Will New California Law Banning For-Profit Charter Schools Make a Difference?

Many of the states passed charter school enabling legislation back in the 1990s, before there was any understanding of how these privately operated schools—naively imagined as innocent incubators for innovation—might take advantage of public goodwill and access to pools of tax dollars to find ways to make a profit. By now we ought to have learned a lesson.

There are a few instances of fledgling regulation—notably last week, when California Governor Jerry Brown signed a law that is supposed to ban for-profit charter management companies and for-profit “sweeps” management contracts under which for-profit management companies take over and operate charters that are formally not-for-profit.

Living in Ohio, however—where the notorious Electronic Classroom of Tomorrow stole what is now known to be well over a billion dollars over a seventeen year period while legislators and potential state regulators looked the other way as campaign contributions flowed from the school’s founder and operator—I am skeptical about any state’s capacity to develop the political will to stop the ripoff.  Strong, ethical leadership by politicians would be required.

The problem with California’s new oversight law, according to those who have studied it, is that it really only pretends to impose oversight.

The Washington Post‘s Valerie Strauss fills in some history: “California has permitted charter schools—which are publicly funded but privately operated, sometimes by for-profit companies—since 1992.  Since then, the charter sector has grown so much that the state now has the most charter schools in the country, and the most charter school students.  It is estimated that there are about 1,275 charter schools, with a collective student population of about 630,000 students in California. Nearly 35 charter schools, with some 25,000 students are run by five for-profit companies. Though the number of charter schools has grown in California, oversight has not….”

Governor Jerry Brown, the founder himself of two charter schools in Oakland, has never been a fan of regulation.  In fact in the past, he has vetoed legislation that would have increased regulation. Last week, Brown, uncharacteristically, signed a law which bans for-profit charter schools, like the state’s affiliates of online schools operated by K12, Inc. The new law also prohibits the practice of nonprofit charter boards of directors’ hiring for-profit management companies to operate their schools. Gov. Brown has received widespread praise for signing—finally—a law regulating his state’s charter school sector.

But Carol Burris, the executive director of the Network for Public Education, spent months researching and writing Charters and Consequences, a blockbuster November, 2017, expose of what she dubbed, “California charters gone wild.” I urge you to review this fascinating report about charter school operations that, you would think, ought to have been banned by law a long time ago. In her response to Jerry Brown’s recent signature of Assembly Bill 406, however, Burris regrets that California’s new law will not effectively control some of the worst practices in California’s for-profit charter sector: “Assembly Bill 406, no matter how well intended, will not shut down California’s for-profit schools anytime soon. In some ways, it may make matters worse by obscuring the reality of what many charter schools are—schools run by private corporations that receive public funding with insufficient oversight and supervision.  And whether they are for-profit or nonprofit, there will still be ample opportunity in the charter sector for profiteers to take advantage of the public treasure and trust.”

In her report last November, Burris described tiny, broke and underfunded elementary school districts that have turned themselves into charter school authorizers and subsequently chartered affiliates of the largest national chain of for-profit charters, K12 Inc. The purpose is simple: Despite that the students in the online school are not required to reside within the boundaries of their school districts, these districts have been permitted to authorize big online charter schools merely for the purpose of collecting authorizing fees to pad their own school district budgets. Now that Gov. Brown has signed the new law, Burris still worries that unscrupulous operators will continue to find ways to negotiate around the details of the regulations.

She describes the Dehesa Elementary School District and an action the district took just last week to get around the new law before it takes effect: “It (Dehesa) has one tiny elementary school of 145 students, yet the district shows a total enrollment of 8,677 students due to its authorization of nine charter schools that can pull students from anywhere in San Diego County and adjoining counties… What is most interesting to note is that three K12 Inc. University Prep online charters, including those in Dehesa… were granted their operational number by the California State Education Department on September 9, two days after Gov. Jerry Brown signed the bill banning for-profit charter schools. That is because the bill does not go into effect until July 1, 2019, giving K12 Inc. and other for-profit corporations nearly a full year during which they can work with authorizers to submit applications for new charter schools… And once they are authorized, they can’t be shut down until they are up for renewal in five years, which gives them a pass until 2024.”

At the Education Law Prof Blog, Derek Black tries to be optimistic. Considering the new California law, he concludes: “(I)t bars the most egregious and problematic behavior out there. And if this is just the first step toward more reform, we should welcome it. On the other hand, this bill leaves an enormous number of problems untouched and, if the public is left thinking those problems no longer exist, California is in a worse position now than it was before the bill.”

Reporting for California’s EdSource, John Fensterwald quotes Michael Kraft, a senior vice president for communications at K12 Inc., who doesn’t seem particularly worried that the new California law will curtail the operation of the affiliates of the nation’s biggest for-profit online charter school. Kraft explains that K12 Inc.’s relationship with its California operator, the California Virtual Academy, “has evolved over the years to the point where they (the affiliates of the California Virtual Academy) are independently run schools and the company does not believe that the bill would change how it currently delivers products and services.” Fensterwald paraphrases Kraft describing K12 Inc.’s plan to continue operating in California: “If it has to make changes to meet the requirements of the bill, then it will.”

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National School Choice Week: A Time to Examine How the Lessons of ECOT’s Demise Apply Beyond Ohio

During this National School Choice Week, a celebration of school privatization that is being financially and ideologically promoted by people like Jeb Bush and Secretary of Education Betsy DeVos, it is a good time to consider the lessons we have been learning about the impact of parental choice and what is virtually always at the center of school choice: privatization of education at public expense.

One obvious and little noticed problem for those who seek to bring the problems of school choice to the public’s attention is that the laws which established charter schools and govern their operation are state-specific.  When an unscrupulous charter school, or even a big chain of charters goes down in another state, it is easy to think, “This isn’t relevant to me,” and maybe skip reading the story.  Even if the Network for Public Education (NPE) releases a high quality, incisive a report on a selection of charter schools across the country, it is tempting to look for a chapter about a school in one’s own state and skip the report’s first four chapters about California. One can turn away, thinking, “I can’t do anything about this other state’s mess anyway.”

But if you read NPE’s big report, you’ll notice that charter school problems across the states have some things in common. Coincidentally and ironically, this National School Choice Week is happening only days after the Electronic Classroom of Tomorrow, one of the nation’s largest cyber charter schools, was finally put out of business  by Ohio state officials and its sponsoring organization.  ECOT’s demise last Thursday is a good opportunity to reflect on the broader lessons can be learned about school privatization.  ECOT’s seventeen year longevity, despite a history of controversy, is a lesson about outrageous lack of regulation of a privately operated education sector that relies on public tax dollars—public tax dollars that, even when the school is not-for-profit, too frequently flow to for-profit management contractors who use the money to pay state legislators and regulators to look the other way.

In Sunday’s Columbus Dispatch, Bill Bush quotes Bill Phillis, long ago an assistant superintendent of public instruction in Ohio and now executive director of the Ohio Coalition for Equity & Adequacy of School Funding: “How blind can the state be? It was as if a bear was at the door, but they didn’t look out the window.” Phillis speculates, according to Bush’s report, that ECOT has “over billed the state by more than a half-billion dollars over its lifetime, while its founder, William Lager, showered politicians with campaign cash.”

Bush reviews ECOT’s early history: “ECOT opened in September 2000, and three months later, its first superintendent Coletta Musick, was ousted.  The Dispatch reported that the dispute supposedly centered on ECOT’s attendance claims, but Musick couldn’t discuss it because ECOT had paid her $124,233 in tax money to sign a nondisclosure agreement… Shortly after Musick left, three of ECOT’s five school board members, handpicked by Lager, also resigned.  Then-state Auditor Jim Petro issued an attendance audit in 2001 covering ECOT’s first year: The school initially claimed to have 2,270 students, but records showed only seven logged on to any of the school’s computer systems. Yet the school had still received full funding for all the students. ECOT was ordered to repay $1.6 million but was allowed to work off the debt.”

After the legislature strengthened Ohio’s charter school law a bit in 2015, the state could claim the right to demand computer log-in data before reimbursing ECOT for its students’ per-pupil state aid. ECOT, however went to court to protect its right, under a 2003 agreement, not to present log-in records to the state.  ECOT has had the state in court all year to prevent the state’s claw-back of $80 million for just two school years—2015-16 and 2016-17.  Until  ECOT’s sponsor, the Educational Service Center of Lake Erie West cracked down last week based on the school’s pending bankruptcy, the state has been unable to recapture the money.  The Ohio Supreme Court remains scheduled to hear the school’s final appeal in oral arguments on February 13.

Last summer, the Dispatch‘s Catherine Candisky and Jim Siegel were the first to break the story about ECOT’s early history.  The reporters interviewed a disgruntled former-ECOT-employee, Chandra Filichia, employed by Lager as an ECOT registrar for several years, but now back full time as a waitress at the Columbus Waffle House where she met Bill Lager in 2000. Then bankrupt, Lager met with friends over coffee as they tried to come up with a new business venture.  Lager and his ECOT co-founder Kim Hardy mapped out their business plan on paper napkins.  Finally, “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.”

In a new and detailed expose for Mother Jones, James Pogue revisits this early story, adding details and photographs to depict the online charter school’s humble beginning as a budding business venture.  Pogue re-interviews Chandra Filichia, the waitress later hired by Lager to recruit students for ECOT, about her disillusionment with the quality of ECOT’s academic program: “As a registrar, she described herself as being in a position to see the school’s attendance problems.  She said kids who hadn’t logged on in for weeks would call, after being threatened with truancy proceedings, begging for her help.”

Pogue  quotes Jeffrey Forster, a former superintendent at the school, responding to an inquiry from an Ohio Department of Education’s attorney about the process ECOT used to verify its student enrollment: “Forster recalled as an example how one day in 2009, ECOT gathered its teachers in a Columbus-area Doubletree hotel, and over the course of 10 hours had them verify attendance for as many as 14,000 students. They passed the forms around a string of lined-up tables and worked from memory as much as from login or attendance records… If no one recalled a student, the teachers—each of whom could have had dozens of pupils, sometimes many more—would look on their rosters to see if they could find a name.  Many of the students presumably had done their schoolwork in good faith, and if a student had definitively dropped out the teachers would decline to sign.  But the verifications seem to have had nothing to do with how much time the student actually spent doing classwork.”

Pogue also quotes Keith Richards, who as Newark, Ohio’s public school superintendent in 2006, wrote a formal letter of complaint to ECOT’s sponsor, the Educational Service Center of Lake Erie West.  Superintendent Richards also forwarded his complaint to State Auditor Petro: “Of the 12 former Newark students who have attended ECOT this year, we have found many violations… with regard to enrollment, attendance, instruction time and activity and withdrawal procedures.” Superintendent Richards continued, “We have documentation that shows that four ECOT students… do not have a computer or even in some cases, internet access in their homes.  We know of one student who was enrolled in ECOT for two years… and who was never given a computer or ECOT coursework.”

On Sunday, the first day of this year’s National School Choice Week, the Columbus Dispatch editorialized: “Ohio’s charter-school laws were from the start, exceedingly friendly to big campaign donors who would go on to use them to make a buck. Numerous attempts over the years to reform the laws and strengthen oversight have been stymied by the charter-school lobby and legislators friendly to it.”

As a way of marking National School Choice Week this year, please read Catherine Candisky and Jim Siegel’s July 30, 2017 expose on ECOT ,  James Pogue’s report at Mother Jones: The GOP’s Biggest Charter School Experiment Just Imploded, and the Network for Public Education’s recent report, Charters and Consequences.

Then consider, as a contrast, our nation’s system of public schools, regulated by law and the democratic process to protect the rights of their students and protect the public’s investment. Privatization of education is not inevitable.  School choice responds to power and privilege.  Maybe it is time to consider the best way to protect the public good by strengthening the public investment in well regulated public schools—and distributing tax dollars more generously to the schools in poor communities whose needs are great and whose funding remains meager.