Illinois Senate Overrides Rauner’s School Funding Veto; Will House Save New Equity Plan?

This blog will take a 3 week, end-of-summer break.  Look for a new post on Thursday, September 7.

School finance in somebody else’s state seems like the ultimately irrelevant, boring, and “in-the-weeds” kind of topic. Except that what is happening in Illinois ought to interest us all because it is a microcosm of today’s ideologically driven, rancorous and dangerously divisive state politics.

In Illinois, discord between the General Assembly—both houses dominated by Democrats—and the far-right Republican Governor, Bruce Rauner, has left a statewide school funding crisis looming over the beginning of the school year. In July, the legislature overrode Rauner’s veto of the state budget, but then on August 1, Rauner vetoed part of the school funding distribution formula on which the budget was based. Gov. Rauner has the power in Illinois to veto or amend parts of a piece of legislation, and he used his “amendatory veto” on the school funding formula.  Rauner also showed his true political priorities right after the Democratic legislature overrode his budget veto when he fired key officials in the Governor’s office and replaced them with a staff from the Illinois Policy Institute, an ALEC-affiliated, far-right think tank.

But there are new developments this week. On Sunday, August 13, the Illinois Senate overrode the Governor’s school funding veto. The outcome in Illinois now depends on the House, which begins a special session today to try to resolve the crisis. It is expected that a veto-override will be harder to arrange in the Illinois House.

Here is some background on the school funding crisis threatening the wellbeing of children in Illinois as the 2017-18 school year begins. Until the first week of July, an ideological impasse between Rauner and the legislature had left the state without a budget since Rauner’s election two and a half years ago.  The funding crisis had undermined universities, health care, and social services along with public education. In June, after Rauner vetoed a state budget passed by both houses of the General Assembly, lawmakers finally came together on July 6 to override his veto. But the budget stipulated that school districts would not be able to access their state funds until the Governor approved an “evidence-based” school funding formula, passed by both houses of the legislature, but not yet sent to Rauner for his signature.

Then on August 1, Rauner vetoed that school funding formula. Illinois law permits Rauner to impose what the state of Illinois calls an “amendatory veto”—the right to veto part of a bill—in this case the part of the school funding plan that Governor Rauner called  “a bailout” for the Chicago Public Schools. (Here is an explanation of some of the complexities of Illinois law and the current school funding mess.”)  After Rauner vetoed parts of the school funding formula, the Chicago Tribune explained: “Rauner’s veto sets the stage for weeks—and potentially months—of uncertainty, kicking the issue back to Democrats who control the General Assembly. The senate now has 15 days to consider the veto, then the House gets another 15 days.”

This past Sunday, August 13, the Illinois Senate voted, 38-19, to override Governor Rauner’s amendatory veto of the school funding plan. Here is Tina Sfondeles for the Chicago Sun-Times: “The Illinois Senate on Sunday moved quickly to override Gov. Bruce Rauner’s amendatory veto of a school funding measure he’s declared a Chicago bailout…. The Illinois House has 15 days to act on an override…. State aid payments to school districts were to be sent out on Aug. 10—but the state needs an ‘evidence-based’ school funding formula approved before it can release those funds, per an agreement Democratic leaders inserted into a budget package. The vote came a day after the Illinois State Board of Education released an analysis of the veto that found Chicago Public Schools would receive $463 million less in funding this next school year under Rauner’s funding plan than the measure approved by the Democrat-controlled Illinois General Assembly.”

The Chicago Sun-Times recently reported that the city of Chicago, whose mayor controls the nation’s third largest public school district, has said it would deliver an additional $269 million to the Chicago Public Schools “from the city of Chicago government to balance its $5.79 billion operating budget for the coming year, school officials announced Friday… The $269 million in local funding would be in addition to state money that school officials are hoping will arrive through school-funding legislation that’s been the subject of yet another ongoing political battle in Springfield.”  The Chicago school district has been experiencing a funding crisis for years, closing schools, cutting staff, and borrowing until its bond rating has collapsed. Like other school districts across the state that serve concentrations of very poor children, Chicago has suffered for years from a statewide system that fails to recognize disparities across school districts in local taxing capacity and the enormous needs of school districts in poor areas.

In an interview for Alternet with Jennifer Berkshire, Dusty Rhodes, a reporter for NPR Illinois, explains the history of Illinois’ highly unequal school funding, something legislators tried to address in SB1, the bill that recently suffered Rauner’s amendatory veto: “Really what SB 1 is is a way of quantifying what kind of resources a school needs and coming up with what’s called an adequacy formula for each district.  Our current school funding formula just says,  ‘here’s how much it costs to educate a kid in Illinois: $6,119.’  Period. The current formula is also heavily dependent on property taxes, which means that areas with malls and fancy homes are able to spend considerably more on education. So we have a district that spends $32,000 a year per child and districts that spend $7,000.”

As if we couldn’t read the signs that the school funding fight in Illinois is part of the state-by-state, far-right assault on public services, last week we learned that Governor Rauner has been working with Cardinal Blasé Cupich, who leads Chicago’s Catholic Archdiocese, to push for the addition of tuition tax credits, a form of private school vouchers into the school funding mix. Rauner is implying perhaps he’ll compromise on the school formula if the Legislature will only insert private school vouchers into the school funding plan. The program Rauner proposes would start relatively small. The state would grant only $100 million in tuition-tax-credit vouchers the first year, but Rauner’s proposal would allow the private school voucher plan to grow rapidly year-by-year. The plan would make children in poor and middle class families eligible—children in families with income up to $113,775.  Tuition tax credit vouchers would significantly reduce the state’s general fund, of course—the pot of money from which public schools are funded.

Illinois exemplifies statewide politics as described by economist Gordon Lafer. State governments have become the focus of a fifty-state strategy by the far-right: “For three decades, beginning in the Reagan administration, authority over social and economic policy and programs has steadily moved from the federal to state governments. Unemployment insurance, welfare, food stamps, transportation, education and health care spending…. Fewer than one-quarter of adults are able to name their state senator or representative, and fewer than half even know which party is in the majority… For all practical purposes, these debates take place in a vacuum. Apart from labor unions and a handful of progressive activists, the corporate agenda on such topics encounters little public resistance at the state level because hardly anyone knows about or understands the issues.” (The One Percent Solution, p. 34)

Twenty-six states today are now dominated by far-right ideologues in both houses of the legislature and the governor’s mansion. Others are ideologically fractured.  Illinois, with a Democrat-dominated legislature and a far-right Republican governor, is the site of the kind of battle that is lacking in what are now 26 all-Red states, where, too often, taxes have been quietly slashed, school funding reduced, or vouchers, tuition tax credits or Education Savings Accounts passed without a fight. The far-right continues to transform state governments—through massive corporate lobbying and the influence of the American Legislative Exchange Council (ALEC) and its network of statewide think tanks like the Illinois Policy Institute.

Illinois is the perfect window through which we can watch the implications of this kind of fight.

Ohio Auditor Moves to Recapture Profits from ECOT’s Contractors and Overpayment to Sponsor

For years in Ohio all sorts of people have been siphoning off profits from online charter schools—the giants like ECOT, smaller online schools, and private companies with which the schools contract for management and curriculum. There have also been overpayments to nonprofit charter school sponsors, the organizations that Ohio pays as a percentage of any school’s enrollment to authorize the opening of the school and subsequently to oversee its operations.  Perhaps it is more accurate to say that the state pays the sponsors to pretend to oversee charter schools while they pad their operating budgets with state money.

Now, suddenly, Dave Yost, Ohio’s state auditor, has stopped looking the other way. In a story this blog has been tracking, the state has now halted a 2003 practice of paying online charter schools a per-pupil fee merely for providing 920 hours of curriculum per year.  Beginning in 2015, the state has instead demanded that the schools prove students are actually actively engaging with the online curriculum for 920 hours per year.  In other words, the state has begun to demand accurate attendance reporting. The ensuing scandal has primarily involved the giant Electronic Classroom of Tomorrow, ECOT, which has been over-reporting enrollment by 60 percent.  The state is trying to claw back $60 million in overpayments to ECOT for the 2015-16 school year alone, and is gathering data to bill ECOT for over-reporting its enrollment during 2016-17 as well.  ECOT has responded by trying to block the claw-back in court but has lost in a series of decisions. A final decision is pending from the Ohio Supreme Court.

In the meantime, Dave Yost, Ohio’s state auditor, once an ECOT supporter, has cracked down in an effort to protect what Ohio’s major newspapers have now established is a huge theft of Ohio tax dollars. Patrick O’Donnell of the Plain Dealer recently clarified what have become the stakes involved: “With ECOT cutting staff and losing students as a result of the state’s ‘clawback’ of funding, worries are growing that the school would declare bankruptcy to avoid repaying the money.”

Last week, Yost demanded that not only a charter school—in this case ECOT—must pay back the tax dollars it has overcharged the state, but also the private management companies with which the charter school has contracted must pay back any dollars they have collected due to the charter school’s misrepresentation of its enrollment. And the sponsoring agency which authorized the school and supposedly oversees it on behalf of the state must return funds it earned from the school’s misrepresentation of its enrollment.

Even while Ohio awaits a decision from the Ohio Supreme Court in ECOT’s case, Yost and the Ohio Department of Education have begun deducting into an escrow account a percentage of ECOT’s state reimbursement for the 2017-18 school year as a way for the state to recapture what ECOT owes taxpayers.

Here is Jim Siegel of the Columbus Dispatch explaining Yost’s demand that for-profit charter management companies and nonprofit charter school sponsors must also begin returning overpayments back into state coffers: “If a charter school must repay the state for unjustified enrollment figures, state Auditor Dave Yost wants the sponsor and for-profit companies that oversee and run the school to share the burden. Charter school boards… need to recoup payments made to management companies, software developers and sponsors that are paid based on a percentage of school revenue, he said.”

Siegel quotes Yost: “I understand that this may produce significant difficulty for some… (charter) schools, and for their management companies and sponsors… But if a school was over-funded, it must not result in a windfall profit for a private company, while the school itself suffers with reduced funding.”  Yost warns schools that they are responsible for going after the dollars overpaid to their sponsors and contractors: “(Y)ou have an obligation to go and retrieve a portion of that revenue… This isn’t an option, in our view.  You are a public entity, a public school.  You owe this to taxpayers, the state and to children to retrieve those resources.”  He continues: “I’m sure the private companies are not voluntarily going to write a check for several million dollars and send it back.”

Siegel adds that William Lager’s privately held companies, IQ Innovations (which provides curriculum for ECOT) and Altair Management (which operates the school), have profited, just as ECOT’s nonprofit sponsor has also over-collected from ECOT: “The state Board of Education this year, following a department attendance audit and a ruling from a state hearing officer, ordered ECOT to repay $60 million to the state after the school was unable to verify roughly 60 percent of its enrollment for 2015-16.  Yost said that means ECOT should recoup $9.6 million from IQ, $2.4 million from Altair and about $900,000 from the Educational Service Center of Lake Erie West in Toledo, the school’s sponsor, which gets 1.5 percent of its revenue each year.”

Is there reason to fear that ECOT will declare bankruptcy to avoid paying back the tax dollars the state has overpaid?  Siegel reports that in late July, “ECOT”s board voted to slash spending by $56 million for the coming school year, including the layoff of 250 employees.”  Then last Friday, ECOT’s superintendent, Rick Teeters announced that he will resign next month to spend more time with his family.  Dave Yost worries that William Lager, the owner of the private, for-profit companies that run ECOT, will try to protect his profits by having ECOT declare bankruptcy.  In the Plain Dealer, Patrick O’Donnell reports, “Yost… questioned whether ECOT has the ability to declare bankruptcy.  He called it a public entity subject to different bankruptcy rules that individuals or companies and said it would need permission from the state tax commissioner to do so.” O’Donnell speculates as well that, “Yost’s stance may give other boards legal cover to demand re-payment from contractors, since they have now been ordered to do it.”

Overpayments by the state to ECOT for the school’s apparent gross inflation of its enrollment figures are much larger than for smaller online charters, but Jim Siegel reported on Saturday that, “(O)ther online charter schools also face repayments, and a few others have shut down. One school, TRECA Digital Academy, recently reached a tentative settlement to repay $5 million, to be deducted over five years… The Department of Education also reached a smaller settlement with the Massillon Digital Academy… Akron Digital Academy is awaiting a decision from the hearing officer. Appeals are ongoing for Buckeye Online School for Success, Findlay Digital Academy, Quaker Digital Academy and Reynoldsburg-based Virtual Community School, which was just taken over by the state.”  Three online schools have closed—Provost Academy (which paid back the state in full), Marion Digital Academy, and Southwest Licking Digital Academy, which still owes $140,500 to the state for inflated enrollment figures it submitted.

The state’s overpayment to the Educational Service Center of Lake Erie West in Toledo—ECOT’s nonprofit sponsor—is only a tiny piece of the ECOT scandal. But Ohio’s reliance on nonprofit organizations as charter school sponsors—agencies often located across the state from the schools they supposedly oversee—agencies that frequently lack any experience in education—agencies poorly regulated by the state—is an enormous problem. In ECOT’s case, one can only imagine the sort of lax oversight imposed by the Educational Service Center of Lake Erie West when one observes the massive theft of state dollars paid to ECOT for phantom students. Last week this blog covered other serious problems with Ohio’s nonprofit charter school sponsors.

Parents Gather 111,540 Signatures, Put Arizona Education Savings Account Vouchers On Hold for Now

Parents in Arizona collected and, this week, delivered petitions with 111,540 signatures to Arizona’s secretary of state to stop the expansion of a new law that would have made 1.1 million public school students in Arizona eligible for Education Savings Account vouchers.

To demand that a referendum on the new Education Savings Account expansion be placed on the November 2018 ballot, opponents of the Education Savings Accounts were required to present 75,321 valid signatures. Save Our Schools Arizona’s collection of over 100,000 signatures puts the implementation of the law on-hold until the signatures can be verified.

The law to launch Education Savings Accounts was an expansion of school choice provisions already in place in Arizona.  SB 1431, enacted and signed in April, would make 1.1 million students eligible to apply, although it capped the number of children who could receive grants under the program to 30,000 by 2022.

Here is the Arizona Republic describing what happened last Tuesday: “A law expanding Arizona’s school-voucher program was put on hold Tuesday after foes delivered 111,540 signatures to the secretary of state in hopes of giving voters the final say on whether the controversial measure should stand. Save Our Schools Arizona, a volunteer group that formed in opposition to Republicans’ expansion of the Empowerment Scholarship Account program, said it gathered the signatures from public education supporters across the state who oppose using tax dollars for private school tuition and are critical of the program’s lack of transparency. Supporters transported the petitions to the Capitol in 76 bankers boxes using a yellow school bus and a red wagon.”

Arizona already had a similar program, although it was limited to students with special needs, students in schools with low test scores, and military families.  Education Savings Accounts work like a debit card. Parents give up their child’s right to public education and can then use the dollars in the account to pay for private school tuition, the cost of home schooling, tutoring, online education, or therapy for a disabled child.

In April of this year when Governor Doug Ducey signed SB 1431, the Education Savings Account expansion, into law, Derek Black commented on the Education Law Prof Blog: “Arizona just passed a bill that will make every student in the state eligible for a voucher.  It may become the biggest voucher program in the nation.  The ‘program allows parents to take between 90 percent and 100 percent of the state money a local public school would receive to pay for private or religious education. The average student who isn’t disabled will get about $4,400 a year but some get much more.’  The funding mechanism and its expected cost to the state is murky… What is clear, however, is that Arizona’s per public funding for public schools currently ranks 47 out of 50 states. To make matters worse, it distributes those meager funds unequally…  Arizona spends the least on students who need it the most… Arizona ranks 49th in the nation in terms of the level of fiscal effort it exerts to fund its schools… These cold hard facts show that the state is not really interested in supporting adequate and equal education for its students.  Thus, it is no surprise the state would double down and make matters worse.”

The Wall Street Journal reported earlier this week on the effort by Save Our Schools Arizona to collect signatures: “The effort by the public school advocacy group included rallies and knocking on doors to gather signatures. The group believes the program could wreak havoc on public school budgets if it were allowed to expand from its current enrollment of 3,500 to about 30,000 students.”

Arizona Republic reporters spoke with the chair of Save Our Schools Arizona: “Beth Lewis, chair of Save Our Schools and a fifth-grade teacher, said the volunteer group had defied expectations by halting the law from taking effect. ‘Ninety days ago, few people thought this day would come… We, the people of Arizona have done the work to put this on the ballot.  We know Arizona will vote no.'”

Save Our Schools Arizona has also begun collecting money for the political campaign that will be necessary to pass the referendum in November of 2018, with the average donation reported at $38 and most money collected within Arizona. The public school support group expects, however, that the collection of over 100,000 signatures is merely the beginning of a difficult battle.

Dark money groups—many from outside the state—are already organizing to defeat the referendum and preserve the expansion of Education Savings Accounts. Many who support the Education Savings Account program came to the Capitol to protest Save Our Schools Arizona’s presentation of the signed petitions demanding the 2018 referendum. The Arizona Republic reports: “The law was put on hold the same day Americans for Prosperity Foundation, a political education arm of the Koch brothers network, launched an effort ‘to tout Arizona’s untold educational successes.’  In a news release, the group said it is ‘spending six figures to tell Arizonans how charter schools, Empowerment Scholarship Accounts, and other policies are enabling more Arizona children to obtain a quality education.’  Sydney Hay of American Federation for Children, a pro-school-choice, dark money group that lobbied for SB 1431, was also present along with dozens of people whom she said supported the measure.”

The American Federation for Children, of course, is the pro-school-privatization organization founded by our current U.S. Secretary of Education, Betsy Devos, who chaired its board for years.

Cleveland Presses State of Ohio to End Shoddy Oversight by Charter Sponsor, St. Aloysius Orphanage

Ohio, where charter schools can be authorized by nonprofit agencies, even agencies with no experience in education, is a national exemplar of poor oversight of its charter school sector. Agencies frequently sponsor schools in far away cities, as there is no requirement in state law that authorizing agencies be located near the institutions they supposedly oversee.

In the news this week is charter school sponsor, St. Aloysius Orphanage—along with Charter School Specialists, the for-profit firm with which St. Aloysius Orphanage has contracted to provide all the services required of charter school sponsors by the Ohio Department of Education.  St. Aloysius Orphanage was founded in Cincinnati, Ohio in 1837.  It has evolved from a 19th century orphanage into a 21st century mental health agency, which also provides a local Cincinnati charter school for children needing special education services. St. Aloysius Orphanage has also become one of Ohio’s statewide charter school sponsoring agencies.

The Cleveland Transformation Alliance submitted a recommendation this week that the Ohio Department of Education revoke St. Aloysius Orphanage’s authority to continue sponsoring charter schools within the Cleveland Metropolitan School District.  The Transformation Alliance was created as part of the Ohio Legislature’s imposition of a “portfolio school reform” plan that expanded school choice and charter schools across the Cleveland District back in 2012. The state granted the Transformation Alliance the authority to review charter school sponsors, but gave the Transformation Alliance no real power. Final decisions about the authorization and placement of new charter schools is up to the Ohio Department of Education. Whether the  state will accept the Transformation Alliance’s recommendation to curtail the activities of St. Aloysius Orphanage as a charter sponsor in Cleveland remains a question.

This week’s recommendation by the Cleveland Transformation Alliance that the state revoke St. Aloysius Orphanage’s right to continue sponsoring charter schools in Cleveland is damning not only of the job being done by St. Aloysius Orphanage and its contractor, Charter School Specialists.  The letter sent by the Transformation Alliance to State Superintendent Paolo DeMaria also broadly condemns Ohio’s system for regulating charter schools.

Here is the Plain Dealer‘s Patrick O’Donnell reporting on this week’s action by the Transformation Alliance: “The St. Aloysius Orphanage, the sponsor and overseer of 42 charter schools across Ohio, is not worthy of overseeing any new schools in Cleveland, city leaders decided on Monday… Mayor Frank Jackson’s school quality panel says it should not be allowed to. Members said Monday that despite St. Aloysius having a high rating from the state, it does too little to guarantee school quality. They say St. Aloysius is quick to create mediocre or poor schools just to offer school choice for its own sake. They questioned whether profit is a major motivation for adding more schools. And they questioned St. Aloysius’ reluctance to shut down schools that perform poorly.”

The Transformation Alliance’s letter this week to State Superintendent DeMaria explores several serious concerns. When members of a Transformation Alliance task force met by phone with representatives of St. Aloysius, “The sponsor representatives addressed questions…  about the relationship between St. Aloysius, the nonprofit that is eligible to be a sponsor in Ohio, and the for-profit firm with which St. Aloysius contracts to perform all its sponsorship services, Charter School Specialists.  The task force was left without complete clarity on the arms-length relationship between the two entities, how the academic performance of its sponsored schools fits within St. Aloysius’ evaluation of Charter School Specialists, and the motivation that drove St. Aloysius to become a statewide sponsor of… (charter) schools, particularly given its original mission to serve families in the Cincinnati area.”  “The task force also noted that St. Aloysius’s sponsorship fee is 3 percent of a school’s state funding allocation, the maximum allowed by the state… (G)aps in the type and quality of oversight are apparent.  St. Aloysius staff represented on the interview team were unable to adequately answer questions about specific school improvement efforts. It was also not clear that St. Aloysius’s board had any member with an education background…. The task force also expressed some concern that Charter School Specialists, which delivers all sponsorship services for St. Aloysius, also provides school treasurer and other services for sponsored schools for a separate fee. It is not clear how arms-length assurances are maintained.”

The Transformation Alliance also raises questions about school quality: “While St. Aloysius has an articulated process of charter renewal and revocation, this process does not appear to be driven by schools’ academic performance nor tailored specifically to individual schools… The task force found that St. Aloysius did not sufficiently demonstrate a clear vision for quality authorizing and failed to demonstrate an adherence to high academic standards described in the Cleveland Plan… A review of three years of publicly available data on St. Aloysius’s 27 K-8 schools across Ohio shows mixed results…. Literacy standards for grades K-3 are met in only one of 21 reporting schools.  Gap closing is not met in any of the reporting schools. Value-added is met in 13 of the 26 reporting schools… In 2015-16, two-thirds of St. Aloysius’s 15 high schools, all of which are dropout recovery schools, did not meet state standards, compared to 40 percent in that category for all dropout recovery schools across the state.”

The Transformation Alliance has been examining St. Aloysius this summer because the statewide sponsor is set to open a new charter school in Cleveland this fall, Orchard Park, in the West Park neighborhood: “In making the decision to open a new school in the Westpark neighborhood, St. Aloysius noted the availability of an empty building. St. Aloysius did not make use of the 2015 IFF report on Cleveland, which compared the supply of high-quality seats to the number of school-age children in each Cleveland neighborhood. That report showed that Westpark is not a high-priority neighborhood in terms of new schools.”

There are some other serious problems with the new school planned by St. Aloysius at Orchard Park.  Patrick O’Donnell, of the Plain Dealer, has been reporting for several weeks about the for-profit company with which St. Aloysius has contracted to open and manage the school, Cambridge Education Group. Cambridge’s Florida counterpart, Newpoint Education Partners has been indicted in Florida, as has the founder of both companies, Marcus May.  O’Donnell explains: “Cambridge Education Group, the operator of 19 Ohio charter schools and of a new school about to open in Cleveland’s West Park neighborhood, is distancing itself from recent fraud and racketeering charges in Florida against founder Marcus May. But details are trickling out about how much that alleged fraud may have spread from Florida to the 19 schools Cambridge operates here in Ohio.  And Cambridge and its counterpart in Florida, Newpoint Education Partners—a company that is itself under indictment in that state—have had a tight relationship for several years, besides just being founded by May. The school logos in both Ohio and Florida for Cambridge and Newpoint have the same theme…. and the two companies have shared the same officers at times, including Cambridge owner and President John Stack. Stack has not been charged in the case.  His name does not appear in court filings against May…  Stack said that he was unaware of any of the schemes to defraud schools of money that May is accused of.”

Charter School Specialists, the for-profit company with which St. Aloysius Orphanage contracts to fulfill its sponsorship responsibilities, is headed by Dave Cash, who is quoted in an additional article by Patrick O’Donnell about the problems at Cambridge-Newpoint, which St. Aloysius intends to hire to run its new Orchard Park charter school: “We have been aware of the legal concerns of Newpoint in Florida and have been in contact with the prosecutor in the case… The boards of each school that utilize Cambridge Education Group have also been monitoring the case and staying abreast of the issues.”

O’Donnell asked Cash directly, “Given that Cambridge has a low academic rating from the state, why would you pick them?” Here is how he describes Cash’s reply: “Cash responded only that Cambridge applied to be sponsor, that his company approved the school last year and that it was ‘re-approved based on completion of our rigorous application process.'”

It is reassuring that the Cleveland Transformation Alliance has recommended that the Ohio Department of Education revoke St. Aloysius Orphanage’s authority to continue authorizing charter schools in Cleveland. We can only wish that the Ohio Legislature had given the Transformation Alliance real power to eliminate shoddy and shady charter operators within the school district’s boundaries.

Tuition Tax Credit Vouchers Added by Rauner as Bargaining Chip in Illinois School Funding Debate

It shouldn’t be particularly surprising that a proposal to add tuition tax credit school vouchers for children living in families with annual income up to $113,775 has been thrown as a bargaining chip into the Illinois school funding impasse being negotiated in a special session in Springfield. After all, Governor Bruce Rauner has hired a staff of advisors right out of the Illinois Policy Center that pushes such bills, Cardinal Blase Cupich, head of Chicago’s Catholic Archdiocese has met with Rauner to push hard for the program, and the American Legislative Exchange Council (ALEC) has a ready-made model bill that can be pulled right off the shelf.

Here is how things stand in Illinois (covered in more detail in this blog last week).  Illinois is a divided state whose legislature remains dominated by Democrats but whose current Republican governor, Bruce Rauner adheres to far-right ideology including austerity budgeting (and now, clearly, a belief in school privatization via vouchers).  Until the first week of July, due to an ideological impasse, the state had lacked a budget since Rauner’s election two and a half years ago, and the funding crisis had undermined universities, health care, and social services along with public education.  In early July, after Rauner vetoed the state budget passed by both houses of the General Assembly, lawmakers finally came together to override his veto. But the budget stipulated that school districts would not be able to access their state funds until the Governor approved an “evidence-based” school funding formula, passed by both houses of the legislature, but not yet sent to Rauner for his signature. Last week, Rauner vetoed that school funding formula. Rauner can use what the state of Illinois calls an “amendatory veto”—the right to veto part of a bill—in this case the part of the school funding plan that Governor Rauner called “a bailout” for the Chicago Public Schools.

A special legislative session has ensued.  The Senate gets 15 days to consider the veto and the House another 15 days.The General Assembly of Illinois can kill the entire school funding formula or perhaps reach a compromise.  And into these intense negotiations the subject of tuition tax credit school vouchers has been introduced.

Here is the Chicago Sun-Times: “Another powerful player has quietly joined the tangled web of talks about allocating public education money to schools before the fast-approaching first day of class: Cardinal Blase Cupich. The influential head of Chicago’s Catholic Archdiocese met with Gov. Bruce Rauner about trying to get a tax benefit for those who contribute to scholarships for parochial and private schools. The cardinal’s overture drew strong support from the Republican governor, cautious looks from Democratic leaders… As Democrats continue to push for an override of Rauner’s school funding veto, state Sen. Andy Manar, D-Bunker Hill, on Thursday characterized the archdiocesan scholarship program as as something the governor is asking of Democrats.”

Here is Chicago’s WBEZ explaining the details of the tuition tax credit voucher program: “Under the draft proposal reviewed by WBEZ, individual taxpayers could choose to send up to $1 million annually to scholarship organizations rather than to the state Department of Revenue. Those diverted taxpayer dollars would fund scholarships to pay tuition cost at private or parochial schools, or to pay the cost of a public school education in a district outside a child’s community. All told, the state could dole out $100 million annually in tax credits to finance this scholarship program. If the scholarship fund attracts at least $90 million in donations in any year, it would grow to $125 million. It could continue to grow by 25 percent annually, with no cap, as long as taxpayers send at least 90 percent of the maximum allowed to the fund. Donors could direct their money to a specific school, rather than a specific student, and some eligible students could be turned away. The proposal is striking in its reach. Any family of four earning up to $113,775 annually would be eligible for a scholarship. In Illinois, 67 percent of families of two or more people earn up to $100,000 a year, according to U.S. Census Data.”

As in other states like Indiana, the program would begin small but have the potential to grow rapidly once passed.

The voucher proposal may actually work as a bargaining chip. The Sun-Times reports that the idea has some appeal for the powerful Illinois House Speaker Mike Madigan: “‘Democratic negotiators are not warm to giving the Cardinal the scholarship program to the level’ he’s pushing a source said. Illinois House Speaker Michael Madigan supports the idea that the program could fund scholarships, but not as initially proposed, said his spokesman….”

In his new book on the corporate policy agenda to slash taxes, undermine public sector unions, and privatze public services, Gordon Lafer introduces his chapter on “The Destruction of Public Schooling” with a quote from Joseph Bast, (past) president of the Heartland Institute… (another Illinois) ALEC affiliate: “Elementary and secondary schooling in the U.S. is the country’s last remaining socialist enterprise…. The way to privatize schooling is to give parents… vouchers, with which to pay tuition at the K-12 schools of their choice…. Pilot voucher programs for the urban poor will lead the way to statewide universal voucher plans. Soon, most government schools will be converted into private schools or simply close their doors. Eventually middle-and upper-income families will no longer expect or need tax-financed assistance to pay for the education of their children, leading to further steps toward complete privatization…. This is a battle we should win….” (The One Percent Solution, p. 127)

Begin modestly with a bargaining chip in a debate that is holding up basic school funding just as local school districts need their August 10th state funding check to begin the school year. Start by awarding $100 million annually in tuition tax credit vouchers, but build in plenty of room for rapid growth. Neglect to remind the public that tuition tax credits are not a mere tax deduction; with tax credits, 100 percent of one’s contribution to the scholarship-granting organization is removed from the taxes that once fed the state’s general fund. And suddenly—and with less money in the general fund—-Illinois will be supporting two separate systems—a private voucher system and a public education system.

Basic arithmetic demonstrates how public school children will inevitably lose school counselors and nurses and find their class size increased.

No Shame: ECOT Continues to Cheat Ohio Taxpayers Even While Awaiting Final Court Decision

Two prominent and long-experienced national organizations, the NAACP and the National Education Association, have passed resolutions demanding a moratorium on the authorization of new charter schools until some kind of oversight can be put in place to protect students and the investment of tax dollars. Charter schools are being authorized under the laws of 43 states, with an outrageous lack of public oversight in some states.

Ohio and the Electronic Classroom of Tomorrow provide the very definition of the problem. ECOT, as the giant online school is known, awaits a final decision from the Ohio Supreme Court that would permit the state to claw back $60 million in overpayments from the taxpayers to the school for the 2015-16 school year alone. During that school year, ECOT claimed it was serving 15,322 full-time students, but the state has been able to verify only 6,800.

Thanks to Ohio’s major newspapers, the scandal continues to be exposed as each new chapter unfolds.

Here is how the Columbus Dispatch began its editorial on Sunday: “ECOT’s brazen plundering of the Ohio treasury continues to set a new bottom for shameless. The state’s largest online school, told to repay $60.4 million overbilled in a previous school year for students who were MIA, appears to be inflating current enrollment—overcharging the state to raise money to repay its debt. The fear is that Ohio taxpayers will never see a dime of what ECOT owes. The enterprise is employing the time-honored strategy of ‘extend and pretend’: Ignore state orders on how to properly count enrollment for reimbursement.  Appeal the Ohio Department of Education’s orders, upheld by a succession of Ohio courts, while continuing to claim that the state has no right to document that students actually are logging in and getting educated. Drag out the legal fight, a no brainer since the school is paying its legal bills with taxpayer dollars.  And before the Ohio Supreme Court rules, grab as much state cash as possible.”

In Cleveland, the Plain Dealer also editorialized on Sunday: “Ohio Auditor Dave Yost recently sent a letter to the Ohio Department of Education advising it to ‘impound a significant portion of any further funding’ to the Electronic Classroom of Tomorrow until the state can verify the online charter school’s student attendance numbers for the upcoming school year. There are good reasons for this: ECOT has not repaid Ohio the $60 million in reimbursements it owes for what the state determined was ECOT’s 59 percent overstatement of student attendance figures for the 2015-16 school year.  ECOT is arguing its student numbers were correct but, so far, the courts have sided with ODE.  ECOT’s appeal to the Ohio Supreme Court is pending… Yost is right. ECOT claimed 15,300 online students two years ago but could only provide evidence to verify 6,300, according to ODE.  Why take at face value its estimate of 14,000 students this coming academic year?”

On Sunday, the Dispatch also published an extraordinary investigation—by reporters Catherine Candisky and Jim Siegel—of ECOT’s history.  They remind us that besides donating huge political contributions that have endeared ECOT to Ohio’s legislators, William Lager, ECOT’s founder and the owner of the two privately held companies that provide the school’s curriculum and its operations, has featured those with political influence as the school’s annual commencement speakers including Ohio Auditor Dave Yost at three commencements, Governor John Kasich, and even Jeb Bush, a national leader promoting school privatization.

But Yost has now come to understand that Lager and ECOT are trying to cheat Ohio’s taxpayers.  On July 21, Patrick O’Donnell reported for the Plain Dealer: “The state needs to send less money to the Electronic Classroom of Tomorrow… state Auditor Dave Yost says, or it may never recover the $60 million the school already owes.”  In a letter to state education superintendent Paolo DeMaria, Yost asked the state to escrow part of the state’s funding for ECOT for the upcoming school year until ECOT’s enrollment figures can be verified. According to Yost’s request, the state has begun deducting $2.5 million each month from ongoing payments for 2017-18. “Instead of receiving a little over $8.1 million in state tax dollars toward opening the school again this fall, ECOT received just under $5.6 million earlier this month. But that 5.6 million may be too much, Yost said. ECOT is claiming 14,000 students again, Yost noted, so the per-student payments to the school are possibly too high…”  Yost explains: “It is virtually the same number of students ECOT claimed for the 2016-17 school year, and far in excess of the audited number your department found supported for the 2015-16 school year.”  “I am concerned that ECOT is overstating its FTE (attendance) for cash-flow purposes, and the state may not be able to claw back any funds that are improperly distributed to ECOT.”

Yesterday O’Donnell added that the Department of Education has decided to withhold 12 percent of ECOT’s funding for the upcoming school year until the state’s audit of active participation by ECOT’s students is complete: “These cuts would be added to the $2.5 million monthly deductions the state is already taking from the school’s funding to cover the school’s past attendance issues.”

From Candisky and Siegel’s investigation we also learn that ECOT was always envisioned primarily as a money-making scheme, not an experiment in education reform. The idea was not hatched by people with a background in pedagogy, school psychology or educational philosophy: “After making and losing his first fortune in the office supply business, William Lager hatched a plan for Ohio’s first online charter school on the back of napkins over countless cups of coffee at a West Side (Columbus) Waffle House. ‘He was flat busted broke, worse than we were. He would sit there all day long drawing on napkins,’  said Chandra Filichia, a former waitress at the Waffle House on Wilson Road who was tapped to help recruit Electronic Classroom of Tomorrow’s first class of students and worked 16 years for Lager… Lager, Filichia recalled, would photocopy $5 coffee cards—each good for 10 cups of coffee—to save money while working on his business plan with longtime friend and ECOT co-founder Kim Hardy.  The two of them attended state-run classes on how to start a charter school, where they met Coletta Musick.  The former principal brought an actual education background to the team.  Lager already had connections for obtaining computers and office equipment. David Brailsford, a Toledo ticket broker, provided the early financing… But once Lager inked… (the) deal, his financial woes didn’t last long.  ECOT—and his affiliated for-profit companies that provide instructional materials, services and marketing—have brought Lager a fortune.”

Here is what ECOT has amassed—all from tax dollars: “From 2001 to 2016, ECOT took in more than $1 billion from Ohio taxpayers, and of that total paid more than $170 million to Lager’s companies to run the day-to-day operations of the school and provide it with educational software.”

In the fifteen years from 2001-2016, Lager bought a $300,000 condo in downtown Columbus, a $433,500 vacation house on a lake, a $995,000 house in a Columbus suburb, and a $3.7 million house in Key West, Florida. He has also donated $2.1 million in political contributions to Ohio Republicans.

In 2015 the Ohio legislature strengthened the charter school law to prevent conflicts of interest and double dealing, but by that time, ECOT was well established.  In 2001, report Candisky and Siegel, “Lager and Hardy hand-picked the ECOT board that employed their company. In fact, the man who signed the school’s agreement with Lager’s Altair management, ECOT’s board chairman Donald Wihl, was a friend who owned the condo where Lager was staying.  Wihl’s daughter was employed as the ECOT board’s secretary.”  Once then-state auditor Jim Petro began investigating the school back in 2001, three board members resigned along with the director of educational services, and the director of academic affairs. In that same year, Lager’s partner Hardy also resigned.

Petro discovered that the state had, in 2001, paid ECOT $1.9 million during a two month period for students for whom the school could not document any hours of instruction: “An April 2002 audit said the school was overpaid $1.7 million in 2001 after ECOT ‘did not utilize an internal audit function to monitor the hours of educational opportunity. Petro also found the school had no procedures for withdrawing students and no policy on how enrollment would be counted, nor was information available on whether all students got appropriate computer equipment.”

Candisky and Siegel continue: “Petro, who later became a Lager ally and spoke at ECOT’s 2006 commencement, wrote to the Department of Education in March 2000 that… (charter) school boards are made up primarily of employees and board members from management companies and are not representative of the particular community.’… But the legislature wouldn’t take action to significantly limit conflicts of interest and provide stricter oversight of school operations and sponsors for 13 more years.  Meanwhile, two things grew: Ohio’s poor reputation among national education experts as the Wild West of charter schools, and political contributions from for-profit school operators, particularly Lager and David Brennan, founder of another charter school operation, White Hat Management.”

Once a charter school scam is well established—especially an operation where profits are involved and are being strategically invested in campaign contributions to the legislators who would have to do the regulating, it is virtually impossible to protect the taxpayers and the children. Ohio’s ECOT perfectly exemplifies why a national moratorium is needed on the authorization of new charter schools until oversight can be imposed.

Betsy DeVos: So How’s She Doing?

Six months in, several writers have set out to remind us who Betsy DeVos is and to consider where the U.S. Department of Education stands under her leadership.

Writing in the U.K. for The Guardian, David Smith recalls: “(I)t is DeVos, America’s 11th education secretary, who is viewed by many… as its most dangerous and destructive since the post was created by Jimmy Carter in 1979. DeVos, a devout Christian, stands accused of quietly privatising schools, rescinding discrimination guidelines and neutering her own civil rights office… DeVos—who once called traditional public school districts a ‘dead end’—is accused of defunding and destabilising public education in Michigan by bankrolling school choice initiatives.  Now… she is trying to apply the same ideas to the nation, championing privately run, publicly funded charter schools and voucher programmes that enable families to take tax dollars from the public education system to the private sector.”

And, in a sparkling New York Magazine profile, Lisa Miller sums up the impact of Betsy DeVos and her family—longtime far-right activists and philanthropists behind right-wing causes. First there is the family’s role in Michigan education politics: “Detroit now has a greater percentage of kids in charters than any city in the country except New Orleans. Eighty percent of those charters are for-profit. The number of charter schools is growing while the number of students in Detroit continues to shrink, so schools pursue kids like retailers on sale days, with radio ads and flyers and promises of high-end gifts. Still, only 10 percent of Detroit’s graduating seniors are reading at a college level, and the charter schools perform better than or as well as the district schools only about half the time.  When last summer a bipartisan group of concerned Detroiters tried to introduce some accountability and performance standards to the system, GLEP stepped in and killed the measure.” GLEP is the Great Lakes Education Project, a pro-privatization lobbying group founded and funded by Betsy and Dick DeVos.

Miller neatly captures who Betsy DeVos is: “Trump has hired other oligarchs to run his federal agencies, and he has staffed the Executive branch with people who, like DeVos, might have been called ‘lobbyists’ in former lives. But DeVos is a hybrid of the two.  Fortified by great wealth and strong religion in the shelter of a monochromatic community, she has throughout her life single-mindedly used that wealth to advance her educational agenda… She was raised to believe she knew exactly what was right.  And for decades, this certainty has propelled her ever forward, always with her singular goal in mind. But what’s right in the bubble in which she has always lived doesn’t translate on YouTube, or in Cabinet meetings, or on the battlefield of public schools, where stakeholders have been waging vengeful politics for years. This is what those advocates who had admired the zeal she brought to their cause didn’t have the foresight to grasp. Out of Michigan, without her checkbook, DeVos is like a mermaid with legs: clumsy, conspicuous, and unable to move forward.”  Miller writes that Betsy DeVos’s long-time friends and allies—Campbell Brown, Jeb Bush, Eva Moskowitz—“have gone quiet, evading the opportunity to offer further praise.”

Examining DeVos’s record earlier this month, this blog concluded that DeVos has accomplished far less than everyone feared, although there is cause for concern that DeVos is quietly neutralizing the department’s Office of Civil Rights and delaying rules to protect college students who have taken out loans to attend unscrupulous for-profit colleges. But as far as privatization of  K-12 school education goes? Not much progress. Reporters who cover these issues in-depth seem to agree with this assessment.

Alyson Klein, Education Week‘s top reporter following federal policy describes a federal department that has struggled since DeVos took over: “(M)any in the education community were terrified the billionaire school choice advocate would quickly use her new perch to privatize education and run roughshod over traditional public schools. Maybe they shouldn’t have been quite so worried. Nearly six months into her new job, a politically hamstrung DeVos is having a tough time getting her agenda off the ground.”

Klein notes that a House budget bill neglects to fund the very dangerous idea of making Title I portable, a hot issue ultimately rejected by Congress when the federal education law was reauthorized in 2015: “Earlier this month, the House panel charged with overseeing education funding snubbed DeVos’s most important asks so far: using an education research program to push school vouchers, and allowing Title I dollars to follow students to the school of their choice.”

And, Klein reports, “DeVos may not have better luck on the other side of the Capitol, Sen. Lamar Alexander, R-Tenn., the education chairman said.  ‘Not all Republicans support federal dollars for vouchers… I think school choice advocates, and I’m one of them, have made a lot more progress state-by-state and community-by-community than in Washington  I think it’s more difficult here.'”

What about tuition tax credits, the other form of vouchers DeVos has extolled?  Klein explains: “The Trump administration has also hinted that it will pitch a federal tax credit scholarship, which would allow individuals and corporations to get a tax break for donating to scholarship-granting organizations. But that plan, which could be attached to a broader effort at overhauling the tax code, has yet to be rolled out. And time is running short to get it over the finish line this year… One potential stumbling block to getting a tax credit initiative off the runway: There aren’t yet enough top-level political appointees at the agency to think through the policy and sell it on Capitol Hill. DeVos remains the only official at the department who has been confirmed by the U.S. Senate.”

Michael Stratford at POLITICO describes the staffing delay: “EDUCATION DEPARTMENT HIRING HITS A WALL: The task of staffing the Education Department with fresh political faces appears to have hit a wall. Dozens of individuals have dropped out, frustrated by the drawn-out, rigorous hiring process. Those in the pipeline are wondering what’s taking so long. And fewer folks are throwing their hats in the ring, doubting whether the Trump administration’s pledge to dramatically expand private school choice options for working class families will ultimately go anywhere… A lack of senior political hires has failed to attract other talent, compounding the problem…. And the political hires now at the Education Department have way too much on their plate. President Donald Trump has only formally nominated two individuals for politically appointed, Senate-confirmable positions…”

Stratford draws this conclusion: “Amid the chaos, the Hill doesn’t seem interested in funding the president’s school choice budget proposals and it’s unclear if the White House will get behind a plan to expand private school choice through tax reform—a huge lift for Congress and the administration.  Folks who support private school choice are ‘increasingly pessimistic’… (a) source said. ‘There still seems to be people in the pipeline that could get through. But it seems like no one new is getting in line.'”

Does this mean that advocates for strengthening the public schools can let up?  Not at all.  As long as Betsy DeVos remains unpopular with the public and with members of Congress, it will be harder for her to undermine public education. It is our job to continue—relentlessly—to define the importance of the public schools, which are required by law to serve all children, meet their particular needs, and protect their rights. We must also take Sen. Lamar Alexander’s observation seriously: vouchers and tuition tax credits have had more success in state legislatures than in Congress. ALEC model laws are being introduced in statehouses across the country and must be carefully tracked and opposed.