Evidence Keeps On Growing: Charter Schools Cannot Be Successfully Regulated

Can charter schools be regulated to protect the public interest, or is it time for a moratorium on new charter schools and ultimately the phase out of the ones we have?  Here are two articles—one digging deeper into abuses in the federal Charter Schools Program and the other about the failure of one state government to oversee charter schools.  Both were published over the weekend by the Washington Post‘s Valerie Strauss.  Together they will convince you it is time to terminate an unregulated education sector gone mad.

In the first piece, Strauss publishes Carol Burris’s new analysis: Florida’s Charter-School Sector is a Real Mess. Burris is the executive director of the Network for Public Education (NPE). Her new exploration of scandalous misuse of Charter Schools Program money in Florida is an extension of the Network for Public Education’s new report, Asleep at the Wheel, which examines federal dollars wasted between 2006 and 2014 on charter schools that never opened or eventually shut down. Since NPE released the nationwide report, Burris has been drilling down into wasted CSP dollars in specific states.

Between 2006 and 2014, the Charter Schools Program awarded $92 million to to Florida’s education department to start up or expand 502 charter schools. Burris reports that $34,781,736 of that total was spent on 184 charter schools which have closed or were never opened at all.

Nearly half of Florida’s charter schools, explains Burris, are operated by huge for-profit Charter Management Organizations (CMOs): “The nonprofit charter school becomes a ‘pass thru’ for the for-profit corporation to staff the school, provide fiscal, procurement and legal operations, and even be the landlord… According to the U.S. Department of Education, Charter Schools Program guidance document, for-profit CMOs… may not directly receive a CSP grant. However, the charter schools that are governed by a for-profit CMO may, as long as the relationship between the entities meet criteria that indicate independence.”

Actually in 2016, the Department of Education’s Office of Inspector General (OIG) investigated to see whether the federal government was demanding fiscal independence between the nonprofit charter school boards and the for-profit management companies those non-profit boards are supposedly hiring.  The OIG, Burris explains, discovered that in many cases, the management companies were essentially managing the boards and profiting from tax dollars as a result. The OIG discovered rampant conflicts of interest between charter schools and their for-profit CMOs. The Department of Education never followed up, however, by correcting the problems its own OIG discovered.

Burris explores the complex financial arrangements, involving the federal Charter Schools Program and large Charter Management Organizations operating charter schools in Florida.  She describes, for example, Academica, “a for-profit charter management company with schools in five states and the District of Columbia. It services 126 charter schools in Florida alone…”  The U.S. Department of Education’s OIG investigated three of Florida’s Academica schools—Excelsior, Mater High, and Mater East, and their findings at Excelsior alone exemplify the scale of the problems: “The auditors found that the Board of the Excelsior charter school, which ended its relationship with Academica in 2013, allowed Academica to find, design, and procure facilities, recommend staff, conduct the day-today running of the school, assume responsibilities for accounting, budgeting, and produce its financial forecast. The for-profit CMO participated in all charter board meetings and made recommendations to the board.” Burris concludes: “Considering the complicated web of conflicts of interest and raw profiteering, one would think that Academica would have been scaled back. Not at all. Deep-pocket contributions to Florida lawmakers have shielded Academica and other for-profit CMOs from regulations that (would) inhibit their ability to make a profit off taxpayer funds.”  Burris adds that a member of the Florida House of Representatives, Erik Fresen was, until 2016, chair of the House Education Appropriations Committee, “even while working as a consultant for a firm called Civica, which had contracts with Academica schools. During his eight years in the legislature, Fresen never bothered to file his taxes, resulting in a 60-day prison sentence after he left office.”

If the U.S. Department has failed to oversee the grants made to states by the federal Charter Schools Program, what about oversight by state governments themselves?  Charter schools in 44 states are authorized and overseen in state laws. Can’t we expect the state departments of education which administer the charter school laws to make sure there are, for example, no conflicts of interest?

In the second of last weekend’s columns about corruption in the charter sector, Valerie Strauss details plans for the formation of a new charter school in rural Alabama’s Washington County,  with fewer than 17,000 residents. The arrangements being made to open the Woodland Preparatory School are so labyrinthine they are almost impossible to follow.  Why is the state of Alabama permitting a new charter school to open in a tiny Alabama town whose citizens say they don’t want a new charter school?

Alabama state officials have approved the opening Woodland Preparatory School, although the six-term mayor of the little town of Chatom, where the school will open, “doesn’t want it and doesn’t know anybody who does.” Strauss continues: “A national organization that evaluates charter school applications gave the thumbs-down on Woodland’s application saying it did not meet educational and other standard benchmarks.  It’s sponsored by a new nonprofit organization while at the same time being built by a for-profit Utah company.  It will be operated by a for-profit Texas company headed by a man who founded a controversial charter school network in the Lone Star State.” Finally: “Residents fear the charter school will drain resources from the traditional public schools, and they say they have no recourse: The Alabama Public Charter School Commission—the panel that approved the new school—is autonomous and answers to no one, its chairman says.”

The arrangements for the founding of this school are bewilderingly complex: “The deed for Woodland Prep is held by Woodland Charter Holdings, a Utah company that has one registered agent, a woman named Jennifer Lind who is identified on the website of the for-profit American Charter Development company as its office manager… According to records kept by the State of Utah, Woodland Charter Holdings also has just one registered executive: American Charter Development. The same company contracted with the charter board to finance and build the Woodland school building…  Forming a holding company in Utah, where banking laws are particularly lenient, allows for the investors—American Charter Development, in this case—to set up a financial buffer between it and the debt incurred by Woodland Prep. If the school goes broke and has to close, it’s the holding company left on the hook, not ACD.  That means that ACD has relinquished its ownership of the Woodland Prep school to a holding company that ACD owns, and now ACD will charge itself rent and interest—paid for by the tax dollars that were once flowing into Washington County Schools… Woodland Prep will be operated by a company based in Sugar Land, Tex., called Unity School Services (USS), whose founder and chief executive officer is Soner Tarim.”

“Tarim previously co-founded and served as chief executive officer of Harmony Public Schools, a charter school chain that critics say is part of an informal network of scores of charter schools operated by followers of Fethullah Gulen, a Muslim preacher from Turkey…. A number of schools in the unofficial network have been investigated over a period of years by state and federal agencies amid allegations regarding hiring practices that favor Turkish nationals, abuse of the H-1B visa process, and preferences in the awarding of contracts to related Turkish businesses.”

Wanting to protect funding for the town’s two existing public schools, Mayor Harold Crouch of Chatom, Alabama opposes the new school: “If you bring in another site, there are simply not enough funds to provide for them all.”

Strauss confirms Mayor Crouch’s fears: “That’s a key reason that charters—which are publicly funded but established and operated by nonprofit and for-profit companies outside traditional school systems—are facing growing opposition after enjoying bipartisan support for many years. Not only has it become clear that charters are not a panacea for public education—as supporters had claimed—but also many school systems have found they are losing millions of dollars from their education budgets when public dollars are directed to charters.  And that is happening even though the fixed costs for traditional public school systems have not changed.”  Strauss’s concerns were central issues in the recent teachers’ strikes in Los Angeles and Oakland.  The fiscal problems for public schools when children carry away their per-pupil dollars to charters have also been confirmed in research by political economist, Gordon Lafer and Rutgers University school finance expert, Bruce Baker.

The arrangements for the Woodland Preparatory School in Chatom, Alabama are so tangled they are impossible to follow.  Why is this new school scheduled to open in a tiny Alabama town whose citizens say they don’t want a new charter school?  It seems that power and profits are subverting democracy in Alabama’s charter school sector.  And one cannot in Strauss’s report discover anyone involved with Woodland Prep who seems to care about educating children.

Power and money—awash in a system where unscrupulous charter school entrepreneurs can find a way to profit and where profits flow into political contributions—ensure that the sector cannot be adequately regulated in the public interest. The federal Charter Schools Program is out of control, and Alabama is merely an example of failed oversight by state government. It is time for a moratorium on new charter schools and for the phase out of existing charter schools.