Bill Lager, David Brennan, and Ron Packard: Swindlers Stealing Tax Dollars from Ohio Public Schools

While the Ohio Department of Education and the Ohio Supreme Court have finally ended the career of William Lager, the founder of Ohio’s huge, notorious online Electronic Classroom of Tomorrow, Ohio’s legislature has never passed adequate laws to protect taxpayers and students from unscrupulous swindlers operating charter schools.  Besides Bill Lager, another notorious charter school czar has disappeared from the scene this year.  David Brennan, founder of White Hat Management, a huge and shady for-profit Education Management Organization (EMO), has sold off all of his Ohio schools.  But it seems sales of Brennan’s Ohio schools are expanding Ron Packard’s EMO—the for-profit Accel Schools. Packard founded and, until 2014, served as CEO of K12 Inc., the nation’s biggest operator of for-profit, online charter schools.

From the very beginning, Ohio’s biggest charter schools have been run by con men. They paid off  legislators to allow them to cheat the public at the expense of the public schools. This story traces all the way back to 1991, and it is helpful to be reminded of the history. David Brennan, father of Ohio school privatization, was first and foremost a business entrepreneur, reports the Akron Beacon Journal‘s Doug Livingston: “Brennan made millions buying and selling manufacturing companies in Akron.  In the 1990s, he promised to unleash the private market on what he demonized as failing government schools. His tactics included $1 million in political contributions to elected GOP officials… Then Gov. George Voinovich put Brennan in charge of crafting Ohio’s private voucher program, which would eventually bring Brennan’s private schools more state funding per pupil than was flowing to 85 percent of Ohio’s traditional public schools.”

But when Brennan realized that operating charter schools would be far more profitable—under what had become, through the lobbying maneuvers of Brennan and his friends, extremely lax oversight laws—Brennan immediately switched his empire’s mission and became a charter school operator. Livingston continues: “The Akron Beacon Journal reported that flipping the switch from private to charter school on just one White Hat operation in Akron would generate $285,000 more a year for a mere 75 students. The school, reconstituted to get around a state law that banned converting private schools to charter schools,… was called Hope University Campus.  It would be the first of dozens of K-8 schools bearing the Hope Academy moniker. Brennan’s charter schools, ranking among the lowest performers in the state, were plagued from the start with allegations of padded enrollment and skirting accountability. Amid the bad publicity, White Hat lobbyists pushed for exemptions… In 2010, fed up with not knowing how White Hat was spending 97 percent of the tax dollars sent to each academically failing school, 10 (of Brennan’s White Hat) school boards sued the operator.  White Hat fought them to keep ownership of all the desks, computers, and assets bought over the years with public money.”

Livingston explains that White Hat’s Hope Academy (K-8) schools and his Life Skills Academy dropout recovery high schools, among the worst-rated in the state, have been losing ground as charters have expanded across Ohio. Now Brennan has closed or sold off the last of White Hat Management Company’s Ohio charter schools: “By June of this year, White Hat’s once prolific presence in Ohio had shriveled to a single online school—Ohio Distance and Electronic Learning Academy (OHDELA)—and 10 ‘Life Skills’ centers, which deliver computer-based GED courses to academically faltering teens and young adults.”  Over the summer, the Life Skills Academies have either been sold to other operators or shut down.

Now that swindlers, Bill Lager and David Brennan, have left the Ohio charter school scene, one wishes Ohioans could be reassured that unscrupulous online schools and shady dropout recovery academies are gone for good.  But Ron Packard, a former banker, knows a lucrative opportunity when he sees one. The Plain Dealer‘s Patrick O’Donnell reports: “The once-mighty White Hat charter school empire continues being dismantled, with its longtime e-school—the Ohio Distance Learning Academy (OHDELA)—being turned over to the fast-growing Accel charter school network. The move puts Accel founder Ron Packard, the founder and former CEO of the giant national e-school company K12 Inc., back in the online education business after four years away… As White Hat’s presence shrinks, Packard’s is growing incredibly quickly. After resigning as K12 CEO in early 2014, Packard has been taking over operations of charter schools across Ohio, usually by negotiating to assume management of financially-struggling schools. He snagged several strong schools from the Mosaica network first, then more than a dozen low-performing White Hat schools. When Cleveland’s I Can charter network had financial trouble in early 2017, he took over those schools. And earlier this year, he added several more previously run by Cambridge Education Group, a company with White Hat ties.  Even before the OHDELA transfer, Packard and Accel were running 37 charter schools across Ohio with about 10,700– students…. OHDELA adds another 1,100 students.  Accel is also starting new schools this fall in Cincinnati, Dayton, and Lorain. That combined enrollment makes Accel bigger than all but 13 school districts in Ohio…”

In a follow-up report, O’Donnell explains that Packard claims to have learned from the problems of K12 Inc. online schools. Packard says he plans to require more in-person meetings between students at OHDELA to keep online students engaged, to reduce the kind of advertising that pushed enrollment growth at K12 over academic priorities, and to make a a greater effort to engage students who are not self-motivated.  However, as O’Donnell interviews Packard, it is clear that while Packard admits there were failings at K12 Inc., the corrections in his Accel network will be limited. Packard tells O’Donnell: “The overwhelming majority of kids were coming in way behind grade level… and they didn’t have support of households. The model needed to change to reflect that.” But O’Donnell continues, paraphrasing Packard: “Those students, he said, need far more help from the school. That’s why to have students meet with staff more often. It won’t be at the level of ‘blended’ schools, which have students take lessons in person a couple days a week, while working online other days. He envisions monthly visits or having students come to a school for tutoring and to take ongoing tests of their progress.”

As his for-profit Accel management company takes over the Ohio Distance and Electronic Learning Academy, I guess Packard expects to provide students with at least a bit more personal attention.

I hope the recent explosion of Ohio’s ECOT scandal will motivate Ohio’s legislators to enact more than just a bit of added oversight to try to reign in swindlers who continue to figure out ways to suck tax dollars out of state coffers and the budgets of Ohio’s more than 600 local public school districts.

Notorious Ohio Online Charters Try to Evade Oversight, Tarnish Reputation of Charter Sector

Patrick O’Donnell, of the Cleveland Plain Dealer, reports that, “Poor test results at online schools are creating divisions in the charter school community in Ohio and nationally, leading some national leaders to question whether e-schools should even be part of the charter school movement.”

He adds that, “In Ohio three statewide e-schools, each run by for-profit companies, dominate the market with 30,000 students between them.  Combined, the Electronic Classroom of Tomorrow (ECOT), Ohio Connections Academy and Ohio Virtual Academy account for 76 percent of all online students in the state.”  The Ohio Virtual Academy is operated by K12 Inc., and Ohio Connections Academy is reported by O’Donnell to be owned by Pearson. ECOT, the largest, is operated by Columbus entrepreneur, William Lager.

Last month a group of think tanks released a three-part report on the problems in the massive online charter schools. Mathematica Policy Research described how the nation’s 200 online charter schools operate; the Center on Reinventing Public Education explored the policy concerns around regulation, accountability, and funding provisions; and Stanford CREDO examined academic results of the e-schools and compared them to the academic records of traditional public and charter schools in which children come to a school and are taught by live, on-site teachers.  O’Donnell describes the conclusions of CREDO’s study: “Researchers found that students in online schools learn far less than students in other schools.  Nationally, students learned the equivalent of 72 days of school less in reading and 180 days less in math, each school year…. For Ohio, online students learned 79 days less material in reading than peers in traditional schools and 144 less days in math.”  This blog covered the series of reports on e-schools here.

O’Donnell reports that the online schools complain that they are being condemned for serving a very different type of student.  They say they educate many students who have failed to succeed in any other setting and then try online schooling only as a last resort.  The schools complain that with such an at-risk population, they should be held to a lower standard than other schools.  Nina Rees, director of the National Alliance for Public Charter Schools, disagrees.  In an interview, Rees told O’Donnell, “I don’t know if these online schools are the right fit in the charter model.”  She suggested that, unlike charter schools which are required in most places not to impose overt selection screens, online schools ought to be able to select students with motivated parents who will oversee the online instruction to ensure that students do the work.

CREDO’s research has been widely criticized by the operators of the online charter schools, but Lynn Woodworth, a researcher at CREDO defends the conclusions of the research: “If  online charter schools are serving a population so different from other students, then the online charter schools should document: 1. how their students are so radically different, and 2. what they are doing to meet the challenges of those special needs.  Right now the data show the academic growth of students attending online charter schools is not up to the growth of students in brick-and-mortar settings, traditional or charter.”

Meanwhile in Ohio, Neil Clark—ECOT’s lobbyist, who is described by Doug Livingston of the Akron Beacon-Journal as “one of the most influential lobbyists in the state,” is said by Livingston to be exploring with members of Ohio’s House of Representatives attaching to an unrelated bill some language that would soften for Ohio’s online schools the very modest new regulations for charter schools that were finally passed by Ohio’s legislature last month.  The recently passed charter oversight bill curbs the most egregious violations by Ohio’s charter sector—obvious conflicts of interest for charter treasurers and board members, charter hopping, and contracts that leave publicly purchased assets of closed schools with the charter management company when a charter school is closed down—passed finally despite years’ of heavy investment in Republican campaign coffers by Ohio’s online charter czars.  The measure Clark is working with members of Ohio’s House to slip quietly into another piece of legislation would add a complex and poorly understood econometric charter grading plan that could be adapted from California to make it appear that Ohio’s online academies are better serving their students.  Surely before such an amendment is attached to legislation, it ought to be evaluated by technical experts equipped to make its operation for all charter and traditional public schools transparent.

In the meantime, O’Donnell reports that Peggy Lehner, Chair of the Ohio Senate Education Committee, is considering another provision, one that would penalize the online schools.  She says the Ohio Senate will consider changing the way online schools are reimbursed by the state.  Her proposal is that the state pay online schools not according to the number of students who are enrolled, but instead “based on how many credits students earn toward graduation.”  Because there are years’ of evidence that these schools have found ways to pad their enrollment figures to balloon the tax dollars they draw from the state, paying these schools for credits earned would be a very significant move toward better public stewardship.  Let’s hope Peggy Lehner is able to sustain the leadership she courageously provided earlier this year to put in place some regulation of what has been called Ohio’s notorious “wild, wild West” charter school sector.

Venture Capital in Education—Education Technology and On-Line Charters Viewed as Investments

Late last week The Nation posted on-line a series of articles that will appear in the October 13, print edition of the magazine—a special issue on education.  These are in-depth pieces on issues such as the crisis in Philadelphia’s public schools, the role of teachers unions, lack of regulation in charter schools, Eva Moskowitz’s Success Academy Charters, and two articles this blog will explore today on the push by so-called “education reformers” to promote the use of technology and on-line education—including Lee Fang’s blockbuster investigation, Venture Capitalists are Poised to “Disrupt” Everything About the Education Market.  Many of the pieces were originally behind a paywall, but The Nation has now made them accessible to all readers.  As the week continues, this blog will explore some of the other articles in The Nation‘s special issue on education.

“As the articles in this issue illustrate,” write the magazine’s editors as they introduce the special issue, “the strategies pursued by education reformers frequently dovetail with those of austerity hawks.  The latter burnish their conservative credentials by cutting budgets and defunding schools.  The reformers sweep in to capitalize on the situation, introducing charter chains like Rocketship and K12, which produce no real benefits for children.  The chains do, however, generate cash for investors, as a new trove of public money is directed to private coffers.”

Pointing out that in the last quarter century, the marketplace has “carefully crafted business strategies (that) have transformed markets to create huge profits in unlikely sectors”—most notably healthcare—Fang writes, “Next year, the market size of K-12 education is projected to be $788.7 billion.  And currently, much of that money is spent in the public sector. ‘It’s really the last honeypot for Wall Street,’ says Donald Cohen, the executive director of In the Public Interest, a think tank that tracks the privatization of roads, prisons, schools and other parts of the economy.”  Fang quotes a venture capital investor who believes that “despite the opposition of ‘unions, public school bureaucracies, and parents,’ the ‘education market is ripe for disruption.'”

Noting that key staffers came to the U.S.  Department of Education straight from the  “education investment community,” Fang traces the role of the Obama Administration as promoter of the invasion by the private sector into public education.  One enormous market opportunity is emerging, for example, to provide services connected with the Common Core standards, whose expansion across the states will involve the tests themselves developed by two consortia and marketed by publishing companies, aligned textbooks and computer programs, the necessary computers or tablets by which students are to be tested on-line, and the grading and analysis of the tests. (This blog recently covered the ongoing Los Angeles iPad fiasco.)

Fang reminds readers that Ted Mitchell, recently confirmed as Under Secretary of Education, came to the Department of Education from a position as chief executive of the NewSchools Venture Fund.  Jim Shelton, Deputy Secretary, came from the Bill and Melinda Gates Foundation, and before that NewSchools Venture Fund.  Shelton is also “a longtime education investor and the former co-founder of LearnNew, a charter chain that was sold to Edison Learning, a for-profit charter management company.”  Shelton is quoted by Fang as explaining “that the Common Core standards will allow education companies to produce products that ‘can scale across many markets,’ overcoming the ‘fragmented procurement market’ that has plagued investors seeking to enter the K-12 sector.  Moreover, Shelton and his team manage an education innovation budget, awarding grants to charter schools and research centers to advance the next breakthrough in education technology.”  Shelton has predicted that education innovation will spark the next “equivalent of Google or Microsoft to lead the global learning technology market.”  Says Shelton, “I want it to be a U.S. company.”

Fang also traces a changing culture across the states including Democrats and Republicans alike in big city mayors’ offices and state legislatures, a culture that is comfortable “to divert taxpayer funding to charter schools, which are often run as for-profit companies and are more willing to embrace tech-centric classroom solutions….” Fang’s case study is K12, an on-line-virtual charter school,  “a for-profit charter behemoth that enrolls 123,259 students” and that is a darling of Wall Street, despite its notorious reputation.  K12, through its on-line affiliates across the states, enrolls children to study at home on their computers.  Despite that achievement is low and dropout rates are high, state legislators are driving money to such schools at virtually the same rate as to public schools where there is a significantly greater need for staff, transportation, and buildings in addition to other services.

Fang reports that only 27.7 percent of K-12’s on-line schools met the No Child Left Behind Adequate Yearly Progress standard, compared to a 52 percent average at brick and mortar public schools.  In Colorado, Fang reports that one study showed half of the online students at K12 left within a year. Tennessee actually closed K12’s Tennessee Virtual Academy, and recently K12’s largest on-line affiliate, Agora Cyber Charter in Pennsylvania is considering severing ties to K12 due to K12’s manipulation of data to hide the school’s dropout rate.  On Wall Street, however, K12 is promoted as a “solid investment opportunity.”  Baird Equity Research has actively pushed K12 stock because of its potential for growth, based on “K12’s success in working with state policymakers and school districts to enable the expansion of virtual schools into new states or districts.”  Investors are encouraged to learn about the amount K12 spends on advertising and lobbying. “The company has years of experience in successfully lobbying to get legislation passed to allow virtual school to operate,” says Baird in a note to its investors.

While Fang traces the waste of public funds and failure to educate children in for-profit, on-line schools, in  What Happens When Your Teacher Is a Video Game? Gordon Lafer explores the operation of Rocketship Education, a company that has been expanding from California to Texas, Tennessee, Wisconsin, and Washington, D.C.  “Corporate lobbyists are increasingly promoting a type of charter school that places an emphasis on technology instead of human teaching… Rocketship’s model is based on four principles.  First, the company cuts costs by eliminating teachers.  Starting in kindergarten, students spend about one-quarter of their class time in teacherless computer labs, using video-game-based math and reading applications.  The company has voiced hopes of increasing digital instruction to as much as 50 percent of student learning time.  Second, Rocketship relies on a corps of young, inexperienced, low-cost teachers… Third the school has narrowed its curriculum to a near exclusive focus on math and reading.  Finally, Rocketship maintains a relentless focus on teaching to the test.”  Rocketship investors include Reed Hastings, CEO of Netflix, and venture capitalist John Doerr.  Hastings has become well-known as a national spokesman for the elimination of locally elected boards of education, and Lafer explains the reason: “As Hastings explains, ‘School districts [are hard] to sell to because [they] are really reacting to voter forces more than to market forces.'” “By contrast, public-school curricula are set by officials who are accountable to a locally elected board prohibited from any financial relationship with vendors.”

Lafer emphasizes that experimentation with technology-driven schooling is currently an inner-city phenomenon:  “Sixty years after Brown v. Board of Education, a new type of segregation is spreading across the urban landscape.  The U.S. Chamber of Commerce, the American Legislative Exchange Council (ALEC), Americans for Prosperity and their legislative allies are promoting an ambitious, two-pronged agenda for poor cities: replace public schools with privately run charter schools and replace teachers with technology… The destruction of public schooling starts in poor cities because this is where parents are politically powerless to resist a degraded education model. But after the industry has taken over city school systems, it will move into the suburbs.  Profitable charter ventures will look to grow indefinitely, until there are no more public schools to conquer.”  “As Rocketship co-founder John Danner explains, critics shouldn’t worry about charter schools skimming the best students, because eventually ‘we’re going to educate all of the students, so there’s nothing left to skim.'”