headlines in Education Week: Student Login Records at Ohio E-Schools Spark $80 Million Dispute: “The Ohio education department could seek repayment of more than $80 million from nine full-time online schools, based on audits of software-login records that led state officials to determine the schools had overstated their student enrollment. The Electronic Classroom of Tomorrow (ECOT), for example, was paid for 15,322 full-time students during the 2015-16 school year, but state officials said they could document just 41 percent of that total… Under Ohio law, schools are expected to offer students 920 hours of learning. But for the average ECOT student, state officials were able to document just 227 hours spent using the school’s learning software….  Historically, the Ohio education department determined student attendance, and thus enrollment, based on paperwork submitted by e-school representatives, who certified that students were enrolled and had been offered the 920 hours of learning required by state law.”

Now when regulators from the Ohio Department of Education are cracking down to insist that the state pay only for students who are actively participating and that e-schools do more than merely offer the curriculum, the e-schools are pushing back. ECOT has taken the state to court to block the enforcement of stricter regulations, and William Lager, who reaps the profits from both of his privately owned companies that manage ECOT, has hired the state’s most prominent lobbyists as well as keeping up the contributions to legislators’ political campaigns. The Ohio House and Senate, not surprisingly, continue to refuse to pass strict and explicit regulations. (This blog has covered the ECOT phantom student scandal here.)

Together these articles explore and expose what has been happening through school privatization and school reformers’ efforts to undermine the coercive power of government.  Only government—the law and its democratic enforcement—can protect students’ civil rights and our public investment in education.

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3 thoughts on “School Privatization Means Loss of Public Investment to Profits and Sacrifice of Students’ Rights

  1. I wish the Republican Party would stop worshiping their three patriarchs of the Party; namely, Ronald Reagan (The government isn’t the solution to our problems, it is the problem.), Grover Norquist (Our goal is to shrink government small enough to drown it in the bathtub.), and the high patriarch of all, Ebenezer Scrooge–“What! Are there no work houses left?”

  2. Here is another excellent article on the charter industry and how it thrives. Read the full article (free download) by four scholars titled: “Are Charter Schools the Second Coming of Enron?: An Examination of the Gatekeepers That Protect against Dangerous Related-Party Transactions in the Charter School Sector.” This was just published in the Indiana Law Journal ( February 27, 2017) . Here is the abstract.

    In 2001, Enron rocked the financial world by declaring bankruptcy due to the effects of an accounting scandal. Special purpose entities (SPEs) were instrumental to Enron’s demise. Enron parked assets in the SPEs to improve its credit rating.

    Enron violated accounting principles by not revealing that its SPE partnerships were related-party transactions. Andrew Fastow, who was Enron’s CFO, made millions of dollars by managing the SPEs. He also used these illegal proceeds to invest in other ventures. Enron’s gatekeepers failed to protect against this accounting fraud.

    Related-party transactions are now posing a threat to the charter school sector. Similar to Fastow, individuals are using their control over charter schools and their affiliates to obtain unreasonable management fees and funnel public funds into other business ventures.

    In this article, we discuss how some charter school officials have engaged in Enron-like related-party transactions. We also identify several measures that can be taken to strengthen the ability of charter school gatekeepers to protect against this danger.

    This article is divided into four parts. Part I describes how Fastow used his management of Enron and the SPEs to obtain illegal profits. Part II discusses why financial sector gatekeepers failed to stop these related-party transactions. Part III shows how charter school officials are benefitting from their control over charter schools and their affiliates in a manner similar to Fastow. Part IV analyzes pertinent statutory and regulatory provisions to identify steps that can be taken to increase the gatekeepers’ ability to protect against harmful related-party transactions.
    https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2924886

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