Network for Public Education Demands Further Regulation of For-Profit Charter School Sector

Last week, the Network for Public Education (NPE) published Chartered for Profit II: Pandemic Profiteering, a new report exposing the ongoing abuse of the public interest by the operators of for-profit Education Management Organizations (EMOs).

Some background…

In a Washington Post column last July, the executive director of the Network for Public Education, Carol Burris congratulated the U.S. Department of Education for imposing new rules to strengthen federal regulation of the federal Charter Schools Program, which has, since 1994,  awarded millions of dollars in federal grants for the startup and expansion of charter schools: “These new regulations are an essential first step in making sure that fewer tax dollars go to schools that never open, schools that quickly close, and for-profit operators. Unscrupulous individuals who used the program for their enrichment will find it more difficult to do so. ”

In December, just before Congress recessed for the holidays, however, Senator Tim Scott (R-S.C.), under pressure from the National Alliance for Public Charter Schools and other charter school lobbyists, offered a resolution to nullify the rules the Department of Education finalized in July for the purpose of strengthening oversight of the Charter Schools Program.

On December 14, 2022 the U.S. Senate rejected Sen. Scott’s proposal to block the Department’s new rules. Realizing that the work to make the charter school sector accountable must continue, however, last week the Network for Public Education published Chartered for Profit II: Pandemic Profiteering. It is notable that supporters of America’s public schools—concerned about all the ways for-profit Education Management Organizations (EMOs) divert tax dollars for personal gain—are more than matching the doggedness of the charter school lobby.

What’s in NPE’s new report?

In Chartered for Profit II: Pandemic Profiteering, the Network for Public Education tracks the many abuses of the public interest by for-profit charter school operators since NPE published Chartered for Profit: The Hidden World of Charter Schools Operated for Financial Gain two years ago:

“In this follow-up report on the charter for-profit sector, we chronicle its expansion during the years of the COVID-19 pandemic…. According to our research…. The percentage of students attending a charter school designed to produce a profit for its management company soared… (T)he total student enrollment in charter schools during the second year of the pandemic (the 2021-2022 school year) was 3,676,635. Student enrollment in for-profit-run charter schools jumped to 731,406 that year. That means that 20 percent of all charter school students… were enrolled in a charter school managed by a for-profit management corporation by the pandemic’s end. More disturbing is that 27 percent of the students attending for-profit-run schools were enrolled in low-quality virtual charter schools that teach students either exclusively or primarily online.” (emphasis in the original).

Although the new federal rules instituted last summer will stop federal grants from flowing to for-profit charter schools and to the nonprofit charter schools which are fully managed by for-profit Education Management Organizations, the new federal rules will not protect the public from lack of regulation in state laws. Charter schools, operating now in 45 states, are set up and primarily regulated in state law. Therefore, lack of oversight is largely a problem residing in state legislatures where the charter sector maintains a powerful lobby. Some states are especially permissive of for-profit charter schools: “Although most states allow for-profits to manage their charter schools, five states presently have a sizeable for-profit footprint. In three of the five states—Florida, Michigan, and Ohio—charters run-for-profit make up the majority of the charter sector.” In Michigan, 70% of charter schools are operated for-profit; In Florida, 52%; in Ohio 52%; in Nevada 40%; and in Arizona, 38%.

Education Management Companies typically take over small independently operated nonprofit schools or find nonprofit agencies to start up charter schools that will then be fully operated by the larger corporations.  In the new report, we learn more about Oklahoma’s notorious Epic Charter Schools, three of whose leaders were arrested in June of 2022 for shady financial dealings even as the online chain increased its enrollment “by over 31,000 students between 2019-2020 and the 2020-2021 school years alone.”  We learn about the five largest for-profit, brick and mortar Education Management Organizations: Academica, National Heritage Academy, Charter Schools USA, ACCEL, and Leona; and about the two biggest for-profit online academies: Stride K12 and Pearson’s Connections Academy.  We also learn that many Education Management Organizations are much smaller: “Micro-for-profits (EMOs that manage one or two schools) (now) comprise nearly half of all for-profit EMOs.”

How do the for-profit Educational Management Companies make a profit? “(T)he owners of EMOs extract profit thanks to the absence of oversight and regulation.  State governments fail to protect taxpayers from sweetheart deals, sweeps contracts, and related party transactions….”

  • Insider deals, formally referred to as related party transactions, occur when those who have control of a charter school’s decision-making process award contracts to their own companies or those owned by a family member, colleagues, or friends..” NPE traces sweetheart deals for example at Arizona’s Charter One empire. Glenn Way began sponsoring charter schools under the brand, “American Leadership Academy,” from his position as a state legislator in Utah, but, “Because he would be up against a charter cap in Utah, Way moved to Arizona, where for-profit entities can open and operate an unlimited number of schools under the nation’s loosest charter school laws.”  Way founded Charter One L.L.C., as a for-profit EMO to manage the American Leadership Academy schools, founded Schoolhouse Development to rent school facilities to his schools at exorbitant leasing rates, started a construction company to provide construction and building services, and launched an apparel company to provide school uniforms. “Way’s charter empire is now moving beyond Arizona into Nevada, North Carolina, and South Carolina.”
  • “A sweeps contract is an arrangement in which a charter school turns over all or nearly all of its public funding to an operator who then runs the school.” In such an arrangement, the board of the nonprofit charter school being managed by the EMO has no way to track whether the funds are being used to provide services for students or whether they are being siphoned into profits for the EMO. NPE reports that, “National Heritage Academies… runs more than 100 schools with sweeps contracts.” ACCEL Schools runs its 54 schools with sweeps contracts. ” Florida’s Charter Schools U.S.A., the third largest for-profit chain, operates its schools with sweeps contracts, as does the Leona Group, based in Michigan.”
  • Sweetheart real estate deals are how “the real money is made.” “The five biggest for-profit management companies—Academica, National Heritage Academy, Charter Schools U.S.A., ACCEL, and Leona—have related real estate corporations with contracts that put the EMO in charge of lease relationships.” The report abounds with examples.  Here is one: “The largest EMO is Academica, based in Miami, Florida. Academica’s owner is a real estate developer, Fernando Zulueta, who opened the first charter, Somerset, as part of a housing development he had constructed… Over 100 active corporations linked to Fernando Zulueta and his family members… include real estate corporations, holding companies, and finance corporations, as well as sub-chains both within and outside of Florida… The connection between Fernando Zulueta’s real estate holdings and his for-profit managed charter schools goes beyond the state of Florida. According to the State Public Charter School Authority, Academica Nevada pays the lease on behalf of the charter school Mater Academy Mountain Vista of Nevada to Stephanie Development L.L.C. The managing members of Stephanie Development are Fernando and Ignacio Zulueta and Robert and Clayton Howell. Robert Howell is the manager of Academica Nevada.”

NPE outlines all the ways that states should strengthen their regulation for-profit management of charter schools. Finally the Network for Public Education presses the federal government further to expand its regulations: to “require all charter schools that receive federal funds to provide the name and corporate status of any entity that provides management services as well as the names and services provided by all vendors that are related corporations of the EMO.”  Further, NPE recommends that, “charter schools run by EMOs via a sweeps contract not be eligible to receive any federal funds.  Sweeps contracts are a blatant violation of the spirit of federal law, which permits only non-profit schools to be recipients of federal funds.”

The Network for Public Education reminds readers that, “In the for-profit charter market, every customer who walks through the door comes in with ample cash provided by taxpayers.”

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U.S. Dept. of Ed’s Own Office of Inspector General Condemns Department’s Past Failure to Oversee Charter Schools Program Grants

In the Federal Register in mid-March, the U.S. Department of Education proposed new rules to strengthen oversight of its own Charter Schools Program. The Department accepted public comments on the new rules for several months, and then, quietly on the Friday afternoon before the July 4th holiday weekend, the Department announced it had finalized rules and was strengthening oversight of the program.

The charter school lobby, led by the National Alliance for Public Charter Schools has continued loudly to protest the Department’s action to increase regulation of the program.  Over the years, the Network for Public Education, a pro-public schools advocacy organization, has released a series of reports which expose waste and fraud in charter school management across the states (Charters and Consequences, 2017; and Chartered for Profit, 2021), and abrupt charter school closures which have often left students stranded sometimes mid-school year (Asleep at the Wheel, 2019, and Broken Promises, 2020).

Now, in collaboration with Valerie Strauss, the executive director of the Network for Public Education, Carol Burris shares the news that the Network for Public Education has not been the only critic of the U.S. Department of Education’s Charter Schools Program. The Department’s own Office of Inspector General (OIG) just released a blistering critique of the program: “A new report issued by the Office of the Inspector General entitled, ‘Effectiveness of Charter School Programs in Increasing the Number of Charter Schools’ documents how states, charter management organizations, and charter developers often make wildly exaggerated claims regarding the number of charter schools they will open or expand….”

What did the Education Department’s own Office of Inspector General uncover in this new, 2022 audit of the Charter Schools Program?  Burris explains: “The OIG, an independent watchdog of the U.S. Department of Education… found that for grants issued between 2013 and 2016, only 51 percent of the schools promised by Charter Schools Program recipients opened or expanded. The OIG audit also exposed the sloppy record keeping and weak oversight that characterize CSP operations. Since 2006, the department has paid a private corporation, WestEd, millions of dollars to compile, check and update CSP records. WestEd’s present CSP contract exceeds $12 million… Yet an alarming number of grant records could not be found when requested by OIG auditors… The auditors noted that while the department, through WestEd, tracked spending and schools while grants were open, the tracking stopped as soon as the grant was complete. Therefore, the department had no way of knowing whether schools remained open beyond the years federal funds propped them up. This speaks to the purpose of the program—to open and expand high-quality charter schools.”

Burris continues: “Grant applicants asked for and received millions of dollars based on their promises to open and expand charter schools. However, when the auditors examined 94 grantee applications, they found that many grantees fell far short of their commitments. The OIG determined that based on the commitments made in the 94 applications, state education agencies, CMOs, and developers promised to open or expand 1,570 charter schools using CSP funds. As of July 2021, approximately 75 percent of the grant funding had been spent, yet grantees had only opened or expanded 51 percent of the charters they had promised.”

Why, in their grant applications, would charter management companies wildly exaggerate the number of new charter schools they plan to open? Burris responds: “States and charter management organizations get to keep 10 percent of the cut for grant administration and technical assistance to charter schools. The bigger the grant, the bigger the cut. Therefore, KIPP was allowed to keep nearly $5 million for its charter management organization, even though it fell way short of its commitment. The Florida Department of Education secured over $7 million for administrative services on its grant.”

Clearly in March, when the Department proposed new and stronger rules to strengthen regulation of the Charter Schools Program, staff in the Department were responding to a series of well documented critiques of the program from the Network for Public Education. But this week’s new report from the Department’s own Office of Inspector General is not the first scathing criticism of this program from the Department’s OIG. In my own clipping files, I have copies of reports from 2012, 2016, and 2018. One wonders why it has taken so long for the Department to take action.

  • In 2012, the Department’s OIG concluded: “(W)e found that the Office of Innovation and Improvement did not provide the State Education Agencies with adequate guidance on the monitoring activities they were to conduct in order to comply with applicable Federal laws and regulations.”
  • In 2016, the Department’s OIG declared: “We determined that charter school relationships with Charter Management Organizations posed a significant risk to Department program objectives. Specifically, we found that 22 of the 33 charter schools in our review had 36 examples of internal control weaknesses related to the charter schools’ relationships with their CMOs (concerning conflicts of interest, related-party transactions, and insufficient segregation of duties).”
  • In 2018, the Department’s OIG charged: “The Department did not ensure that oversight of the charter school closure process was effective. We found that the Department’s oversight and monitoring of the selected State Education Agencies by Title I, IDEA, and CSP program offices was not effective to ensure that the State Education Agencies performed the charter school closure process in accordance with Federal laws and regulations.” The OIG documented the absence of procedures to protect the disposal of assets paid for with public funds when charter schools shut down.

The Washington Post‘s Valerie Strauss reminds readers of some basic history of the Charter Schools Program: “Charter schools are publicly funded but privately managed. The federal charter program, which began in 1994 with the aim of expanding high-quality charters, had bipartisan support for years, but many Democrats have pulled back from the movement, citing the fiscal impact on school districts and repeated scandals in the sector. The Biden administration is making some changes to the program in an effort to stop waste and fraud and provide more transparency to the operation of charters.”

Burris reminds us that President Biden’s administration is the first in the history of the program to tighten oversight of this program, which has awarded millions of dollars to start up and expand charter schools without sufficient oversight.  She concludes: “(A)s the Office of Inspector General audit shows, reforms are desperately needed.”

We can be grateful that in July, the Department of Education implemented new rules to begin strengthening stewardship of our tax dollars awarded through the federal Charter Schools Program.

Charter School Lobby Agitates to Prevent the U.S. Department of Education from Improving Regulation of the Federal Charter Schools Program

The U.S. Department of Education has proposed new rules to tighten up the awarding of grants through its own Charter Schools Program. Seems like a good thing, right? So why did the Department’s proposed new rules lead to a big protest rally of charter school supporters from around the country in front of the White House last week?

The NY TimesErica Green explains the proposed rules: “The proposal would add requirements to the application process for grants from the federal Charter Schools Program, which has doled out billions of dollars over nearly 30 years to help open new charter schools or expand existing ones. It sets tighter restrictions on the schools’ relationships with for-profit entities and encourages more collaboration between charters and the districts they operate in. The most controversial part of the plan would require grant applicants to prove demand and community support for their schools, examine the effect they would have on neighboring district-run schools, and demonstrate that they would not exacerbate segregation.”

The proposed rules would not affect the state laws that establish charter schools and the rules under which charter schools operate in 45 states. The new rules would be limited to establishing that federal grants could no longer be awarded to charter schools operated by for-profit Charter Management Organizations, and that to qualify for a federal grant, a charter authorizer would have to show there is a need for the new school.  This is the sort of sensible regulation that ought to have been part of the program when it was established back in 1994.

During the Clinton administration and through the Bush and Obama administrations, charter schools were popular among neoliberal Democrats who saw publicly funded but privately operated charter schools as kind of a nice compromise with the more visceral school privatization advocates like Betsy DeVos.  Now a lot of Democrats, including the Biden administration, have become more aware of poor regulation of charter schools by states and the federal government, graft and corruption in the misuse and sometimes theft of public funds, and the reality that despite their promises, charter schools on the whole have not surpassed public schools in helping students achieve academically.

As Green reports, some of the Democrats who have always been and continue to be strong supporters of charter schools are angry: “The rally came on the heels of several high-profile denouncements of the proposed rules, including opinion pieces by Michael Bloomberg…. and Gov. Jared Polis of Colorado….  Senators Dianne Feinstein of California, Cory Booker of New Jersey and Michael Bennet of Colorado joined Republicans in asking the department to revise them.”  But an increasing number of Democrats see the need for better oversight.

Green quotes Carol Burris, the executive director of the Network for Public Education as a prime supporter of the new rules and Nina Rees, the president and chief executive of the National Alliance for Public Charter Schools as a leading opponent of more stringent regulation of the federal Charter Schools Program.  It is important to be very clear about what these organizations are.

Rees’ organization, the National Alliance for Public Charter Schools is the primary mouthpiece for the charter school sector. It has a 32 person staff and is well funded by philanthropists, charter school authorizers, and operators of charter schools. When the National Alliance for Public Charter Schools sponsors a rally at the White House, the organization can afford to fly in charter school parents from around the country to speak for their schools. But the testimony of satisfied parents passionately defending their experience with particular charter schools is not the whole story.

The Network for Public Education (NPE)—a national, volunteer, good government, public school advocacy organization—has been a primary critic of waste and fraud in the charter school sector’s spending of tax dollars, especially by the for-profit Charter Management Organizations. NPE has also condemned the damage to public school districts by rapid charter school growth. Its members have supported a tiny, four-person, mostly part time staff conducting research about what is really happening in the charter school sector.

Despite that federal law has previously prohibited grants to for-profit charter schools, in a 2021 report, Chartered for Profit, the Network for Public Education exposed that too many nonprofits have been turning over virtually all of their state and federal dollars to a for-profit management company without any oversight of the use of the money: “Despite strict regulations against the disbursement of funds from the federal Charter Schools Program to charter schools operated by for-profit entities, we identified over 440 charter schools operated for profit that received grants totaling approximately $158 million between 2006 and 2017, including Charter Schools Program grants to schools managed with for-profit sweeps contracts.”

In an earlier report, Asleep at the Wheel, the Network for Public Education found that the U.S. Department of Education has not been a responsible steward of taxpayer dollars in its management of the Charter Schools Program. “Based on what we found, we believe it is likely that one billion dollars of federal ‘seed money’ has been wasted on charters that never opened or shut their doors. We were equally dismayed to find that many of the Charter Schools Program-funded charter schools that survived did not fulfill their stated mission, especially in regard to enrolling proportionate numbers of disadvantaged youth. As public dollars are pulled from public schools and a more disadvantaged student body is left behind, the students who attend their neighborhood schools have fewer resources and greater challenges.”

Research from the Network for Public Education has been replicated by other researchers. In a report for In the Public Interest, economist Gordon Lafer showed how charter schools in just one school district, Oakland, California, suck $57.3 million every year out of the public schools that serve the majority of Oakland’s children and adolescents.  Amazingly, in a series of biennial reports, the U.S. Department of Education’s own Office of Inspector General has condemned the Department’s Office for Innovation and Improvement for poor oversight of the Charter Schools Program.  And in 2021, Wagma Mommandi and Kevin Welner, the director of the National Education Policy Center, published a book, School’s Choice: How Charter Schools Control Access and Shape Enrollment, showing all the ways charter school operators select their students and leave behind in public schools the students who are most likely to need additional expensive additional services—including disabled students and English language learners.

I live in Ohio, where the charter school sector has been out of control for over two decades. When the U.S. Department of Education published its proposed new rules and asked for public comment, I was moved by the comment submitted on behalf of Policy Matters Ohio by Piet Van Lier, who strongly endorses the proposed rule that would ban federal grants to nonprofit charter schools managed by for-profit management companies: “More than 10 years ago Policy Matters began tracking abuses by for-profit management companies operating schools in Ohio. We documented abuses by Imagine Schools, which had a poor record of performance in our state and a business model driven by elaborate school real estate transactions, high management and operations fees paid by nonprofit schools to the corporation, overlapping business relationships, low spending on classroom instruction, and tight control of school finances and business relationships.”

Van Lier continues: “Our subsequent research found additional problematic practices by management corporations including: hand-picking board members of charter schools that are by law responsible for school operations; preventing schools from hiring their own independent attorneys, accountants, and auditors; binding schools to them contractually and financially, making it impossible to seek new management; controlling school revenue from public sources; claiming ownership of school equipment purchased with public funds; and loaning money to schools well above market rates. We also documented the practice of management corporations pretending to comply with Ohio law mandating school closure for poor academic performance by simply changing the names of schools and re-opening them in the same location with largely the same staff. These practices continue today.”

Policy Matters also endorses the need for charter school startups to conduct an impact study and demonstrate the need for the new school: “Examples abound… of charter schools opening simply because they have access to a building and want the public funding that will flow to the school, even if they cannot meet enrollment targets and have no evidence that they have talked to families and other stakeholders in the community about what kinds of schools are needed. Requiring schools and operators to demonstrate community need and interest in their models is simply good policy and will prevent the over-saturation of charter schools many urban areas already face.”

We should certainly not be surprised when the charter school lobby, represented by the National Association of Public Charter Schools, sponsors a rally to protest more stringent rules to block the flow of federal funds to charter schools.  We must also hope that staff in the U.S. Department of Education carefully read the thousands of comments thanking the Department for proposing new regulations to end the flow of federal dollars to for-profit management companies and to require charter school sponsors to consider the needs of the communities where they propose to locate new charter schools.

Ohio Charter School Sector Epitomizes All the Reasons Why the Federal Charter Schools Program Must Be Reformed

In its new report, Public Schooling in America: Measuring Each State’s Commitment to Democratically Governed Schools, the Network for Public Education (NPE) grades the 50 states and the District of Columbia on their commitment to the institution of public education, or alternatively in some states, their commitment to privatized marketplace school choice at the expense of their public school districts.

This blog will take a short spring break.  Look for a new post on Tuesday, May 10, 2022.

Implicit in the report is an understanding of the decades-old role of public education in the United States. Public schools—publicly funded, universally available, and accountable to the public—are essential for ensuring that over 50 million U.S. children and adolescents are served. Public schools are the optimal way to balance the obligation to meet the needs of each particular student with the public responsibility for creating a system that secures the rights and addresses the needs of all students.

The Network for Public Education documents that some states are abandoning this public purpose: “Not only do we grade the states based on their willingness to commit exclusively or primarily to democratically governed public schools open to all, but their willingness to put sufficient guardrails and limits on publicly-funded alternatives to ensure that taxpayers, students, and families are protected from discrimination, corruption and fraud in the programs they have.”

Ohio ranks third from the bottom, according to the Network for Public Education’s new report.  Its legislature’s commitment to the expansion of both publicly funded private school tuition vouchers and to the growth of an unregulated charter school sector sets it on a path toward becoming “a publicly-funded, uncoordinated, free-for-all parading as an education system.”

Earlier this month, the expansion and oversight of charter schools took center stage in the policy debate as the U.S. Department of Education proposed to tighten up oversight of the federal Charter Schools Program (CSP), founded in 1994 to spur innovation by expanding charter schools. The program has been shown by the Network for Public Education and by the U.S. Department of Education’s own Office of Inspector General to be poorly regulated, and in early April the Department proposed to strengthen its own rules and regulations.  When a period of public comment was initiated, the charter school lobby stimulated a storm of comments opposing regulations.  Public school supporters submitted a mass of comments supporting better oversight.

Piet van Lier submitted a comment on behalf of Policy Matters Ohio which caught my attention because it speaks so profoundly about the reasons why NPE’s new report awards Ohio an “F” for its lagging support for the public schools that serve 1.8 million of our state’s children.

First, the comment from Policy Matters Ohio speaks to the need for much stronger rules and regulations to rein in the for-profit charter management companies that have been ripping off Ohio’s taxpayers for two decades:

“As a state policy research institute, Policy Matters believes that public education is an essential public good and must be fully supported at every level of government, from local to state, to federal. For decades now we have been tracking the growth of charter schools in Ohio, and for that reason we are encouraged by the proposed changes to rules governing the federal Charter Schools Program (CSP)… We strongly support the proposed change that charter schools receiving CSP funding must provide assurance that they have not and will not enter a contract with any for-profit charter school management organization…. More than 10 years ago Policy Matters began tracking abuses by for-profit management companies operating schools in Ohio. We documented abuses by Imagine Schools, which had a poor record of performance in our state and a business model driven by elaborate school real estate transactions, high management and operations fees paid by nonprofit schools to the corporation, overlapping business relationships, low spending on classroom instruction, and tight control of school finances and business relationships.”

Van Lier continues: “Our subsequent research found additional problematic practices by management corporations including: hand-picking board members of charter schools that are by law responsible for school operations; preventing schools from hiring their own independent attorneys, accountants, and auditors; binding schools to them contractually and financially, making it impossible to seek new management; controlling school revenue from public sources; (and) claiming ownership of school equipment purchased with public funds and loaning money to schools well above market rates. We also documented the practice of management corporations pretending to comply with Ohio law mandating school closure for poor academic performance by simply changing the names of schools and re-opening them in the same location with largely the same staff. These practices continue today.”

Policy Matters also supports a second rule the U.S. Department of Education has proposed. To qualify for federal funds, the new charter school would be required to conduct and report on a community impact study to demonstrate the need for the new charter school.

Van Lier writes: “We strongly support new rules that would require charter schools receiving CSP grants to demonstrate need for the proposed schools and locations and to provide evidence that they engaged with residents in planning for the schools.” Policy Matters summarizes Ohio’s very different experience with charter school startups: “Examples abound… of charter schools opening simply because they have access to a building and want the public funding that will flow to the school, even if they cannot meet enrollment targets and have no evidence that they have talked to families and other stakeholders in the community about what kinds of schools are needed. Requiring schools and operators to demonstrate community need and interest in their models is simply good policy and will prevent the over-saturation of charter schools many urban areas already face.”

Of course, many of the appalling practices Policy Matters describes will not cease even if the new federal rules are formally adopted and enforced. The federal Charter Schools Program provides only a fraction of the funds fueling a rapidly growing and poorly regulated charter sector in Ohio. But strengthening the federal rules would set an important precedent which just might help increase public pressure on a legislature like Ohio’s, which, as the Network for Public Education’s new report explains, seems bent on expanding publicly funded school privatization at the expense of the public schools. Remember, NPE ranks Ohio third from the bottom in its support for public schools—ahead of only Florida and Arizona.

Private Equity Partnership with Ron Packard’s Accel Charter Schools Supercharges the Profit Motive

Charter school management in Ohio was, for a long time, a flamboyant affair.  For nearly two decades, until the state finally put him out of business, William Lager ran the Electronic Classroom of Tomorrow—charging the state, year-after-year, for students who were not really enrolled and making contributions to the legislators who then neglected to regulate online charter schools.

Even more notorious was David Brennan, who wore a ten gallon hat and dubbed his charter company White Hat Management. He had an empire of Life Skills and Hope Academy charter schools and an online virtual school, the Ohio Distance and Electronic Learning Academy (OHDELA).

In 2018, the same year that Bill Lager’s ECOT was shut down, Brennan sold off his charter school holdings and later died. Charter school management quieted down after that, but the quality didn’t improve, and the profits continued to flow to the man (and his partner investors) who bought off much of David Brennan’s empire—Ron Packard. Packard was the founder of the for-profit online giant, K-12, but he left K-12, when it was under a cloud for misleading investors and poorly educating its students. By 2014, Packard had founded Accel Schools, another for-profit chain of charter schools, which was owned and operated by something called Pansophic Learning.

In a stunning new Alternet report, Jeff Bryant traces how Packard and Pansophic Learning expanded rapidly—27 charter schools across Colorado, Illinois, Michigan,  Minnesota and Ohio.  Pansophic Learning bought up not only Brennan’s charter schools but also the financially struggling Mosaica network of charters and a small local chain of I Can schools in Cleveland, along with Brennan’s statewide electronic school, OHDELA.

Packard’s finances are complicated by private equity investment intended quickly to produce significant profit. Investors in Accel and Pansophic Learning include a Saudi private equity firm, Safanad, whose CEO Kamal Bahamdan, leads Bahamdan Investment Group.

Bryant explores the role of private equity ownership not only of charter schools but also of private prisons and nursing homes.  He cites a study which “distinguished private equity for-profit ownership from ‘generic’ for-profit ownership because ‘private equity ownership confers distinct incentives to quickly and substantially increase the value of their portfolio firms.’  It is this form of intense, high-powered profit-maximizing incentives, the authors asserted, ‘that characterizes private equity… and could lead to detrimental implications for consumer welfare.'”

Bryant describes Accel’s use of a sweeps contract to operate the Broadway Academy charter school in Cleveland.  With a sweeps contract, an Accel charter school collects per-pupil charter school funding from the state of Ohio and then turns over more than 90 percent of the funding to Pansophic which then manages the school with virtually no oversight from the appointed charter school board but with a strong incentive to maximize profit by reducing services for students.

Bryant identifies an additional source of profit for Packard and his partners: “While Accel’s contract with Broadway Academy doesn’t include real estate, the authors of (a recent) Network for Public Education report searched the database of Ohio charter school contracts… and found that ‘Global School Properties Ohio, LLC holds the leases for many Accel charter schools. The… landlord is at the same 1650 Tysons Blvd. address in McLean, Virginia, as Pansophic Learning.'” Hence we learn that Pansophic not only collects virtually all the state per-pupil charter school funding, but it also very likely makes a profit by charging inflated rent to lease the building that it secretly owns back to its own school.

Bryant unearths the complicated financial dealings of Pansophic Learning, Safanad, and the Bahamdan Investment Group. His report details the troubling financial web underneath Accel and the Ohio Distance and Electronic Learning Academy (OHDELA).  For the Washington Post, Steve Yoder describes how all this affects a Conneaut, Ohio mother and her children. Amanda Nemergut wanted to move her children to online learning as an alternative to in-person schooling during COVID-19.  Wooed by fancy online advertising, Nemergut enrolled her children in OHDELA: “Soon Nemergut and her kids… noticed problems. OHDELA’s model relies on parents to help supervise their children’s instruction, and Nemergut did, stepping in throughout the day to aid with technical glitches and questions on assignments. But there were issues she couldn’t fix.  The homework didn’t match the material teachers covered in class. When teachers gave live instruction—no more than 20 minutes per class… students couldn’t ask questions because chats were blocked. When her daughters sent questions by email, they got no answer. Teachers didn’t give credit for work her kids had turned in and marked them absent for classes they attended.”

One must acknowledge that the test-score-based Ohio state school report cards are flawed measurements of school quality, but even recognizing the inadequacy of the report cards, Jeff Bryant writes that Ron Packard’s Accel Schools in Cleveland area are not breaking any records for academic quality: “Accel Schools in the Cleveland area, where the management company has its highest density of schools, has no schools with A or B ratings from the 2018-2019 school year, the last one measured due to the pandemic. There are three C rated schools, including Broadway Academy.  Eleven others are D and F rated schools.”

Jeb Bush’s Pitiful Attempt to Defend Federal Funding of Charter Schools Managed by For-Profit Companies

It’s clear that the charter school lobby is upset about the House of Representatives’ effort in its proposed budget resolution to curtail abuses in the federal Charter Schools Program and to reduce the program’s appropriation by $40 million in the upcoming fiscal year.

Jeff Bryant explained last week: “The top lobbying group for the charter school industry is rushing to preserve millions in funds from the federal government that flow to charter operators that have turned their K-12 schools into profit-making enterprises, often in low-income communities of color. The group, the National Alliance for Public Charter Schools (NAPCS), objects to a provision in the House Appropriations Committee’s proposed 2022 education budget that closes loopholes that have long been exploited by charter school operators that profit from their schools through management contracts, real estate deals, and other business arrangements.”

The executive director of National Alliance for Public Charter Schools, Nina Rees went on C-Span to try to defend the program, and now it’s clear that the organization is calling on old allies to push Congress to cancel the House Appropriations Committee’s proposed elimination of all federal funding for charters operated for-profit by Charter Management Organizations. Bryant reminds us that Nina Rees was the deputy assistant for domestic policy for former Vice President Dick Cheney.

This week Jeb Bush, the ultimate old advocate for school privatization, came out of the woodwork with an op-ed circulated all over the country by the Tribune News Service. Bush’s piece appeared in our Sunday Cleveland Plain Dealer. Toward the end of his article, Bush gets to the point and protests the proposed House Budget Resolution: “Not only does it specifically cut $40 million in education funding (from the Charter Schools Program), but the House budget bill also includes alarming language that would prevent any federal funds from reaching any charter school ‘that contracts with a for-profit entity to operate, oversee or manage the activities of the school.'”

Bush thinks that the U.S. Department of Education ought to be allowed to make grants to charter schools whose operators are, in many cases, collecting huge profits at the expense of our tax dollars and at the expense of children whose education programming is reduced to ensure operators can make a profit. I guess he isn’t bothered by the charter management companies that have managed to negotiate sweeps contracts that gobble up more than 90 percent of the state and federal operating dollars and manage the school without transparency.

The Network for Public Education (NPE) just published a major report, Chartered for Profit, that details how all this works. Recently NPE’s executive director, Carol Burris was interviewed about the extent of the problem: “The original charter is secured by the nonprofit, which gets federal, local, and state funds, and then the nonprofit turns around and gives those funds to the for-profit company to manage the school… Now, some of these for-profits only provide a limited amount of services. But an awful lot of them, especially some of the big chains like National Heritage Academy, operate using what is known as a ‘sweeps’ contract. The reason they’re called that is the for-profit operator sweeps every penny of the public money that a charter school gets into the for-profit management company to run the school. The for-profit then either directly provides services, from management services to cafeteria services, or they contract out with another for-profit company to provide services.  Either way, the goal is to run the charter school in such a way that there’s money left over. And the more money they save by doing things like hiring unqualified teachers and refusing to teach students with special needs, the more money is left at the end of the day.”

In his recent commentary, Bush buries his defense of for-profit charter school management companies near the end of an article packed with tired, meaningless rhetoric. He begins by alleging that our system of public schools derives from an “outdated mentality”—a factory model dating from the 1890s that won’t work in the “21st century economy (which) is vastly different.” I guess he means that public schools haven’t kept up with the times, or maybe he is implying that something is wrong with what kids are learning in public schools.  When he explains that public schools serve 56.6 million students and charter schools serve 3.3 million students, one wonders why he fails to recognize that investing federal dollars to improve the nation’s public schools would be the best strategy for serving the mass of America’s students. After all, in a well known study, economist Gordon Lafer has explained how charter schools in just one school district, Oakland, California, suck $57.3 million every year out of the public schools that serve the majority of Oakland’s children and adolescents.

Next, Bush references a litany of studies, based, he says, mostly on the National Assessment of Education Progress (NAEP).  He claims this research proves that charters are better academically. Without specific references, it is hard to know which studies he is citing, although he does name one source—from the University of Arkansas, where the Department of Education Reform is a think tank funded by the Walton Foundation.

In her recent book, Slaying Goliath, Diane Ravitch, who served for several years on the NAEP Governing Board, refutes Bush’s argument that charter schools are academically superior: “Charter schools on average get about the same results when they enroll the same demographic groups of students. Those charter schools that report outstanding test scores typically have high rates of attrition and do not enroll the most difficult to educate students, such as English language learners and students with disabilities. Charters have the freedom to write their own rules about suspensions and discipline and some have used this freedom to push out the students they don’t want, those who are discipline problems, and those who can’t meet the school’s academic demands, who then return to public schools.” (Slaying Goliath, p. 135)

Next, in an argument that would be funny if it were not so sad, Bush claims that critics of for-profit charter schools are captives of the money-grubbing teachers unions. “(U)nions fear that choice will lead to fewer students attending schools that fund their private coffers… It’s a feedback loop without a soul.”

And finally, Jeb Bush explains that, by defunding for-profit charter schools, members of the House of Representatives want to eliminate federal support for the education of “millions of students, especially our nation’s special-needs students who qualify for funding under the Individuals with Disabilities Education Act, and our students living in poverty.” Has Bush not read President Biden’s budget proposal, whose public school investments are copied in the House of Representative’s proposed budget resolution? The President and the House Appropriations Committee propose to increase funding for wraparound Full-Service Community Schools from $30 million to $443 million, double Title I funding for schools serving concentrations of poor children, and significantly increase funding for the Individuals with Disabilities Education Act.

Jeb Bush and his Foundation for Excellence in Education, now called ExcelinEd, have been advocating for charter schools and school privatization for years. To promote these very ideas, Bush and ExcelinEd spawned Chiefs for Change (which has since become an independent organization) in order to promote school privatization and corporate school accountability among state school superintendents and commissioners and local school superintendents.

Betraying his long alliance with our former education secretary, Betsy DeVos, Bush condemns public schools because, he writes, they are a system which is not designed to serve individual students. The move to privatize public education is merely an expression today’s wave of libertarian individualism (at public expense) and consumerist, market-place thinking.

It is useful to keep in mind the warning of the late political theorist Benjamin Barber: “Privatization is a kind of reverse social contract: it dissolves the bonds that tie us together into free communities and democratic republics. It puts us back in the state of nature where we possess a natural right to get whatever we can on our own, but at the same time lose any real ability to secure that to which we have a right. Private choices rest on individual power… personal skills… and personal luck.  Public choices rest on civic rights and common responsibilities, and presume equal rights for all. Public liberty is what the power of common endeavor establishes, and hence presupposes that we have constituted ourselves as public citizens by opting into the social contract. With privatization, we are seduced back into the state of nature by the lure of private liberty and particular interest; but what we experience in the end is an environment in which the strong dominate the weak… the very dilemma which the original social contract was intended to address.” (Consumed, pp. 143-144)

Charter Schools: The Vision of their Founders vs. Today’s Reality

Charter school operators and advocates persistently brand charter schools as “public charter schools” even though charter schools are, by definition, always privately managed. However, operation is paid for with tax dollars appropriated by 44 of the state legislatures along with some federal investment and the diversion of school district dollars.

The people who proposed the idea of charter schools 30 years ago imagined how these schools would work and what would be the widespread result for children. What if we compare what the founders of charter schools imagined with today’s reality?

The Thomas Fordham Institute is a sponsor of charter schools and one of the nation’s prominent cheerleaders for these institutions. Chester Finn, president emeritus of the Fordham Institute and Bruno Manno, an emeritus member of Fordham’s board and an advisor to the Walton Foundation, recently celebrated the history of charter schools on their 30th anniversary.  Finn and Manno praise Ted Kolderie, who enthused about charter schools in a 1990 report for the Minnesota Center for Policy Studies. Describing Kolderie as “arguably the foremost theoretician of chartering,” Finn and Manno quote his report:

“(O)ur system of public education is a bad system. It is terribly inequitable. It does not meet the nation’s needs. It exploits teachers’ altruism. It hurts kids. Instead of blaming people…we need to fix the system [and] organize public education in America on a new basis. The proposal outlined in this report is designed to introduce the dynamics of choice, competition and innovation into America’s public school system. How can we use the powerful idea of choice to improve our schools while retaining the essential purposes of public education? This report proposes a simple yet radical answer: allowing enterprising people—including teachers and other educators—to… create new public schools, and ultimately a new system of public education, [by having] the states…simply withdraw the local districts’ exclusive franchise to own and operate public schools. [We need to undertake] divestiture, or allowing the districts to get out of running and operating public schools altogether.”

Now, 30 years later, Finn and Manno brag about what they believe are charter schools’ strengths:

  • “The best charters consistently make greater student achievement gains than traditional public schools.”
  • “Chartering has… pioneered new forms of governance for public education, including statewide Recovery School Districts that restart low-performing schools as charter or charter-like schools….”
  • “Other charter-inspired governance models include ‘portfolio’ districts’… where districts transfer school governance to independent nonprofit organizations…”

They conclude: “Through a combination of choice, competition, and innovation, chartering has bettered the academic and life outcomes of K-12 students, thereby reducing inequality, widening opportunity, strengthening parents, and enhancing civil society.  These are remarkable accomplishments for a thirty-year period, worth protecting and cultivating… When dealing with so many complex institutions across so many different jurisdictions, the challenges of politics, resources, talent, and implementation were sure to be profound.  And when what’s being changed contains as many ingrained practices, hidebound regulatory regimes, and vested interests as American public schooling, these trials are even greater.”

Finn and Manno share a number of reforms they would like to see in charter schools: more attention to authorizing and quality control, need for more funding, and insufficient autonomy.  While they allege that the best charters improve student achievement, they don’t explore the problems with the academic studies they cite.  Neither do they discuss how few “best” charters there are in a sector where charter schools differ from each other and run the gamut of quality. They admit that, “charter promoters have sometimes been naive, occasionally self-interested, and often set in their ways.”

Now that charter schools have been around for 30 years, however, there is significant research demonstrating a whole range of problems on the ground, problems which Kolderie never imagined and which Finn and Manno neglect to mention.

First is the role of money and the absence of sufficient regulation in a sector which has been invaded by for-profit management and where 44 state legislatures, who are subject to lavish lobbying by charter sponsors and advocates, have failed to provide adequate oversight. After all, Kolderie defined  the very purpose of charter schools as escaping the constraints of public bureaucracy.  Jacobin Magazine published a recent interview with, Carol Burris, the executive director of the Network for Public Education, which recently published a report, Chartered for Profit Jacobin‘s reporter asked Burris how it is that so many charter schools—which state laws require to be sponsored by and operated as nonprofit organizations—have become the source of massive profits their operators.  Here is her reply:

“The original charter is secured by the nonprofit, which gets federal, local, and state funds, and then the nonprofit turns around and gives those funds to the for-profit company to manage the school… Now, some of these for-profits only provide a limited amount of services.  But an awful lot of them, especially some of the big chains like National Heritage Academy, operate using what is known as a ‘sweeps’ contract. The reason they’re called that is the for-profit operator sweeps every penny of the public money that a charter school gets into the for-profit management company to run the school. The for-profit then either directly provides services, from management services to cafeteria services, or they contract out with another for-profit company to provide services.  Either way, the goal is to run the charter school in such a way that there’s money left over. And the more money they save by doing things like hiring unqualified teachers and refusing to teach students with special needs, the more money is left at the end of the day.”

It is worth pointing out the irony that we would all be shocked if we discovered the principal of our public high school or our school district’s superintendent profiting from our tax dollars. While such activity is illegal in public schools, money in the charter school sector is handled very differently. Burris explains: “Individuals can become very wealthy if they run charter schools, whether for-profit or nonprofit. Eva Moskowitz, who’s in charge of Success Academy Charter Schools in New York City… pulls down a salary of nearly $1 million a year.  By comparison, the New York City public schools chancellor makes about $250,000 a year.” Burris continues: “A lot of this is possible simply because there’s so little oversight.  I was a public school teacher and then a high school principal.  Purchases had to go out to bid, and everything was very transparent.  I couldn’t contract with my Uncle Louie’s furniture company to buy desks. But you can in the charter school world… The charter school lobby says that this model is necessary for innovation. But what is it about the ability to commit fraud and avoid transparency that helps you to be more innovative?  The innovation that we’re seeing too often, sadly, is criminal manipulation.”

Second is the problem that charter schools are parasites on the public school districts where they are located. In some states, as was the case until recently in Ohio, school districts have to pay an additional charter school tuition fee right out of their own budget when children leave for a charter school.  But even in states where public school districts merely lose the state’s per-pupil basic aid when each child leaves, the school district suffers financially.  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…  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.” At the same time, charter schools are less likely to enroll students with expensive special needs, which concentrates children who need expensive extra investment in their education in district public schools.

Third, neither the federal government nor the states have consistently protected students’ rights in charter schools.  For example, New York City’s Success Academy Charter Schools has established a reputation for a regimented, no-excuses school culture. For years, however, parents have complained that instead of helping students thrive, the school has established a pattern—for children who don’t fit the school’s culture or for children whose test scores will likely bring down the school’s overall average—of severely punishing the students or repeatedly suspending them until their parents pull them out of the school.  In March, Success Academies was fined $2.4 million by a federal district court for violating students’ rights: “Charter school network Success Academy, which touts its commitment to children ‘from all backgrounds,’ has been ordered to pay over $2.4 million on a Judgment in a case brought by families of five young Black students with learning and other disabilities who sued after the children were pushed out of a Success Academy school in Brooklyn.  Success Academy’s efforts to oust the children even included the creation of a ‘Got to Go’ list, as reported by the New York Times in October 2015, which singled out the students they wanted to push out, including the five child plaintiffs.”

And especially in the South, charter schools have too often violated students’ rights by increasing racial segregation. A 2017 study—by researchers Helen F. Ladd, John B. Holbein and Charles T. Clotfelter of Duke University reported:  “(W)e find that the state’s charter schools, which started out disproportionately serving minority students, have been serving an increasingly white student population over time. In addition, during the period, individual charter schools have become increasingly racially imbalanced, in the sense that some are serving primarily minority students and others are serving primarily white students.”

Thirty years after the first charter school in Minnesota, there is finally some support in Congress to begin reining in some of the most outrageous for-profit charter chains. The House Budget Resolution would disqualify charter schools managed for-profit from the U.S. Department of Education’s Charter Schools Program.

Chester Finn and Bruno Manno have been promoting the same lies for decades. Advocates need to continue to push hard to force the U.S. Department of Education, Congress, and legislators across the states to see what’s wrong with the glossy ideology that has blinded so many.

We Need a Massive National Campaign to Protest School Privatization

Fighting the privatization of public education feels like an overwhelming challenge. Partly, because all kinds of vouchers (plain old vouchers, tuition tax credits, and education savings accounts) are set up and funded by state legislatures, and charter schools are also set up and controlled (and too frequently poorly regulated) by state law,  the battle is fragmented from place to place.  Except for the money allocated every year out of the federal Charter Schools Program, begun in 1994 during the Clinton administration, school privatization is not driven by federal policy that affects all of us across the United States.  What happens in California and Arizona doesn’t have any effect on the public schools of Ohio where I live.  So why should I care about what happens in another state?

Then there is the question of why the problem of school privatization matters so much. While much of the research and advocacy materials about the impact of school privatization inspects the quality of the privatized school alternatives, I  believe that what ought to concern us most is the amount of money being driven out of the public schools that serve the mass of our children. The evidence shows that school funding in many states has fallen very significantly since the Great Recession in 2008 and that school privatization has contributed to that problem.

In his new book, Schoolhouse Burning, Derek Black,traces, for example, how funding charter schools depleted public school funding in Ohio during and after the Great Recession in 2008: “While states were reducing their financial commitment to public schools, they were pumping enormous new resources into charters and vouchers—and making the policy environment for these alternatives more favorable. Charter schools, unlike traditional public schools, did not struggle during the recession. Their state and federal funding skyrocketed. Too often, financial shortfalls in public school districts were the direct result of pro-charter school policies… Ohio charter schools received substantial funding increases every year between 2008 and 2015. While public schools received increases in a few of those years, they were modest at best—in one instance just one-tenth the size of the charter school increase. In 2013-14, Ohio school districts, on average, went $256 in the hole for every student who went to a charter.  Some went deeper in the red.  Nine districts sent charters between 20 percent and 65 percent more money than they received from the state… All told, charter schools received $7,189 per pupil in state funding.  Public school districts received less than half that amount.” (Schoolhouse Burning, pp. 35-36)

Once voucher and charter programs are well established, their proponents across the state legislatures ensure that they grow and expand.  Earlier this month, Steve Dyer showed how Ohio’s charter school program has continued to grow since Derek Black researched his book: “According to the latest Charter School funding report form the Ohio Department of Education, we are set to spend $999.7 million” on charter schools this year. And it isn’t because more students are attending charter schools: “It’s because Ohio politicians have continued bumping up the per pupil amounts flowing to charters. So now kids in Ohio charters, on average, get nearly $8,500  per pupil in state aid—about double what that same kid would receive in a local public school. As I’ve recounted for more than a decade, because of the way we fund charters (through the local school district deduction), that means that local property taxes have to subsidize charter school kids. It doesn’t take a Ph.D in Rocket Science to understand that, if you’re removing $8,500 in state aid from a district for a kid the district was only getting about half of that from the state to educate, the difference has to come from somewhere. This year, that subsidy is slated to be $148 million.  And in some districts, it’s really high. Like in Columbus where $62 million in local revenue has to subsidize the state funding deduction for charters.”

Three major reports published in the past two months confirm that when states set up private school tuition voucher programs and charter school programs, these privatized alternatives compete with public schools for dollars from state budgets.

  • In a February report for In the Public Interest, political economist Gordon Lafer documents that, “California is overpaying for online charter schools that are failing students.”  Online charters are a rapidly growing education sector in California: “In 2018-19, nearly 175,000 California students were enrolled in nonclassroom-based charter schools, representing 27 percent of all charter school students in the state… In 2014, just 18 percent of newly approved charter schools were nonclassroom-based; by 2019 that figure had reached 43 percent.  But this sector has also been plagued with repeated scandals and poor educational performance.”  Despite the passage of new regulation to prevent abuses: “Following a new stet of scandals that saw one of the largest charter school chains charged with defrauding the state of nearly $50 million, legislators imposed a two-year moratorium on authorizing new nonclassroom-based charter schools…. The moratorium expires at the end of 2021.”  Here is the primary problem identified in Lafer’s report: “It is common sense that the cost of operating an online charter school must be less than that of running a brick-and-mortar school. Yet California’s online charter schools, with very few exceptions, receive the same dollars per pupil as a physically existing school with classrooms, buses, a cafeteria, and maintenance and security staff. To the extent that funding for online charter schools exceeds the actual cost of operation, the government is wasting many millions of tax dollars that are desperately needed in school districts across the state.”
  • This week, the League of Women Voters of Florida released a shocking report on StepUpforStudents.org, a 20-year-old nonprofit, which has taken over administering all of that state’s voucher programs: “Step Up began with a mission to award vouchers to low-income students to attend private schools. It has grown to include vouchers… for students with special needs, students who have been bullied, students who are homeschooled, and students with reading difficulties… Step up for Students was created by venture capitalist John Kirtley in 2002, one year after Governor Jeb Bush’s administration established the first Florida Tax Credit voucher program…. By 2020, Step Up had total net assets of over a half billion dollars… Step Up is one of two Scholarship Funding Organizations authorized to administer five school choice scholarship programs in Florida. Step Up administers 99% of the contributions, while AAA Scholarship Foundation handles the remaining 1%.

Here is how the tax credit program administered by Step UP works: “Step Up receives donations from corporations who receive a dollar-for-dollar tax credit on corporate and certain sales taxes owed to the state of Florida. Billions of dollars have been diverted to Step Up instead of having been deposited into the General Revenue to operate state government, including public schools.  These tax diversions have been cleverly labeled as ‘donations.'”  Step Up not only administers the state’s voucher programs, but it also oversees the programs it administers: “The Florida Department of Education’s Office of School Choice cannot supervise a program of this magnitude. The task of supervising over 1,800 private schools and tracking individual vouchers given to parents is huge and varied. Where students enroll must be verified. Some schools report vouchers for students who are not enrolled. Some vouchers are awarded to students who do not meet the family income requirement for their voucher. In addition, some vouchers allow parents to purchase supplies and services for students. These individual purchases must be tracked. This is where Step Up has stepped in. The Department of Education has outsourced oversight functions to the same private agency that also awards the scholarships.”  The rest of the report lists questionable practices in Step Up’s program compliance monitoring, and explains further how so-called charitable donations in Florida are in this case merely a means of avoiding paying taxes.

  • Finally there is Chartered for Profit: The Hidden World of Charter Schools Operated for Financial Gain, the mammoth report from the Network for Public Education.  While only Arizona law permits the operation of for-profit charter schools, all the other states with charter school enabling legislation require the schools to be nonprofits. “However, those who wish to profit from charter schools have developed creative workarounds to evade state and federal laws. The for-profit management organization, commonly referred to as an EMO, finds individuals to create a nonprofit board. That board, which is appointed, not elected, enters into a contract with the for-profit to run the school. Some EMOs manage only one or two schools.  Others manage over ninety… Many operate using a ‘sweeps contract’ in which virtually all revenue, public and private, raised by the charter, is passed to the for-profit management corporation to run the school.  In other cases, the EMO contracts various services out to other for-profit provides, sometimes owned by the owners of the EMO… Whatever money is left over after the bills are paid can accumulate as profit.”

“In total we identified 1,237 charter schools that have contracts with for-profit organizations which control critical or complete operations of the schools, including management, personnel, and/or curriculum… While our research suggests that over 15 percent of all charter schools are operated for profit, the percentage of schools, however, belies the impact.  Based on our match of school names to federal 2018-2019 school year data, over 600,000 students are educated in charters run for profit…. Twenty-six states and the District of Columbia presently have charter schools operated by for-profit corporations… Most of the schools are located in four states—Michigan, Florida, Ohio and Arizona… Together, the seven largest national chains (Academica, National Heritage Academies, The Leona Group, K12Inc., Charter Schools USA, Pansophic Learning/ACCEL, and Pearson/Connections Academy manage 555 schools.  At least one of the big chains operates in twenty-five states and the District of Columbia.”

In a 2016 report published by the Economic Policy Institute, Rutgers University school finance expert, Bruce Baker showed how the expansion of charter schools destabilizes big city school districts: “(C)harters established within districts operate primarily in competition, not cooperation with their host, to serve a finite set of students and draw from a finite pool of resources. One might characterize this as a parasitic model… one in which the condition of the host is of little concern to any single charter operator. Such a model emerges because under most state charter laws, locally elected officials—boards of education—have limited control over charter school expansion within their boundaries, or over resources that must be dedicated to charter schools.”

Baker continues: “If we consider a specific geographic space, like a major urban center, operating under the reality of finite available resources (local, state, and federal revenues), the goal is to provide the best possible system for all children citywide….  Chartering, school choice, or market competition are not policy objectives in-and-of-themselves. They are merely policy alternatives—courses of policy action—toward achieving these broader goals and must be evaluated in this light. To the extent that charter expansion or any policy alternative increases inequity, introduces inefficiencies and redundancies, compromises financial stability, or introduces other objectionable distortions to the system, those costs must be weighed against expected benefits.”

Bruce Baker and Derek Black summarize long trends and the recent reports bring the discussion into the immediate present.  The enormous and obvious question is: what can be done to stop the theft of public tax dollars from the public schools that serve the mass of our children and adolescents in the United States?  According to the most recent, September 2019 School Choice in the United States Report from the National Center for Education Statistics, in 2016, 47.3 million students were enrolled in public schools, and 3 million students were enrolled in charter schools.  The same report concludes: “In fall 2015, some 5.8 million students (10.2 percent of all elementary and secondary students) were enrolled in private elementary and secondary schools.” Obviously not all of those private school students are paying for their private education with public tax vouchers of various kinds or with tuition tax credits, but clearly the number of students using vouchers pales compared to public school enrollment. Another National Assessment of Education Statistics report updates public school enrollment in 2020: “Total enrollment in public elementary and secondary schools increased from 47.2 million students to 50.7 million students between fall 2000 and fall 2017.”

Clearly the information is voluminous about the expense of school privatization and about widespread corruption.  I wonder why we who support our nation’s strong and historically significant system of public education are too shy to mount a massive campaign to oppose school privatization. It is understandable that we are reluctant to pit ourselves against our friends and neighbors who use privatized alternatives. But the cost has grown too high. We don’t need to personalize the attack.  Can we not stand against the consumerist marketplace and stand up for the social contract—for the public good—for the public schools that protect our children’s rights by law and ensure that schooling is available in every community across this nation? These programs operate state-by-state, but this is a national problem.

Charter School Support Fades: the Network for Public Education Deserves Much of the Credit

Earlier this week, this blog explored what Betsy DeVos hopes will be a major restructure in the U.S. Department of Education. That she is considering the restructure of the department became clear in the President’s FY21 budget proposal, which collapses Title I into a huge block grant with 28 other programs, and cuts funding for these combined programs by $4.7 billion. Title I is the Department’s largest program and the centerpiece of the federal government’s primary role in public education—ensuring that whatever happens in the states, the federal government will supplement programming to assist schools serving concentrations of very poor children. In a related responsibility (through the Department’s Office for Civil Rights), the U.S. Department of Education’s mission is also to protect the educational rights of children our society has historically marginalized. These programs, begun in the 1960s, grew out of the Civil Rights Movement and the War on Poverty.

Congressional failure to enact President Trump’s budgets over the past three years suggests that passage of the  President’s proposed federal budget for the 2021 fiscal year is also unlikely.  However, a budget proposal is a statement of an administration’s priorities. The idea that Trump and DeVos want to mess with Title I should alert Congress to be very careful.

There is another shocker in Trump’s federal FY21 federal budget proposal that we ought to notice: The President and the Secretary of Education propose to end the federal Charter Schools Program as a stand alone funding line. Since 1994, the Department of Education has spent billions of dollars to startup and expand the number of charter schools across the states. Why is an Education Secretary who insistently promotes school choice proposing a budget that phases out the Charter Schools Program?  Some are speculating that DeVos prefers vouchers, and she is putting all of her effort in the fourth year of this administration into pushing her Education Freedom Scholarship Tuition-Tax-Credit vouchers.

I believe, additionally, that public opinion has shifted as the exposure of problems in the charter school sector has made charter schools increasingly difficult to defend.  An organization that may have contributed to a primary shift in public opinion and undermined support for charter schools in Congress is the Network for Public Education (NPE) and it’s dogged executive director and researcher Carol Burris.  There is no reason to believe that Betsy DeVos herself would take NPE seriously, but, thanks to NPE, far fewer people are likely to be sorry that the federal Charter Schools Program seems to be on the chopping block.

NPE’s School Privatization Explained Toolkit (2017) remains the best basic primer for the general public on all the ways the Friedman Foundation (now EdChoice), Jeb Bush and his ExcelinEd Foundation, the American Federation for Children which Betsy DeVos founded, and the American Legislative Exchange Council have distorted our national conversation about education—to undermine support for public education and elevate the reputation of privatized alternatives (always publicly funded). In a series of two-page briefs, the toolkit addresses the following questions:

  • Are charter schools truly public schools?
  • Do charter schools and school vouchers “hurt” public schools?
  • Do charter schools get better academic results than public schools?
  • Are charter schools and vouchers a civil rights cause?
  • Are charter schools “more accountable” than public schools?
  • Do charter schools profit from educating students?
  • Do school vouchers help kids in struggling schools?
  • Are charter schools innovative?
  • Are online charter schools good options for families?
  • Do “Education Savings Accounts” lead to better results for families?
  • Do education tax credit scholarships provide opportunity?
  • Are tax credit scholarships a voucher by a different name?
  • Do charter schools and vouchers save money?

Later in 2017, following months of research and extensive travel to examine California’s charter school sector on the ground, Carol Burris penned an in-depth report about what she discovered: Charters and Consequences. Like most other people who care about school privatization, I had read exposes in various newspapers here in my home state of Ohio and elsewhere, but Burris drew conclusions about charter schools as an education sector. I remember my amazement about the extent of underhanded efforts by tiny, public, California elementary school districts sponsoring storefront charter schools in shopping malls to draw students from neighboring public school districts and yield “sponsorship fees” to help pad the sponsoring school districts’ meager budgets. Here are just some of the findings Burris summarizes in the introduction: “There are national chains that are corporately managed and ‘mom and pop’ charters. There is instability as charters open and close. About 1 in 5 are for-profit. Some have a real estate arm that buys buildings, then rents them to their own schools at exorbitant rates. Still others are not-for-profit fronts that are managed by for-profit corporations.”

2018 brought NPE’s examination of the funders of the charter school and privatization movement: Hijacked by Billionaires: How the Super Rich Buy Elections to Undermine Public Schools.  The report begins with an index of billionaires funding charter-friendly candidates for local school boards and other elected positions in state government: Reed Hastings, the Walton Family, the Fisher family, the Bloomberg family, the Gates family, Eli Broad, Paul Allen, the Arnold family, the Bezos family and others.  Politicians supported by these and other donors, for example, charterized the schools in Newark, funded a long fight to bring charter schools to Washington state, and promoted a pro-charter candidate for governor of Rhode Island. This report also covers New York hedge fund managers supporting a pro-charter governor in New York.

In another 2018 report, Grading the States: A Report Card on Our Nation’s Commitment to Public Schools, NPE joined with the Schott Foundation for Public Education to examine “our nation’s commitment to democracy by assessing the privatization programs in the 50 states and the District of Columbia with the goal of not only highlighting the benefits of a public school education, but comparing the accountability, transparency, and civil rights protections offered students in the public school setting versus the private school setting.”

Then in March of 2019, NPE exposed outrageous problems in the federal Charter Schools Program itself—a program administered by the U.S. Department of Education. NPE’s report, Asleep at the Wheel, demonstrated that the federal Charter Schools Program has awarded $4 billion federal tax dollars to start or expand charter schools across 44 states and the District of Columbia and has provided some of the funding for 40 percent of all the charter schools that have been started across the country since the inception of the program in 1994. Roughly a third of all charter schools receiving Charter Schools Program grants never opened or have been subsequently shut down.

NPE continued to probe details of the program in a second report, Still Asleep at the Wheel, released in December, 2019. After further data analysis, NPE discovered that the number of never-opened or eventually closed schools was even larger than its earlier report identified. The second report also documented that not all the federal money has been supporting the schools themselves: “Since Betsy DeVos has been in charge, five of the 20 grants from the State Entities program, totaling $101,571,458 have gone not to state government agencies, but to private organizations whose mission is charter advocacy and support. In addition to opening up the State Entities program to private recipients, the Department’s new ‘National Dissemination’ grants have been a financial windfall for charter advocacy groups. The National Alliance for Public Charter Schools received a $2.38 million grant to create a charter facility center… The National Alliance was not alone.  Eight dissemination grants were offered to private organizations in 2019, totaling $16 million….” including, “the National Association of Charter School Authorizers and the California Charter Schools Association.  In essence, the Department is now funding groups that lobby for more funding for the organizations they represent and for themselves.”

Finally, NPE has insistently kept stories of corruption and mismanagement in charter schools in front of the public. NPE’s website features a page devoted to each week’s charter school problems from city to city: Another Day, Another Charter School Scandal. And Burris has provided regular summaries for readers who are overwhelmed by a succession of news reports on scandals.

The Network for Public Education has expanded awareness that charter schools are parasites sucking essential dollars from the public school districts where they are located; that while some predicted the expansion of charter schools would improve academic achievement on a broad scale, children in traditional public schools and charter schools perform about the same; that opposing for-profit charter schools misses the point because in most states the charter schools themselves must be nonprofits, but the nonprofit boards of directors of these schools may hire for-profit management companies to operate the schools; and that the charter school sector is saturated with corruption and malfeasance. And in this past year, NPE has exposed abuses in the federal Charter Schools Program, which has operated  essentially 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 system-wide public operation of the public schools.

We will likely never know why, in its FY21 budget request, the Department of Education collapsed the Charter Schools Program—without a designated funding stream—into a huge block grant with over two dozen other programs.  And it may be that, in an election year, Congress will ignore the budget proposal from DeVos and Trump which which omits designated funding for the Charter Schools Program.

But the Network for Public Education deserves credit for raising awareness about the reality beneath the rhetoric regarding charter schools. There is considerably more skepticism these days than there was back in 2017 before NPE launched this campaign.

Federal Charter Schools Program Wasted Nearly $36 Million on Ohio Schools That Never Opened or Soon Closed

Several weeks ago the Network for Public Education (NPE) released Asleep at the Wheel, a major report on the lack of accountability and subsequent waste and fraud in the federal Charter Schools Program. At the end of last week as part of a letter addressed to Secretary of Education Betsy DeVos (and published by Valerie Strauss in the Washington Post), Carol Burris the executive director of NPE, and Diane Ravitch began releasing state-by-state lists of never-opened or eventually shut-down charter schools that received seed money between 2006 and 2014 from the federal Charter Schools Program (CSP). The numbers are shocking. In my state, Ohio, between 2006 and 2014, the amount of Charter Schools Program money spent on charter schools that never opened or eventually closed amounts to nearly $36 million.

Here is a brief review of the Network for Public Education’s findings in last month’s Asleep at the Wheel report.  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 44 states and the District of Columbia, and has provided some of the funding for 40 percent of all the charter schools across the country. The CSP has lacked oversight since the beginning, and during the Obama and Trump administrations—when the Department of Education’s own Office of Inspector General released a series of scathing critiques of the program—grants have been made based on the application alone with little attempt by officials in the Department of Education to verify the information provided by applicants. The Network for Public Education found that the CSP has spent over a $1 billion on schools that never opened or were opened and subsequently shut down: “The CSP’s own analysis from 2006-2014 of its direct and state pass-through funded programs found that nearly one out of three awardees were not currently in operation by the end of 2015.”

I suppose the idea is that if you scatter hundreds of seeds across a state, they’ll grow and enrich the educational environment.  But as I examine Ohio’s list of failed or never-opened, CSP-funded charter schools, I can see that the seeds were scattered so widely that they weren’t particularly noticeable even when they came up. Unless there was a splashy scandal or a school was widely advertised on the side of city buses, nobody would have had any idea of the existence or failure of most of the seeds that did come up. And anyway a lot of them never sprouted at all.  Because the Charter Schools Program has lacked oversight from the U.S. Department of Education and because Ohio’s charter schools are poorly regulated by a large number of nonprofit agencies that serve as sponsors, the Ohio press has—until NPE’s Asleep at the Wheel report—not to my knowledge reported that the U.S. Department of Education is funding a lot of failed or never-opened schools. Until now, the failure of this program has been virtually invisible.

In the the list of failed or never-opened Ohio charter schools released last Friday by the Network for Public Education, NPE reports: “Two hundred ninety-three Ohio charter schools were awarded grants through the U.S. Department of Education’s (U.S. DOE) Charter Schools Program (CSP) from money that the U.S. Department of Education gave to the states between 2006-2014.  At this time, at least 117 (40%) of those (Ohio) charter schools were closed or never opened at all.” NPE explains that 20 of the Ohio charter schools on the list never opened; ninety-seven of the Ohio charter schools receiving CSP grants opened but subsequently shut down.

I suspect that like me, hardly anybody in Ohio has heard of most of the 20 schools that received CSP funding but never opened. Here are their names: Academy for Urban Solutions; Buckeye Academy; Central Ohio Early College Academy; Cleveland Arts and Literature Academy; Cleveland Lighthouse Charter Community School West; Columbus Entrepreneurial Academy; Cuyahoga Valley Academy; Medina City Schools Technology School; New Albany School for Performing Arts Middle School 6-8; Phoenix Village Academy Secondary 2; Rising Star Elementary School; School of Tomorrow; Summit Academy Community Schools in Alliance, Marion, Massillon, Columbus, and Cincinnati; Technology and Arts Academy of Cleveland; Vision into Action Academy-South Columbus; and WinWin Academy.  It is difficult to tell from the names of most of these schools even where it was intended that they would be located.

Ninety-seven CSP-funded schools in Ohio have shut down, but from the list, it is not possible to discern whether they were shut down by their sponsors for conflicts of interest or fraud, or whether their sponsors determined they were failing their students academically, or whether they just went broke. Most of the CSP grants awarded to closed or never-opened schools were in the six figure range—$150,000 or more.  Two of the schools that failed or were never opened had been awarded CSP grants over $700,000; three had been granted between $600,000 and $700,000; two had received between $500,000 and $600,000; and 25 had been awarded between $400,000 and $500,000.

The federal Charter Schools Program is neoliberal by design.  It awards public funding to private operators—individuals and companies—to run schools in competition with the traditional public schools. One primary problem with the CSP along with other schemes to privatize the public schools is that oversight is lacking to protect the rights of the students and to protect the stewardship of tax dollars.

The late political philosopher, Benjamin Barber explains that lack of oversight, absence of transparency, waste and fraud are predictable when public programs and services are privatized: “It is the peculiar toxicity of privatization ideology that it rationalizes corrosive private choosing as a surrogate for the public good. It enthuses about consumers as the new citizens who can do more with their dollars and euros and yen than they ever did with their votes. It associates the privileged market sector with liberty as private choice while it condemns democratic government as coercive…  Privatization is a kind of reverse social contract: it dissolves the bonds that tie us together into free communities and democratic republics. It puts us back in the state of nature where we possess a natural right to get whatever we can on our own, but at the same time lose any real ability to secure that to which we have a right. Private choices rest on individual power… personal skills… and personal luck.  Public choices rest on civic rights and common responsibilities, and presume equal rights for all. Public liberty is what the power of common endeavor establishes, and hence presupposes that we have constituted ourselves as public citizens by opting into the social contract. With privatization, we are seduced back into the state of nature by the lure of private liberty and particular interest; but what we experience in the end is an environment in which the strong dominate the weak… the very dilemma which the original social contract was intended to address.” (Consumed, pp. 143-144)

The new Ohio report released last Friday by the Network for Public Education documents that between 2006 and 2014, Ohio charter schools were awarded $35,926,693 from the federal Charter Schools Program, money that disappeared when the intended recipient schools never opened or eventually shut down. The entire scheme has lacked oversight at both federal and state levels and entirely lacked transparency.  Most of us in Ohio were aware neither of the operation of this federal program nor its propensity to fund experiments that failed to serve Ohio’s children.

In last Friday’s letter to Betsy DeVos, Burris and Ravitch also share reports on schools that never opened or were soon shut down in Michigan, Louisiana, California, and Florida. They explain: “In the coming weeks, we will continue the process of identifying all of the closed and ‘ghost’ schools in every state, posting the names of those schools and issuing state reports.”