Charter Schools: The Vision of their Founders vs. Today’s Reality

Charter school operators and advocates persistently brand charter schools as “public charter schools” even though charter schools are, by definition, always privately managed. However, operation is paid for with tax dollars appropriated by 44 of the state legislatures along with some federal investment and the diversion of school district dollars.

The people who proposed the idea of charter schools 30 years ago imagined how these schools would work and what would be the widespread result for children. What if we compare what the founders of charter schools imagined with today’s reality?

The Thomas Fordham Institute is a sponsor of charter schools and one of the nation’s prominent cheerleaders for these institutions. Chester Finn, president emeritus of the Fordham Institute and Bruno Manno, an emeritus member of Fordham’s board and an advisor to the Walton Foundation, recently celebrated the history of charter schools on their 30th anniversary.  Finn and Manno praise Ted Kolderie, who enthused about charter schools in a 1990 report for the Minnesota Center for Policy Studies. Describing Kolderie as “arguably the foremost theoretician of chartering,” Finn and Manno quote his report:

“(O)ur system of public education is a bad system. It is terribly inequitable. It does not meet the nation’s needs. It exploits teachers’ altruism. It hurts kids. Instead of blaming people…we need to fix the system [and] organize public education in America on a new basis. The proposal outlined in this report is designed to introduce the dynamics of choice, competition and innovation into America’s public school system. How can we use the powerful idea of choice to improve our schools while retaining the essential purposes of public education? This report proposes a simple yet radical answer: allowing enterprising people—including teachers and other educators—to… create new public schools, and ultimately a new system of public education, [by having] the states…simply withdraw the local districts’ exclusive franchise to own and operate public schools. [We need to undertake] divestiture, or allowing the districts to get out of running and operating public schools altogether.”

Now, 30 years later, Finn and Manno brag about what they believe are charter schools’ strengths:

• “The best charters consistently make greater student achievement gains than traditional public schools.”
• “Chartering has… pioneered new forms of governance for public education, including statewide Recovery School Districts that restart low-performing schools as charter or charter-like schools….”
• “Other charter-inspired governance models include ‘portfolio’ districts’… where districts transfer school governance to independent nonprofit organizations…”

They conclude: “Through a combination of choice, competition, and innovation, chartering has bettered the academic and life outcomes of K-12 students, thereby reducing inequality, widening opportunity, strengthening parents, and enhancing civil society.  These are remarkable accomplishments for a thirty-year period, worth protecting and cultivating… When dealing with so many complex institutions across so many different jurisdictions, the challenges of politics, resources, talent, and implementation were sure to be profound.  And when what’s being changed contains as many ingrained practices, hidebound regulatory regimes, and vested interests as American public schooling, these trials are even greater.”

Finn and Manno share a number of reforms they would like to see in charter schools: more attention to authorizing and quality control, need for more funding, and insufficient autonomy.  While they allege that the best charters improve student achievement, they don’t explore the problems with the academic studies they cite.  Neither do they discuss how few “best” charters there are in a sector where charter schools differ from each other and run the gamut of quality. They admit that, “charter promoters have sometimes been naive, occasionally self-interested, and often set in their ways.”

Now that charter schools have been around for 30 years, however, there is significant research demonstrating a whole range of problems on the ground, problems which Kolderie never imagined and which Finn and Manno neglect to mention.

First is the role of money and the absence of sufficient regulation in a sector which has been invaded by for-profit management and where 44 state legislatures, who are subject to lavish lobbying by charter sponsors and advocates, have failed to provide adequate oversight. After all, Kolderie defined  the very purpose of charter schools as escaping the constraints of public bureaucracy.  Jacobin Magazine published a recent interview with, Carol Burris, the executive director of the Network for Public Education, which recently published a report, Chartered for Profit.  Jacobin‘s reporter asked Burris how it is that so many charter schools—which state laws require to be sponsored by and operated as nonprofit organizations—have become the source of massive profits their operators.  Here is her reply:

“The original charter is secured by the nonprofit, which gets federal, local, and state funds, and then the nonprofit turns around and gives those funds to the for-profit company to manage the school… Now, some of these for-profits only provide a limited amount of services.  But an awful lot of them, especially some of the big chains like National Heritage Academy, operate using what is known as a ‘sweeps’ contract. The reason they’re called that is the for-profit operator sweeps every penny of the public money that a charter school gets into the for-profit management company to run the school. The for-profit then either directly provides services, from management services to cafeteria services, or they contract out with another for-profit company to provide services.  Either way, the goal is to run the charter school in such a way that there’s money left over. And the more money they save by doing things like hiring unqualified teachers and refusing to teach students with special needs, the more money is left at the end of the day.”

It is worth pointing out the irony that we would all be shocked if we discovered the principal of our public high school or our school district’s superintendent profiting from our tax dollars. While such activity is illegal in public schools, money in the charter school sector is handled very differently. Burris explains: “Individuals can become very wealthy if they run charter schools, whether for-profit or nonprofit. Eva Moskowitz, who’s in charge of Success Academy Charter Schools in New York City… pulls down a salary of nearly $1 million a year.  By comparison, the New York City public schools chancellor makes about $250,000 a year.” Burris continues: “A lot of this is possible simply because there’s so little oversight.  I was a public school teacher and then a high school principal.  Purchases had to go out to bid, and everything was very transparent.  I couldn’t contract with my Uncle Louie’s furniture company to buy desks. But you can in the charter school world… The charter school lobby says that this model is necessary for innovation. But what is it about the ability to commit fraud and avoid transparency that helps you to be more innovative?  The innovation that we’re seeing too often, sadly, is criminal manipulation.”

Second is the problem that charter schools are parasites on the public school districts where they are located. In some states, as was the case until recently in Ohio, school districts have to pay an additional charter school tuition fee right out of their own budget when children leave for a charter school.  But even in states where public school districts merely lose the state’s per-pupil basic aid when each child leaves, the school district suffers financially.  In a study published by In the Public Interest, economist Gordon Lafer documents that charter schools undermine the fiscal viability of Oakland, California’s public schools by pulling away $57.3 million annually in state per-pupil public school enrollment reimbursements: “To the casual observer, it may not be obvious why charter schools should create any net costs at all for their home districts…  When a new charter school opens, it typically fills its classrooms by drawing students away from existing schools in the district…  If, for instance, a given school loses five percent of its student body—and that loss is spread across multiple grade levels, the school may be unable to lay off even a single teacher… Plus, the costs of maintaining school buildings cannot be reduced…. Unless the enrollment falloff is so steep as to force school closures, the expense of heating and cooling schools, running cafeterias, maintaining digital and wireless technologies, and paving parking lots—all of this is unchanged by modest declines in enrollment.” At the same time, charter schools are less likely to enroll students with expensive special needs, which concentrates children who need expensive extra investment in their education in district public schools.

Third, neither the federal government nor the states have consistently protected students’ rights in charter schools.  For example, New York City’s Success Academy Charter Schools has established a reputation for a regimented, no-excuses school culture. For years, however, parents have complained that instead of helping students thrive, the school has established a pattern—for children who don’t fit the school’s culture or for children whose test scores will likely bring down the school’s overall average—of severely punishing the students or repeatedly suspending them until their parents pull them out of the school.  In March, Success Academies was fined $2.4 million by a federal district court for violating students’ rights: “Charter school network Success Academy, which touts its commitment to children ‘from all backgrounds,’ has been ordered to pay over $2.4 million on a Judgment in a case brought by families of five young Black students with learning and other disabilities who sued after the children were pushed out of a Success Academy school in Brooklyn.  Success Academy’s efforts to oust the children even included the creation of a ‘Got to Go’ list, as reported by the New York Times in October 2015, which singled out the students they wanted to push out, including the five child plaintiffs.”

And especially in the South, charter schools have too often violated students’ rights by increasing racial segregation. A 2017 study—by researchers Helen F. Ladd, John B. Holbein and Charles T. Clotfelter of Duke University reported:  “(W)e find that the state’s charter schools, which started out disproportionately serving minority students, have been serving an increasingly white student population over time. In addition, during the period, individual charter schools have become increasingly racially imbalanced, in the sense that some are serving primarily minority students and others are serving primarily white students.”

Thirty years after the first charter school in Minnesota, there is finally some support in Congress to begin reining in some of the most outrageous for-profit charter chains. The House Budget Resolution would disqualify charter schools managed for-profit from the U.S. Department of Education’s Charter Schools Program.

Chester Finn and Bruno Manno have been promoting the same lies for decades. Advocates need to continue to push hard to force the U.S. Department of Education, Congress, and legislators across the states to see what’s wrong with the glossy ideology that has blinded so many.

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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.