What’s Happening with Adoption of Final Rules to Improve Regulation of the Federal Charter Schools Program?

Many of us submitted formal testimony to the U.S. Department of Education in late March, when the Department requested comments on proposed new rules to improve oversight of grants made by the federal Charter Schools Program. I have been, and I assume you may have been, wondering about what will be the final rules the Department adopts and the timeline for adoption of the final rules.

This blog will take a week’s summer vacation. Look for a new post on Tuesday, June 28th.

Libby Stanford recently addressed these questions for Education Week by speaking with Jessica Cardichon, a deputy assistant secretary for policy development.  Also, Chalkbeat‘s Matt Barnum interviewed Roberto Rodriguez, Assistant Education Secretary.

The Timeline for Adoption of Final Rules

We shouldn’t hold our collective breaths. Cardichon and Rodriguez report that the department received over 25,000 comments, which staff are considering.  Barnum quotes Rodriguez: “We are certainly continuing to wade through the many comments that came in… We know we need to finalize something, if it’s going to be applicable for this year’s funding, this summer. That is certainly a goal that we would like to meet… We’re assessing that in real time now, honestly, to determine what’s possible this summer.”

What Are Likely to Be the Department’s Priorities?

First:     Perhaps surprisingly, because it was not explicitly named in the new rules, one priority seems to be reducing the high closure rate for charter schools that have recently received a Charter Schools Program grant. Clearly Department staff are responding to the 2019 report from the Network for Public Education, Asleep at the Wheel, which exposed the outrageous closure rate of charter schools that had received Charter Schools Program funds. Perhaps we should recognize that this concern might have been part of the reason why the Department of Education proposed the rule demanding that each charter school startup application would include a community impact statement.

Education Week‘s Stanford details the problem from Cardichon’s point of view: “Charter school closure rates are a top administration concern.  From 2006 through 2017, the Office of Elementary and Secondary Education provided grants to 3,128 schools through the program. But 15 percent of the charter schools that receive funding through the federal program either never open or close before the three-year grant is complete, said Jessica Cardichon.”

Matt Barnum quotes Assistant Secretary Roberto Rodriguez: “(W)e did want to get involved in some of those quality issues. This is in part trying to be responsive to the fact that we know 15% of grantees, as we looked back across the program, either never opened or were closed by the end of the grant period. That’s 930 schools that received over $174 million in federal funding. It’s important to make sure that the stewardship of the program—particularly with respect to accountability and fiscal responsibility—is there.”

Second:     A Departmental priority seems to be ceasing to make grants to small nonprofit charter schools that are fully managed under what are called “sweeps contracts” by for-profit Charter Management Organizations.  Roberto Rodriguez tells Chalkbeat: “There is (an)… objective around addressing for-profit entities that operate charter schools—not entities that might partner with charter schools for services, but entities that might be for-profit operators. Which is something the administration would like to address in this rule—to make sure we are not, from a federal level, supporting dollars that are going to for-profit entities operating charters.”

Education Week‘s Stanford explains: “Schools that plan to contract with for-profit organizations have to describe all of the details of that contract, including the amount of federal funds that would be used to pay for services under the contract, information on the governing board members of the organization, and any conflicts of interest.”

Third:     It would appear that Department staff are listening a bit more to pushback coming from Nina Rees, the president and C.E.O. of the  National Alliance for Public Charter Schools against the Department’s proposed rule to demand a community impact statement in a charter school startup’s grant request. Education Week‘s Stanford explains: “Charter advocates are concerned that the proposed rules will discourage incoming charter schools from pursuing grants, preventing schools that don’t already have substantial outside funding from coming to fruition. Fifty percent of all charter schools rely on the program for their initial funding, Rees said. ‘If the funds are this complicated to access it will dampen the sector’s interest in opening more schools.'”

But Stanford quotes Jessica Cardichon pushing back: “The Education Department has since clarified that overenrollment is one of a number of factors that could demonstrate need. Applicants can include other factors that show a need for the school, such as evidence of demand for specialized instructional approaches. ‘Traditional public schools do the same thing before they build a new school, getting a sense of will they have sufficient students to maintain a certain level of enrollment… The idea that we’re doing something different, we think is a misconception.”

Rodriguez tells Matt Barnum: “The goal here was to try to do more to solicit a needs analysis, just as we do with many other programs across the department that address K-12 education…. One of the currents that we’ve seen in this comment is the worry about burden—the amount of time and effort that it would take to meet some of those requirements.  That’s something we’re looking at and paying close attention to and will really be considering carefully before we finalize any rule… The objective is to have some reflection of community input.”

Summary:     It looks as though it is a possibility that rules will be finalized by summer’s end and that the Department will hold firm on banning grants that would flow to Charter Management Organizations. There may be some easing of specific demands for a startup’s impact analysis and demonstrated collaboration with traditional neighborhood schools. Finally it appears that the Department wants to stop the flow of federal dollars to schools that are so poorly conceptualized that they will never open or will close soon after opening.

Just this week, the executive director of the Network for Public Education, Carol Burris published evidence of the need for stricter oversight of funds when charter school startups are delayed or schools fail to open: “Charter Schools Program grants to the states have a timeline of five years.”  In New York, eight charter schools in New York have filed a lawsuit claiming, “that in 2019, the U.S. Department of Education unfairly pulled promised funds from the schools when it called back unspent funding from a 2011 Charter Schools Program grant.”

Burris responds: “Despite the claim, the 2019 clawback of funds was not only justified but also long overdue… In 2011, the New York State Education Department (NYSED) was given more than $13 million from the federal Charter Schools Program (CSP)  to disperse as subgrants to charter schools as start-up or expansion funds. At the same time, New York’s big charter chains like Success Academy, Kipp, and Democracy Prep were also getting federal dollars from the Charter Schools Program Charter Management Organization grants. There was so much CSP funding with limited demand that NYSED could not give it all away… (B)y 2016, NYSED should not have continued to make sub-grants. But apparently, it did not stop awarding grants and return the excess funds. It continued to give the federal dollars out.”

This sort of situation is precisely the reason for Assistant Education Secretary Roberto Rodriguez’s statement to Chalkbeat‘s Matt Barnum: “It’s important to make sure that the stewardship of the program—particularly with respect to accountability and fiscal responsibility—is there.”

Burris’s New York story is the very reason why the new rules proposed by the U.S. Department to tighten up its own program are so urgently needed.

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