Phantom Students—One Part of a Much Bigger Problem of Unregulated Charter Schools

Ohio’s Senate Bill 298, Senate Minority Leader Joe Schiavoni’s proposed law to ensure that the state is paying online charter schools for real students, not merely phantom students, will have a fourth hearing this week. Ohio pays on-line charter schools nearly $7,000 per pupil. According to Bill Phillis of the Ohio Coalition for Equity and Adequacy, e-schools are draining approximately $250 million in public dollars to the Electronic Classroom of Tomorrow (ECOT), the Ohio Virtual Academy—a K12 Inc. affiliate, and other e-schools.

Earlier this spring ECOT, Ohio’s largest online charter school, proposed that the legislature allow the state to reimburse the online academies when students sign up instead of paying the schools only for the students who participate actively on a daily basis.  Senator Schiavoni’s proposed law to prevent such a practice is pretty basic—require e-schools to keep accurate records of the number of hours students spend doing coursework—require the online school to notify the Ohio Department of Education if a student fails to log-in for ten consecutive days—require that a qualified teacher check in with each student once a month to monitor active participation.  The bill has been shunted to the Ohio Senate Finance Committee, however, by Republican leaders because the chair of the education committee has seemed overly sympathetic to its provisions. It is known that sponsors of the virtual academies are also key political contributors to Ohio Republicans, and it is feared that the bill will never make it out of committee.  (This blog covered ECOT’s effort to soften attendance regulations for the virtual academies and Senator Schiavoni’s bill to increase oversight here and here.)

Even though some of the charter management companies have affiliates across many states, charters are established and regulated in state law. A very serious problem across the states is the lack of uniform charter school regulations.  Jessica Calefati of the Bay Area News Group published a scathing report in mid-April of some of the California affiliates of K12 Inc., the same national company that runs the Ohio Virtual Academy: “The TV ads pitch a new kind of school where the power of the Internet allows gifted and struggling students alike to ‘work at the level that’s just right for them’ and thrive with one-on-one attention from teachers connecting through cyberspace… but the Silicon Valley-influenced endeavor behind the lofty claims is leading a dubious revolution.  The growing network of online academies, operated by a Virginia company traded on Wall Street called K12 Inc., is failing key tests used to measure educational success. Fewer than half of the students who enroll in the online high schools earn diplomas, and almost none of them are qualified to attend the state’s public universities.”  The Bay Area News Group blames the problem on “a systemic breakdown in oversight by local school districts and state bureaucrats.”

Calefati’s investigation tracks the research from Mathematica Policy Research, Stanford University’s Center for Research on Education Outcomes, and the National Education Policy Center demonstrating that students at the online schools nationwide are far behind their peers in brick and mortar schools in reading and math. Why? The Bay Area News Group report attributes low achievement in many cases to the fact that despite that the state is paying the online schools for students who are registered, too few actually attend school and participate: “A handbook distributed to teachers at the start of the school year says attendance credit may be given even if ‘very few lessons are completed daily,’ so long as the student is ‘actively engaged in completing assigned schoolwork.'” Teachers continue to complain about a state rule that students are attending school if they log in for one minute each day.  Mike Kraft, a spokesperson for K12, denies that students remain formally enrolled if they are merely logging in each day.  He claims teachers must “review each student’s work and determine how many days of attendance to credit.  Still, several teachers interviewed by this newspaper confirmed the policy, and in June a group of them filed formal complaints with local school districts and county offices of education seeking investigations of the schools’ attendance practices.”  “In separate complaints filed in June, the teachers seek investigations into the schools’ withdrawal policies because ‘many students who are not sufficiently attending school stay on the rolls with no action taken to withdraw them.'”

In California, school districts themselves can collect substantial fees if they sign on to oversee an online charter school, and several small school districts have undertaken this responsibility.  “In California, bureaucrats don’t monitor the day-to-day operations of charter schools.  Instead, state law requires districts that vet and approve charter applications to oversee the schools once they are open.  But there are no guarantees—and no monitoring from the Department of Education—to assure that is happening.  Jefferson Elementary School District is responsible for overseeing California Virtual Academy at San Mateo’s operations, and the duty comes with a reward.  The school has paid the district more than $1 million in oversight fees since the small Daly City-based school system approved the academy’s application in 2006, allowing it to enroll students of all ages who live in San Francisco, San Mateo, Santa Clara and Santa Cruz counties. Larger schools pay even more. The Los Angeles Academy, which enrolls quadruple the number of students as the San Mateo Academy, typically pays the West Covina Unified School District more than $1 million a year.”  And farther south, “a tiny district with 35 pupils called Spencer Valley Elementary is responsible for overseeing the more than 3,000 students who attend California Virtual Academy at San Diego.”

Calefati interviewed Bernie Vidales, Superintendent of the Jefferson Elementary School District which is responsible for California Virtual Academy in San Mateo: “In an interview last year, Jefferson Elementary Superintendent Bernie Vidales conceded that he knew very little about the online school for which he’s responsible.  Vidales said he wasn’t sure how many kids were enrolled, where they lived, or even how well they had done on the last round of state tests—even though the California Charter Schools Association insists state law requires authorizers to monitor student performance closely… Vidales acknowledged that Jefferson Elementary is paid to look after the online school.  With close to 1,000 pupils, it is easily the largest school the 6,000-student district oversees.  But, he said, the district did little more than review the academy’s budget and make sure it has enough cash to cover costs.”

In part 2 of its report, Bay Area News Group explains that California law does not speak to the issue of whether for-profit corporations like K12 Inc. are permitted to operate tax supported charter schools.  To protect itself, “(B)efore applying 14 years ago to open the state’s first online academies, K12 treaded cautiously into a new market, creating a series of nonprofit organizations whose names match those of the schools.  That means each California Virtual Academy is considered by the IRS to be a charitable organization that need not pay taxes, even though K12 effectively controls the schools by providing them with all academic services… Tax and education records show that K12 employees started each of more than a dozen online academies in California, even though the applications they filed to open the schools described the founders as a ‘group of parents,’ none of whom were named. For several years, company employees even signed the nonprofit schools’ tax filings.”

And, if K12’s schools cannot cover all of their costs during a school year, K12 covers their expenses to balance the budget:  “Writing down the operating losses of the schools it manages in California and across the country has allowed K12 to reduce its taxable income by $179.5 million over the past three years, according to the company’s most recent annual report.” K12’s spokesperson, Mike Kraft, “insists that the company doesn’t receive a tax deduction for forgiving the debts of the schools it operates.  But when the newspaper presented Kraft with K12’s most recent Securities and Exchange Commission filing and asked him to explain whether K12 wrote off the losses, his answer was hardly straightforward….”

Lack of oversight of the charter school sector, clearly a problem in Ohio and California, seems also to be a federal problem.  Just last week, Arn Pearson, General Counsel for The Center for Media and Democracy filed a formal appeal demanding that the U.S. Department of Education search documents of the federal Charter Schools Program more carefully for records about the charter schools that have received federal funding but may have been closed.  The Charter Schools Program has been bragging in press releases about the important grants it has made to states for charter schools as well as touting its transparency, but when the Center for Media and Democracy filed a FOIA request for information about schools funded by this program that had failed or never opened, the U.S. Department of Education replied that it was ‘unable to locate any documents that were responsive to your requests.'”

In his appeal of the Department’s failure to locate records, Pearson writes: “It strains credulity and common sense that, despite spending billions in taxpayer dollars on charters and putting out this press release—among several—on the accomplishments of the Charter Schools Program, the Department claims to have no databases, no data analyses, and no internal communications about the program mentioned in its press release and charters that received funds but closed or never opened, nor any external communications with charter school grant recipients about the success or failure of those charters.”

Charter schools were created as an experiment to encourage innovation by removing what critics of public schools called the bonds of bureaucratic regulation.  Clearly more than twenty years into this experiment, what is happening instead is widespread profiteering from tax dollars.  And too few people are paying enough attention to build sufficient political will to stop the ripoff.

No Oversight: U.S. Dept. of Ed. Has Invested $3.3 Billion in Charters Without Regulation

Back in 2010, I personally heard Secretary of Education Arne Duncan declare, “Good charters are part of the solution; bad charters are part of the problem.” But despite his acknowledgment of many charter schools of poor quality, Arne Duncan and his U.S. Department of Education have done nothing to address what he called “part of the problem.”  Although to qualify to apply for Race to the Top grants, states had to agree to eliminate statutory caps on the authorization of new charter schools, the department did not require states to provide adequate oversight of the new schools.  The Department of Education under Arne Duncan has incentivized and funded a vast increase in the quantity of charter schools, but it has done nothing to improve the quality.

In a blockbuster report released on Friday, Jonas Persson of the Center for Media and Democracy (CMD) documents an enormous scandal: “CMD’s review of appropriations reveals that the federal government has spent a staggering sum, $3.3 billion, of taxpayer money creating and expanding the charter school industry over the past two decades, but it has done so without requiring the most basic transparency in who ultimately receives the funds and what those tax dollars are being used for, especially in contrast to the public information about truly public schools. Although some charters have a veneer of being alternative ‘public schools,’ many of them are run by for-profit companies or outsource key operations to for-profit firms, and are exempt from any local democratic control.  These billions have been funneled to charters through a patchwork of state laws often designed to prevent government agencies from exercising control over how that money is spent by charters or to exempt charters from rules that apply to traditional public schools, including enforceable sunshine rules on spending tax money… Federal charter school funding has expanded 6-fold since its inception in 1995, and—despite statements by ED (the U.S. Department of Education) and others of regret regarding enormous amounts squandered by incompetent or greedy charter school operators—very little has been done by the government to require strong financial controls to protect the educational opportunities of kids attending charters and to protect our tax dollars from rip-offs and waste.” (emphasis in the original)

The Center for Media and Democracy is blunt in its criticism of U.S. Secretary Arne Duncan, who is reported to have testified about charter schools just last month to a Congressional appropriations committee: “The waste of taxpayer money—none of us can feel good about.”  “Yet,” writes Persson, “he (Duncan) is calling for a 48% increase in the U.S. Department of Education’s quarter-billion-dollar-a-year ($253.2 million) program designed to create, expand, and replicate charter schools—an initiative repeatedly criticized by the Office of the Inspector General for suspected waste and inadequate financial controls.”

Persson reports that $3,352,841,281 can be traced in federal expenditures to expand and develop charter schools, but at the same time a solid research base is lacking for these schools that are publicly funded and privately operated: “This sweeping expansion, under the banner of bipartisanship, is surprising given the fact that academic studies—independent of charter school advocates and its industry—have consistently found mixed results in terms of charter schools and learning outcomes.  And even the most glowing reports funded by school privatization interests have had to admit that the worst charter schools perform much worse than any traditional public school… Despite these findings and numerous examples of abject failure of particular charter schools, many policymakers have bought into the PR that charters are a panacea for ‘reforming’ traditional public schools.”

Persson blames pro-charter philanthropies and advocates who have invested heavily to promote the expansion of charters without accountability: “Many of the gaps through which millions have passed unaccountably have been intentional, resulting from ideological opposition to state oversight over charters that operate like private, not public, schools.”  Oversight of charters has been left to state governments, but state laws often defer to charter school authorizers, who lack the capacity or the will to oversee the schools they sponsor.  Persson quotes Congressional testimony from Kathleen S. Tighe of the U.S. Office of Inspector General: “OIG has conducted a significant amount of investigative work involving charter schools.  These investigations have found that authorizers often fail to provide adequate oversight to ensure that charter schools properly use and account for Federal funds.”

The new report concludes: “For decades a small group of millionaires and billionaires, like the Koch Brothers, have backed a legislative agenda to privatize public education in America.  Lobbying groups funded by them, like the corporate bill mill ALEC (the “American Legislative Exchange Council”), have been pushing states to create and expand charter schools outside of the authority of the state public school agencies and local school boards, confining the state to limited oversight of whether authorizers have adequate policies, not over how charters spend tax dollars.”  “The fact that authorizers enjoy almost complete autonomy—not only from state regulations but also from public control through elected school boards—is a feature of the anti-regulatory environment in which charters have grown, rather than a bug.”

The Bottom Line: no one actually tracks the list of charter schools that received federal tax dollars to open, expand and/or replicate charter schools, how much they received, or how they spent the people’s monies.  Each link in the chain can point to someone else who may have parts of that data but who likely has no obligation to publish that information for the public to understand, although what can be gleaned varies by state.  That is, there is no systematic public accounting for how the federal budget allocated to charters is actually being spent, and not even a reliable per-pupil/per capita figure.” (emphasis in the original)

Please read this short, pithy report.

Reports Add Up to Show Charter Fraud, Charter Failure, and Incapacity to Realize What Was Promised

In a new blog post Gene V. Glass, who, earlier this year with David Berliner published the excellent 50 Myths & Lies That Threaten America’s Public Schools, recently posted, Are Charter Schools Greenhouses for Innovation and Creativity?  Glass declares: “The rationale for the charter school movement went something like this: ‘Public education is being crushed by bureaucratic regulation and strangled by teacher unions.  There is no room left for creative innovation; and tired, old traditional educators have run out of energy and ideas.  Let free choice reign!’ It sounded good, especially to people who were clueless about how schools actually run.  How have things actually worked out?  What new, revolutionary ideas have come out of the charter school movement that can teach us all about how to better educate the nation’s children?”  Glass describes the conclusion in his and Berliner’s new book: “that in our opinion the vast majority of charter schools were underperforming traditional K-12 public schools and that the charter school industry was shot through with fraud and mismanagement.”  You’ll have to check out his blog post to read the story of his confrontation with two young charter teachers who recently tried to prove to him that their school was more innovative than the surrounding public school district only to learn that the International Baccalaureate program their charter had just launched was introduced ten years ago and continues to be offered in the public schools.  Berliner’s critique of charters comes among a recent rash of news reports about the woes of the charter sector.

This blog just covered Robin Lake’s despairing critique of the charter school catastrophe in Detroit.  “No one in Detroit is responsible for ensuring that all neighborhoods and students have high-quality options or that parents have the information and resources they need to choose a school.  ‘It’s a free-for-all,’ one observer said. ‘We have all these crummy schools around, and nobody can figure out how to get quality back under control…’”  Lake is the executive director of the Center on Reinventing Public Education which has made the promotion of “portfolio school reform” (in which the portfolio contains a mix of public and charter schools from which parents can choose) its primary mission.  Her recent piece  suggests that she, a central promoter of charter schools, has no idea how to rein in school choice gone wild in Detroit.

Like Michigan, Texas is struggling to regulate the quality of its charter schools. The NY Times reports that one charter school district, the Honors Academy Charter chain, is currently operating seven schools even though Honors Academy Charters were formally closed under a 2013 law due to poor performance.  “Well into the new school year, all seven Honors Academy schools, which enroll a total of almost 700 students in Central Texas and the Dallas-Fort Worth area, are still open,” despite that the district has lost its contract and its accreditation.  Although, “The state ordered the charter operator to turn over student records and its remaining state funds, and to find alternatives for its students,” “Honors Academy officials… decided to open their doors anyway.  They have argued that the provision forcing closure is unconstitutional.” Costs are being covered by $3.5 million left over from last year, most of it revenue from the state.   According to state officials, because the schools are now unaccredited, students attending Honors Academy schools will be unable to transfer coursework.  Parents interviewed by the reporter in the parking lot were unaware that the school had lost its charter to operate.

What is happening in North Carolina may not be illegal, but it ought to be. In his column Taking Note, PBS education correspondent John Merrow recently skewered Baker Mitchell, the North Carolina “businessman who has figured out a completely legal way to extract millions of dollars from North Carolina in payment for his public charter schools… Even though none of his publicly-funded schools is set up to run ‘for profit,’ about $19,000,000 of the $55,000,000 he has received in public funds has gone to his own for-profit businesses, which manage many aspects of the schools.”  This blog covered Baker Mitchell’s schools here.

Mark Weber, writing for New Jersey Spotlight, echoes Gene Glass’s critique that charter schools have never as a sector fulfilled what was promised.  Weber co-authored a recent report from Rutgers University that used readily available data from the state to demonstrate that charter schools segregate students. (This blog covered the Rutgers report here.)  In his short review for New Jersey Spotlight, Weber concludes: “On average, charters educate proportionately fewer students in economic disadvantage… than do the district schools in their communities.  Charters also educate fewer students with special education needs; further the students with those needs that charters do educate tend to have less costly disabilities.  In addition, the sector enrolls very few students who are English language learners.”  “‘Choice’ in schooling will likely lead to what we found in our report: the concentration of economically disadvantaged, special education, and Limited English Proficient students within district schools…  I see three core challenges in New Jersey’s urban schools: segregation, inadequate school funding, and child poverty.  None of these challenges will be solved by the expansion of charter schools.”