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.”

Congress Should Defund the Charter Schools Program and Invest the Money in Title I and IDEA

The Network for Public Education published its scathing report on the federal Charter Schools Program three weeks ago, but as time passes, I continue to reflect on its conclusions. The report, Asleep at the Wheel: How the Federal Charter Schools Program Recklessly Takes Taxpayers and Students for a Ride, is packed with details about failed or closed or never-opened charter schools.  The Network for Public Education depicts a program driven by neoliberal politicians hoping to spark innovation in a marketplace of unregulated startups underwritten by the federal government. The record of this 25 year federal program is dismal.

Here is what the Network for Public Education’s report shows us. The federal Charter Schools Program (CSP) 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. Begun when Bill Clinton was President, this neoliberal—publicly funded, privatized—program has been supported by Democratic and Republican administrations alike.  It 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.  Hundreds of millions of dollars have been awarded to schools that never opened or that were shut down: “We found that it is likely that as many as one third of all charter schools receiving CSP grants never opened, or opened and shut down.”  Many grants went to schools that illegally discriminated in some way to choose their students and served far fewer disabled students and English language learners than the local pubic schools.  Many of the CSP-funded charter schools were plagued by conflicts of interest profiteering, and mismanagement. The Department of Education has never investigated the scathing critiques of the program by the Department’s Office of Inspector Genera; neither has the Department of Education investigated the oversight practices of the state-by-state departments of education, called State Education Agencies by CSP, to which many of the grants were made. Oversight has declined under the Department’s leadership by Betsy DeVos.

One of the shocking findings in the Asleep at the Wheel report is that a series of federal administrations—Clinton, Bush, Obama, and Trump have treated this program 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. This use of the Charter Schools Program as a source for venture capital is especially shocking in the past decade under Presidents Obama and Trump, even as federal funding for essential public school programs has fallen. The Center on Budget and Policy priorities reports, for example, that public Title I formula funding dropped by 6.2 percent between 2008 and 2017.

The authors of the Network for Public Education’s Asleep at the Wheel report explain that the Department of Education itself justifies the high failure rate of schools receiving Charter Schools Program grants because the program’s purpose is to provide start-up money for entrepreneurs to experiment with innovative ideas for schools:  “CSP’s explanation for the high cost of failure was, ‘As with any start-up, school operators face a range of factors that may affect their school’s opening.  And as with any provider of start-up capital, the department learns from its investments.'”

Late in March, when the current Secretary of Education was questioned by members of the House Appropriations Committee about the findings in the Network for Public Education’s Asleep at the Wheel report, the Washington Post‘s Laura Meckler quotes Betsy DeVos herself justifying the high rate of charter school failure with an argument that basically the Charter Schools Program provides venture capital to support entrepreneurship and innovation: “When you have experimentation, you’re always going to have schools that don’t make it, and that’s what should happen.”

The Department of Education took a big leap toward support for social entrepreneurship (and diminished attention to the Department’s traditional programming) under the leadership of Arne Duncan, who served as Secretary of Education between 2009 and  December of 2015.  To lead the Department’s Office for Innovation and Improvement, Duncan hired Jim Shelton.  Before joining the department, Shelton had, according to a Department of Education biography, earned two master’s degrees from Stanford in business administration and education.  He developed computer systems, then joined McKinsey & Company in 1993 before moving to the education conglomerate founded by Mike and Lowell Milken, Knowledge Universe, Inc.  In 1999, he founded LearnNow, later acquired by Edison Schools and then worked for Joel Klein to develop and launch his school strategy in New York City that closed public schools and opened more and more charter schools.  He became a partner in the NewSchools Venture Fund and then in 2003 joined the Bill and Melinda Gates Foundation as the program director for its education division.

To be hired at the U.S. Department of Education, Shelton had to be waivered from a federal law that bans people from moving into governmental positions in which they will work directly with their former employer.  In Shelton’s case, the danger was not that he would shower his former employer with federal government largesse, but instead that he would import the priorities and practices of his former employer—the Gates Foundation—directly into government. Shelton oversaw not only the Charter Schools Program but also Race to the Top, which made large federal stimulus grants to states, which had each been given (by the Gates Foundation) a quarter of a million dollars apiece to hire grant writers to develop creative ways to invest federal stimulus money to support the turnaround of so-called failing schools. To qualify, the states had to agree to Duncan’s prescribed turnaround plans and also promise to remove caps on the authorization of new charter schools. There is now widespread agreement that Race to the Top failed to fulfill its stated goal of improving school achievement. After leaving the department, Duncan and Shelton both continued their careers in grant-funded social entrepreneurship; at least their work has no longer been publicly funded. Shelton ran education programming for the Chan-Zuckerberg Initiative, and Duncan has been working for Laurene Powell Jobs’ Emerson Collective.

Meanwhile, Betsy DeVos now leads the U.S. Department of Education, and her leadership has further reduced oversight, according to the Asleep at the Wheel report: “Under the current administration, while Congressional funding for the CSP rises, the quality of the applications and awardees has further declined.”

The Charter Schools Program is the only one of DeVos’s school privatization initiatives whose budget Congress has increased.  The Network for Public Education traces its funding history: “The program was appropriated at $219 million in 2004.  The budget went up to $256 million in 2010, $333 million in 2016, then to $342 million in 2017, $400 million in 2018 and is now at $440 million for FY 2019.”  In his proposed FY 2020 budget, President Trump has asked Congress to add another $60 million.

When Organizations like the NewSchools Venture Fund or today’s mega-foundations experiment with educational innovation, the risk is underwritten by private capital or philanthropic grants from the Walton, Gates, or Broad Foundations, for example. And if the experiments fail, the money lost is private.  In the case of the federal Charter Schools Program, the Department of Education has been gambling with $4 billion of our tax dollars—money desperately needed by the public schools in our nation’s poorest communities—money that could have been invested, for example, in Title I for schools serving concentrations of poor children or in implementation of programs to meet the mandates of the IDEA.  At their inception, Congress promised to fund a significant part of the cost of both Title I and IDEA, but Congressional appropriations have chronically fallen short.  Senator Chris Van Hollen (D-Maryland) has currently introduced the “Keep Our PACT Act,” which if passed would significantly increase the federal commitment to supporting federal these priorities. Van Hollen explains: “Title I, which gives assistance to America’s highest-need schools, is a critical tool to ensure that every child, no matter the zip code, has access to a quality education. However, it has been deeply underfunded, shortchanging our most vulnerable students living in poverty… (T)he Title I formula was underfunded by $347 billion from 2005-2017… Similarly, IDEA calls on the federal government to fund 40 percent of the cost of special education, but Congress has never fully funded the law. Currently, IDEA state grants are funded at just 14.7 percent.”

The Asleep at the Wheel report’s authors conclude: “The CSP’s grant approval process appears to be based on the application alone, with no attempt to verify the information presented.  Hundreds of schools have been approved for grants despite serious concerns noted by reviewers… The… lack of rigor and investigation in the review process, and the seeming willingness of the CSP program to offer grants despite concerns expressed by reviewers raise questions about whether this program is truly committed to jump-starting schools that hold the greatest promise of success, or whether simply letting 1,000 flowers bloom, and accepting the chaos and waste of repeated failure is really the operational model.”

For 25 years, the U.S. Department of Education has enabled, and Congress has funded, a failed, neoliberal, market-based, and unregulated charter school experiment.  In an article he published last spring, the McMaster University education theorist, Henry Giroux said it best: “Public schools are at the center of the manufactured breakdown of the fabric of everyday life. They are under attack not because they are failing, but because they are public….”

This blog has previously explored the Asleep at the Wheel report here and here.

Scathing New Report Demands Moratorium on New Grants from Federal Charter Schools Program

The Network for Public Education has released Asleep at the Wheel: How the Federal Charter Schools Program Recklessly Takes Taxpayers and Students for A Ride, a scathing condemnation of the federal Charter Schools Program (CSP), which is part of the Office for Innovation and Improvement at the U.S. Department of Education: “For over a decade, Congress has poured money into CSP at rates much higher than overall Education Department spending has increased.  We estimate that approximately $4 billion federal tax dollars have been spent or allocated to start, replicate and expand charter schools.”

The report recounts mounting abuses over the quarter century since the federal Charter Schools Program was established: “The CSP… was established in 1994 as a way to kick-start the creation of new charter schools…. Over its 25-year existence, the U.S. Department of Education estimates that the program has offered federal dollars to as many as 40 percent of charter schools.”  In this report, the Network for Public education evaluates three of the program’s seven funding streams: that award charter school start-up or expansion funds (1) to the 50 state departments of education, (2) to individual charter schools, or (3) to the Charter Management Organizations (CMOs) that operate chains of charter schools.

The Network for Public Education’s new report is explosive. The researchers conclude that if you want to start a charter school, you ought to hire a grant writer skilled at creating a compelling fictional narrative, because the department makes its grants without investigation—almost exclusively based on the story spun in the grant application: “While congressional appropriations to the CSP continue to climb, our investigation… found that not only does grant money awarded to charters by the CSP continue to go to schools that never open or quickly close, but hundreds of millions of dollars have been provided to schools that don’t resemble ‘high quality’ schools, including many that engage in exclusionary practices that keep some economically disadvantaged students, students of color, students with disabilities and English language learners (ELL) out.  Through our detailed examination of the CSP’s application process, we found a system in which the program awards grants based on which schools can write (or hire someone to write) the most compelling narrative in its application, knowing that the facts they present will never be checked. As we compared information on state databases and school websites with application data, we found startling discrepancies between what charter applicants promised and what they ultimately delivered. Time and again, huge sums of grant money have been awarded to charter schools that have inadequate business plans, discriminatory enrollment practices, or no evidence of strong demand for the school from the surrounding community.”

The Department of Education’s Office of Inspector General (OIG), in a series of reports beginning in 2012, has seriously criticized the lack of accountability in the federal Charter Schools Program, but the problems the Department’s own OIG highlighted have neither been investigated nor addressed. The Network for Public Education explains why the problem has worsened under Betsy DeVos’s leadership of the Department of Education: “The present Secretary of Education, Betsy DeVos believes that the promulgation of choice for its own sake is a public good, and that an education ‘marketplace’ should be the ultimate decision-maker of how education is delivered, regardless of the cost to American taxpayers. She is a determined supporter of the Charter Schools Program and is likely to continue to promote increasing investments in it.”

The researchers document seven primary findings:

  1. “Hundreds of millions of federal taxpayer dollars have been awarded to charter schools that never opened or opened and then shut down.  In some cases, schools have received federal funding even before securing their charter…
  2. “The CSP’s grant approval process appears to be based on the application alone, with no attempt to verify the information presented.  Schools have been approved for grants despite serious concerns noted by reviewers…
  3. “Grants have been awarded to charter schools that establish barriers to enrollment, discouraging or denying access to certain students…
  4. “Recommendations by the Office of Inspector General have been largely ignored or not sufficiently addressed…
  5. “The department does not conduct sufficient oversight of grants to State Entities or State Education Agencies, despite repeated indications that the states are failing to monitor outcomes or offer full transparency on their subgrants…
  6. “The CSP’s grants to charter management organizations are beset with problems including conflicts of interest and profiteering…
  7. “Under the current administration, while Congressional funding for the CSP rises, the quality of the applications and awardees has further declined.”

The Network for Public Education recommends a moratorium on new grants from the federal Charter Schools Program while a serious investigation of the program is undertaken: “(I)t is time to investigate where millions of dollars have gone and secure back for the public all unaccounted-for spending. American taxpayers have a right to demand that their tax dollars aren’t wasted. Tax dollars that went to charter schools that never opened or quickly closed should not be considered the cost of doing business. And a program with a stated commitment to spread ‘high-quality’ schools should not be a major funding source for schools that leave families in the lurch and promote discriminatory enrollment practices.

Finally, the new report, Asleep at the Wheel: How the Federal Charter Schools Program Recklessly Takes Taxpayers and Students for A Ride, is particularly critical of the Department of Education’s willingness to trust the state departments of education (SEAs) with having established adequate oversight of the charter schools whose authorization they enable. The researchers declare that officials running the federal Charter Schools Program have not grasped, “the significance of the problems posed by providing the vast majority of funding to State Education Agencies, which have proven to be incapable or unwilling to tightly monitor the funds. Our findings show that some of the worst abuse of charter grant funds occurs when SEAs pass that funding along directly to individual charters or charter organizations as subgrants.  We found a continuing record of failure in the SEA grants program, with grants going to schools that never opened or closed quickly, to schools that blatantly discriminate in their discipline, curricular, and enrollment practices, and to schools that engage in fraud as well as in related-party transactions that result in private individuals and companies pocketing huge sums of money at taxpayer expense.”

Under the leadership of Betsy DeVos, this problem is exacerbated by her philosophy of hands-off deregulation: “The department claims it is unable to stem the flow of good money going to bad results because the states are responsible for oversight. The current Secretary of Education denies the existence of the problem altogether, arguing that stronger oversight of the program would be ‘inconsistent with the federal role in education.’ This impasse leaves American taxpayers with the expectation that public funds intended to proliferate the privately-managed charter school marketplace will continue to be subject to unavoidable waste, fraud, and abuse.”

Please do read the Network for Public Education’s new report in its entirety.   The report’s details of abuses in the federal Charter Schools Program are riveting.  NPE makes a compelling case for a moratorium on this program.

Momentum Grows for Desperately Needed Regulation of Charter Schools

Last summer the Schott Foundation and the Network for Public Education’s published a fine report on the privatization of public education.  Grading the States begins with a reminder that charter schools educate the few at the expense of the many: “The ability for every child, regardless of race, income, disability, religion, gender, ethnicity, sexual orientation or other immutable characteristic, to obtain a free quality public education is a foundational principle in American society.  This principle is based on the belief that everyone should be given the opportunity to learn…. Although the public school system is not perfect and has continual room for improvement, it is… the cornerstone of community empowerment and advancement in American society.  In fact, the overwhelming majority of students… continue to attend public schools with total public school enrollment in prekindergarten through grade 12 projected to increase by 3 percent from 50.3 million to 51.7 million students. This compares with a 6% enrollment in charter schools….”

Wooed by the ideology of freedom of choice, however, the public has not been willing to demand that government rein in what the Network for Public Education’s Carol Burris has called “charters gone wild.” However two recent news analyses highlight growing public skepticism and even outrage about charter schools destroying local public school districts.

For The American Prospect, Rachel M. Cohen summarizes what she calls “the washout” in the past month of charter schools in California: “Following the United Teachers of Los Angeles’ six-day strike, where opposition to charters was a central point of the teachers’ advocacy, the L.A. school board approved a nonbinding resolution in support of an eight-to-ten month moratorium on new charter schools, pending a study on California’s charter laws… A public opinion survey of Los Angeles County residents taken during January and the first two weeks of February found that 75 percent of respondents said they wanted to focus on improving existing public schools, and just 25 percent said the focus should be on giving families more school choices… Further north in California, teachers in Oakland went on strike in late February, ending with an agreement that included among other things, (a resolution for) a moratorium on charter schools… Last week, the California Assembly approved a bill that would subject all charter schools in the state to the same open meetings, public records, and conflict-of-interest laws that traditional public schools are subject to… And that’s likely not all.  Other bills that have been introduced would place a cap on charter schools, limit where charter schools could open, and create new ways to deny charter school applications.”

Cohen adds that a pro-public school candidate, Jackie Goldberg, was the leader—with 48 percent of the vote—in a field of ten candidates for a position on the Los Angeles school board.  The run-off election will take place in May.  And Governor Gavin Newsom and California state superintendent Tony Thurmond have established a select committee to consider further regulation and report out by July. The path to reform may not be smooth, however: Diane Ravitch points out that the committee is loaded with representatives of the charter sector.

Penn State University school finance expert, Matthew Gardner Kelly examines the same issue that became apparent during the teachers’ strikes in California. Charter schools do more damage than many people have realized by siphoning public funding dollars out of the public schools: “From California to Wisconsin, efforts to stop charter school growth are gaining momentum. In the April 2019 mayoral election in Chicago, both candidates say they want to halt charter school expansion.  Financial issues lie at the core of these efforts.  Schools were hit particularly hard by the 2008 recession. Many states cut education funding. As a scholar of school finance, I would argue that charter school expansion is making this bad situation worse… The details of how school funding is structured differ by state, and even by districts within a given state.  Despite this variation a number of studies have shown that charter school growth hurts the finances of nearby public school districts. Recent studies from New York and North Carolina have found that charter expansion negatively impacts local districts’ finances above and beyond simply losing per pupil revenue because of declining enrollments. In Pennsylvania, the local district makes a tuition payment to the charter school enrolling each student from that district.  The payment is based on per-pupil spending for similar students. For example, if a fourth grader leaves a public school in the Pittsburgh School District to attend a charter, the Pittsburgh School District is required to pay the charter school $16,805.99—which is the average amount the district spends on a student in the district.”

Kelly describes how charter schools have contributed to a financial crisis in Bethlehem, Pennsylvania: “Bethlehem Area School District paid $25 million in charter school tuition payments in 2017.  It was not possible to save $25 million with the students gone, however, because of the way the students were distributed across the district. The students enrolled in charter schools came from 13 different grades in 22 different schools. Since students moving to a charter were rarely all of the students from a single school, grade or class, the district was not able to reduce staff or close classes to help cover the charter tuition payments… When (charter tuition) payments are repeated and distributed unevenly across schools and grades, it adds up to millions of dollars… Bethlehem Area School District had 1,900 students, about 12 percent of the districts population, enrolled in charter school in 2017.”  Kelly concludes: “Charter school  expansion drains dollars from local districts in other ways as well. For example, charters enroll far fewer students with characteristics that require additional financial resources, including students with disabilities and English language learners. These dynamics compound the financial difficulties for traditional public schools, which are required to educate all students.”

Then there are the shocking charter school scandals.  The scandals happen regularly, although they are usually reported in local newspapers—which makes it hard to realize the nationwide scale of fraud, conflicts of interest, and corruption. (Check out the Network for Public Education’s list of charter school scandals in 2018 alone.)

This past week’s scandal made the NY Times, because the nonprofit whose operators were profiting from Texas charter school dollars is Southwest Key, the same contractor that has been warehousing migrant children at the border.  Kim Barker reports: “At East Austin College Prep in Texas, raccoons and rats invade offices and classrooms.  When it rains, the roof of the main building leaks. Room 106 was so rickety a chair leg fell through the floor. Yet for all this, the secondary school pays almost $900,000 in annual rent.  It has little choice: Its landlord is also its founder, Southwest Key Programs, a charity that is the nation’s largest provider of shelters for migrant children.”

Barker continues: “The nonprofit says it formed the charter school and three others to help disadvantaged students get to college, but Southwest Key has financially benefited from the schools.  Not only does it collect rent, but it has forced them to hire its for-profit companies, which have charged high fees for everything from maintenance to school lunches… The operations of the charter schools, serving about 1,000 students, show how Southwest Key profits off public money, boosting compensation for charity leaders and stockpiling tens of millions of dollars… A dozen years ago, Southwest Key decided to open charter schools and for-profit companies, including a florist, that ended up funneling money into the charity. The charters, called Promesa Public Schools, pay almost $1.4 million in rent annually to Southwest Key… Money from the schools and for-profits helped raise salaries for charity officials, letting them collect pay far beyond the federal cap for migrant shelter grants—$187,000 in 2017.  Mr. Sanchez (Juan Sanchez, Southwest Key’s founder) was paid $1.5 million that year….. His wife, Jennifer Nelson, earned $500,000 as a vice president, and Melody Chung, the chief financial officer, was paid $1 million. Mr Sanchez resigned on Monday (March 11).”

Grading the States, last year’s report from the Schott Foundation and the Network for Public Education, summarizes the absence of academic and financial regulations in the laws that established charter schools in 44 states and the District of Columbia.  Here are just some of the problems: “Of the 44 states and District of Columbia with charter laws, 28 of these states and the District of Columbia fail to require the same teacher certification as traditional public schools…. Thirty-eight (38) of the states and the District of Columbia have no required transparency provisions regulating the spending and funding by the charter school’s educational service providers….  Of the 44 states and the District of Columbia with charter school laws, students with disabilities are particularly disadvantaged in 39 states and the District of Columbia, which do not clearly establish the provision of services. Twenty-two (22) states do not require that the charter school return its taxpayer purchased assets and/or property back to the public if the charter school shuts down or fails.”

Fortunately teachers on-strike in California—a state which provides school districts virtually no control over the expansion of charter schools within their boundaries and a state where regulation has been extremely lax—have strengthened the political will to rein in an out of control charter sector.  We must hope that the fervor for regulation continues in California and that it becomes contagious enough to drive the political will for stronger oversight across other states as well.

Charter School Sector Cannot Be Reformed or Effectively Regulated

As we begin a new year, consider that charter schools were first authorized thirty years ago.  As this sector of publicly funded but privately operated schools has matured, it has become clearer that a serious set of problems are part of charter schools’ very design. Charter schools were envisioned as free to innovate and less bound by regulation and bureaucracy.  In a fine analysis just before the holidays, the Executive Director of the Network for Public Education, Carol Burris summarizes some of the most pervasive problems she has noticed as she has traveled through a number of states examining their charter school sectors. The Network for Public Education has published two in-depth, multi-state reports on the impact of charters and school privatization—the recent Grading the States, and the 2017, Charters and Consequences. While charters are established in state laws which may differ from state to state, Burris has been tracking broad trends.  She explains:

“Entrepreneurial governance, freed from most of the regulations and oversight mandated for true public schools, was at the heart of the ‘charter school experiment.’  Thirty years later, we have the results.  Charter school students generally do about the same academically as their public school counterparts; in some places, they do better, and in others, they do worse. There is no evidence that charters are more innovative than public schools, with many relying on ‘no excuses’ discipline reminiscent of a late 19th-century school. The original idea of a teacher-led school designed to create innovative practices has been lost.”

Burris identifies five pervasive problems:

First:   Freedom from regulations and public oversight under law—the kind of protection democratic governance provides public schools —has left charter schools vulnerable to widespread waste and fraud: “When public dollars freely flow without independent oversight, it is all too easy for dollars to find their way into employee pockets and bank accounts, for friends and relatives to get ‘sweetheart deals’ and for school leaders to receive astronomical salaries that would be unheard of in public schools… Every serious legislative attempt to rein in abuse meets opposition from the charter lobby, which makes strategic donations to legislators to avoid accountability.”

Second:   Charter schools find sometimes subtle ways to select the students their operators want, even though admission is supposed to be by lottery:  “Nearly every charter school admission begins with an application that sometimes serves as a screen.”  But there are other ways.  Burris describes Arizona’s BASIS charter schools which require that students pass Advanced Placement exams to graduate.  And BASIS schools offer no federally funded free or reduced priced lunches and no school transportation. “These policies produce high attrition rates and a student body that does not reflect the demographics of the state.”  In New York City, Eva Moskowitz’s Success Academies accomplish extraordinary attrition rates with “no excuses” discipline. “A first-grade class of 72 became a graduating class of only 16….”

Third:   “Charter schools bleed money from the public school system…. Charters are predominantly funded in one of two ways—by ‘backpack’ funding in which state dollars go with the child when he leaves the public school for a charter school, or district’ tuition ‘funding which requires the district to pay tuition to the charter based on district per-pupil spending.  Either way, the children in the public school get less.” Stranded costs for public school districts when children leave for charters are very high.

Fourth:   “Charter schools eliminate democracy from school governance, and this lack of voice is most acutely felt by parents in disadvantaged communities.  Charter schools are run by private boards that choose their members… The Network for Public Education… took a look at the members of the board of 14 of the largest charter chains… The most frequently encountered career of the board members of the 14 chains was finance—hedge fund managers and directors of investment capital dominated several of the chains’ boards… What is crystal clear when you examine the boards of charter chains is that members do not represent the families that their schools serve in lifestyle, wealth and demographics.”

Fifth:   State laws that established charter schools fail to prevent conflicts of interest and have resulted in an ongoing succession of scandals when school leaders turn out to be profiteers and swindlers: “Imagine starting a business for which you assume no personal financial risk and you receive taxpayer income from every customer who comes through the door. That is a charter school. Not only is there little or no risk; there are ample opportunities to realize profit.” “Even though few states allow for-profit charter schools, nearly all others (34) allow the charter management company to operate for-profit. Charter management organizations (CMOs) and education management organizations (EMOs) are where much of the profiteering occurs—hidden behind a veil of secrecy. Thirty-eight states have no required transparency provisions regulating the spending and funding by charter schools’ educational service providers or charter management organizations, be they for-profit or nonprofit.”

Burris concisely summarizes a set of serious design flaws that legislators failed to consider as they established an unregulated, privately operated education sector at public expense.  Her piece is filled with details and examples omitted from this brief summary.  Please take a few minutes to read it.

She concludes: “It is time to acknowledge that what may have begun as a sincere attempt to promote innovation has given rise to fraud, discrimination, and the depletion of public school funding.  Thirty years of charters have resulted in an increase in profiteering far more than… innovation… The bottom line is this.  It is foolish to fund a parallel system of privately managed schools at the expense of the nation’s public schools.”