Thousands of Charter Schools Close: Rip Off Taxpayers, Steal Students’ Future

Last week I received a press release about a new report: Center for Media and Democracy Publishes Full List of 2,500 Closed Charter Schools.  What to do with this information?  What does it really mean?  Isn’t the threat of possible school closure really the point of school choice driven by the theory of the marketplace?  Good schools will open and stay open but the bad ones will go out of business when parents vote with their feet.  Isn’t this the very mechanism by which the marketplace is supposed to hold schools accountable?

I opened the link to the Center for Media and Democracy’s website to learn the significance of the new report, which announced: “Among other things, this data reveal that millions and millions of federal tax dollars went to ‘ghost’ schools that never even opened to students… (N)early 2,500 charter schools have shuttered between 2001 and 2013, affecting 288,000 American children enrolled in primary and secondary schools…. For example, in the 2011-2012 school year, charter school students ran two and a half times the risk of having their education disrupted by a school closing and suffering academic setbacks as a result of closure.  Dislocated students are less likely to graduate.  In 2014, Matthew F. Larsen with the Department of Economics at Tulane University looked at high school closures in Milwaukee, almost all of which were charter schools, and he concluded that closures decreased ‘high school graduation rates by nearly 10%.  He found that the effects persist ‘even if the students attend a better quality school after closure.'”… Then there are the charter schools that never opened despite tax money from a federal program to help more entities apply to create even more charters.  Drilling down into the data of just one state in just one school year, 25 charter schools (or, really, just prospective charter schools) awarded grants in 2011-12 never opened in Michigan.  The non-profit groups behind these were granted a total of $3.7 million in federal tax money in implementation and planning grants, and they also received at least $1.7 million in state tax dollars.  These charter schools exist only on paper, in this case on grant notification forms and in databases of state expenditures.”

Back in May, the Center for Media and Democracy released another in-depth report that demonstrates the failure of the marketplace as a regulatory mechanism for schools.  In fact CMD’s report in May raises serious concerns about lack of regulation in the charter sector: “CMD’s review of appropriations reveals that the federal government has spent a staggering sum, $3.3 billion, of taxpayer money creating and expanding the charter school industry over the past two decades, but it has done so without requiring the most basic transparency in who ultimately receives the funds and what those tax dollars are being used for, especially in contrast to the public information about truly public schools.  Although some charters have a veneer of being alternative ‘public schools,’ many of them are run by for-profit companies or outsource key operations to for-profit firms, and are exempt from any local democratic control.  These billions have been funneled to charters through a patchwork of state laws often designed to prevent government agencies from exercising control over how that money is spent by charters or to exempt charters from rules that apply to traditional public schools…. This lack of oversight is a recipe for disaster for far too many American school children, and for taxpayers, when large chunks of the money end up either missing in action or in corporate charter school coffers.”

Just last week, as the Center for Media and Democracy was releasing its list of 2,500 closed charters, Doug Livingston, the education reporter for the Akron Beacon Journal, published the story of the disfunction and ultimate closure of the Next Frontier Academy, “an urban agriculture-based charter school” located in West Akron. Livingston’s report explains why this particular school closure wasn’t just an example of the marketplace regulating charters through accountability.

Livingston explains, “As the first day of school drew near this year, Unique Foxworth wondered whether her new school would believe that she had ever attended her old one.  She knew she did.  As a 14-year-old, she awoke at 5 a.m. each morning to catch a bus outside her East Akron home by 6:15 a.m.  At the central transfer station downtown, she would board another shuttle bound for Copley Road in West Akron.  She finished the 90-minute trip with a short walk to the Next Frontier Academy…. ‘It would always be the same three people that were there on time,’ said Foxworth, now 15.  ‘One was a teacher.  The other two were students.  I was one of them.'”

Reporting on Ohio charter schools, Livingston continues: “Now, like 200 other charters, the school has closed, adding to the $1 billion in taxpayer funding given to failed charter schools.  More charter schools closed last year than at any point in the industry’s 17-year history in Ohio.  For Foxworth, the closure meant finding a new school with only a few days notice.  Her mother said teachers—not administrators—told her of the school’s financial woes and likely closure.  As Foxworth searched for a new education, Akron Public Schools sifted through records for more than 60 students who attended the school.  None contained complete attendance counts or test scores, or adequate proof that students ever went there.”

Livingston’s report is thorough, with shocking details categorized by the story’s subtitles:

  • Broken promise: “The vocational charter school promised to teach agriculture to city students.  The state provided Next Frontier nearly $2,000 in additional funding per pupil to make it work.”
  • Chaotic closing: “The records weren’t easily obtained.  The school’s sponsor, Tri-County Educational Service Center in Wooster, said it sent staff to take them when the charter school refused to hand them over.  But the records were little more than cover letters….”
  • A violent place: “A teenage girl told police months later that an older male student ‘sexually assaulted her and held her against the wall’ inside the school.  Police recorded numerous thefts and fights at the school, which employed about five teachers and two administrators… Often parents, not the school, notified the police.”
  • Mismanaged money: “The Ohio Attorney General’s Office filed a worker’s compensation lawsuit in June.  Teachers were told to wait days before cashing paychecks as investors deposited money to keep the school’s bank account positive.  Summit County officials say $14,398.83 in taxes is owed on the property.”
  • Follow the money: “There’s a complicated paper trail that connects (Cleveland entrepreneur Michael) Hoffman’s company and the private landlord to the publicly funded school…. It starts with $125 in March 2012 when Hoffman paid the state to create the charter school.  A month later, he did the same to launch his company, Blue Lake Educational Management—a ‘limited liability company’ that shields Hoffman or school founder John Hairston from personal liability.”
  • Any assets?  “If there were desks or computers or anything of value, the sponsor would be responsible for selling the assets, paying bills and returning the balance to taxpayers.  The management company says the money is gone and no assets remain.”
  • Academic shortcomings:  “Ohio Department of Education records indicate staff lacked credentials or taught outside their areas of expertise…. Principal Tarik West, for example, held no administrative license, only a certificate as a substitute gym teacher.”

In June, this blog covered an effort by the national organizations that make up the Alliance to Reclaim Our Schools—American Federation of Teachers, Alliance for Educational Justice, Annenberg Institute for School Reform at Brown University, Center for Popular Democracy, Gamaliel, Journey for Justice Alliance, National Education Association, National Opportunity to Learn Campaign, and Service Employees International Union, the submission of a formal letter to U.S. Secretary of Education Arne Duncan demanding that the federal government begin regulating charter schools.  The alliance cited formal audits from 2010 and 2012 in which the Department of Education’s own Office of Inspector General (OIG), “raised concerns about transparency and competency in the administration of the federal Charter Schools Program.”  The OIG’s 2012 audit, the members of the Alliance explain, discovered that the Department of Education’s Office of Innovation and Improvement, which administers the Charter Schools Program, and the State Education Agencies, which disburse the majority of the federal funds, are ill equipped to keep adequate records or put in place even minimal oversight.  The State Education Agencies that lack capacity to manage the programs are the 50 state departments of education.  In its letter, the Alliance to Reclaim Our Schools demanded that the federal government establish a moratorium on the awarding of federal funds to charter schools until federal oversight is improved.

The Washington Post reporter Lyndsey Layton reported earlier this week, however, that on Monday, the U.S. Department of Education announced grants of $157 million to expand charter schools.  Layton adds, “Asked how taxpayers can be assured that federal dollars will be spent properly, (Arne) Duncan said it was largely up to states and the public agencies that approve charter schools… The department sent a ‘Dear Colleague’ letter to states emphasizing the importance of financial accountability for charter schools receiving federal dollars.  Duncan also said that his agency plans for the first time to publicly report some data, including the names of some schools that have received federal grants and their performance statistics.”

Scandal of Ohio Charter School Governance Finally Gets Some Attention

Nearly a billion dollars flowing out of the state’s public education budget every year.  Scandals brought to light years after a charter school closes, money not recoverable because it’s been so long, no news coverage in time to make a difference.  Blog postings here and there about outrageous profits for Electronic Classroom of Tomorrow czar, William Lager.  Charter czars and management companies buying the legislature.

Will it ever be possible to get the money back where it belongs in public schools in a state where—even in the richer suburbs—families now have to pay added fees for their sons to play on the football team?  This is Ohio today.

With the coming of spring this year, however, there are some sprouts of hope.

Ohio’s state auditor, William Yost, has begun looking into big and small scandals alike.  Yesterday the Plain Dealer reported that Yost fined two officials of the Elite Academy of the Arts, $45,000 they had misspent on lavish meals and airfare before the school was closed in 2012 for academic failure.  Elite Academy of the Arts was located on East 93rd street in a very poor neighborhood, but according to Yost, “It turns out the ‘Elite’ in their name refers to their personal tastes when spending public money intended for education.”  Yost has taken to naming bluntly the corruption in Ohio’s unregulated charter sector: “theft from children.”

State auditor Yost is to be commended for using the power of his office to investigate the operation and supposed regulation of Ohio’s charter schools.  In February, the Columbus Dispatch reported that Yost is undertaking the investigation of three not-for-profit long-distance sponsors of Ohio charters: the St. Aloysius Orphanage of Cincinnati, the North Central Ohio Educational Service Center in Marion and Tiffin, and the Warren County Educational Service Center.  Yost began looking into these statewide charter sponsors when, 9 of the 17 new charters opened in 2013 in Columbus closed within  months, “costing taxpayers at least $1.6 million and leaving hundreds of students without schools.”  The Dispatch continues: “The auditor has said he has the authority to investigate sponsors because they receive state money.  Sponsors can keep up to 3 percent of the $780 million in state education aid that flows to charter schools annually.”

Then earlier this week, as this blog reported here, the Akron Beacon Journal launched a creative multi-city journalism project to expose the lack of transparency in the operation and regulation of Ohio’s charter schools.  The Beacon Journal has created NewsOutlet.org, a collaboration of the journalism programs of the University of Akron, Youngstown State University, and Cuyahoga Community College, along with two newspapers, the Beacon Journal and the Youngstown Vindicator and several public radio stations.  Already reporters have exposed the secrecy and conflicts of interest built in to charter school governance in Ohio along with the extraordinary expense that Ohio law imposes on public school districts for busing children to charter schools.

Finally, the Ohio Coalition for Equity and Adequacy of School Funding published a five part series (here posted as Governance Part 1,2,3,4,5) by an insider,  a long time school administrator who consulted toward the end of his career with the Ohio Department of Education to implement Ohio’s charter school laws.  “Dennis Smith is a retired school administrator who worked both as a sponsor representative for charter schools as well as a consultant in the state charter school office.”

According to Smith (Part 4), “It’s all about governance.”  “In Ohio, the Revised Code treats a charter school as a school district, with its own treasurer, chief administrative officer, and governing board.  But state law also allows great latitude regarding the operation and governance of the school….  In such loose legal construction, charter schools become the creatures of those who ‘own’ them, rather than the public who pays for them….  This flaw in charter school genetic code will, over time, be its undoing for the American public is showing signs of increasing impatience with institutions….  If they believe the companies ‘own’ these ‘public’ schools, then surely the public will understand that the companies also ‘own’ the boards…  An owned or bought board is not characteristic of our democratic system.”

Smith is particularly concerned about large charter chains under Ohio law that considers charter schools “their own school districts.”  Smith declares: “Public policy should not be so deranged as to allow private, for-profit national charter school chains to ‘own’ school districts.” (Part 5)

 

 

Flipping Schools, The Story of Ohio Charter Schools

Doug Livingston, the education reporter for the Akron Beacon-Journal, describes an old, old practice permitted by Ohio charter school law:  Failing Charter Schools Often Close, Reopen with Little Change.

“Analysis of Ohio Department of Education records for years prior to 2013 show(s) seven charter schools operated by for-profit management companies were closed for academic performance and were reopened under that same company, with only one exception,”  writes Livingston.

Members of the public are rarely aware of the shady practices of Ohio’s big charter managers, because the privately held companies control information and the Ohio legislature, beholden to large contributors who manage charter schools, has made it impossible for the Ohio Department of Education or anyone else to regulate such scams.

Livingston reports: “The process of flipping a failing school is an easy one. The original idea behind charter schools was that a group of citizens interested in experimenting with new education concepts would create a nonprofit organization, form a school board and work with the Ohio Department of Education to launch a school.  In practice, however, many for-profit management companies do all the work.  And when they see a forced shutdown on the horizon, they create a new nonprofit, establish a new school board—or keep the same one—and in essence control the entire process.”  Notice that the management company is creating the school board when it ought to be the community, non-profit school board deciding whether to run the school or bring in a management company.

Livingston quotes John Charlton, an official with the Ohio Department of Education: “We have no authority to make a judgment about the worthiness of a [prospective] school.”  “If we suspect that there may be recycling of a school closed for poor academic performance—same management company, same building—we ask the sponsor to verify that a different program is going into the building; that the majority of staff at the building are different; that there’s a different governing authority.  We ask for this verification, and we have gotten assurances that it is not the same old, same old, but we have no explicit legal authority to prevent this from happening.”

One of the turnaround strategies being prescribed nationwide by the U.S. Department of Education when a public school persistently struggles to raise standardized test scores is that the school may be turned over to a Charter Management Organization or an Education Management Organization.  However, regulation of such privatization is left to the discretion of state legislatures.  While the U.S. Department of Education conditions qualification for federal grants under programs like Race to the Top, School Improvement Grants, and No Child Left Behind waivers on states’ adopting its prescribed turnaround models, the federal government has no legal authority to regulate the charter schools it is encouraging states and school districts to create.  The regulation itself is controlled by the politics of the states qualifying for the federal grants.

Nor do the federal grants that “incentivize” privatization pay the full cost.  In Ohio, as in other states, when charters and e-schools are created, state funds follow the child away from the public school district.  In some states local tax money is diverted as well.

In their applications for these competitive federal funding streams, states promise to create quality alternatives.  In Ohio, at least, legislative politics have ensured that the state has no way to prevent mismanagement of the funds  charter schools suck out of public school coffers.  Neither can Ohio ensure that children will be provided a quality academic experience.

White Hat Charter Scandal Continues in Ohio

This week, for the first time in my memory, the Cleveland Plain Dealer reports extensively on the scandal of White Hat Management, the charter school operation owned by powerful Akron political contributor, David Brennan. In Funds are at Issue in Charter School Suit the newspaper reports on a case that has now been appealed to the Ohio Supreme Court.

Several White Hat schools, trying to pull out of the network, sued White Hat in 2010 to find out what equipment belongs to the management company and what belongs to the school. The plaintiff schools won at the trial court and appellate level, but White Hat continues to appeal the case. At issue is that White Hat, a privately held corporation, is not required to explain how much it spends on salaries or equipment. Not even to its own appointed school boards or to the staffs at its schools.

What the Plain Dealer does not point out this morning is that the public’s interest is a little different than the interests of the boards of the schools trying to leave the network.

White Hat is known to take 96 percent of the state revenue provided for the schools, but White Hat is not required to document publicly how much goes into educating the children and how much is taken as profit by owner David Brennan.

The attorney for White Hat, Charles “Rocky” Saxbe is reported in today’s paper as explaining “that the company already has provided as much information as state law and the Ohio auditor’s office require.” That is of course the problem: the state of Ohio has failed its obligation to protect the public from waste and to protect children from low performing schools. Charter school boards appointed by Charter Management Organizations are not in a position to provide adequate oversight over the corporations that appoint them.

The other problem, as the Akron Beacon Journal reported on June 29 is that David Brennan, a huge political contributor, got a boost of $1,400 per child in Basic Aid in the biennial budget that our governor signed into law on June 30. This is far higher than the increase in state aid for traditional public school districts or for other charter schools, even those posting far higher test scores than Brennan’s schools.

In a 2010 pastoral letter sent to the President and Congress, the governing board of the National Council of Churches wrote: “We believe that democratic operation of public schools is our best hope for ensuring that families can secure the services to which their children have a right. On balance, we believe that if government invests public funds in charter schools that report to private boards, government, not the vicissitudes of the marketplace, should be expected to provide oversight to protect the common good.”

For more about troubles in Ohio’s charter schools, read this new report from Innovation Ohio: Unfair Funding: How Charter Schools Win & Traditional Schools Lose.

Trouble for Public Education in the Industrial Heartland

The end of June brought action across the states that will affect public education for millions of children. Here are reports from three states in the industrial heartland where children’s right to quality education remains seriously threatened: Ohio, Pennsylvania, and Michigan.

In Pennsylvania the state has slashed funding for the School District of Philadelphia, forcing massive school closures and the elimination of 3,859 teachers, aides, administrators and other staff; libraries, the arts, nurses, aides, assistant principals, counselors—all gone. Daniel Denvir continues to report the catastrophe in Philadelphia for the Philadelphia City Paper. Here is Corbett to Philly: Fix Your Own Schools. Last week Randi Weingarten, president of the American Federation of Teachers and education historian and reformer Diane Ravitch wrote a letter asking Arne Duncan, U.S. Secretary of Education, to intervene to avert catastrophe in Philadelphia. I urge you to read the letter in which teachers describe what cuts will mean for particular schools and the children they serve. Cuts to the School District of Philadelphia will have a disparate impact with poor students of color most seriously denied opportunity.

The Akron Beacon Journal reports Ohio Budget Rewards Low Performing Charter Schools. While this piece reports only on funding for Ohio’s charter schools and skips the subject of cuts to public schools that serve the majority of Ohio’s children, remember that funds for charters in Ohio remove funding from traditional public schools. Here the Beacon Journal describes the influence of David Brennan, owner of White Hat Management (a Charter Management Organization), Ohio’s most significant investor in political contributions to legislators.

One bright spot: Education Justice at the Education Law Center reports Michigan Court Rules Children Have the Right to Education. On June 27, a Michigan Circuit Court ruled that the state’s constitution guarantees the children of the Highland Park School District the right to an education and rejected a motion to dismiss a lawsuit brought by the ACLU protesting the Highland Park emergency manager’s hiring of the Leona Group (a Charter Management Organization) to run the school district without the emergency manager’s having taken steps to provide for the basic literacy of the children. According to the Education Justice Newsletter:

” ACLU-MI filed the case in July 2012, on behalf of Highland Park’s students, many of whom are years behind in reading and writing. At the heart of the lawsuit is a Michigan law that requires districts to provide additional “special assistance” to students who are not performing at grade level on fourth- and seventh-grade tests. The assistance must be “reasonably expected … to bring reading skills to grade level within 12 months.”

Plaintiffs are seeking a court order for immediate remedy by the state, including research-based methods of instruction, highly trained educators and administrators, new educational materials and textbooks, a clean and safe learning environment, and implementation of a process for monitoring progress. ACLU’s Moss asserts that the state, district and for-profit charter company have no program to systematically deliver the mandated reading assistance.

ACLU’s lawsuit in Highland Park is urgently important as a brake on Michigan’s emergency manager legislation that abrogates democracy by permitting the state to seize power from local school boards and appoint emergency financial managers who can over-ride labor agreements, fire entire teaching staffs, and hire private firms to run local school districts without public oversight. The citizens of Michigan overturned the “emergency manager law” in a referendum last November, but Governor Snyder and the Michigan legislature responded by passing a new emergency manager law that is supposedly referendum-proof.