U.S. Senate Should Eliminate Federal Charter Schools Program in FY 22 Budget Resolution

Both chambers of Congress have been drafting their budget resolutions. Once they accomplish this work, Congress and the President, who presented his budget proposal in April, will negotiate federal spending priorities and pass a final federal budget. This process is supposed to be complete by September 30, because October 1 begins Fiscal Year 2022.

The President’s budget proposal has excited public education supporters by radically increasing funding for Full-Service Community Schools from $30 million to $443 million. The President’s proposal also doubles Title I for schools serving concentrations of poor children and increases funding for the Individuals with Disabilities Education Act. When the House of Representatives passed its budget resolution on July 5, members of the House pleased parents, public school educators and community advocates by including all three of these priorities and generously funding public schools.

The House budget resolution goes one step farther, however, by cutting $40 million from the $440 million federal Charter Schools Programs.  Education Week‘s Andrew Ujifusa explains: “Antipathy to the program has grown on Capitol Hill among Democrats in recent years, although the charter program still draws on bipartisan support.” Ujifusa also points to House support for a significant reform to this program: “The bill would prohibit federal money ‘from being awarded to charter schools run by for-profit entities.’ Charter schools run by such organizations have created significant controversy in the education community.”

What are charter schools?

Charter schools are a form of private contracting, but across the 45 states which have authorized charter schools, the state laws that created these schools are different. Some states let school districts themselves authorize charter schools; other states override local authorization through state authority or permit other outside authorizers.  And the amount of and quality of oversight varies. The original goal was to stimulate innovation by reducing what charter proponents alleged was the bureaucratic regulatory straitjacket that, they claimed, constrains traditional public schools.  Charter schools originated in the early 1990s, and now, nearly three decades later as the charter school sector has matured, we discover what might have been predicted in an education sector paid for with public tax dollars but at the same time operated privately with little oversight.

What is the federal Charter Schools Program?  

A series of federal administrations—Clinton, Bush, Obama, and Trump have treated the Charter Schools Program (part of the Office of Innovation and Improvement in the U.S. Department of Education) as a kind of venture capital fund created and administered to stimulate social entrepreneurship—by individuals or big nonprofits or huge for-profits—as a substitute for public operation of the public schools. Since the program’s inception in 1994, the CSP has awarded $4 billion in federal tax dollars to start up or expand charter schools across 45 states and the District of Columbia, and has provided some of the funding for 40 percent of all the charter schools across the country.

Four Reasons Why the U.S. Senate Should Go Farther than the House and Eliminate the Charter Schools Program Altogether

While it is certainly a great idea reduce this year’s appropriation for the federal Charter Schools Program and to prohibit federal tax dollars from flowing into the coffers of those who are reaping huge profits by operating chains of charter schools, I don’t think the House has gone far enough.  The Senate is still drafting its budget resolution. I hope Senators will eliminate this program.

First, over the years we have learned about how in many places charter schools operate as parasites—sucking money out of public school budgets.

In a study published by In the Public Interest, economist Gordon Lafer documents that charter schools undermine the fiscal viability of Oakland, California’s public schools by pulling away $57.3 million annually in state per-pupil public school enrollment reimbursements “To the casual observer, it may not be obvious why charter schools should create any net costs at all for their home districts. 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…  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.”

Further, Rutgers University’s Mark Weber and Julia Sass Rubin demonstrate that, “New Jersey charter schools enroll a fundamentally different student population than the districts where their students reside. New Jersey charter schools continue to enroll proportionally fewer special education and Limited English Proficient students than their sending district public schools. Furthermore, the special education students enrolled in charter schools tend to have lesscostly disabilities compared to special education students in the district public schools.”  School districts must absorb the additional costs of educating a high percentage of each district’s students with special needs.

Second, the federal government, which awards Charter Schools Program grants, and the 45 states, which authorize charter schools under state law, fail to provide adequate oversight of charter schools.

In 2019, the Network for Public Education released Asleep at the Wheel, a detailed report examining the operation of the federal Charter Schools Program from its launch in 1994 until 2015: “Hundreds of millions of federal taxpayer dollars have been awarded to charter schools that never opened or opened and then shut down… The CSP’s grant approval process appears to be based on the application alone, with no attempt to verify the information presented… The CSP’s review process to award grants does not allow the verification of applicants’ claims… Grants have been awarded to charter schools that establish barriers to enrollment, discouraging or denying access to certain students… The (Education) Department does not conduct sufficient oversight of grants to State Entities or State Education Agencies, despite repeated indications that the states are failing to monitor outcomes or offer full transparency on their subgrants… The CSP’s grants to charter management organizations are beset with problems including conflicts of interest and profiteering.”

The Department of Education’s own Office of Inspector General has also conducted a series of scathing reports on lack of oversight in the federal Charter Schools Program.  For example, in 2018, the OIG investigated the quality of the Department’s oversight when charter schools shut down.  The Department of Education did not track whether the state departments of education properly oversaw the disposal of a school’s assets when it shut down to protect the tax dollars that had been invested. The OIG also discovered that, “In three selected states, the State Education Agency and/or authorizer required charter school officials to notify parents or legal guardians of a charter school’s impending closure… However, we found that for 23 of the 89 closed charter schools in our sample, school officials did not notify parents or legal guardians of displaced students of the charter schools’ impending closure and did not provide information regarding alternative public school placements and appropriate assistance with enrollment.”

Third, fraud and corruption run rampant in this publicly funded but privately operated education sector whose oversight depends on the actions of 45 different state legislatures, whose members are the targets of well-paid lobbyists hired by charter school advocates and school operators.  One possible source of leverage is reform in the federal Charter Schools Program.

Fraud, corruption and outright theft is common.  In April of this year, CNBC reported that Seth Andrew, the founder of Democracy Prep charter schools in Harlem and a former official in the Obama administration, was arrested for stealing $218,005.00 from Democracy Prep Charter Schools “to maintain a bank account minimum that gave him a more favorable interest rate for a mortgage on his… Manhattan residence.”  The Network for Public Education has set up a web page to track the hundreds of scandals reported year after year across the United States in local newspapers.

A prime example of the problem is the Charter School Program grants for the IDEA charter chain in Texas and Louisiana.  In 2019, Chalkbeat‘s Matt Barnum reported that IDEA charter schools had received one of the largest federal Charter Schools Program grants that year: “IDEA, a Texas-based charter network, won an expected $116 million over five years. The network’s application says it will use the money to add grades at 56 schools and create 38 new schools across Texas; in New Orleans and East Baton Rouge, Louisiana; and in Tampa Bay, Florida… (IDEA received) what appears to the largest award ever directly given to a charter network through the federal program. It’s the fifth time IDEA has won a Charter Schools Program grant, including a 2017 award of $67 million over five years.  The network was hatched in 2000 in Donna, Texas, along the Mexico border. It currently runs 79 schools serving 45,000 students. The network has dramatic growth goals, aiming to reach 100,000 students by 2022 and 250,000 students in a decade.”  Then in 2020, Barnum reported that IDEA charter schools won another five-year Charter Schools Program grant, this time of $72 million.  But in April of 2020 we also learned something else about the management of IDEA charter schools: CEO Tom Torkleson was forced to resign when it was shown he had bought a private jet with the school’s dollars for the use of the school’s executives and their families and that he used $400,000 of the school’s revenue every year on luxury sky boxes for sporting events for the schools’ employees.  Now the two women who replaced Torkelson as CEO and Chief Operating Officer have been fired for misusing the huge charter company’s revenue.

Fourth: Neither the federal government nor the states have consistently protected students’ rights in charter schools.

In the latest example, described by Network for Public Education’s Executive Director Carol Burris, a private North Carolina white-flight academy found a way to transform itself into a publicly funded charter school without desegregating.  Burris explains that racial segregation in charter schools is a long-running problem in North Carolina: “How North Carolina’s charter schools are used to resist integration is well documented, as more predominantly White charter schools pop up in integrated or majority-minority school districts.  For example, a 2017 study—by researchers Helen F. Ladd, John B. Holbein and Charles T. Clotfelter of Duke University—found the state’s charter schools ‘increasingly serving the interests of relatively able White students in racially imbalanced schools’ with the number of students in predominantly White charter schools nearly doubling as the number of minority students concentrated in charters that were more than 90 percent minority.”

Recently Hobgood Academy, an all white private school converted to a charter.  Burris explains that while in the past “segregation came with a cost—$5000 a year in tuition,” when the school decided to become a charter school, advocates posted this disclaimer: “No current law forces any diversity whether it be by age sex, race, creed.”

Despite its segregation, however, Burris reports that Hopgood Academy received money from the federal Charter Schools Program: “Thirty of the 42 charter schools that to date have received CSP grants via the North Carolina Department of Education have reported demographic information.  Of those schools, more than one-third (11) have significant overrepresentation of White students or a significant underrepresentation of Black students compared with the population of the public school district in which they are located. In addition to Hobgood… (there) are four examples of other schools that got the money.”

Burris concludes: “It is easy to blame Betsy DeVos for giving a $26.6 million grant to a state whose charter sector has come under repeated fire for increasing segregation in an already segregated school system.  Now the Biden administration and Secretary Miguel Cardona own the grant.  Indeed, they own the whole flawed Charter Schools Program.”

Congress also owns this program and it is time for the Biden administration and Congress to make the federal Charter Schools Program a relic of the past.