Charter Schools: All the Ways They Are Not In the Public Interest

Donald Cohen is the executive director of In the Public Interest. In a powerful statement about his organization’s mission for 2020, Cohen proclaims:

“So much is under attack: public education, water, transit, public parks, public health, libraries, the postal service, air traffic control, and much more.  Where there’s money to be made, there are corporations positioning to take over… What worries us most is when private interests get too much control and influence over fundamental democratic decisions and our ability to provide public goods… We often hear that government is needed when markets fail. We disagree. There are market things and public things. They’re different things, like apples and oranges.  Here’s what we mean by ‘public’ (or, what’s in the public interest):

• The things we can only do if we do them together…
• The things we all benefit from regardless of whether we use the specific service or asset…
• The things that protect and support us all…
• The things that make us a better, fairer, more compassionate, and more democratic nation.

“We are pro-government because it is the only institution capable of ensuring that public things remain public.”

During the past quarter century, charter schools have come to threaten the public interest as Cohen defines it.  While their sponsors call them “public charter schools,” they are public only in the funding stream of public tax dollars. Their boards are private, and the management companies that operate many of them are frequently for-profits.

In an article she published last fall in the Journal of Policy Analysis and Management, Duke University public policy expert, Helen Ladd explains how charter schools threaten the public interest: “A fundamental problem with charter schools is that in most cases they undermine the coherence and effectiveness of state and local school systems. If charter schools were limited in number to the fringe of the traditional system, as was originally envisioned by some early supporters such as Ray Budde and Albert Shanker, or if elected policymakers take special precautions to ensure that charters and traditional schools work toward common goals, the adverse systemic effects might be contained. But, in areas with relatively large or growing charter school sectors overseen by weak authorizers, the negative systemic effects undermine the public interest.”

While the overall academic quality of charter schools cannot be assessed because each one or each chain of charter schools is unique, two very significant overall problems with charter schools threaten the public interest.  The first overall problem is that charter schools drain tax dollars out of the public schools. Because legislators never add new taxes when they budget money for charter schools, the state education budget is depleted.

Charter schools also drain funds from the school districts where their students live, and over time, this financial loss is unsustainable for the public schools. In a report published in 2018 by In the Public Interest, political economist Gordon Lafer demonstrates that charter schools drain $57.3 million annually from California’s Oakland Unified School District. Why does this happen? “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.” “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.”

The second problem is that charter schools are difficult to regulate. The charter sector is well funded, and the coffers of its advocates are fed by the tax dollars collected by the for-profit operators. The money for lobbying and political contributions to the legislators who would have to pass regulations saturates the system with corruption.

It is encouraging that three times since Christmas states or local school districts have taken steps in the public interest to rein in their out-of-control charter school sectors.

In Newark, New Jersey, the Superintendent of Newark Public Schools worries about what he says is 30 percent of the school district’s revenue redirected to charter schools. For Chalkbeat, Patrick Wall explains: “The head of the Newark school system is calling for the closure of four local charter schools and a ban on most new charter schools…. First, he cited the financial impact of charter schools on the district.  Because school aid follows students in New Jersey, districts must hand over most of the funding attached to each student who enrolls in a charter school.  Wall describes the superintendent’s concerns: “Finally, he questioned whether the schools adequately serve a significant number of students with special needs. He pointed to data in the schools’ renewal applications showing that they serve a smaller share of students with disabilities or those still learning English than the district and argued that the schools’ own descriptions of their programs suggest students are not being properly served.”

The state of New Hampshire just turned down a federal Charter Schools Program grant of $46 million.  The Concord Monitor reports: “The Joint Legislative Fiscal Committee voted 7-3… to reject the funds… Democrats have maintained they rejected the money due to a sense of fiscal responsibility.” The newspaper quotes an op ed column by Senate Majority Leader Dan Feltes, Senator David Watters, and Reps. Mel Myler, Dave Luneau, and Mary Heath: “There are simply too many unanswered questions about the current landscape of charter schools in New Hampshire, and our state’s capacity to support doubling the number of those schools… It would be fiscally irresponsible for the fiscal committee to move forward with this grant, which would double charter schools outside the legislative process, jeopardize the financial health of New Hampshire’s current traditional and charter public schools, and make an end-run around the state budget that commits the state of New Hampshire to millions of dollars in unbudgeted education aid into the future.”

The final story is from Ohio—a story of sort-of protecting the public interest. In Ohio there are all sorts of authorizers of charter schools, and there have been decades of insufficient oversight of charter schools. Ohio is also where one of today’s players is Ron Packard, who started K-12 Inc.—the notorious national online for-profit school—and whose new for-profit education venture is Accel, which has been taking over the management of schools once run by White Hat Management and the infamous David Brennan.

Keep in mind that Ron Packard and Accel manage all the schools described last week by the Cleveland Plain Dealer‘s Patrick O’Donnell: “East Academy, Cleveland Preparatory Academy and West Park Academy charter schools each scored an F on their latest state report cards. But school leaders are claiming they are ‘quality’ schools, so they can receive new bonus tax money of up to $1,750 per enrolled student from the state. Officials of the F-rated OhDela online charter school of nearly 2,000 students are making the same claim. And Chapelside Cleveland Academy is seeking the ‘quality’ bonus, even though its authorizer—the non-profit that oversees the school on behalf of the state—has given up on trying to fix the school’s F grade and is yanking its support. The fast growing for-profit Accel charter school chain, which runs all of these schools, has applied for more than $15 million in cash from a new $30 million fund that Gov. Mike DeWine and the state legislature created this summer as a boost for Ohio’s best charter schools.”

Thanks to charter school promoters in Ohio, $30 million to reward charter schools was buried in the fine print of the state budget. The fund is supposedly to support quality charter schools, but a school can also qualify if its management company has received a federal Charter Schools Program grant for a school it operates in another state: “Under a provision in the bill, these F-rated Accel schools may qualify for the bonus because a Colorado Springs charter school run by Accel won a federal grant a few years ago.”

O’Donnell reports this week, however, that the Ohio Department of Education blocked Ron Packard’s  swindle: “The Ohio Department of Education has blocked a ‘loophole’ that would have given millions of tax dollars to charter schools with bad grades…. (T)he department today rejected Accel’s application for those schools, citing details of Accel’s corporate registrations in Ohio that fail to connect Ohio operations with those of Accel in Colorado. Because Accel is not registered as a business that also operates in other states, the department ruled it is not eligible for the money… Accel founder Ron Packard said the ruling is unfair and while schools in different states may have different corporate registration, they are all Accel subsidiaries.”

It is definitely not in the public interest that $30 million was secreted in Ohio’s state budget last summer for charter schools when, in the same budget, basic-aid foundation funding for public schools is frozen over the FY 20-21 biennium.  However, it is very much in the public interest that the Ohio Department of Education has just prohibited a windfall award of $1,750 per-pupil to Ron Packer’s academically inferior, for-profit, Accel charter schools.

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Charter Schools at a Turning Point: How to Rein In an Out of Control Education Sector

If you read one article about education this week, you should read Jack Schneider’s column from last week’s Washington Post.  If you have already read it, I encourage you to read it again.  Schneider is an education historian at the University of Massachusetts at Lowell.  In last week’s column, Schneider shows how charter schools have failed to fulfill the promises of their promoters.

Schneider’s analysis is fair and balanced as he notes that charters have a mixed record.  While some are excellent schools that serve children well, “On the whole… charters have failed to live up to their promises.”

Schneider adds that the public is growing more aware of the problems charter school growth has caused for the public school districts where the charters have been located: “The charter school movement is in trouble.  In late December, the editorial board of the Chicago Sun-Times observed that the charter movement in the Windy City was ‘in hot water and likely to get hotter.’  Among more than a dozen aspirants for mayor, ‘only a handful’ expressed any support for charter schools, and the last two standing for the… runoff election both said they wanted to halt charter school expansion.  In February, New York City’s elected parent representatives—the Community and Citywide Education Councils—issued a unanimous statement in which they criticized charters for operating ‘free from public oversight’ and for draining ‘substantial’ resources from district schools. A month later, Mayor Bill de Blasio told a parent forum that in the ‘not-too-distant future’ his administration would seek to curtail the marketing efforts of the city’s charters, which currently rely on New York City Department of Education mailing lists. After a six-day strike in January, Los Angeles teachers forced the city’s Board of Education to seek a state moratorium on new L.A. charters, an outcome that reverberated across California and then repeated itself in Oakland.”

“But,” writes Schneider, “much of the movement’s potency was a product of promises, rather then results.”  What were the promises? “The first big promise of the charter movement was, in the words of Barack Obama, that these schools would be ‘incubators of innovation’… The second promise, as George W. Bush put it, was that charters would give ‘families with children stuck in failing schools the right to choose someplace better.’ In a competitive marketplace, families would no longer be trapped inside the ‘public school monopoly.’… The third promise was that charters would foster competition among schools in a manner that would lead to systemwide improvement.”

But, Schneider shows that charter schools weren’t really innovative: “Consider, for instance, the lack of innovation in the charter sector.  According to a recent report by the IBM Center for the Business of Government, for instance, charter schools tend toward a particular set of practices: longer schooldays, comprehensive behavioral policies (governing how students dress, when they can speak and where they can move, enforced by a range of punishments) and a focus on academic achievement.”

And, “Charters have also failed to live up to the hype of freeing families from ‘bad schools.’ In large part, that is because the introduction of charters simply creates an opportunity for choice; it does not ensure the quality of schools.”

Neither has competition driven widespread school improvement in K-12 education across the United States: “Theoretically, the introduction of charters and choice would force all schools to get better to maintain enrollment. But schools can attract students for reasons other than superior quality, and the obsession with securing per-pupil funding has in many cases been a distraction from the work of educating students.”

For all these reasons, Schneider concludes, “the long-running consensus that has sustained the charter movement has begun to unravel.”

One of the places where support for charters has been unraveling is California, where former Governor Jerry Brown—himself the founder of charter schools in Oakland, vetoed legislation to increase oversight of the charter sector. California’s new governor, Gavin Newsom, has shown himself more willing to consider expanding regulation of what continues to prove itself an education sector out of control.

Just this week, for example, the San Diego Union Tribune has been reporting in-depth on the indictment of eleven people who operated an online charter school scam in San Diego. This was neither a small nor an inconsequential scandal: “Two charter school leaders illegally pocketed more than $50 million of state funds by siphoning the money through a network of 19 online charter schools across California which falsely enrolled thousands of students… San Diego District Attorney Summer Stephan said that leaders of the charter schools enrolled thousands of students into their schools, often without their knowledge, and collected millions of dollars in state funds.  Many students were already enrolled in private schools or in youth athletic groups, and the charter school leaders bought their information to claim them as their students….”  The operators of the charter schools claimed to be providing services for the schools through private corporations they owned, “But the two men never provided any services to the charter schools….”

California allows school districts to sponsor charter schools, and it has been reported in the past that tiny elementary school districts have sponsored online or storefront charter schools in strip malls in locations outside their own school districts in order to reap sponsorship and oversight fees from the state to pad their own school district budgets. The Dehesa Elementary School District in San Diego County is one such district. The charter school operators who were indicted, “looked for low-enrollment school districts like Dehesa to authorize their charter schools… because small school districts would likely want to benefit from charter school oversight fees that charters pay to their authorizing districts.” “One of the people indicted last week is Dehesa School District Superintendent Nancy Hauer, “who was indicted for allegedly over-charging charter schools by more than $2 million in oversight fees—which is more than the district’s own payroll budget.”

Researchers in California have also begun calculating the loss from public school district budgets to charter schools.  A year ago, In the Public Interest, a public policy organization in California, published a study by political economist Gordon Lafer which explored the fiscal implications of the unregulated expansion of charter schools for three California school districts—the Oakland Unified School District, the San Diego Unified School District, and the Santa Clara County East Side Union High School District.  When students leave a California public school district, writes Lafer, “all the funding for that student leaves with them while all the costs do not.”

Lafer examines the stranded costs that cannot be managed by public school districts when students leave for charter schools: “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.” “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.”

In his report last year, Lafer calculated that, “Measured as a per-pupil cost, we estimate the net impact of each student who transfers from a traditional public school to a charter school to be approximately $5,000 in San Diego, $5,700 in Oakland, and $6,600 in the East Side district.

Just two weeks ago, In the Public Interest used the methodology Lafer developed last year to measure the impact of unrestricted charter school growth on the net finances of another school district—the West Contra Costa Unified School District, an urban district in the East Bay near Oakland.  Here are the findings of the new report: “Public school students in California’s West Contra Costa Unified School District (WCCUSD) are paying dearly for privately managed charter schools they don’t attend… Charter schools add $27.9 million a year to WCCUSD’s costs of running its own schools… That’s a net loss, after accounting for all savings realized by no longer educating the charter school students. As a result, the district has $978 less in funding for each traditional public student it serves.”

During last winter and into this spring, striking school teachers in Los Angeles and Oakland drove home the consequences of California charter schools’ sucking millions of tax dollars out of public school districts. We listened as teachers described their despicable working conditions, the layoffs of desperately needed school nurses, librarians, counselors and social workers, and insultingly low pay that drives many teachers out of the profession. As a result, California’s legislature has been considering four bills to rein in out-of-control charter school growth across the state—a bill to return charter school authorization and oversight to the school districts where they are located; another to cap unregulated growth of charter schools; a third to prevent charter schools from locating outside the district that authorizes them; and a fourth to impose a five-year moratorium on the establishment of new charter schools.

As I write this blog post, Diane Ravitch reports that the legislature is no longer considering two of those reforms—capping the growth of charter schools and establishing a moratorium on the authorization of new charters.  However, still under consideration are two important reforms—a bill that “gives local school districts the sole authority to approve new charter schools and to consider how new schools would impact the districts’ budget in the approval process,” and a bill to close “a loophole in state law that has let some districts boost their budgets by approving charter schools outside their boundaries.”

In 2009, to qualify for Arne Duncan’s $4.5 billion grant program, the Race to the Top, states had to change their own laws by removing caps on the authorization of new charter schools.  We are watching as, one-at-a-time, state legislatures grapple with the consequences of a privatized sector gone wild.

This blog is now on a Monday, Wednesday, Friday summer schedule.

In The Public Interest Releases New Report on Widespread Financial Mess in California Charters

Today’s subject is the charter school sector in California, a microcosm of widespread problems with charter schools across the states. Many of us are missing the seriousness of the charter school scandal across the United States. Because education is governed pretty much by the state constitution, activists are in the habit of following the education news in their own state and assuming that schools elsewhere are the problem of that other state. This all makes it very easy to ignore the scope of violations of students’ rights and the amount of tax dollars being stolen by unscrupulous charter school operators. Reading about what’s happening in another state’s charter schools helps one grasp that problems of charter schools are widespread.*

Yesterday, In the Public Interest (ITPI) published Fraud and Waste in California’s Charter Schools, a fine new report clarifying the magnitude of charter school problems in California: “A modern gold rush continues to sweep California. Charter schools, which are publicly funded but privately operated, have increased in number by more than 900 percent in the past two decades to over 1,200 schools today, the most in the nation. Charter school funding (in California), including local, state, and federal expenditures, now tops $6 billion annually—this on top of the hundreds of millions of public dollars and publicly subsidized funds the state’s charter schools receive each year to lease, build, or buy buildings.”

And it is not only that money flows out of the public schools to fund privatization, but also that charter schools in California—as in many other states—are poorly regulated: “Despite this substantial investment, governments at all levels are unable to proactively monitor (for fraud and waste) the private groups that operate charter schools…. Most public school districts aren’t given adequate resources to oversee operators, especially large charter management organizations (CMOs), while all lack the statutory authority to effectively monitor and hold charter schools accountable.”

ITPI’s new report identifies three categories of fraud and waste:

• “The most straightforward type of charter school fraud is the illegal practice of using public funds directly for personal gain.”  For example, the founder of the Celerity Education Group in Los Angeles used public dollars to buy luxurious meals, hotel stays, limousine trips and salon visits.
• “Some charter school operators have used public funds to illegally support their own personal businesses.”  For example, the Bay Area’s Tri-Valley Learning Corporation was discovered covering up conflicts of interest, misappropriation of funds, and weak internal financial controls that allowed the CEO to divert $2.7 million without any record of the spending.
• Finally there is widespread basic mismanagement. Beacon Classical Academy eventually lost its charter for failure to educate students, faulty financial audits, violations of the open-meeting-law, and fire code violations.

Despite that California’s legislature has “made limited attempts to increase oversight,” there are not nearly enough auditors to monitor charter schools for fraudulent financial practices, and state officials lack adequate authority for investigation unless serious violations have been alleged. Charter school operators are able to manipulate regulations to limit transparency. In California local school boards or country boards of education function as charter school authorizers, but if a school district or county board rejects a charter school application, state law permits the California State Board of Education to overrule the local agency’s decision.

ITPI’s report lists individual schools that have been caught, punished or closed in each category—turning public money into personal gain, self-dealing, and mismanaging public money and schools.  The report also includes an appendix that identifies the name of each charter school, its location, and the amount of money stolen or misspent.

Last November’s report from the Network for Public Education (NPE) is a wonderful companion to ITPI‘s new report. The early chapters in Charters and Consequences describe NPE Executive Director, Carol Burris’s visits to California to investigate abuses by charter schools. Her stories describe not only financial mismanagement and fraud by currently operating California charter schools but also educational malpractice—drop-in centers in strip malls where even 12-year-old students stop by occasionally to talk with their supposed teachers—and tiny school districts that sponsor satellite drop-in schools in far away urban school districts (that are never informed about the siting of these charter schools within their school district boundaries) in order to tap into funds California awards to sponsors for what is assumed will be oversight. Oversight, however, is what is lacking; nobody is looking out for the needs of students or for the interests of California taxpayers.

ITPI’s Fraud and Waste in California’s Charter Schools concludes: “Only the tip of the iceberg is visible, but this much is known: total alleged and confirmed fraud and waste in California’s charter schools has reached over $149 million.”

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*Here is the question that comes up every time we talk about charter schools.  Aren’t charter schools really a kind of public school? The answer is NO.  Charter schools are a form of private contracting by a state or state-approved charter school authorizer. Even if your school district is the authorizer, your school district is contracting with a private provider with its own privately appointed board of directors. Proponents of charter schools try to BRAND charter schools as “public charter schools,” and they justify the branding with the fact that charter schools are funded largely with tax dollars. But the tax dollars are always paid to a private operator. That operator may be nonprofit or for-profit, but even if it is a nonprofit, it may well be subcontracting the operation of the school to a for-profit. By definition, however, charter schools are a form of private contracting. Someone other than a public school district is basically hired to run the charter school.