Talk of Charter Oversight in Ohio is Likely Just Talk

Ohio’s governor and members of the legislature have begun talking about regulating charter schools in a state that was called  by an official at the National Association of Charter School Authorizers, “the wild, wild west” of charter schools.  But it’s really only just talk, and the real question is whether the legislature will make any serious effort crack down on the charter sector whose tycoons have continued to fill legislators’ political coffers.

There are serious questions, for example, about whether any of the new regulations proposed by Ohio’s governor or House of Representatives would touch the kind of fraud that was recently investigated by the state auditor, who released a report on Ohio’s so-called “dropout recovery” charters that, he discovered, have been collecting state reimbursements for phantom students who are not really attending the schools.  This blog covered the auditor’s investigation here.

Patrick O’Donnell, a reporter for the Plain Dealer, has been investigating the recent discussions about regulating Ohio’s charters. In this report O’Donnell summarizes the contents of a proposed bill in the Ohio House that would, if it ever passes, prevent some of the really serious problems with Ohio’s charter schools.  And there are some extremely serious problems right now.  For example, if a charter school is failing miserably academically or found to be misusing state funds, the school would no longer be able to, ” ‘hop’ from one sponsor to another if a sponsor, the organization responsible for making sure they do a good job, cracks down on them.”  The bill, if passed, would also require charter school board members to “disclose if they have any family members or business associates doing business with the school.”  And the sponsors would be prohibited “from selling goods or services to the schools they oversee.”  Proposed regulations would require charter schools to have their own treasurers who are independent from the sponsors as well as the management companies hired by the charter school boards.

And while the new law, if passed, would not determine whether desks and computers and other equipment purchased with tax money belong to the charter school itself or the private management company hired by a charter school board to run the school, the new law would at least require the school to have established a clear agreement with the sponsor and management company about who owns the equipment. The agreement would need to define “which entity owns… school facilities and property including, but not limited to, equipment, furniture, fixtures, instructional materials and supplies, computers, printers….”  Currently ten of Ohio’s charter schools are involved in a long running lawsuit to determine if the schools, whose boards want to change management companies, can take with them the equipment purchased with tax money.  For-profit White Hat Management Company, whose management contract all ten schools want to terminate, claims it owns all of the equipment.

Here and here, O’Donnell examines Ohio’s Governor John Kasich’s proposal that the legislature crack down on Ohio’s system of charter school sponsors: “Ohio differs sharply from other states… by allowing many different kinds of agencies to take that sponsor/authorizer role.  In some states, only local school districts, universities or a few state charter boards can sponsor schools.  But Ohio has nearly 70 sponsors and is one of the few states that allows other nonprofit agencies to be sponsors… Some people… have accused sponsors of using schools as a money grab, just to collect three percent annual fees that are supposed to cover oversight costs or to find other ways to draw money from the schools.”  O’Donnell continues, “Asked last week how Ohio can justify having sponsors as a layer of bureaucracy in the process of cracking down on poor charter schools, National Association of Charter School Authorizers’ spokesman Greg Richmond could offer no defense of Ohio’s system. ‘It’s hard to rationalize or justify Ohio’s system,’ he said.”

O’Donnell reports that Kasich will ask the legislature to better regulate sponsors and perhaps eliminate those with low ratings. “The rating system currently has three categories: exemplary, effective and ineffective.  Kasich would add a fourth rating as the lowest: ‘poor.’  When an authorizer is rated as poor, the state would withdraw sponsorship rights and take over sponsorship of all of its schools.”  Current law puts low-rated sponsors on probation and blocks them from adding new charters to their roster until they improve.  Kasich proposes to reward the most successful charters by permitting them go to their local public school board to request that the local board of education place a local property tax levy on the ballot for the charter school in the same way public school districts in Ohio raise local millage.  Charters sponsored by “exemplary” agencies could also qualify for help from a $25 million state fund to be created to assist charter schools to purchase or renovate their school facilities.  The new rules Governor Kasich suggests the legislature pass would even apply to the “handful of authorizers that the state named as permanent sponsors in Ohio’s first charter school pilot project.”  Till now, these sponsors have been grandfathered out of regulations.

Are there reasons to be skeptical?  Yes.  Does all this sound too complicated to pass in the legislature?  Yes. Why focus on the sponsors and ignore the possibility of just regulating particular charters that are known to be wasting or stealing taxpayer dollars and failing to educate children?

One reason for skepticism is that, as O’Donnell reports, past efforts to get the Ohio legislature to regulate charter schools have failed.  In 2012, as part of a proposed Cleveland Transformation Plan, Cleveland Mayor Frank Jackson asked the legislature merely to pass enabling legislation for the formation of a local Cleveland charter school regulatory agency with representatives appointed from the city school board and civic and business leaders.  The legislature did permit the creation of what is  now called the Cleveland Transformation Alliance but denied the Transformation Alliance the right to shut down any charter schools, even if their academic or financial records are abysmal. The Cleveland Tranformation Alliance serves only in an advisory capacity.  The legislature has never even given the Ohio Department of Education the capacity to regulate charter schools or close those whose performance is poor.

Ohio is currently a one party state: Republican governor, Republicans with large majorities in both houses of the General Assembly.   Innovation Ohio recently tracked the political contributions of Ohio’s two biggest charter operators—William Lager of the Electronic Classroom of Tomorrow and David Brennan of White Hat Management:  “Between the two of them, they have contributed about $6.4 million to Ohio politicians and committees since 1998. Of that, less than 3 percent went to Democrats.”

It is clearly in the financial interest of Ohio’s legislative leaders that charter schools not be regulated.

The Rev. John Thomas Decries Attack on Democracy in America’s Big City School Districts

The Rev. John Thomas, the retired President and General Minister of the United Church of Christ and now a professor and administrator at Chicago Theological Seminary, writes a blog on that institution’s website about issues of the day.  His prophetic post this week considers Democracy Under Attack in urban public education: “In 1785, John Adams wrote, ‘The whole people must take upon themselves the education of the whole people and be willing to bear the expenses of it.  There should not be a district of one mile square without a school in it, not founded by a charitable individual, but maintained at the public expense of the people themselves.’  In 1787 the Northwest Ordinance set aside one section of each township for a school.  Most of us grew up never calling into question these foundational principles of our American republic.  Today, these notions seem to be turned on their heads.  The whole people is barred from meaningful engagement in the education of the whole people, and the responsibility to bear the expense is increasingly scorned by those who view public dollars as a piggy bank for their private ventures.”

Thomas’ blog post couldn’t be more timely.  Just two days ago New York’s Alliance for Quality Education and several partner organizations released a report, Good for Kids or Good for Carl?, that begs for public scrutiny of the likely conflict of interest involving Carl Paladino, the Buffalo, New York real estate developer who ran unsuccessfully for governor of New York in 2010, and who subsequently has joined Buffalo’s board of education.  According to the Alliance for Quality Education, Paladino is making lots of money from the charter schools that benefit from his votes on the board of education. When questioned about this matter by the Buffalo News, Paladino defended his right to make a profit: “If I didn’t, I’d be a frigging idiot.”

The Alliance for Quality Education explains: “Carl Paladino is the chairman of Ellicott Development, one of the largest property developers focused on the Buffalo area.  Paladino’s companies are the leading charter school developers in Buffalo.  Ellicott Development has worked with the private operators of at least five Buffalo charter schools, either flipping property to the private operators of those schools or financing school construction through pricey ‘leaseback deals’…  As the preferred real estate developer for Buffalo’s charter schools, Paladino is well-positioned to secure more business for himself as a result of using his position on the school board to bring more privately run charter schools to Buffalo.”

The report accuses Paladino not only of profiting from his dual role as school board member and real estate developer but also of failing to honor his own promise to recuse himself from school board votes about the charter schools connected to his business.  “He has a conflict of interest.  Instead of recusing himself, Paladino actually is the most vocal proponent of charter schools on behalf of the majority of the school board.  He recently led the way when the majority members of the school board passed a resolution in support of immediate conversion of four public schools into privately-run charter schools and even offered an amendment that would set the stage to potentially convert all of Buffalo public schools into privately run charter schools.”

In his new blog post, the Rev. Thomas writes: “In city after city the story is the same. Control and management of our public schools is being systematically removed from parents, teachers, and ordinary citizens, and placed in the hands of mayors, their political allies in state legislatures and governor’s offices, their wealthy donors, the operators of charter schools, and politically well connected entrepreneurs and vendors eager to make money from contracts for things like technology or maintenance with the charters they themselves have invested in.”

Profits siphoned from tax dollars are a big part of this problem.  The story of Carl Paladino’s real estate ventures in Buffalo is only the latest in a long series of tales of business tycoons making money from the tax dollars flowing into poorly regulated charter schools.  Earlier this week this blog covered Baker Mitchell’s schools in North Carolina and the national charter management organization, Imagine Schools, that operates in 11 states and conducts a real estate profit scheme through SchoolHouse Finance, its own real estate subsidiary.  Then there is the enormous charter mess in Detroit that was exposed in a week-long investigation last summer by the Detroit Free Press.  And in Ohio, David Brennan of White Hat Management and William Lager of the Electronic Classroom of Tomorrow (ECOT)—who has made over $100 million since 2001 from the two privately held companies he owns that provide all services for ECOT—have been very openly purchasing public policy.

But graft, corruption, and influence peddling are only part of what the Rev. Thomas is describing.  His greater concern is the threat to urban public education as a democratic institution.  Rev. Thomas describes Philadelphia, where an appointed School Reform Commission recently abrogated the legal contract the School District of Philadelphia had established with its teachers union. “Local school boards are vanishing and the collective bargaining rights of teachers, one of the few remaining countervailing power bases available to challenge the privatization of our schools, are under assault.”  He writes about New York City where Eva Moskowitz, the Success Academy Charter School diva, has been able to turn “her wealthy friends loose on the governor and legislature” to ensure that New York City redirects public funds to pay for rent in the private market for her schools if there is no empty space that can be found to co-locate her schools into public school buildings themselves.  And he describes Chicago, where he has been watching as political maneuvering blocked “a non-binding referendum that would have provided the citizens of the city an opportunity to offer an opinion on whether Chicago should return to an elected school board.”  There are other examples.  There is Newark, New Jersey, where Governor Chris Christie declared, “And I don’t care about the community criticism.  We run the schools in Newark, not them,”  and where his appointed superintendent has imposed a massive choice plan on the school district while quashing public protests including the outcry of the mayor. There is New Orleans where the schools were seized by the state and charterized after the 2005 Hurricane Katrina, and there is Michigan, where Governor Rick Snyder has imposed state-appointed emergency managers with the power to abrogate union contracts, turn over school districts to charter management organizations, and even shut down whole school districts experiencing financial problems.

“We have always imagined our schools to be the formative institutions of our democracy,” writes the Rev. Thomas. “What happens to all of us when that is no longer the case?”  I urge you to read Rev.Thomas’ fine column.

October Charter School Investigations—Tales of Fraud, Mismanagement, and Mis-Education

There is so much news from place to place about the financial and management scandals in particular charter schools and charter management organizations that it is hard to keep track. Schools are taking public money—and too frequently finding a way to make a profit—while failing to serve the children they enroll or neglecting to enroll particular groups of children with special needs.  All of this increases the burden on public schools and misspends tax dollars, thereby undermining the public good.  Here are just three examples that have surfaced during mid-October.

North Carolina ProPublica just published a major investigation of Baker Mitchell’s charters in North Carolina including Douglass Academy in Wilmington.  After he came to North Carolina in 1997, according to ProPublica, “Mitchell quickly connected with the state’s big political players, including conservative Kingmaker Art Pope.  By 2002, he was sitting alongside Pope on the board of the John Locke Foundation…. part of the State Policy Network, a Koch-supported group of think tanks whose agenda includes steering public funds away from traditional schools and toward charters, vouchers and tax credits for homeschoolers.”

Mitchell then established the same kind of racket that William Lager of the Electronic Classroom of Tomorrow has going in Ohio: he created a private, for-profit company owned by himself to provide all services for his charter schools. “The company, Roger Bacon Academy, is owned by Mitchell.  It functions as the schools’ administrative arm, taking the lead in hiring and firing school staff.  It handles most of the bookkeeping.  The treasurer of the non-profit that controls the four schools is also the chief financial officer of Mitchell’s management company.  The two organizations even share a bank account.”  Back in 2001 the Internal Revenue Service denied Mitchell’s management company  non-profit status, for, according to IRS, “Mr. Mitchell… controls both your management company and your lessor.  He has dual loyalties to you and his private, for-profit companies.  This is a clear conflict of interest for him.”  However, Mitchell’s board (on which he was serving actively as a member) protested and the IRS eventually capitulated based on promises by the board—promises never fulfilled, according to ProPublica.

Mitchell has also become involved in advocacy for privatization of education in North Carolina.  In 2011, he joined the state’s Charter School Advisory Council that helped eliminate the cap on the growth of charter schools.  In 2013 he was instrumental in helping push a bill through the legislature to remove oversight and regulation of charters and to provide a tax exemption “for landlords who, like Mitchell, rent property to charter schools.”

Adelanto, California: Bill Raden, a reporter for California’s Capital & Main, has investigated the first school in the nation to have undergone a “Parent Trigger” conversion.  The investigation tracks the operation of Desert Trails Elementary School during its first year of operation after it was seized by parents through a petition and subsequently charterized.  The American Legislative Exchange Council (ALEC) disseminated model “parent trigger” legislation across the state legislatures.  According to Raden, “At least 25 states have considered parent trigger legislation and seven of them have enacted some version of the law, including Connecticut, Indiana, Louisiana, Mississippi, Ohio and Texas,” in addition to California.

Rapid turnover of teachers has plagued Desert Trails. Although its executive director has been paid a salary of $200,000, teachers are reported by Raden to be earning only $3,300 per month.  “During its first year, teachers say, the charter lost a principal (Don Wilkinson) and a director (Ron Griffin)—both before the Christmas break—and its vice principal, six classroom teachers and its behavioral specialist.  In addition only nine of Desert Trails’ first-year teacher roster—or 33 percent—are returnees this year.”  Several teachers or former teachers who agreed to be interviewed tell of personally spending hundreds of dollars for basic classroom supplies.  They explain that drinking fountains were turned off to prevent their freezing at night during the high-desert winter when the heat was turned off to save money.

While Desert Trails employed a special education coordinator and teacher, teachers say they were advised by Debra Tarver, the current executive director, not to tell parents about their right to services for children with special needs.  Raden describes instances when parents of children with special behavioral needs were advised that the school “was not a suitable environment to meet their needs,” while school administrators denied that the students had been suspended or expelled.

Teachers report they were subject to a succession of curriculum changes as the school’s administrators turned over.  All report, however,  that intense pressure grew throughout the year to focus on language arts and math, the two tested subjects, and to cut out social studies, science, and physical education.  Raising test scores became an obsession.

Columbus, Ohio: Catherine Candinsky and Jim Siegel of the Columbus Dispatch examined real estate profit-making by Imagine Schools, a national charter management organization.  Candinsky and Siegel report that rent—paid to a real estate subsidiary of its national sponsor, Imagine Schools Inc.—is the highest expense for Columbus Primary Academy.  The school will pay rent of $700,000 this year to SchoolHouse Finance, a national Imagine-owned subsidiary, at the same time its expenditures for salaries and benefits will be only $614,000. “SchoolHouse buys the buildings, resells them typically for two or three times the purchase price, and then leases the facility from the new owner so it can rent the space back to Imagine.”  Policy Matters Ohio has highlighted that this arrangement yields profits for Imagine Schools “both at resale and as it collects rent.”

Real estate profit-making by Imagine Schools  is not merely an Ohio phenomenon: “The upshot is that the complex deals are diverting hundreds of thousands of public dollars to one of the nation’s largest charter-school operators, Imagine Schools Inc., and its affiliates.  Imagine operates 67 charter schools in 11 states and the District of Columbia.  At least three states and Washington, D.C, are investigating Imagine for real-estate maneuvers like those in Ohio, and a fourth state, Missouri, already has shut down several Imagine schools.”

As such investigations continue to turn up violations of the public trust, one wonders whether any kind of oversight is likely to be imposed by state legislatures.  Candinsky and Siegel conclude their Columbus Dispatch expose on Imagine Schools with a reflection on this very issue.  They describe the power of financial contributions for shaping public policy, in this case the political investments by Ohio’s two largest for-profit charter operators:  “David Brennan of White Hat Management and William Lager of the Electronic Classroom of Tomorrow, have combined to give $2.25 million since 2009 to state political parties, lawmakers and statewide officeholders, mostly Republicans.  That includes a combined $320,000 to the House GOP caucus and Speaker William G. Batchelder, R-Medina; $223,000 to Senate President Keith Faber, R-Celina, and his caucus; and $71,000 to (Governor) Kasich.  The likely top two leaders of the House starting next year got a combined $104,000 since 2009.”