Office of Inspector General Again Condemns U.S. Department of Education’s Oversight of Federal Charter School Dollars

For many good reasons, we are prone to blame Betsy DeVos, our current U.S. Secretary of Education, for weakening regulations in the Department of Education.  She has, for example, eliminated regulations designed to protect student borrowers from predatory for-profit colleges and cut back civil rights enforcement in the public schools.  But a new report from the U.S. Department of Education’s Office of Inspector General (OIG) once again disparages Arne Duncan, and his lax oversight of federal dollars flowing to charter schools.  The new report documents that when charter schools have closed or been shut down, the Department has failed to ensure that federal dollars flowing to the schools from Title I, the Individuals with Disabilities Education Act, and the federal Charter Schools Program were properly tracked. Further, students’ records from the closed schools were not properly protected.

The report condemns a trend of poor oversight: This is the third major report in which the Department of Education’s OIG has documented poor management of federal dollars flowing to charter schools.  Reports from the Department of Education’s OIG in 2012 and 2016 also disparaged Duncan’s charter school oversight. It is not likely, however, that Betsy DeVos, a libertarian, will improve the Department’s regulatory role.

The new 2018, OIG report examines whether the U.S. Department of Education has a process for adequately monitoring the management of federal dollars and the management of student records and data when charter schools are closed. OIG examined charter school closures in three states between 2011 and 2015.  Defining privately operated charter schools as public schools for the purpose of this report, the OIG notes that in the 2015-2016 school year, there were 98,277 public schools across the United States, among which 6,855 were charter schools.  Between 2011 and 2015, 977 of the charter schools closed.  OIG studied charter school closures in three states: Arizona, which had the highest number of closed charter schools authorized by the same authorizer; California, which had more charter schools than any other state and more students enrolled in charter schools; and Louisiana, which had the highest ratio of charter school closures relative to the number of charter schools in the state.  In its 2018 report, OIG examines the procedures used in 89 of the closed charter schools—45 in Arizona, 31 in California, and 13 in Louisiana.  OIG explains: “The purpose of the audit (is) to determine whether the U.S. Department of Education has effective oversight of the programs provided to charter schools….”

The OIG begins its report by reassuring us—in oxymoronic language— that, “Charter schools are nonsectarian, publicly funded schools of choice that are intended to be held accountable for their academic and financial performance in return for reduced governmental regulation.”  Maybe the myth that charters can be held accountable without accountability explains why the Department of Education hasn’t done so well with with preventing the kind of problems the report describes.

The 2018, OIG report charges that the Department of Education has not provided adequate guidance to enable states and local school districts to comply with the federal laws and regulations they must follow to protect Title I, IDEA and Charter Schools Program dollars when charter schools are shut down. Neither Arizona, California, nor Louisiana had developed required procedures for tracking how the assets of charter schools were disposed after the schools were closed. The report notes that in September of 2015, the Department of Education sent a letter to state departments of education to remind them “of their role in helping to ensure that Federal funds received by charter schools are used for intended and appropriate purposes.”  OIG explains, however, that, “The Dear Colleague Letter did not specifically discuss charter school closures.”  Neither has the Department adequately monitored states’ charter school closure processes. “The Title I, IDEA, and CSP program offices did not incorporate a review of charter school closure procedures into their State Education Agency monitoring tools.”

The 2018, OIG report continues: “During our audit period, the Department did not consider charter school closures to be a risk to Federal funds; therefore, the Title I, IDEA, and CSP program offices did not prioritize providing guidance to State Education Agencies on how to manage the charter school closure process….”  “Without adequate Department guidance provided to the State Education Agencies and sufficient State Education Agency and authorizer oversight and monitoring of charter school closure processes, the risk of significant fraud, waste, and abuse of Federal programs’ funds is high.  The growing number of charter schools, from 1,993 in School Year 2000-2001 to 6,855 in School Year 2015-2016, and the number of charter schools that closed, ranging from 72 in School Year 2000-2001 to 308 in School Year 2014-2015, require the Department’s program offices to develop and implement a modified approach to overseeing the State Education Agencies.”

Finally: “We found there was no assurance that for the sampled closed charter schools (1) Federal funds were properly closed within the required period, (2) assets aquired with Federal funds were properly disposed of, and (3) the students’ personally identifiable information was properly protected and maintained.”

OIG’s earlier reports criticized the Office of Innovation and Improvement, which operates the federal Charter Schools Program, for its failure to monitor problems in the relationships of the charter schools receiving federal grants with the Charter Management Organizations providing services to the schools. In its 2012 report critiquing the federal Charter Schools Program, the Department’s OIG exposed the Department’s failure to ensure careful oversight of federal funds by the state departments of education that received the grants, and confirmed the Department’s failure to regulate Charter School Management Organizations charged with overseeing the operations of the schools supposedly under their purview.  In its 2016 report, OIG again condemned the Department of Education’s oversight.  OIG described the majority of charter schools studied lacking internal controls in their relationships with their management companies to prevent conflicts of interest. The lack of internal controls, explained the report, subjects the schools to the danger of financial risk and presents a lack of accountability for federal funds.  Further the 2016 report charged that for charter schools receiving federal Charter Schools Program funding, the Department had failed adequately to identify and mitigate risks in the relationship of specific charters to their Charter Management Organizations.

A primary policy irony of the past quarter century has been the creation by neoliberals and libertarians of school competition—via an unregulated, unaccountable, privately operated charter school sector—as the primary mechanism of public school accountability.  Instead we’ve been left with an unaccountable charter school sector stealing precious public education funding.