Network for Public Education Demands Further Regulation of For-Profit Charter School Sector

Last week, the Network for Public Education (NPE) published Chartered for Profit II: Pandemic Profiteering, a new report exposing the ongoing abuse of the public interest by the operators of for-profit Education Management Organizations (EMOs).

Some background…

In a Washington Post column last July, the executive director of the Network for Public Education, Carol Burris congratulated the U.S. Department of Education for imposing new rules to strengthen federal regulation of the federal Charter Schools Program, which has, since 1994,  awarded millions of dollars in federal grants for the startup and expansion of charter schools: “These new regulations are an essential first step in making sure that fewer tax dollars go to schools that never open, schools that quickly close, and for-profit operators. Unscrupulous individuals who used the program for their enrichment will find it more difficult to do so. ”

In December, just before Congress recessed for the holidays, however, Senator Tim Scott (R-S.C.), under pressure from the National Alliance for Public Charter Schools and other charter school lobbyists, offered a resolution to nullify the rules the Department of Education finalized in July for the purpose of strengthening oversight of the Charter Schools Program.

On December 14, 2022 the U.S. Senate rejected Sen. Scott’s proposal to block the Department’s new rules. Realizing that the work to make the charter school sector accountable must continue, however, last week the Network for Public Education published Chartered for Profit II: Pandemic Profiteering. It is notable that supporters of America’s public schools—concerned about all the ways for-profit Education Management Organizations (EMOs) divert tax dollars for personal gain—are more than matching the doggedness of the charter school lobby.

What’s in NPE’s new report?

In Chartered for Profit II: Pandemic Profiteering, the Network for Public Education tracks the many abuses of the public interest by for-profit charter school operators since NPE published Chartered for Profit: The Hidden World of Charter Schools Operated for Financial Gain two years ago:

“In this follow-up report on the charter for-profit sector, we chronicle its expansion during the years of the COVID-19 pandemic…. According to our research…. The percentage of students attending a charter school designed to produce a profit for its management company soared… (T)he total student enrollment in charter schools during the second year of the pandemic (the 2021-2022 school year) was 3,676,635. Student enrollment in for-profit-run charter schools jumped to 731,406 that year. That means that 20 percent of all charter school students… were enrolled in a charter school managed by a for-profit management corporation by the pandemic’s end. More disturbing is that 27 percent of the students attending for-profit-run schools were enrolled in low-quality virtual charter schools that teach students either exclusively or primarily online.” (emphasis in the original).

Although the new federal rules instituted last summer will stop federal grants from flowing to for-profit charter schools and to the nonprofit charter schools which are fully managed by for-profit Education Management Organizations, the new federal rules will not protect the public from lack of regulation in state laws. Charter schools, operating now in 45 states, are set up and primarily regulated in state law. Therefore, lack of oversight is largely a problem residing in state legislatures where the charter sector maintains a powerful lobby. Some states are especially permissive of for-profit charter schools: “Although most states allow for-profits to manage their charter schools, five states presently have a sizeable for-profit footprint. In three of the five states—Florida, Michigan, and Ohio—charters run-for-profit make up the majority of the charter sector.” In Michigan, 70% of charter schools are operated for-profit; In Florida, 52%; in Ohio 52%; in Nevada 40%; and in Arizona, 38%.

Education Management Companies typically take over small independently operated nonprofit schools or find nonprofit agencies to start up charter schools that will then be fully operated by the larger corporations.  In the new report, we learn more about Oklahoma’s notorious Epic Charter Schools, three of whose leaders were arrested in June of 2022 for shady financial dealings even as the online chain increased its enrollment “by over 31,000 students between 2019-2020 and the 2020-2021 school years alone.”  We learn about the five largest for-profit, brick and mortar Education Management Organizations: Academica, National Heritage Academy, Charter Schools USA, ACCEL, and Leona; and about the two biggest for-profit online academies: Stride K12 and Pearson’s Connections Academy.  We also learn that many Education Management Organizations are much smaller: “Micro-for-profits (EMOs that manage one or two schools) (now) comprise nearly half of all for-profit EMOs.”

How do the for-profit Educational Management Companies make a profit? “(T)he owners of EMOs extract profit thanks to the absence of oversight and regulation.  State governments fail to protect taxpayers from sweetheart deals, sweeps contracts, and related party transactions….”

• “Insider deals, formally referred to as related party transactions, occur when those who have control of a charter school’s decision-making process award contracts to their own companies or those owned by a family member, colleagues, or friends..” NPE traces sweetheart deals for example at Arizona’s Charter One empire. Glenn Way began sponsoring charter schools under the brand, “American Leadership Academy,” from his position as a state legislator in Utah, but, “Because he would be up against a charter cap in Utah, Way moved to Arizona, where for-profit entities can open and operate an unlimited number of schools under the nation’s loosest charter school laws.”  Way founded Charter One L.L.C., as a for-profit EMO to manage the American Leadership Academy schools, founded Schoolhouse Development to rent school facilities to his schools at exorbitant leasing rates, started a construction company to provide construction and building services, and launched an apparel company to provide school uniforms. “Way’s charter empire is now moving beyond Arizona into Nevada, North Carolina, and South Carolina.”
• “A sweeps contract is an arrangement in which a charter school turns over all or nearly all of its public funding to an operator who then runs the school.” In such an arrangement, the board of the nonprofit charter school being managed by the EMO has no way to track whether the funds are being used to provide services for students or whether they are being siphoned into profits for the EMO. NPE reports that, “National Heritage Academies… runs more than 100 schools with sweeps contracts.” ACCEL Schools runs its 54 schools with sweeps contracts. ” Florida’s Charter Schools U.S.A., the third largest for-profit chain, operates its schools with sweeps contracts, as does the Leona Group, based in Michigan.”
• Sweetheart real estate deals are how “the real money is made.” “The five biggest for-profit management companies—Academica, National Heritage Academy, Charter Schools U.S.A., ACCEL, and Leona—have related real estate corporations with contracts that put the EMO in charge of lease relationships.” The report abounds with examples.  Here is one: “The largest EMO is Academica, based in Miami, Florida. Academica’s owner is a real estate developer, Fernando Zulueta, who opened the first charter, Somerset, as part of a housing development he had constructed… Over 100 active corporations linked to Fernando Zulueta and his family members… include real estate corporations, holding companies, and finance corporations, as well as sub-chains both within and outside of Florida… The connection between Fernando Zulueta’s real estate holdings and his for-profit managed charter schools goes beyond the state of Florida. According to the State Public Charter School Authority, Academica Nevada pays the lease on behalf of the charter school Mater Academy Mountain Vista of Nevada to Stephanie Development L.L.C. The managing members of Stephanie Development are Fernando and Ignacio Zulueta and Robert and Clayton Howell. Robert Howell is the manager of Academica Nevada.”

NPE outlines all the ways that states should strengthen their regulation for-profit management of charter schools. Finally the Network for Public Education presses the federal government further to expand its regulations: to “require all charter schools that receive federal funds to provide the name and corporate status of any entity that provides management services as well as the names and services provided by all vendors that are related corporations of the EMO.”  Further, NPE recommends that, “charter schools run by EMOs via a sweeps contract not be eligible to receive any federal funds.  Sweeps contracts are a blatant violation of the spirit of federal law, which permits only non-profit schools to be recipients of federal funds.”

The Network for Public Education reminds readers that, “In the for-profit charter market, every customer who walks through the door comes in with ample cash provided by taxpayers.”

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U.S. Dept. of Ed’s Own Office of Inspector General Condemns Department’s Past Failure to Oversee Charter Schools Program Grants

In the Federal Register in mid-March, the U.S. Department of Education proposed new rules to strengthen oversight of its own Charter Schools Program. The Department accepted public comments on the new rules for several months, and then, quietly on the Friday afternoon before the July 4th holiday weekend, the Department announced it had finalized rules and was strengthening oversight of the program.

The charter school lobby, led by the National Alliance for Public Charter Schools has continued loudly to protest the Department’s action to increase regulation of the program.  Over the years, the Network for Public Education, a pro-public schools advocacy organization, has released a series of reports which expose waste and fraud in charter school management across the states (Charters and Consequences, 2017; and Chartered for Profit, 2021), and abrupt charter school closures which have often left students stranded sometimes mid-school year (Asleep at the Wheel, 2019, and Broken Promises, 2020).

Now, in collaboration with Valerie Strauss, the executive director of the Network for Public Education, Carol Burris shares the news that the Network for Public Education has not been the only critic of the U.S. Department of Education’s Charter Schools Program. The Department’s own Office of Inspector General (OIG) just released a blistering critique of the program: “A new report issued by the Office of the Inspector General entitled, ‘Effectiveness of Charter School Programs in Increasing the Number of Charter Schools’ documents how states, charter management organizations, and charter developers often make wildly exaggerated claims regarding the number of charter schools they will open or expand….”

What did the Education Department’s own Office of Inspector General uncover in this new, 2022 audit of the Charter Schools Program?  Burris explains: “The OIG, an independent watchdog of the U.S. Department of Education… found that for grants issued between 2013 and 2016, only 51 percent of the schools promised by Charter Schools Program recipients opened or expanded. The OIG audit also exposed the sloppy record keeping and weak oversight that characterize CSP operations. Since 2006, the department has paid a private corporation, WestEd, millions of dollars to compile, check and update CSP records. WestEd’s present CSP contract exceeds $12 million… Yet an alarming number of grant records could not be found when requested by OIG auditors… The auditors noted that while the department, through WestEd, tracked spending and schools while grants were open, the tracking stopped as soon as the grant was complete. Therefore, the department had no way of knowing whether schools remained open beyond the years federal funds propped them up. This speaks to the purpose of the program—to open and expand high-quality charter schools.”

Burris continues: “Grant applicants asked for and received millions of dollars based on their promises to open and expand charter schools. However, when the auditors examined 94 grantee applications, they found that many grantees fell far short of their commitments. The OIG determined that based on the commitments made in the 94 applications, state education agencies, CMOs, and developers promised to open or expand 1,570 charter schools using CSP funds. As of July 2021, approximately 75 percent of the grant funding had been spent, yet grantees had only opened or expanded 51 percent of the charters they had promised.”

Why, in their grant applications, would charter management companies wildly exaggerate the number of new charter schools they plan to open? Burris responds: “States and charter management organizations get to keep 10 percent of the cut for grant administration and technical assistance to charter schools. The bigger the grant, the bigger the cut. Therefore, KIPP was allowed to keep nearly $5 million for its charter management organization, even though it fell way short of its commitment. The Florida Department of Education secured over $7 million for administrative services on its grant.”

Clearly in March, when the Department proposed new and stronger rules to strengthen regulation of the Charter Schools Program, staff in the Department were responding to a series of well documented critiques of the program from the Network for Public Education. But this week’s new report from the Department’s own Office of Inspector General is not the first scathing criticism of this program from the Department’s OIG. In my own clipping files, I have copies of reports from 2012, 2016, and 2018. One wonders why it has taken so long for the Department to take action.

• In 2012, the Department’s OIG concluded: “(W)e found that the Office of Innovation and Improvement did not provide the State Education Agencies with adequate guidance on the monitoring activities they were to conduct in order to comply with applicable Federal laws and regulations.”
• In 2016, the Department’s OIG declared: “We determined that charter school relationships with Charter Management Organizations posed a significant risk to Department program objectives. Specifically, we found that 22 of the 33 charter schools in our review had 36 examples of internal control weaknesses related to the charter schools’ relationships with their CMOs (concerning conflicts of interest, related-party transactions, and insufficient segregation of duties).”
• In 2018, the Department’s OIG charged: “The Department did not ensure that oversight of the charter school closure process was effective. We found that the Department’s oversight and monitoring of the selected State Education Agencies by Title I, IDEA, and CSP program offices was not effective to ensure that the State Education Agencies performed the charter school closure process in accordance with Federal laws and regulations.” The OIG documented the absence of procedures to protect the disposal of assets paid for with public funds when charter schools shut down.

The Washington Post‘s Valerie Strauss reminds readers of some basic history of the Charter Schools Program: “Charter schools are publicly funded but privately managed. The federal charter program, which began in 1994 with the aim of expanding high-quality charters, had bipartisan support for years, but many Democrats have pulled back from the movement, citing the fiscal impact on school districts and repeated scandals in the sector. The Biden administration is making some changes to the program in an effort to stop waste and fraud and provide more transparency to the operation of charters.”

Burris reminds us that President Biden’s administration is the first in the history of the program to tighten oversight of this program, which has awarded millions of dollars to start up and expand charter schools without sufficient oversight.  She concludes: “(A)s the Office of Inspector General audit shows, reforms are desperately needed.”

We can be grateful that in July, the Department of Education implemented new rules to begin strengthening stewardship of our tax dollars awarded through the federal Charter Schools Program.

Good News: U.S. Dept. of Ed. Strengthens Needed Regulation of Federal Charter Schools Program

Quietly on Friday afternoon before the July 4th holiday weekend, the U.S. Department of Education announced it has finalized rules to strengthen oversight of the federal Charter Schools Program (CSP). The new rules are just the sort of sensible regulation that ought to have been part of the program when it was established back in 1994.

For Education Week, Libby Stanford reports: “Incoming charter schools will have to gather community input and prove they aren’t managed by a for-profit company to receive federal funding under the Biden administration’s finalized Charter Schools Program rules published Friday. The U.S. Department of Education’s final notice on the new regulations is the latest development in the controversy surrounding charter school rules… The administration’s goal in issuing the new rules is to prevent private companies from using federal dollars to open charter schools and to curb premature closures.  Fifteen percent of the charter schools that receive funding from the program either never open or close before the three-year grant period is over, department officials told Education Week.”

In a Fact Sheet about its new rules, the Department declares that it will no longer award our federal tax dollars to supposedly nonprofit charter schools which are operated under sweeps contracts by huge for-profit charter management organizations (CMOs): “Given the significant risks to public funds that fall under the purview of for-profit charter school operators, the Department’s rulemaking is in alignment with federal statute that expressly prohibits for-profit organizations from applying for grants or subgrants under CSP.”

The Department also now requires that charter school authorizers applying for grants to start up new schools must explore and document the impact of the new school on the traditional public schools and the community. The Fact Sheet explains: “Supporting high-quality charter school options in the interest of students and families requires CSP applicants to demonstrate the need for the school and the benefits to the community—for example, increasing the number of high-quality seats available to students. It also means that school plans, including enrollment projections, inclusive practices and academic goals, are well-conceived and evidence-based.” The Department adds that new charter schools must “not be used to increase racial or socio-economic segregation and isolation.”

The Network for Public Education reports some of the details of the new regulations. Charter schools operated by for-profit CMOs need not apply. White flight charter schools will not qualify for Charter Schools Program (CSP) grants.  The new rules bar the use of CSP implementation funds until the school has not only a charter but has also acquired a building in which it will operate. Applicants for CSP grants must hold or participate in a public hearing on the proposed charter school’s expected impact. The new rules require added transparency: within 120 days, all schools with CSP funds, CMOs and states with charter school state grants must post on a website detailed information about all grantees, including peer reviews and management contracts.

Background

In March, the U.S. Department  of Education posted the proposed rules in the Federal Register and requested public comments. Supporters of the new rules and opponents of charter school regulation submitted over 5,000 unique comments including many readers of this blog who submitted comments supporting the proposed regulations. The charter school lobby, led by the National Alliance of Public Charter Schools, also mounted an enormous effort including a D.C. rally and TV ads to oppose stronger oversight of this federal grant program.

Some History and Context

Those of us who follow the news about charter schools know there is a need for better oversight of this education sector. The Network for Public Education tracks the myriad financial and educational charter school scandals reported in the local news across the states. Just in the month of June three of the most sensational and most expensive charter school scandals once again popped up:

• Oklahoma’s Epic Charter School Scandal — On June 23, The Oklahoman reported: “The co-founders of Epic Charter Schools have been arrested on charges of financial crimes… Ben Harris, David Chaney and the chief financial officer for their company, Josh Brock were…. booked into the Oklahoma County jail on a $250,000 bond. Harris, Chaney and Brock were arrested on charges of embezzlement of state funds, racketeering, obtaining money by false pretense, conspiracy to commit a felony, violations of the state computer crimes act, submitting false documents to the state and unlawful proceeds… The charges stem from a nine-year investigation into the defendants’ management of Epic Charter Schools, a public virtual charter school system. On top of establishing Epic, Harris… and Chaney… founded a private company that operated the school system and earned 10% of its yearly education funding.  Epic severed all ties with the co-founders, Brock and their business in May 2021.”
• California’s A3 Charter School Scandal — In early June, the San Diego Union Tribune reported California’s collection of additional restitution as part of the punishment for perpetrators of an enormous online charter school fraud: “An additional $18.8 million has been paid to San Diego County as restitution for the statewide A3 charter school scam in which the state was defrauded of hundreds of millions of school dollars…. Sean McManus of Australia, along with Jason Schrock of Long Beach, led a statewide charter school scheme from 2016 to 2019 in which they used a network of mostly online charter schools to defraud the state of approximately $400 million and used $50 million of that amount for personal use. They did so by falsely enrolling students and manipulating enrollment and attendance reporting across their schools to get more money per student than schools are supposed to, prosecutors said. In total, about $240 million of the $400 million has been recovered.”
• Ohio’s ECOT (Electronic Classroom of Tomorrow) Scandal — The Columbus Dispatch’s Laura Bischoff reported on Tuesday of last week that the state of Ohio is still owed $117 million by the operators of ECOT, which was shut down over four years ago for charging the state for students who were never enrolled: “The Electronic Classroom of Tomorrow—an online charter school that abruptly closed in January 2018—owes the state more than $117 million, a newly released state audit found.  Ohio Auditor Keith Faber on Tuesday said the school owes $106.6 million to the state Department of Education and another $10.6 million to the Attorney General’s office. Faber’s auditors found that ECOT wasn’t entitled to some of the state money it received in 2016 and 2017 and none of the cash it received in 2018.  William Lager founded ECOT in 2000 and built it into the largest online charter school in Ohio. Lager also operated Altair Learning Management Inc. and IQ Innovations LLC, which contracted with ECOT to provide support services.”  The two companies were the source of enormous profits collected by Bill Lager.

In June, we also had an opportunity to read an updated assessment of the years-long impact of the 2005 experiment which radically expanded charter schools in New Orleans following Hurricane Katrina. New Orleans educator, Michael Deshotels describes what happened during 2005 and 2006 and the condition of education in New Orleans today:

“In 2005, as Hurricane Katrina physically destroyed much of the Orleans public school system, the Louisiana legislature passed a law allowing the State Department of Education to take over approximately three-fourths of New Orleans public schools. According to the new state law, school takeover (only in New Orleans) became automatic for any school producing less than the state average score on state tests… The (Louisiana) Department of Education was authorized to turn such schools over to charter school management organizations in an agreement that removed many state requirements and standards in exchange for greatly improved academic results… The majority of charter management organizations came into the Orleans system starting with the 2006-07 school year.  State officials had fired almost 7,000 experienced teachers and staff as a way of cleaning house and allowing the new managers a fresh start, unhampered by previous teacher contracts.  Most charter groups began by hiring new—mostly younger teachers…. Most new teachers were provided by Teach for America. Also, many of the charter school managers had no education credentials.”

Deshotels updates the story, based on a new (2022) report from the Louisiana Pelican Policy Institute. “The recent study shows that taken as a whole, the New Orleans all charter system is still ranking in the bottom quartile of all public-school systems in the state. This is in a state that performs near the bottom of all states on national testing and college preparedness… In the key subjects of math and reading, Orleans performs at the 24th percentile compared to all other state school systems.  This is approximately the same as the Orleans school system performed before Katrina! … Did the increased funding allow the reformed Orleans school system to hire a better quality of teachers? The state auditor recently found that more than half of Orleans teachers are not certified as teachers. In addition, most of the teachers now employed in Orleans are Caucasian, while 90% of the students are African American.”

The New Federal Rules Won’t Entirely Clean Up Charter School Abuses.

After examining the new rules, the Network for Public Education’s Carol Burris concludes: “These new regulations are an essential first step in making sure that fewer tax dollars go to schools that never open, schools that quickly close, and for-profit operators. Unscrupulous individuals who used the program for their enrichment will find it more difficult to do so. State Entities that have pushed money out the door will now be forced to provide more oversight and supervision. And so they should. State Entities get 10 percent of every grant, representing millions of federal dollars, to use for such supervision.”

The new federal  regulations cannot themselves prevent many of the fraudulent schemes like the ones described in Oklahoma, California and Ohio.  Neither will the new regulations prevent state legislators from introducing wild experiments exemplified by the 2005 New Orleans state takeover and transformation to charter schools. Charter schools are established by law in 45 of the states and the District of Columbia, and they are regulated largely by state law. If the new regulations are well enforced, they will ensure that unscrupulous charter school operators can no longer qualify for federal grants under the Charter Schools Program.

The federal Charter Schools Program, begun in 1994, was envisioned by promoters who sold charter schools as an innovative alternative to traditional public schools operating in a bureaucratic straight jacket of regulations. Ironically the experiment has instead proven the urgent need for careful government oversight. The federal Charter Schools Program rules adopted last Friday will better protect our federal tax dollars and set an example of the kind of regulations state legislators should themselves begin to undertake. Charter school operators like those described in the examples here have flagrantly demonstrated the urgent need for better stewardship of tax dollars flowing to charter schools.

Charter School Lobby Agitates to Prevent the U.S. Department of Education from Improving Regulation of the Federal Charter Schools Program

The U.S. Department of Education has proposed new rules to tighten up the awarding of grants through its own Charter Schools Program. Seems like a good thing, right? So why did the Department’s proposed new rules lead to a big protest rally of charter school supporters from around the country in front of the White House last week?

The NY Times‘ Erica Green explains the proposed rules: “The proposal would add requirements to the application process for grants from the federal Charter Schools Program, which has doled out billions of dollars over nearly 30 years to help open new charter schools or expand existing ones. It sets tighter restrictions on the schools’ relationships with for-profit entities and encourages more collaboration between charters and the districts they operate in. The most controversial part of the plan would require grant applicants to prove demand and community support for their schools, examine the effect they would have on neighboring district-run schools, and demonstrate that they would not exacerbate segregation.”

The proposed rules would not affect the state laws that establish charter schools and the rules under which charter schools operate in 45 states. The new rules would be limited to establishing that federal grants could no longer be awarded to charter schools operated by for-profit Charter Management Organizations, and that to qualify for a federal grant, a charter authorizer would have to show there is a need for the new school.  This is the sort of sensible regulation that ought to have been part of the program when it was established back in 1994.

During the Clinton administration and through the Bush and Obama administrations, charter schools were popular among neoliberal Democrats who saw publicly funded but privately operated charter schools as kind of a nice compromise with the more visceral school privatization advocates like Betsy DeVos.  Now a lot of Democrats, including the Biden administration, have become more aware of poor regulation of charter schools by states and the federal government, graft and corruption in the misuse and sometimes theft of public funds, and the reality that despite their promises, charter schools on the whole have not surpassed public schools in helping students achieve academically.

As Green reports, some of the Democrats who have always been and continue to be strong supporters of charter schools are angry: “The rally came on the heels of several high-profile denouncements of the proposed rules, including opinion pieces by Michael Bloomberg…. and Gov. Jared Polis of Colorado….  Senators Dianne Feinstein of California, Cory Booker of New Jersey and Michael Bennet of Colorado joined Republicans in asking the department to revise them.”  But an increasing number of Democrats see the need for better oversight.

Green quotes Carol Burris, the executive director of the Network for Public Education as a prime supporter of the new rules and Nina Rees, the president and chief executive of the National Alliance for Public Charter Schools as a leading opponent of more stringent regulation of the federal Charter Schools Program.  It is important to be very clear about what these organizations are.

Rees’ organization, the National Alliance for Public Charter Schools is the primary mouthpiece for the charter school sector. It has a 32 person staff and is well funded by philanthropists, charter school authorizers, and operators of charter schools. When the National Alliance for Public Charter Schools sponsors a rally at the White House, the organization can afford to fly in charter school parents from around the country to speak for their schools. But the testimony of satisfied parents passionately defending their experience with particular charter schools is not the whole story.

The Network for Public Education (NPE)—a national, volunteer, good government, public school advocacy organization—has been a primary critic of waste and fraud in the charter school sector’s spending of tax dollars, especially by the for-profit Charter Management Organizations. NPE has also condemned the damage to public school districts by rapid charter school growth. Its members have supported a tiny, four-person, mostly part time staff conducting research about what is really happening in the charter school sector.

Despite that federal law has previously prohibited grants to for-profit charter schools, in a 2021 report, Chartered for Profit, the Network for Public Education exposed that too many nonprofits have been turning over virtually all of their state and federal dollars to a for-profit management company without any oversight of the use of the money: “Despite strict regulations against the disbursement of funds from the federal Charter Schools Program to charter schools operated by for-profit entities, we identified over 440 charter schools operated for profit that received grants totaling approximately $158 million between 2006 and 2017, including Charter Schools Program grants to schools managed with for-profit sweeps contracts.”

In an earlier report, Asleep at the Wheel, the Network for Public Education found that the U.S. Department of Education has not been a responsible steward of taxpayer dollars in its management of the Charter Schools Program. “Based on what we found, we believe it is likely that one billion dollars of federal ‘seed money’ has been wasted on charters that never opened or shut their doors. We were equally dismayed to find that many of the Charter Schools Program-funded charter schools that survived did not fulfill their stated mission, especially in regard to enrolling proportionate numbers of disadvantaged youth. As public dollars are pulled from public schools and a more disadvantaged student body is left behind, the students who attend their neighborhood schools have fewer resources and greater challenges.”

Research from the Network for Public Education has been replicated by other researchers. In a report for In the Public Interest, economist Gordon Lafer showed how charter schools in just one school district, Oakland, California, suck $57.3 million every year out of the public schools that serve the majority of Oakland’s children and adolescents.  Amazingly, in a series of biennial reports, the U.S. Department of Education’s own Office of Inspector General has condemned the Department’s Office for Innovation and Improvement for poor oversight of the Charter Schools Program.  And in 2021, Wagma Mommandi and Kevin Welner, the director of the National Education Policy Center, published a book, School’s Choice: How Charter Schools Control Access and Shape Enrollment, showing all the ways charter school operators select their students and leave behind in public schools the students who are most likely to need additional expensive additional services—including disabled students and English language learners.

I live in Ohio, where the charter school sector has been out of control for over two decades. When the U.S. Department of Education published its proposed new rules and asked for public comment, I was moved by the comment submitted on behalf of Policy Matters Ohio by Piet Van Lier, who strongly endorses the proposed rule that would ban federal grants to nonprofit charter schools managed by for-profit management companies: “More than 10 years ago Policy Matters began tracking abuses by for-profit management companies operating schools in Ohio. We documented abuses by Imagine Schools, which had a poor record of performance in our state and a business model driven by elaborate school real estate transactions, high management and operations fees paid by nonprofit schools to the corporation, overlapping business relationships, low spending on classroom instruction, and tight control of school finances and business relationships.”

Van Lier continues: “Our subsequent research found additional problematic practices by management corporations including: hand-picking board members of charter schools that are by law responsible for school operations; preventing schools from hiring their own independent attorneys, accountants, and auditors; binding schools to them contractually and financially, making it impossible to seek new management; controlling school revenue from public sources; claiming ownership of school equipment purchased with public funds; and loaning money to schools well above market rates. We also documented the practice of management corporations pretending to comply with Ohio law mandating school closure for poor academic performance by simply changing the names of schools and re-opening them in the same location with largely the same staff. These practices continue today.”

Policy Matters also endorses the need for charter school startups to conduct an impact study and demonstrate the need for the new school: “Examples abound… of charter schools opening simply because they have access to a building and want the public funding that will flow to the school, even if they cannot meet enrollment targets and have no evidence that they have talked to families and other stakeholders in the community about what kinds of schools are needed. Requiring schools and operators to demonstrate community need and interest in their models is simply good policy and will prevent the over-saturation of charter schools many urban areas already face.”

We should certainly not be surprised when the charter school lobby, represented by the National Association of Public Charter Schools, sponsors a rally to protest more stringent rules to block the flow of federal funds to charter schools.  We must also hope that staff in the U.S. Department of Education carefully read the thousands of comments thanking the Department for proposing new regulations to end the flow of federal dollars to for-profit management companies and to require charter school sponsors to consider the needs of the communities where they propose to locate new charter schools.

President Biden’s Proposed FY 2023 Federal Budget Increases Funding for Key Federal Responsibilities Including Title I, IDEA, and the Office for Civil Rights

A President’s federal budget proposal is a always statement of the President’s priorities.  It is released in the spring, after which time Congress is expected to consider and vote on the priorities before the beginning of the upcoming fiscal year (FY) when the budget will go into effect. But this year, as you may have noticed, stuff continues to be all jammed up in Congress.

The budget for the current fiscal year, the FY 2022 federal budget, was proposed by President Biden over a year ago. But Congress kept putting off voting on it and instead passing a succession of what are known as continuing resolutions. Congress finally passed, and the President signed the FY 2022 federal budget last month—on March 15, to be exact, nearly half a year into the fiscal year to which it applies. This blog covered the recently enacted FY 2022 K-12 public education budget here.

Then at on March 28, the President released his proposed FY 2023 federal budget—his wish list for spending for next fiscal year beginning on October 1, 2022. There has been very little reporting on the newly proposed budget. The primary components of Biden’s proposal, however, indicate that the President’s support for public K-12 public education remains strong. The proposed FY 2023 budget includes increased appropriations for key K-12 programs with an emphasis on increasing the opportunity to learn for populations of students who have historically been left behind across the states.

For the Washington Post, Moriah Balingit and Danielle Douglas-Gabriel summarize the spending priorities in Biden’s Education Department budget overall—including higher education:

“The budget proposal released Monday for fiscal year 2023 comes just 18 days after Congress approved a spending package that significantly pared back the president’s ambitions for education—while still delivering historic increases to key programs. This year’s proposal… (seeks) to increase funding for the Education Department to $88.3 billion. That’s a 16 percent increase when compared with the spending package (for FY 2022) signed into law this month. The White House is asking Congress to double funds for high-poverty schools (and) boost special education funding by 25 percent…. The proposal also includes $100 million for a new program to encourage racial and socioeconomic school integration, and adds $30 million to the Office for Civil Rights.”

Here, from President Biden’s FY 2023 budget proposal, is what the President proposes to spend for several key K-12 public school programs in FY 2023 compared to FY 2022 spending recently signed into law.

• The President proposes to increase Title I spending from $17.5 billion to $36.5 billion.
• Funding for IDEA grants would grow from $13.3 billion to $16.3 billion.
• Funding for Full-Service Community Schools would grow from $75 million to $468 million.
• Federal Charter Schools Program dollars would be frozen from FY22 to FY23 at $440 million.

In the reports I have been able to find, the names differ from year to year for budget lines for programs to support the health and well-being of students, add more counselors and mental health professionals, and support social and emotional learning. The President proposes to increase funding in FY 2023 for these programs that are urgently needed as schools help students cope with the disruption of COVID 19. The President proposes to increase the allocation for educating English language learners to $1.1 billion.  K-12 Dive reports that the President wants to add $514 million to recruit and train teachers. Additionally the President proposes to increase funding for the Office for Civil Rights by 23 percent to $161 million. Head Start funding, which falls in the Department of Health and Human services would increase to $12.2 billion.

Although many advocates for public schools hoped the President would propose to cut the allocation for the federal Charter Schools Program, this budget line is flat-funded at $440 million.  However, the Department of Education posted a Federal Register notice last week to strengthen oversight of this notoriously poorly regulated program. The first of the new rules would require that charter schools asking for startup funding from the Charter Schools Program conduct and report a community impact study showing that the new school is needed in the community, that its presence will neither undermine existing schools nor the neighborhood, and that the school will not promote racial segregation. The second important new rule would make nonprofit charter schools which are operated under sweeps contracts by for-profit charter management organizations ineligible to qualify for grants from the Charter Schools Program. These urgently important rules are posted for comments until April 13.  Please do send a comment yourself. Here is how to do it.

Please Submit a Comment Supporting Stringent New Rules for the Federal Charter Schools Program

Last week this blog covered the news that the U.S. Department of Education has published a notice in the Federal Register proposing new rules to strengthen oversight of the federal Charter Schools Program (CSP). It is urgently important for each one of us—parents, educators, advocates, and citizens who care about the careful stewardship of federal tax dollars—to write and submit a formal comment expressing support for stronger oversight of the Charter Schools Program.

Our comments are especially important to counter the voices of charter school lobbyists and proponents of marketplace school choice who are mounting strong opposition to the new regulations. Here is Robert Maranto in a commentary published last week  by the New York Post: “Starting in the Reinventing Government era, Democrats like Bill Clinton and Barack Obama praised… charter schools for their innovations… Even traditional liberal Hillary Clinton got boos from a National Education Association audience during the 2016 presidential campaign when she made positive remarks about charter schools… But now, with Democrats going woke and a new president in town, the U.S. Department of Education has declared war on charter schools, using obscure bureaucratic rulemaking to kill the federal charter-school program without having to explain why.”

Even the Washington Post has published an editorial, The Biden Administration’s Sneak Attack on Charter Schools, opposing the balanced and sensible new rules the Department of Education has proposed for the purpose of improving oversight of this program.  In a recent blog, Diane Ravitch puts the Washington Post‘s opposition to the Department’s proposed rules into some historical perspective.

What specific dangerous practices in the charter school sector would, under the new rules, disqualify a charter school from receiving funding from the Charter Schools Program?

First — Even though the Elementary and Secondary Education Act forbids the allocation of federal dollars to for-profit charter schools, the owners of for-profit charter management organizations (CMOs) have learned how to get around the law. The U.S. Department of Education has proposed to stop the misallocation of federal Charter Schools Program (CSP) dollars to for-profit charter school management companies that hide behind the nonprofit charter schools they manage under sweeps contracts. This rule would be especially relevant in places like Ohio, where we have learned over two decades about the shady practices of charter management organizations. The new rules would at least make schools engaged in such practices ineligible to receive federal dollars from the Charter Schools Program. In the decade after David Brennan launched the notorious White Hat Management Company, the Akron Beacon Journal’s reporters Dennis Willard and Doug Oplinger taught us, month after month, year after year, about how Brennan’s charter management organization (CMO) openly recruited the company’s friends to form nonprofit boards who would open individual charter schools and then turn over more than 95 percent of Ohio’s public tax dollars to White Hat to manage the school under what has become known as a sweeps contract. The nonprofit board had no role in operating the school, and no oversight over how the money was spent or how much Brennan took as profit. We learned again and again that when one of White Hat’s Hope or Life Skills charter schools closed, the management company kept all the equipment and books purchased originally with public tax dollars.

In 2018, when Brennan became ill and subsequently died, ACCEL, a for-profit charter management organization run by Ron Packard, took over the White Hat charter school empire. ACCEL also acquired management of Cleveland’s I Can charter schools and the schools of another collapsing charter management company (CMO), MOSAICA, as well as Brennan’s Ohio Distance and Electronic Learning Academy, OHDELA.  Reporter Jeff Bryant has shown how ACCEL’s finances are complicated by private equity investment intended quickly to produce significant profits from his supposedly nonprofit charter schools managed by ACCEL under sweeps contracts. ACCEL is really part of Pansophic Learning whose investors include a Saudi private equity firm, Safanad, whose CEO Kamal Bahamdan, leads Bahamdan Investment Group. Bryant also shows that Packard and his partners own Global School Properties Ohio, LLC, which leases school buildings—at exorbitant rents— back to the nonprofit charter school boards that are managed by Packard’s ACCEL CMO.

Second — When a charter school asks for Charter Schools Program startup funds, the Department has proposed another rule requiring a community impact statement to ensure that there is a need for a new charter school in the community and that the school won’t promote racial segregation. The federal Charter Schools Program must ensure that grants to charter school startups do not violate the principles which the U.S. Department of Education is responsible for enforcing by its own Office for Civil Rights. The U.S. Department of Education is charged with requiring that public schools promote racial diversity and an inclusive welcome for all children. The Department must protect equal access at publicly funded schools for students of every race, ethnicity, religion, gender, and sexual orientation.

Neither should rapid expansion of charter schools undermine urban neighborhoods. The most serious consequence of out-of-control charter school expansion has been evident in large cities, where charter schools advertise lavishly to attract families from public schools. Recently we have watched as the Oakland Unified School District in California has begun shutting down neighborhood public schools.  In June of 2013, we all watched as Chicago closed 50 public neighborhood elementary and high schools. The Renaissance 2010 project had proclaimed that the strategy of opening a mass of new charter schools in competition with the public schools would improve education overall.  Instead, 88 percent of students in the public schools closed in 2013 were African American and communities across Chicago’s South and West Sides were subsequently left without a neighborhood-anchor public school.

Here, as stated in the Federal Register, are the two urgently important rules the U.S. Department of Education proposes to add:

First — “Each charter school receiving CSP funding must provide an assurance that it has not and will not enter into a contract with a for-profit management organization, including a non-profit management organization operated by or on behalf of a for-profit entity, under which the management organization exercises full or substantial administrative control over the charter school and, thereby, the CSP project.”

Second — “Each applicant must provide a community impact analysis that demonstrates that there is sufficient demand for the proposed project and that the proposed project would serve the interests and meet the needs of students and families in the community or communities from which students are, or will be, drawn to attend the charter school, and that includes the following:  (a) Descriptions of the community support and unmet demand for the charter school, including any over-enrollment of existing public schools or other information that demonstrates demand for the charter school, such as evidence of demand for specialized instructional approaches. (b) Descriptions of the targeted student and staff demographics and how the applicant plans to establish and maintain racially and socio-economically diverse student and staff populations, including proposed strategies (that are consistent with applicable legal requirements) to recruit, enroll, and retain a diverse student body and to recruit, hire, develop, and retain a diverse staff and talent pipeline at all levels (including leadership positions).”

Please submit a comment supporting the Department’s new stronger regulations. Don’t let yourself be intimidated by the complicated language and presentation of the new rules in the Federal Register.  Begin your comment by thanking the Department of Education for strengthening  long-needed accountability in this program.  In simple prose, explain your support for each of the proposed new rules for the Charter Schools Program. In your comment, if you like, you may quote the language (above) of each rule followed by your reason for believing the new regulation is so important.  Your comment may be as long or as short as you like—a few sentences or several paragraphs.  Longer comments must be submitted as attached documents. Here is the comment I have submitted.

You can submit your comment HERE, and you must submit the comment before April 13, 2022.

If you are not planning to write your own comment, you should definitely send the Network for Public Education’s action alert letter, but I urge you to personalize your letter by adding a few sentences of your own.

The board of Ohio Public Education Partners has also taken a strong position supporting stronger regulation of the federal Charter Schools Program. PEP also provides guidance for writing and submitting a comment.

U.S. Dept. of Ed. Proposes Rules to Stop Flow of Federal Charter School Grants into Management Company Profits

Despite that during his presidential campaign, candidate Biden promised to end funding for the federal Charter Schools Program, the President and Congress funded the Charter Schools Program in the  FY 2022 federal budget at $440 million. And in the President’s FY 2023 federal budget proposal, released just yesterday, the President flat-funds the Charter Schools Program at $440 million.

However, last week the U.S. Department of Education did propose new rules to strengthen oversight of this poorly managed program. The proposed new rules would prevent the granting of federal funds to charter schools operated for profit. The proposed rules are open for public comment before their proposed formal adoption on April 14.

Current rules already specify that to receive a grant from the federal Charter Schools Program a charter school must be a nonprofit, but for years federal rules have failed to prohibit the practice by which for-profit charter management organizations (CMOs) hide behind the nonprofit status of the individual charter schools they operate in order to collect federal dollars. While virtually all the states require charter schools to be nonprofit entities, many nonprofit boards bring in for-profit CMOs to run their schools. The CMO may even have been involved in recruiting the board which establishes the nonprofit charter school to be part of the CMO network. The new rules would prohibit federal grants to charter schools whose overall operations are handled by one of the many for-profit CMOs.

The Washington Post‘s Laura Meckler explains: “Nonprofits could outsource particular tasks—such as payroll, for instance—to for-profit companies. But arrangements in which for-profit companies run the entire operation under contracts known as ‘sweeps’ would be ineligible for the start-up grants. The proposal specifically bars arrangements under which a for-profit management company ‘exercises full or substantial administrative control over the charter school… or over programmatic decisions.'”

Despite the requirement that recipients of federal Charter Schools Program grants be non-profit entities, in a 2021 report, Chartered for Profit, the Network for Public Education found lots of for-profit management companies profiting from our federal tax dollars: “Despite strict regulations against the disbursement of funds from the federal Charter Schools Program (CSP) to charter schools operated by for-profit entities, we identified over 440 charter schools operated for profit that received grants… between 2006 and 2017, including CSP grants to schools managed with for-profit sweeps contracts.”  Sweeps contracts are arrangements in which the nonprofit charter school board hires a charter management organization and turns over virtually all of the school’s federal, state, and local tax dollars to the company to operate the school without oversight by the nonprofit school’s board of trustees.

Here are examples demonstrating why the Charter Schools Program rules need strengthening. Early in 2020, the executive director of the Network for Public Education, Carol Burris reported that the IDEA “charter chain, which according to its audit had more than $1.13 billion in assets, has received since 2010 more than $200 million from the federal Charter Schools Program…. IDEA is receiving one huge grant after another, even before the prior grant is spent, from Education Secretary Betsy DeVos, who awarded the chain a grant worth $116,775,848 in 2018.”  A Network for Public Education (NPE) brief adds: “In 2019, the Houston Chronicle reported the IDEA Charter Schools Board voted to lease a private jet at an annual cost of $1.92 million. Two months earlier, the Texas Monitor revealed the use of first-class airfare for IDEA top employees along with their families, and tickets to professional sports events.”

Profiteering is frequently also embedded in the real estate leasing arrangements charter management organizations impose on their schools. The CMO frequently owns school buildings and leases them to the charter schools it operates, often at exorbitant rents. As reported in NPE’s brief, “Another (CSP) grant was awarded to the Somerset network, founded by the owner of a for-profit, Academica charter management organization. Academica also manages its schools including Somerset, which make rent payments to real estate companies tied to Academica executives. The lucrative tax-funded real estate deals afford the organization to have a ‘leadership retreat’ at a Bahamas resort.”

Despite that Congress ignored Biden’s campaign promise to end or reduce funding for the long mismanaged Charter Schools Program, it would appear that staff at the U.S. Department are proposing to tighten oversight by adopting some of the recommendations from the Network for Public Education’s 2021 report: “The U.S. Department of Education should enforce its own regulations… (which) require that CSP grant administration be independent of a for-profit board… The U.S. Department of Education should conduct an extensive audit of present and former grantees to ascertain compliance with all regulations that define the for-profit relationship… The Department (should) update its non-regulatory guidance that determines whether a Charter School Program applicant is in fact, ‘independent from the for-profit CMO or EMO (education management organization) hired to manage the day-to-day operations of the charter school’ so that for-profit organizations that use nonprofits as a facade are ineligible to receive federal, taxpayer-funded grants… (W)e suggest the federal government define a for-profit charter school as a school in which more the 30 percent of all revenue flows directly or indirectly to the for-profit vendors.”

In her article last week, Meckler adds that the Department of Education’s new proposed rules would also require charter schools applying for start-up grants to document the impact the new charter school would have on the neighborhood or in the community where the school is to be located: “Applicants must submit a community impact analysis demonstrating there is ‘sufficient demand’ for the new school and that the project would meet the needs of students and families in the community. They would also have to detail how the applicant would create racially and socioeconomically diverse student and staff populations… To show ‘unmet demand,’ applicants are asked to cite data about any over-enrolled existing public schools.”

Charter startups are known to have destabilized public schools In a number of cities—most recently in Oakland, but also in Chicago and Detroit, for example, where competing charter start-ups have wooed families with lavish advertising, driving down enrollment in neighborhood schools. In Chicago, 88 percent of students in the 50 neighborhood public schools that were closed in 2013  were African American. Neighborhoods across Chicago’s South and West sides were subsequently left without a neighborhood-anchor public elementary or high school.

One can only hope that, if a community impact rule is established, it will be enforced.  Even the Department of Education’s own Office of Inspector General has released a long series of reports exposing the Department’s poor oversight of the federal Charter Schools Program in past years under already existing rules.

Jeb Bush’s Pitiful Attempt to Defend Federal Funding of Charter Schools Managed by For-Profit Companies

It’s clear that the charter school lobby is upset about the House of Representatives’ effort in its proposed budget resolution to curtail abuses in the federal Charter Schools Program and to reduce the program’s appropriation by $40 million in the upcoming fiscal year.

Jeff Bryant explained last week: “The top lobbying group for the charter school industry is rushing to preserve millions in funds from the federal government that flow to charter operators that have turned their K-12 schools into profit-making enterprises, often in low-income communities of color. The group, the National Alliance for Public Charter Schools (NAPCS), objects to a provision in the House Appropriations Committee’s proposed 2022 education budget that closes loopholes that have long been exploited by charter school operators that profit from their schools through management contracts, real estate deals, and other business arrangements.”

The executive director of National Alliance for Public Charter Schools, Nina Rees went on C-Span to try to defend the program, and now it’s clear that the organization is calling on old allies to push Congress to cancel the House Appropriations Committee’s proposed elimination of all federal funding for charters operated for-profit by Charter Management Organizations. Bryant reminds us that Nina Rees was the deputy assistant for domestic policy for former Vice President Dick Cheney.

This week Jeb Bush, the ultimate old advocate for school privatization, came out of the woodwork with an op-ed circulated all over the country by the Tribune News Service. Bush’s piece appeared in our Sunday Cleveland Plain Dealer. Toward the end of his article, Bush gets to the point and protests the proposed House Budget Resolution: “Not only does it specifically cut $40 million in education funding (from the Charter Schools Program), but the House budget bill also includes alarming language that would prevent any federal funds from reaching any charter school ‘that contracts with a for-profit entity to operate, oversee or manage the activities of the school.'”

Bush thinks that the U.S. Department of Education ought to be allowed to make grants to charter schools whose operators are, in many cases, collecting huge profits at the expense of our tax dollars and at the expense of children whose education programming is reduced to ensure operators can make a profit. I guess he isn’t bothered by the charter management companies that have managed to negotiate sweeps contracts that gobble up more than 90 percent of the state and federal operating dollars and manage the school without transparency.

The Network for Public Education (NPE) just published a major report, Chartered for Profit, that details how all this works. Recently NPE’s executive director, Carol Burris was interviewed about the extent of the problem: “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.”

In his recent commentary, Bush buries his defense of for-profit charter school management companies near the end of an article packed with tired, meaningless rhetoric. He begins by alleging that our system of public schools derives from an “outdated mentality”—a factory model dating from the 1890s that won’t work in the “21st century economy (which) is vastly different.” I guess he means that public schools haven’t kept up with the times, or maybe he is implying that something is wrong with what kids are learning in public schools.  When he explains that public schools serve 56.6 million students and charter schools serve 3.3 million students, one wonders why he fails to recognize that investing federal dollars to improve the nation’s public schools would be the best strategy for serving the mass of America’s students. After all, in a well known study, economist Gordon Lafer has explained how charter schools in just one school district, Oakland, California, suck $57.3 million every year out of the public schools that serve the majority of Oakland’s children and adolescents.

Next, Bush references a litany of studies, based, he says, mostly on the National Assessment of Education Progress (NAEP).  He claims this research proves that charters are better academically. Without specific references, it is hard to know which studies he is citing, although he does name one source—from the University of Arkansas, where the Department of Education Reform is a think tank funded by the Walton Foundation.

In her recent book, Slaying Goliath, Diane Ravitch, who served for several years on the NAEP Governing Board, refutes Bush’s argument that charter schools are academically superior: “Charter schools on average get about the same results when they enroll the same demographic groups of students. Those charter schools that report outstanding test scores typically have high rates of attrition and do not enroll the most difficult to educate students, such as English language learners and students with disabilities. Charters have the freedom to write their own rules about suspensions and discipline and some have used this freedom to push out the students they don’t want, those who are discipline problems, and those who can’t meet the school’s academic demands, who then return to public schools.” (Slaying Goliath, p. 135)

Next, in an argument that would be funny if it were not so sad, Bush claims that critics of for-profit charter schools are captives of the money-grubbing teachers unions. “(U)nions fear that choice will lead to fewer students attending schools that fund their private coffers… It’s a feedback loop without a soul.”

And finally, Jeb Bush explains that, by defunding for-profit charter schools, members of the House of Representatives want to eliminate federal support for the education of “millions of students, especially our nation’s special-needs students who qualify for funding under the Individuals with Disabilities Education Act, and our students living in poverty.” Has Bush not read President Biden’s budget proposal, whose public school investments are copied in the House of Representative’s proposed budget resolution? The President and the House Appropriations Committee propose to increase funding for wraparound Full-Service Community Schools from $30 million to $443 million, double Title I funding for schools serving concentrations of poor children, and significantly increase funding for the Individuals with Disabilities Education Act.

Jeb Bush and his Foundation for Excellence in Education, now called ExcelinEd, have been advocating for charter schools and school privatization for years. To promote these very ideas, Bush and ExcelinEd spawned Chiefs for Change (which has since become an independent organization) in order to promote school privatization and corporate school accountability among state school superintendents and commissioners and local school superintendents.

Betraying his long alliance with our former education secretary, Betsy DeVos, Bush condemns public schools because, he writes, they are a system which is not designed to serve individual students. The move to privatize public education is merely an expression today’s wave of libertarian individualism (at public expense) and consumerist, market-place thinking.

It is useful to keep in mind the warning of the late political theorist Benjamin Barber: “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… personal skills… and personal luck.  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… the very dilemma which the original social contract was intended to address.” (Consumed, pp. 143-144)

Politicians Are Discovering They Can No Longer Ignore Charter School Outrages

In Wednesday’s Washington Post‘s Laura Meckler traces fading support for charter schools among Democrats who are running for President:

“Democrats have long backed charter schools as a politically safe way to give kids at low-performing schools more options… The presidential contest is proof that’s no longer the case. If the candidates say anything about charter schools, it’s negative… Instead, the Democratic candidates are pitching billions of dollars in new federal spending for schools and higher pay for teachers, with few of the strings attached that marked the Obama-era approach to education. It adds up to a sea change in Democratic thinking, back to a more traditional Democratic approach emphasizing funding for education and support for teachers and local schools.”

Except that major political change is excruciatingly slow and difficult.  And, in education, the policy that most directly affects schools happens in state legislatures, where the American Legislative Exchange Council wields the power.

Just this week in West Virginia, for example, the state legislature passed an omnibus bill which combines added state investment in public schools with the launch of charter schools.

Nearby in Pennsylvania, the Philadelphia Inquirer published a scathing critique of the state legislature’s ongoing debate of bills that would supposedly regulate charter schools: “Last week, the Pennsylvania House passed a set of bills proffered to ‘fix’ Pennsylvania’s charter school law. Yet the bills fail to address necessary charter school funding reform, and two of the bills… specifically allow charters to expand without adequate oversight… Statewide, in 2016, state school districts paid $1.5 billion… in charter school tuition payments.  Charter schools receive this funding regardless of whether their students are making the grade. Worse yet, in 2012-13 they were paid over $200 million more for special education services than they spent on these services for our students.”

Jeff Bryant explores in more detail just how Pennsylvania charter school funding is destroying local school districts’ capacity to fund their public schools.  Bryant quotes the Pennsylvania Association of School Business Officials: “‘Charter school tuition is one of the largest areas of mandated cost growth for school districts.’ With the current cost of charter growth at 10 percent annually, PASBO calculates at least $0.37 of every new dollar raised in property taxes in 2017-18 went directly to charters… Because the state does virtually nothing to help alleviate these costs, school districts are forced to turn to property taxes… To stave off the decimation, ‘school districts shifted resources from other areas of the budget, cut programs, and raised property taxes to cover the difference’ created by rising charter school costs.”

Meckler is correct, however, that the tide seems to be turning against charter schools. She quotes Democratic candidates for President who, once enthusiastic supporters of charter schools, have carefully been changing their message—Cory Booker especially, and also Joe Biden.  After the Network for Public Education released a scathing report on the appalling absence of oversight in the federal Charter Schools Program, Bernie Sanders increased the pressure on other candidates by “calling for a halt to all federal funding for charter schools.”

So… what is shifting public opinion away from support for charter schools and forcing Democratic candidates to recalculate their messaging?

• Meckler names a year of teachers’ strikes and wildcat walkouts as an important factor: “The shift was reinforced last year by teacher strikes that focused public attention on educators’ low pay.”  But it is not only attention to the collapse of teachers’ salaries that we have have been watching. Teachers have drawn attention to the implications of  their low salaries—teachers leaving for states where salaries are better supported, teachers unable to find housing in the communities where they work. Teachers have also shown us their despicable working conditions and school districts forced to lay off nurses, counselors, librarians and social workers.
• Academic research economists like Gordon Lafer and Bruce Baker have documented that charter school expansion leaves school districts with very significant fixed costs when children carry away their funding to a charter school—fixed costs that are large enough to devastate public school services and eliminate enrichments that are needed for the majority of children who remain in the public schools.
• Teachers’ unions are deliberately working with candidates—encouraging them to talk with local school teachers who help them understand the damage test-and-punish school reform policies and the expansion of charter schools have inflicted on the public schools where teachers cope with the consequences day after day.  Meckler explains: “The American Federation of Teachers has been hosting candidate forums throughout the country, inviting contenders to spend a day with teachers and then answering questions town hall-style.”
• Finally, the press along with advocates for investing in the public schools have relentlessly exposed the theft of public dollars by unscrupulous charter operators and for-profit charter management companies; the violation of students’ rights when charters push out vulnerable students or neglect to provide services for English language learners or children with special needs; the failure of state governments to regulate charter schools in the public interest; and the outrageous mismanagement of the federal Charter Schools Program, which has made grants totalling over a billion dollars since 1994 but without sufficient oversight.  The U.S. Department of Education’s own Office of Inspector General has condemned the management of this program in biennial reports for years, but nothing has been done to improve regulation of the schools which were seeded or expanded with large federal grants.

The Network for Public Education (NPE) has done some of the most notable work to expose the abuse of the public interest in the federal Charter Schools Program. Three months ago, NPE released Asleep at the Wheel, a major report documenting that over a billion in federal Charter Schools Program dollars has been wasted since 1994, when the program was launched, on charter schools that never opened or subsequently shut down. NPE has been updating that report by digging deeper into the state-by-state problems with charter schools that were started up or expanded with the federal grants.

On Monday, the Washington Post‘s Valerie Strauss  published the newest findings from Carol Burris, the Network for Public Education’s executive director and one of the authors of the Asleep at the Wheel report: “The Network for Public Education… continued investigations, going state by state, documenting the failed and never opened charter schools that received grants. To date, we have analyzed the lists of grants given from 2009 to 2014 in 15 of the 40 recipient states.  Some of the states received multiple grants, others few.  We have found 1,203 charter schools in those 15 states alone that either never opened or have closed.  This represents 40 percent of the total grantees… It appears we underestimated the waste in the report—the percentage of failed schools is higher than the 30 percent that we reported, and given the limited number of states and years analyzed so far, it is likely that waste will exceed our estimate of $1 billion.”

In Michigan, Burris reports the Asleep at the Wheel report caused the Michigan Board of Education to slow down on dispersing the federal funds: “Just this spring, based on the history of failed grants, the Michigan Board of Education voted to stop the disbursement of funds from a new federal $47 million dollar grant while it investigates what happened to the funds given to charter schools that never opened or quickly failed.”  Burris adds: “Eighty percent of Michigan charter schools are run by for-profit companies.”

Deeper investigation by NPE has revealed that, “Maryland had 54 schools in the 2009-2014 federal data set that never opened.  Overall, the percentage of Maryland charters that received federal grants but never opened or failed is an astounding 55 percent.  Those schools, together, had received $7,901,164 in federal Charter Schools dollars. Forty-two percent of the Pennsylvania charter schools that received grants either never opened, closed or may not have ever been a charter school at all… Other states with grantee failure rates above 50 percent are Delaware (57 percent), Arkansas (52 percent) and Georgia (57 percent).”

The National Center for Education Statistics assigns a name and a 12 digit code to all public and charter schools and has updated its school-locator tool through the 2017-2018 school year.  Burris reports: “Most of the time, the charter schools that received grants but never opened had not been assigned an NCES number in the database. However, we found numerous cases in two states where the school not only did not have a NCES number, it did not even have a name. Tennessee, which has a 49 percent grantee failure rate, gave 38 (federally funded) grants of $10,000 each to schools that not only did not have a NCES number, they also did not have a listed name. Where did that $380,000 go? Apparently, the Department of Education has no idea. Nor do they (or taxpayers) know where 18 grants to Arkansas ‘no name and no NCES ID’ charter schools went. Two of those grants were for $50,000.”

Burris further explores outrageous scandals in several charter schools and charter school chains seeded originally with federal Charter Schools Program grants. In California, 11 people associated with the online  Academic, Arts and Action Charter Academies, known as A3 Education, were indicted a few weeks ago on criminal charges of grand theft, conspiracy, personal use of public money and financial conflict of interest. (This is the scandal involving Steve Van Zant, Jason Schrock, Eli Johnson, and Sean McManus). It is alleged that over $50 million was stolen. “And who gave the seed money to start this adventure? The U.S. Department of Education’s Charter Schools Program did.” Burris further explores scandals in charters originally set up with federal Charters Schools Program dollars in Pennsylvania and Texas.

Burris concludes: “It appears that Sean McManus of the California online A3 charter scam has left the country.  But the multimillion-dollar heist of federal and California taxpayers’ funds for which he allegedly is responsible pales in comparison to the hundreds of millions of dollars in waste we are finding in our investigation of the U.S. Department of Education’s Charter Schools Program.”

Thanks to this kind of investigation—along with the outcry from public school teachers and the work of economists showing that charters steal essential dollars from public school districts—politicians are beginning to realize they can no longer ignore the problems with charter schools.

Lack of Oversight of Federal Charter Schools Program Cheats Taxpayers, Students, Families, and Local Public Schools

The impact of federal investment in the Charter Schools Program has been in the news this month thanks to the Network for Public Education’s stunning new report, Asleep at the Wheel, which exposes the number of schools across the states that received millions of dollars from the U.S. Department of Education’s Charter Schools Program but never opened or, after opening, subsequently shut down.  The Network for Public Education (NPE) documents the waste of hundreds of millions of dollars out of the total $4 billion that has been spent on the Charter Schools Program (CSP), which has been operated with an outrageous absence of oversight. A third of the schools whose startup or expansion was seeded by the CSP are currently not in operation.

Last week the Network for Public Education expanded its coverage of abuses in the Charter Schools Program by breaking down the numbers to show how much money was wasted in five of the states. (NPE says it will continue to break down the numbers in upcoming weeks for the rest of the 44 states and the District of Columbia which have charter schools.)  Jeff Bryant follows up this week by summarizing the percentage of failure in CSP-funded schools in the five target states. In Michigan, 42 percent of the federal dollars granted by CSP were wasted on schools that never opened or subsequently closed. The percentage of failure was similar in Ohio (40 percent), Louisiana (46 percent), California (38 percent), and Florida (36 percent).

Responding to the Network for Public Education’s report, charter school promoter Nina Rees justifies the federal Charter Schools Program as a crucial source of venture capital to jump start and expand a privately operated but publicly funded education sector.  Chalkbeat’s Matt Barnum shares Rees’ assessment: “Nina Rees, the president of the National Alliance for Public Charter Schools, said federal grants are a crucial source of funding for start-up schools and that closures of ineffective schools are signs that the charter model is working.”

Barnum adds that right at the end of March, the U.S. Department of Education announced another category of new five-year grants, this time to the giant Charter School Management Organizations (CMOs).  The list posted on the Department of Education’s website includes several of the usual subjects. KIPP schools will receive $86,311,042 over the next five years to add what Barnum reports are 52 new schools.  IDEA, a charter chain in Texas, Louisiana and Florida, will receive $116,755,848 over five years to double its size.  Barnum  explains: “IDEA is the other big winner, getting what appears to be the largest award ever directly given to a charter network through the federal program…Like KIPP, IDEA takes a strict approach to student behavior—even emblazoning the phrase ‘no excuses’ on students’ uniforms. Chalkbeat has previously reported that the network has a high attrition rate—at one point, a third of students were gone within four years—and serves far fewer students with disabilities than the state of Texas as a whole.”

In the next five years, New York City’s Success Academy Charter Schools will also receive a federal Charter Schools Program grant—$9,842,050. The award comes at the same time Chalkbeat reports that Success Academies was sued again this week by a family alleging that their child was on one of Success Academies’ much reported “got to go lists.”  It has long been reported that when students are a particularly poor fit or students are especially disruptive, Success Academies repeatedly suspends or punishes the students until despairing parents withdraw the students from the schools.

In his report on the federal grants to the big Charter Management Organizations, Barnum wonders if the size of these grants may fuel what appears to be a growing backlash against the expansion of charter schools: “The grants… underscore the substantial role the federal government plays in helping charter schools expand. But they come at a perilous time politically for the charter school movement, which has seen its growth and popularity ebb in recent years. These networks’ plans for rapid growth might both run into—and fuel—political opposition, particularly in places where that growth will strain school districts’ finances.”

The effect of charter school expansion is a serious threat to the finances of traditional public school districts. When students leave a public school system to attend a charter school they carry away money from the school district’s budget. There are charter promoters who allege that, because the exiting students no longer require the services public school districts are providing, the fiscal impact is neutral.  However, the political economist, Gordon Lafer counters this argument forcefully in a report published a year ago by In the Public Interest: “To the casual observer, it may not be obvious why charter schools should create any net costs at all for their home districts. To grasp why they do, it is necessary to understand the structural differences between the challenge of operating a single school—or even a local chain of schools—and that of a district-wide system operating tens or hundreds of schools and charged with the legal responsibility to serve all students in the community.  When a new charter school opens, it typically fills its classrooms by drawing students away from existing schools in the district. By California state law, school funding is based on student attendance; when a student moves from a traditional public school to a charter school, her pro-rated share of school funding follows her to the new school. Thus, the expansion of charter schools necessarily entails lost funding for traditional public schools and school districts. If schools and district offices could simply reduce their own expenses in proportion to the lost revenue, there would be no fiscal shortfall. Unfortunately this is not the case.”

Lafer continues, detailing the costs public school districts cannot immediately cut when students leave for charter schools: “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. In addition, both individual schools and school districts bear significant administrative responsibilities that cannot be cut in response to falling enrollment. These include planning bus routes and operating transportation systems; developing and auditing budgets; managing teacher training and employee benefits; applying for grants and certifying compliance with federal and state regulations; and the everyday work of principals, librarians and guidance counselors.” “If a school district anywhere in the country—in the absence of charter schools—announced that it wanted to create a second system-within-a-system, with a new set of schools whose number, size, specialization, budget, and geographic locations would not be coordinated with the existing school system, we would regard this as the poster child of government inefficiency and a waste of tax dollars. But this is indeed how the charter school system functions.”

Finally, of course, one must consider the students whose educational needs are abandoned when a charter school abruptly closes. Writing about the individual schools which received money under State Education Agency grants—the schools covered in NPE’s new Asleep at the Wheel report, Jeff Bryant explains: “With every new charter school that said it would open and didn’t, or opened and then quickly closed, there were families and kids who fell for the marketing pitch and ran after promises of new and better educational opportunities that turned out to be a mirage. In a California community, one of the schools that received a $600,000 grant, Iftin University Prep High School in San Diego, closed mid-year, abandoning the remaining students and disbanding the senior class, who then had to find other schools to complete their high school diplomas… In Michigan, a Detroit charter school, University Yes Academy, that received an $830,000 CSP grant, promised high school students academic courses and school programs it never delivered. The school had five principals in three years.  An audit of the school could not account for $300,000 of Title I funds. After the money went missing, the school switched to a different management firm run by the same person. Then the school’s contract was transferred to a third management firm, which closed the school a week before classes were to start, leaving students and families stranded and high school seniors uncertain of how they would graduate….”