In Michigan, Out-of-Control Charter Sector Diminishes Equitable Access to Quality Education

Buried in news about the hurricanes, several in-depth articles have explored the emergence, growth and impact of school privatization. There has also been fine reporting on the retreat from school integration and multicultural studies in public schools.  This blog’s four posts this week will highlight important reports that trace how public policy in education has been playing out over time in Detroit and Highland Park, Michigan; in St. Louis, Missouri; in metropolitan Birmingham, Alabama; and in Tucson, Arizona.

Watching her Congressional confirmation hearing, one could sense that Michigan’s Betsy DeVos is unsuitable for the position she now holds as Secretary of Education, but for those willing to learn how absolutely unfit she is to lead the federal department that administers federal policy for the nation’s public schools, Mark Binelli’s NY Times Magazine profile of school privatization in Michigan will provide the details.

In Michigan Gambled on Charter Schools. Its Children Lost, Binelli traces the history of Michigan’s venture into school privatization—the primary players and the intellectual foundation for the movement as it was articulated by the Mackinac Center: “Over the last 30 years, the Mackinac Center, which was founded in 1987 by, among others, John Engler, a Republican state senator, has become a model for state-level conservative policy shops around the country. When Engler was elected governor in 1990, the intellectual foundation of his signature policy issue—education reform—came via a Mackinac Center white paper that pushed school choice as a means of breaking up the ‘bureaucratic monopoly’ of a public-education system smothering risk-taking and entrepreneurial moxie.  The author of the study, Lawrence W. Reed—then the center’s president—argued that it was time ‘to put our faith in the virtues that made America great in all areas where they have been tried: competition, private initiative, and, of course, consumer choice.’  He cited private-school vouchers as a possible model and also gave a nod to an experiment taking place in Minnesota, where they were testing ‘independently run public schools, known as ‘chartered schools.’… Betsy DeVos, a wealthy, deeply religious conservative willing to spend millions of dollars lobbying for a radical redefinition of public education, and her husband, Dick, the heir to the Amway fortune, provided significant financial backing to the Mackinac Center, as well as to pro-charter lobbying groups like Teach Michigan and their own Great Lakes Education Project.”

As governor, John Engler passed a 1994 ballot initiative that was sold as a way to equalize school funding. It would make all districts depend equally on a state per-pupil distribution of sales taxes, though legislators from Detroit’s wealthy suburbs, of course, ensured that school districts could still add local contributions to supplement the state allotment.  When Michigan’s economy sagged and wealthy districts continued to supplement their own budgets with local taxes, the chasm between wealthy and poor districts deepened. Privatization was sold as the remedy.

Binelli covers a maelstrom of problems spinning together— inequality, racial segregation, the economic collapse of Michigan’s poorest cities, deregulation, and the ideological attack on government itself: “Charters continue to be sold in Michigan as a means of unwinding the inequality of a public-school system in which districts across the state, overwhelmingly African-American—Detroit, Highland Park, Benton Harbor, Muskegon Heights, Flint—grapple with steep population declines, towering financial obligations, de-industrialization and the legacy of segregation.  By allowing experimentation, proponents argue, and by breaking the power of teachers’ unions, districts will somehow be able to innovate their way past the crushing underfunding that afflicts majority-minority school districts all around the country.” “Today, all but seven states have some version of a charter law, though few have adopted a model as extreme as Michigan’s. Twenty-one states have a charter cap, 31 require charters to submit annual reports and 33 have statewide authorizing bodies. Michigan, abiding by none of those rules, has allowed 80 percent of its own charters to be operated by for-profit EMOs (Education Management Organizations).  Only 16 percent of charters nationwide are run by for-profit companies.”

Throughout his analysis, Binelli threads the story of Carver Academy, a charter school in Highland Park, a Detroit-area school district turned over by its state-appointed emergency manager in 2012 to the Leona Group, a for-profit EMO: “The state’s solution that year was to ‘charterize’ the entire district: void the teacher’s union contract, fire all employees, and turn control of the schools to a private, for-profit charter operator. But enrollment at Highland Park High (School) continued to decline, so the state closed the school in 2015. Highland Park now has no high school, either public or charter.” (Filling in an important detail, Wikipedia reports that Carver Academy, the school Binelli profiles, left the Leona Group in 2016 and found another authorizer, Bay Mills Community College.)

One of the enormous problems Binelli profiles is Michigan’s problem with myriad, unaccountable charter school authorizers: “Perhaps the most startling feature of Michigan’s system is its lack of centralized oversight. In most of the country, state governments play some role in determining who can open charter schools and monitor their progress. But Engler ceded nearly all control to dozens of groups throughout Michigan—universities and community colleges, as well as existing public school districts.” Highland Park’s George Washington Carver Academy, a PreK-8 charter school that Binelli profiles in depth, is authorized by the Bay Mills Community College (B.M.C.C.), “owned and operated by the Bay Mills Indian Community, an Ojibwa tribe with over 2,000 members and 5.5 square miles of reservation land” along Lake Superior in Michigan’s Upper Peninsula. “In 2003, the tribe started its own K-8 charter, which would offer classes devoted to Ojibwa language and culture. In addition to serving as authorizer for the tribal school, Bay Mills Community College began authorizing other schools around the state. Today, with 42 schools in locations as far-flung as Flint, Benton Harbor and Detroit, B.M.C.C. is the third-largest charter authorizer in Michigan.”

Binelli takes us to the meeting of the review panel where a committee at Bay Mills Community College evaluates several charter schools under its sponsorship—their financial and academic performance—to determine their future.  Bay Mills Community College’s president, Mickey Parish chairs the meeting. Later Parish explains privately to Binelli that there is little incentive for B.M.C.C. ever to close a school: “After the meeting, when I spoke with Parish alone, he acknowledged that the 3 percent fee (paid to authorizers by the state), beyond covering charter-office expenses, ‘does provide a little bit of extra money to help our college activities.'”

Carver Academy is, however, being more carefully investigated, by Oak Ridge Financial, a business that makes its profits by working with Michigan’s financially fragile charters. When Sylvia Brown recently became became Carver’s school principal, not only did she take over the responsibility for improving the academic achievement of Carver’s students, but she also faced the need to keep the school going despite its heavy debt load, which she sought to refinance: “When Brown took over at Carver Academy, one of the many problems she inherited was enormous real estate debt. The problem is not uncommon: Michigan does not mandate that its charter schools buy or lease property at fair-market prices, resulting—predictably—in wildly inflated real estate spending. In Carver’s case, the situation was especially frustrating because the debt was a legacy from yet another for-profit entity… It contracted (in 2000) with a for-profit EMO called Mosaica Education. After only a year of operation, Carver, still run by Mosaica, signed a mortgage agreement to buy and upgrade the school property for $7.1 million—the loan Brown found herself facing 17 years later.” The refinancing partnership with Oak Ridge Financial eventually falls apart, and Brown faces the need to shop around for another financial partner. Binelli describes the financial analysis of Carver Academy’s problems by Scott VanderWerp, who runs Oak Ridge Financial: “Carver’s debt made no sense to VanderWerp: $6.5 million of debt on a building that’s surrounded by public-housing complexes, in a place where 49 percent of people live under the poverty rate. ‘The crime rates are high, there are vacant buildings everywhere… I think you’d readily agree that the building and land isn’t worth $5 or $6 million. Quite candidly, it’s probably worth $500,000 or $600,000.’  He said charters often entered bad deals because authorizers and school boards, which must approve loans, lacked a basic understanding of bond finance.” Binelli adds, describing another serious charter school real estate problem, in many cases charter school management companies themselves acquire buildings, remodel them cheaply as school facilities, and then charge outrageous rents to the very schools they themselves manage, a clear conflict of interest.

Please read Mark Binelli’s fine report: Michigan Gambled on Charter Schools. Its Children Lost. It is impossible adequately to summarize Binelli’s nuanced analysis of the public crisis that has derived from Michigan’s ideologically driven experiment with privatization. Due to the school district’s size and the sheer number of charter schools, Detroit has become the epicenter of Michigan’s charter school problem. Binelli explains: “Last year, State Senator Geoff Hansen, a Republican from the tiny city of Hart, tried to rein things in. Setting his sights on Detroit, Hansen sponsored a bipartisan bill that would have increased oversight of charters in the city, creating a seven-member Detroit Education Commission with mayoral appointees and a mandate to determine where new charter schools could open and whether existing schools would expand or be closed. The bill passed the Senate with the support of Gov. Rick Snyder, a Republican, and Detroit’s Democratic mayor, Mike Duggan, but it was derailed in the 11th hour by Republicans in the… (House)—thanks in large part, to the lobbying efforts of the DeVos family, which, The Detroit Free Press reports, showered the state Republican Party with ‘near-unprecedented amounts of money’ during the campaign cycle.”

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Stunning New Report and Website Expose Connected State-by-State Web of Privatizers

As an advocate for public policy, I believe it is more important to know more about what I am for than about what I am against.  Let me begin by naming what I am for: public schools—universally available, publicly funded, and accountable to the public.  I also believe that our most important priority in the United States, as far as public education goes, is to improve—not punish—the public schools in the poorest neighborhoods of our big cities.  These are the places where many children live in neighborhoods where extreme poverty is concentrated.

But knowing about the forces on the other side of this highly polarized debate is also important, and this week a new website was launched to help with the task of learning more about the privatizers: stinktanks.org, a joint project of the Center for Media and Democracy (which also houses the valuable ALECExposed site) and ProgressNow.  The goal of stinktanks.org is to expose the State Policy Network (SPN), a tightly connected web of think tanks across the states that are being funded by far-right ideologues with the purpose of promoting privatization and unfettered free markets, and undermining government, regulation and the public good.

While these organizations have ties with the far-right American Legislative Exchange Council (ALEC) and while they are actively promoting the same agenda, they are lesser known.  If you live in Ohio, you may have heard of the Buckeye Institute; if you live in Pennsylvania, you may know about the Commonwealth Foundation, or if you live in Michigan perhaps you have learned about the Mackinac Center, but you likely don’t realize how funding for all of these groups is connected to the same philanthropists, and how their interests are being pursued state by state by state. The new website features an interactive map of the states.  By clicking on any state, you’ll access a one page description of that state’s SPN member’s agenda and its funders. You will also find a more detailed report about a number of the state think tanks.

For example, if you have been paying attention to Michigan, you know that destroying workers’ rights, privatizing public schools, blocking healthcare, destroying public pensions, opposing minimum wage laws, and lowering corporate taxes is being pushed by Michigan’s governor and many in the legislature.  Perhaps you won’t be surprised then to discover that the Mackinac Center devotes itself to promoting this very agenda.

This week, to launch the new “stink tanks campaign,” The Center for Media and Democracy and AlecExposed.org released a stunning national report, Exposed: The State Policy Network—The Powerful Right-Wing Network Helping to Hijack State Politics and Government.

Here you will learn more about the extensive role of the Koch Brothers and others in the secretive world of far-right funding.  “The largest known funders behind SPN and its member think tanks are two closely related funds—DonorTrust and Donors Capital Fund… They are what are called ‘donor-advised funds,’ which means that the fund creates separate accounts for individual donors, and the donors then recommend disbursements from the accounts to different non-profits.  It cloaks the identity of the original mystery donors or makes it impossible to connect donors with recipients…. For example, a relatively unknown Koch family foundation called the Knowledge and Progress Fund gave $4.5 million to DonorsTrust between 2007 and 2010, but what organizations received that funding from Donors is unknown.” (p. 18)

None of these state organizations focuses solely on privatizing education; they all pursue a complex agenda.  You will learn, however, that several of these groups have representatives on ALEC’s Education Task Force: the State Policy Network itself, the Goldwater Institute (AZ), the Pacific Research Institute (CA), the Independence Institute (CO), the James Madison Institute (FL), the Illinois Policy Institute, the Maine Heritage Policy Center, the Oklahoma Council on Public Affairs, the Mackinac Center (MI), the John Locke Foundation (NC), and the Freedom Foundation ( MN).

The report describes the goal of the State Policy Network as creating an echo chamber across the states: “While SPN is a national organization with 63 affiliates and over 100 associate members, it remains a closely connected network.  It is not uncommon for think tank members to share board members, “scholars,” or staffers, nor is it uncommon for the think tanks to share research materials, coordinating their agenda and tailoring national research to fit into state-related politics.” (p. 9)

The report wonders how groups like like ALEC and these state advocacy organizations continue to operate as tax-exempt, 501C3 non-profits:  “Acknowledging the group’s political power, conservative commentator Michelle Malkin called the SPN member Idaho Freedom Foundation a ‘do’ tank.  Darcy Olsen, president and CEO of SPN member think tank the Goldwater Institute, told the National Review, ‘We’re in the business of applied policy.’ Applied policy appears to translate to changing state laws. Although most do not register lobbyists, many SPN members advance legislation through ALEC and outside of ALEC” (p. 13)