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.”

Ohio Charter Regulation Goes On Life Support, Will Likely Die

Benjamin Barber is a political philosopher, and his observations are usually pretty abstract, which is why is it so fascinating to observe what his words mean in the real life drama of everyday politics—a drama that turned to tragedy this week in the Ohio legislature as the bill to regulate charter schools and their sponsor-authorizers collapsed and went on life support, though it hasn’t quite died.

Consider Barber’s reflection on the way privatization undermines the common good: “Privatization is a kind of reverse social contract: it dissolves the bonds that tie us together into free communities and democratic republics.  It puts us back in the state of nature where we possess a natural right to get whatever we can on our own, but at the same time lose any real ability to secure that to which we have a right.  Private choices rest on individual power…. Public choices rest on civic rights and common responsibilities and presume equal rights for all.  Public liberty is what the power of common endeavor establishes, and hence presupposes that we have constituted ourselves as public citizens by opting into the social contract.  With privatization, we are seduced back into the state of nature by the lure of private liberty and particular interest; but what we experience in the end is an environment in which the strong dominate the weak….” (Consumed, pp. 143-144)

Here is what happened earlier this week as Ohio’s public governing body left on break before reigning in the for-profit, privatized charter management sector, according to Patrick O’Donnell, the Plain Dealer‘s education reporter: “The Ohio House will head off on summer break without voting on the new accountability and financial reporting rules for Ohio’s $1 billion charter school industry that have been in the works for months.  House leaders skipped a vote on the package late last week and have left it off the schedule for Tuesday, the last session before leaving for recess.  Brittany Warner, spokesperson for Ohio House Speaker Cliff Rosenberger, confirmed today that there will be no vote before break… Warner said that leaders want more time to study some of the changes and that differences between the House and Senate versions should be sorted out in a conference between leaders of both houses.” O’Donnell concludes: “Republican leaders say the delay is to clear up some issues with the just-revised bill.  Others call it an attempt to buy time to water down the bill to please charter school operators who donate to Republican candidates.”

Here is the meaning of the delay, according to an e-mail on Monday afternoon from Stephen Dyer, former member of the Ohio House and former reporter for the Akron Beacon Journal:  “It looks like the Ohio House won’t take up the charter reform package that cleared the Ohio Senate last week before the end of business tomorrow (Tuesday).  So now, it’s being slow walked, which means at best we wait until mid-July…. We know that the powerful Ohio poor performing charter operator lobby would love for both chambers to bog this bill down so nothing changes.”

The Plain Dealer’s report quotes the ranking Democrat on the House Education Committee, Rep. Teresa Fedor, who is more blunt: “They never will call a vote, which means the tax dollars will continue on the ripoff train.”

Charter schools have always been conceptualized, to use Benjamin Barber’s language, around “the lure of private liberty and particular interest.”  They were designed to be free of the regulations (described as the constraints of bureaucracy) that, some believe, limit innovation in the traditional public schools that are held to particular standards and required to provide sufficient and appropriate services for all kinds of children.  The idea was to free up charters, and Ohio did just that, so much so that even charter advocacy organizations have condemned the academic malpractice and financial malfeasance that have been documented again and again.

Last December the Stanford Center for Research on Education Outcomes (CREDO) released a study of the academic effectiveness of Ohio’s charters (as measured by standardized test scores). CREDO has been a charter supporter, but its Ohio report is scathing: “First, recent efforts across Ohio to improve the quality of charter school performance are only dimly discernible in the analysis.  Overall performance trends are marginally positive, but the gains that Ohio charter school students receive even in the most recent periods studied still lag the progress of their traditional public school peers… Despite exemplars of strong results, over 40 percent of Ohio charter schools are in urgent need of improvement: they both post smaller student academic gains each year and their overall achievement levels are below the average for the state.  If their current performance is permitted to continue, the students enrolled in these schools will fall even further behind over time.”  “Compared to the educational gains that charter students would have had in a traditional public school, the analysis shows on average that the students in Ohio charter schools perform worse in both reading and mathematics.”

Margaret Raymond, director of the Stanford Center for Research on Education Outcomes (CREDO), followed up by coming to speak  at the Cleveland City Club, where she announced that it has become pretty clear that markets don’t work in what she calls the education sector: “This is one of the big insights for me because I actually am a kind of pro-market kind of girl, but the marketplace doesn’t seem to work in a choice environment for education… I’ve studied competitive markets for much of my career… Education is the only industry/sector where the market mechanism just doesn’t work… I think it’s not helpful to expect parents to be the agents of quality assurance throughout the state.”

The legislation that the Ohio House declined to vote on this week was already so watered down that it would have addressed only a few of the most serious academic and financial problems across Ohio’s charter sector.  Jim Siegel of the Columbus Dispatch explains that last week the Senate did add provisions to strengthen transparency and oversight: “Key Senate additions… include giving the Department of Education more effective authority to oversee charter school sponsors, more transparency of operator spending, and a stronger provision aimed at preventing sponsor hopping, where a poor-performing school quickly seeks to re-open under a new sponsor to avoid being closed… The bill also seeks to improve the way the state evaluates charter sponsors, nix the potential conflicts of interest that exist between schools and sponsors, and provide more assurance that sponsors are actually spending state money on their school oversight role.  New additions also would require online e-schools to keep more accurate attendance records, implement annual sponsor ratings with consequences for low scores, and establish stronger contracts between the state and the sponsors.”

Here, however, is some of what Ohio’s legislature entirely neglected to address—even in the proposed legislation that has now been hopelessly delayed.  Doug Livingston, in the Akron Beacon Journal, reported last week that the state, “has removed all test scores for online and computer-based dropout recovery high schools when grading sponsors.  These are the lowest-performing types of charter schools… Though there are only 24 online schools among the more than 380 charter schools in Ohio, they receive nearly one in three state dollars set aside for charter schools, or $267 million… The two largest—the Electronic Classroom of Tomorrow (ECOT) and Ohio Virtual Academy—received $185 million in state funding… Two are run by influential for-profit companies: White Hat Management, which operates Ohio Distance and Electronic Learning Academy founded by Akron industrialist David Brennan; and Altair Learning, which operates ECOT and is owned by Bill Lager.  Brennan and Lager have given more than $1.4 million in political contributions to state lawmakers since 2009…. In addition to his online school, Brennan’s Life Skills dropout recovery schools also are not included—at least this year—in sponsor ratings.”

It is worth noting that Ohio House Speaker William Batchelder—when he was term-limited out in January of this year and revolved directly into a lobbying job—took on a very powerful and influential client: William Lager and the Electronic Classroom of Tomorrow.

Ohio is the exemplar of Benjamin Barber’s critique: “Privatization is a kind of reverse social contract: it dissolves the bonds that tie us together into free communities and democratic republics.  It puts us back in the state of nature where we possess a natural right to get whatever we can on our own, but at the same time lose any real ability to secure that to which we have a right.  Private choices rest on individual power…. Public choices rest on civic rights and common responsibilities and presume equal rights for all.  Public liberty is what the power of common endeavor establishes, and hence presupposes that we have constituted ourselves as public citizens by opting into the social contract.  With privatization, we are seduced back into the state of nature by the lure of private liberty and particular interest; but what we experience in the end is an environment in which the strong dominate the weak….”

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.