Many Predict Trump-DeVos Will Privatize with Tuition Tax Credits, Not Plain Old Vouchers

Everyone is wondering exactly how President Donald Trump’s and Secretary of Education, Betsy DeVos’s plans for expanding privatization of public education will play out. Two upcoming events may provide more details.  It has been predicted that the President will lay out his priorities when he releases his budget proposal in mid-March. Even before that, however, in a major address tomorrow to a joint session of Congress, he has said he’ll outline his policy priorities. Here is Politico commenting on what is expected from tomorrow’s address: “White House officials said that after a first month driven almost entirely by policies they could enact unilaterally, the joint congressional address will focus on work the White House wants done on Capitol Hill during the rest of 2017.”

The President and his education secretary have said they will expand the privatization of education but how that will happen isn’t yet clear. One member of the House of Representatives has already introduced a bill to eliminate the federal education law, the Elementary and Secondary Education Act (now called the Every Student Succeeds Act) entirely and redirect the money now spent on Title I, ESEA’s primary program, to a school choice expansion. Others predict that Trump and DeVos will expand the one existing federal voucher program in Washington, D.C.

Some have suggested that Trump will convince Congress to go back to tinker with ESSA and pass a program Lamar Alexander and other conservatives endorsed back in 2015, Title I Portability—the idea that each poor child would be able to carry a designated amount of extra money to any public school that child chose to attend. Title I Portability was never broadly endorsed in Congress, however, because it would defeat the primary purpose of Title I, which was designed to address concentrations of poverty in particular school districts.  Schools educating concentrations of children whose families are extremely poor face an overwhelming set of challenges.  In its excellent (2010) book, Organizing Schools for Improvement, the Consortium on Chicago School Research documented the challenges for schools in neighborhoods where over 90 percent of children live in extreme poverty: “An endemic concern for urban schoolteachers are the students in their classrooms with extraordinary personal and social needs. Many urban children live under unstable home and community circumstances, including homelessness, domestic violence, abuse, and neglect. In such circumstances, a most basic need for healthy child development—stable, dependable relationships with caring adults— may not always be present… At both the classroom and the school level, the good efforts of even the best of educators are likely to be seriously taxed when confronted with a high density of students who are in foster care, homeless, neglected, abused….” (pp. 172-173)

It now appears more likely, however, that while Trump is likely to enlarge the federal Washington, D.C. voucher program, any program on a national scale will expand school choice through tuition tax credits.  Here is Valerie Strauss of the Washington Post: “Is there enough support in Congress to close the Education Department and create a federal voucher program for America’s schoolchildren?  No, according to people on Capitol Hill who are familiar with the issue, though a pilot federal voucher program is possible. Still, Trump has said he wants to spend $20 billion in federal funds to expand school choice, and the Hill sources said this could come in the form of a federally funded scholarship tax credit program that would be part of a Trump-promised reform of the U.S. tax code… Scholarship tax credit programs offer lucrative tax credits to individuals and corporations donating to nonprofits that provide money for students to use for tuition at private and religious schools and public schools outside a student’s designated district.  There are now 17 states with programs that offer scholarship tax credits… including Florida, the state that DeVos has frequently mentioned as a model for the kind of reform she is seeking.” (This blog covered the range of voucher, tax credit, and education savings account programs here.)

A tax credit plan would be easier to pass in Congress according to Caitlin Emma at Politico, “A federal tax credit scholarship program could be part of a larger tax reform bill and pass through the budget reconciliation process with only 51 votes in the Senate.”  Diverting Title I funds, by contrast, would require an appropriations bill, that could potentially be filibustered and require 60 votes.

You might wonder how tax credits could damage the public schools, if they merely divert tax dollars to private schools without affecting already-existing federal public school programs. Here is how this would likely work out. While the federal government provides less than 10 percent of school funding, states are a primary funder of public schools, covering about half of school spending. Any federal tax credit program would very likely be designed to incentivize states to launch new tuition tax credit programs or expand existing programs. And establishing or expanding state tax credits would reduce the amount of tax dollars flowing into the states’ public education budgets.  Here is how David Berliner and Gene Glass define tuition tax credits in their book, 50 Myths and Lies That Threaten America’s Public Schools: “There are tax credits and then there are tax deductions. They are very different things. Suppose you and your spouse have an income of $100,000…. And suppose that the federal income taxes you owe… amount to about $25,000 a year. If you take a tax deduction for your contribution of $1,000 to the Red Cross, that will reduce your tax indebtedness by about $250. Not so with tax credits… If you and your spouse live in a state with a state income tax (and a tuition tax credit program)… then you can direct $1,000, say, of your state income tax to the My-Pet-Project fund, and your state income tax indebtedness will be reduced by the full $1,000.” (p. 188)

Jeff Bryant quotes Kevin Welner of the National Education Policy Center explaining more about how such schemes  work: “Welner explains, tax credit scholarship programs are a ‘money-laundering mechanism’ that inserts into the transaction a third party—often called a school tuition organization (STO). Instead of taxpayer money being distributed directly to parents as vouchers, credits are issued by the state when tax deductible donations go to an STO. That credit then becomes scholarship money for parents to pay for private school tuition.”

Meanwhile, as Trump and DeVos move forward with some kind of expansion of vouchers or tax credits, in the NY Times, Kevin Carey just published a scathing critique based on three new research reports on the performance of traditional school voucher programs that have been operating for some time in a number of states.  Carey reports on a new study of the Indiana voucher program, created by Governor Mitch Daniels and rapidly expanded by Mike Pence when he was Indiana’s governor. The new research confirms that Indiana students who have moved to voucher schools “experienced significant losses in achievement” in mathematics and no improvement in reading.  Another 2015 study, this time in Louisiana, documents “negative results in both reading and math” when students used a voucher to transfer to a private school. Then this past June, “a third voucher study was released by the Thomas B. Fordham Institute, a conservative think tank and proponent of school choice. The study, which was financed by the pro-voucher Walton Family Foundation, focused on a large voucher program in Ohio. ‘Students who use vouchers to attend private schools have fared worse academically compared to their closely matched peers attending public schools,’ the researchers found.  Once again, results were worse in math.”

Carey concludes: “The new evidence on vouchers does not seem to have deterred the Trump administration, which has proposed a new $20 billion voucher program.  Secretary DeVos’s enthusiasm for vouchers, which have been the primary focus of her philanthropic spending and advocacy, appears to be undiminished.”

These new voucher studies would not surprise Christopher and Sarah Lubienski, professors at the University of Illinois, who, in their 2014 book, The Public School Advantage, explain: “We were both skeptical when we first saw the initial results: public schools appeared to be attaining higher levels of mathematics performance than demographically comparable private and charter schools—and math is thought to be a better indicator of what is taught by schools than, say, reading, which is often more influenced directly and indirectly by experiences in the home. These patterns… held up (or were ‘robust’ in the technical jargon) even when we used different models and variables in the analyses… (T)he data show that the more regulated public school sector embraces more innovative and effective professional practices, while independent schools often use their greater autonomy to avoid such reforms, leading to curricular stagnation.” (pp xvii-xviii)

Advertisements

Charter Grants from Arne Duncan Destabilize Under-Resourced Public Districts

There is growing evidence that we have a big problem with public money flowing to poorly regulated charter schools—schools that do a poor job of educating students and that find all sorts of ways to rip off the public and suck in tax dollars that are desperately needed by the public school districts in which they are located. But there is a bigger problem.  In school districts that are not growing demographically—the big cities where charters are expanding—the rapid growth of new charters is destabilizing the public schools.  Research continues to demonstrate that charter schools attract parents who are active choosers and children who do not present really expensive education challenges.  Charters are known to serve fewer English language learners and fewer students whose special education needs are complex—fewer autistic, blind, deaf, and multiply-handicapped children, and fewer homeless children and those who are living below 50 percent of the federal poverty level.  Traditional public school districts are being turned into school districts of last resort as they are expected to serve the children left behind by school choice while money is divided with more and more charter schools.

At the end of September, the U.S. Department of Education awarded over $157 million to seven states, the District of Columbia, and eleven charter school projects across the country for the expansion of charter schools.  The outrageous granting of $71 million to Ohio even as the state was locked in a political battle about establishing even the most minimal oversight of charter schools has been questioned in the press. But what about the other grants?

This week Linda Lutton, the education reporter at WBEZ Chicago, questions the five-year charter grant of $8,412,500 to the Noble Network of Charter Schools in Chicago.  She describes the astute reaction of Jesse Sharkey, Vice President of the Chicago Teachers Union: “Our neighborhood schools have a hard time just delivering a basic education program.  But at the same time there’s federal dollars and private dollars mixing together to privatize schools… It’s like we’re going on a privatization bender in our schools.  And we’re gonna wake up in the gutter and discover that we have sold off the asset of our public education system, and our schools are being run by private operators that don’t have our values.”

Michael Masch, the former school finance chief of the School District of Philadelphia, Pennsylvania, offered a very similar analysis recently to the Philadelphia Inquirer.  The reporter describes Masch’s worry about the the consequences for the public school district when charters are quickly expanded: “Masch expressed concern that the boom in charter expansion could reach a point of implosion, as the demand to finance new (charter) school buildings is derived mainly by the transfer of students out of traditional district schools. ‘There are no new students coming into the Philadelphia school district and yet we’re building all these new schools. At some point, you’re going to have to start closing schools.’ Masch also said that because charters get guaranteed funding based on the number of students they will enroll, their budgets stayed relatively stable while the district made deep cuts in response to a shortage of state education dollars.  As a result, construction of new district school buildings has ground to a halt. ‘Whether it’s a plan or a strategy or an unintended consequence, the reality is that you have brand-new buildings for charters while district schools are falling apart.  You’re starving one system to fund another.’”

Precisely how does the expansion of charters threaten the public schools in cities where charter networks are rapidly growing?  Lutton describes Chicago, where a district phase-out process leads to the closure of public schools: “Several Chicago high schools this year have freshman classes of just 20, 25, or 30 kids—that’s the entire freshman class.  There are more than two dozen district-run high schools—including neighborhood high schools Fenger, Harper, Hirsch, Manley, Richards, Robeson, and Tilden—with fewer than 400 students total.  A half dozen high schools have fewer than 200 students.  The under-enrollment problems have ballooned as the city has continued to open new high schools—part of its school improvement efforts—even though high school enrollment has been essentially flat.  Since 2004, the population of high school students has grown less than 2 percent, while the number of high schools has grown 58 percent—and that’s not including dozens of alternative schools the city has added.”

Community members and parents in Chicago’s Bronzeville neighborhood mounted a 103 day hunger strike late this summer to preserve a neighborhood public high school at Dyett, a school that would be open to any student in the neighborhood.  After Noble Network Charters received the recent grant from the U.S. Department of Education, Patrick Brosnan, executive director in Chicago’s Brighten Park Neighborhood Council discussed with Lutton what he believes is happening in Chicago’s neighborhoods when charter networks expand: “Brosnan’s group has opposed the new Noble campus proposed for 47th and California for fear it will mean fewer students and thus less funding at nearby Kelly High School, which has seen its population cut by one-third and its budget slashed by $4 million in recent years, as five new schools have opened nearby. ‘It’s basically up for grabs.  They get to make these decisions and make these plans, and there’s really no public discussion about this… I mean, there would be a tremendous impact on existing schools.'”

Michael Milkie, the founder of Noble Network of Charters, has a very different point of view: “This grant can really help us start on that next phase… 20, 30, 40 high schools…. I foresee a day where—I hope—where a majority of the students are educated in either Noble campuses or campuses like that at the high school level.”

What’s going on here?  Over a year ago, Robin Lake, the Director of the Center on Reinventing Public Education at the University of Washington, creator of the “portfolio school reform model”—that actively supports school choice and whose strategy projects delivering a good choice of school for every child in all neighborhoods and encouraging city school districts to launch charter schools and expand school choice—went to Detroit to see how all this is working.  Last winter, Lake published a scathing analysis in Education Next:  “Whose job is it to fix the problems facing parents in Detroit?  Our interviews with leaders in the city suggest that no one knows the answer.  It is not the state, which defers oversight to local education agencies and charter authorizers.  It is not DPS (Detroit Public Schools), which views charters as a threat to its survival.  It is not charter school authorizers, who are only responsible for ensuring that the schools they sponsor comply with the state’s charter-school law.  It is not the mayor, who thus far sees education as beyond his purview.  And it is not the schools themselves, which only want to fill their seats and serve the children they enroll.  No one in Detroit is responsible for ensuring that all neighborhoods and students have high-quality options or that parents have the information and resources they need to choose a school.  ‘It’s a free-for-all,’ one observer said. ‘We have all these crummy schools around, and nobody can figure out how to get quality back under control….’”

Just perhaps, depending on how the politics play out, there is hope for some containment in Chicago.  Lutton reports: “Chicago’s Board of Education will still have to approve the eight new schools Noble wants to open.  And the hurdles to that have never been higher.  The district is in a financial crisis.  Forty-two aldermen have called for a freeze on charter schools… But the network has the mayor and the governor on its side, along with tens of millions of dollars in projected philanthropic donations.”

One would wish that the U.S. Department of Education, which is making these multi-million dollar grants for charter school expansion, would do something about regulating the schools being launched with federal money.  Last spring the Alliance to Reclaim Our Schools wrote a letter to Secretary of Education Arne Duncan demanding a moratorium on the expansion of charter schools until the federal government establishes some regulation.  The Alliance noted a 2012 report from the Department’s own Office of Inspector General that documented the need for far more federal oversight.

During the Senate debate in July on the reauthorization of the federal education law, No Child Left Behind, Ohio Senator Sherrod Brown introduced an amendment to provide some oversight of federal investment in the expansion of at least the for-profit charter schools.  Brown declared: “There’s no sector that misspends tax dollars more than these for-profit charter schools.”  “I’m curious that the people that complain about waste, fraud and abuse in government are now standing up to defend these for-profit charters.”

Ohio’s Term-Limited House Speaker Becomes Lobbyist for Notorious Charter Operator

Ohio’s top education reporter, Doug Livingston at the Akron Beacon Journal, recently reported that Bill Batchelder—longtime legislator and recent Ohio House Speaker who just left the House due to term limits—has revolved directly into lobbying.  Batchelder has already taken on a prominent client, William Lager—one of Ohio’s most notorious contributors of campaign cash, founder of Ohio’s long-failing Electronic Classroom of Tomorrow (ECOT), and owner of the two privately held, for-profit companies that provide all services for ECOT.

Livingston explains: “Recently retired Ohio House Speaker William Batchelder, R-Medina, long an advocate for school choice, has gone into business with former House staffers who are lobbying for the state’s largest charter school organization. The online school, Electronic Classroom of Tomorrow and known as ECOT, is among the state’s lowest performing charter schools.  The for-profit companies related to ECOT are Altair Learning Management and IQ Innovations, an online education software firm.  The founder, William Lager, has donated more than $1 million to prominent Ohio Republicans since 2010, among them Batchelder. Less than a month after he speaker was term-limited in December, Batchelder’s former chief of staff, Troy Judy, and policy director, Chad Hawley, changed the name of a consulting firm created by Judy months earlier to The Batchelder Company, a lobbying firm.”

Even the Plain Dealer, which has in the past been relatively neutral about the growing charter school sector in Ohio, has begun to express concern.  On the same day as Livingston described Batchelder’s new lobbying venture in the Beacon Journal, the Plain Dealer published a full page editorial (with a picture in the print edition of a huge wave of hundred dollar bills) about Governor John Kasich’s biennial budget proposal for education, a proposal that favors charters and cuts traditional public schools.  The headline screams: “Charter Schools Can Expect a Tsunami of Cash Under Kasich’s Budget Plan, While Traditional Public Schools’ Resources Ebb.”

The editorial begins: “There has to be a better way to fund kindergarten-through-12th-grade charter schools than Gov. John Kasich’s latest budget proposal, which would further rob traditional public schools of millions of dollars in order to subsidize poorly regulated charter schools.  The governor’s plan would continue the cannibalization of Ohio’s public schools.  That’s especially so since the General Assembly itself has been all too willing over the years to pick the pockets of traditional public schools to pad the pockets of the private interests behind for-profit charters and the lobbyists who represent them—and far too unwilling to tighten Ohio’s shamefully lax regulatory framework for charters.”

The editors remind us of the recent Stanford CREDO (Stanford Center for Research on Education Outcomes) report that concludes, “Despite exemplars of strong results, over 40 percent of Ohio charter schools are in urgent need of improvement: they both post smaller student academic gains each year and their overall achievement levels are below the average for the state.  If their current performance is permitted to continue, the students enrolled in these schools will fall even further behind over time.”  “Compared to the educational gains that charter students would have had in a traditional public school, the analysis shows on average that the students in Ohio charter schools perform worse in both reading and mathematics.”

In December, Margaret Raymond, part of the Hoover Institution and director of Stanford’s CREDO, came to the Cleveland City Club, where she declared that in Ohio the school-choice marketplace is not working: “I’ve studied competitive markets for much of my career… Education is the only industry/sector where the market mechanism just doesn’t work… I think it’s not helpful to expect parents to be the agents of quality assurance throughout the state.  There are other supports that are needed… I think we need to have a greater degree of oversight of charter schools, but I also think we need to have more oversight of the overseers… the authorizers.”

Governor Kasich has recently said he is making it a new priority to regulate the bad actors in Ohio’s charter sector.  The Plain Dealer‘s editors credit him with good intentions, but they wonder why the proposed budget, which speaks with dollars proposed rather than mere political rhetoric, is supporting the notorious profiteers the Governor claims he intends to sanction: “This year, it appears charter reforms supported by Kasich finally will emerge in the General Assembly.  Increasing charters’ taxpayer subsidy should await the results of that reform effort; pumping nearly $1 billion into their coffers, as the governor’s plan envisions, is not the answer.”  The editorial continues: “The Ohio General Assembly should also change a state law that puts traditional public school systems, such as Akron’s, on the hook for millions of dollars to provide bus transportation to private and charter school students even beyond what they can afford to offer regular public students.”

The Plain Dealer‘s editors conclude: “The state must stop a school-funding approach that, to benefit deficient charter schools, is hollowing out the ability of public schools to function.”  Unfortunately, the fact that the just-retired House Speaker, Bill Batchelder, is becoming the lobbyist for William Lager and ECOT instead portends more state support for political players like William Lager and continued lax oversight—thereby protecting their huge profits.

In Ohio, Political Contributions Yield Budget Gift for White Hat’s David Brennan

Here’s what happened in Ohio’s mid-biennium budget review bill, signed into law on Monday by Governor John Kasich.  The governor and the legislature rewarded David Brennan, who runs the White Hat Life Skills Academy “dropout recovery” schools.  According to Brent Larkin in the Cleveland Plain Dealer, David Brennan “has poured more than $4 million into the coffers of Republican candidates in Ohio during the past decade.”

Recently this blog covered the scandal of Ohio’s so-called “dropout-recovery” charter schools, a scandal that has been exposed by Doug Livingston of the Akron Beacon Journal.  These schools offer students who have dropped out or are in danger of dropping out the opportunity to sit in a cubicle with a computer for four hours each day to recover enough credits to graduate from high school.  The state pays the dropout-recovery schools for all the students who are supposedly enrolled, but the dropout rate at these schools is higher than at any other secondary schools in the state, and the state keeps on paying for several weeks after the students stop attending.  Livingston has demonstrated that these schools are, in fact, driving up Ohio’s high school dropout rate.

Livingston writes, “Absenteeism tops the reasons why students drop out; charter schools continue to collect tax dollars for more than a month while they are gone.” “Administrators call it churning’ or ‘school hopping’—when student drop out, disappear for months and then return.”  “The state requires that students who are absent or truant for more than 23 days be taken off school rolls, but during that 23 days, the state reimburses the school. Livingston explains: “There were more than 11,000 removals for truancy last year, meaning taxpayers paid for perhaps 253,000 days of no student instruction, or the equivalent of 1,400 empty desks for an entire school year.”

So, what happened in the new mid-biennium budget review bill signed by the governor this week?  The state, according to the Plain Dealer‘s Larkin, has already been wasting money paying for students up to age 22 to attend “dropout recovery” charters that themselves account for 66 percent of Ohio’s high school dropouts.  The new bill allows such students to continue at White Hat Life Skills Academies and the state’s other designated “dropout recovery schools,” at state expense, until they are nearly 30 years old.  While this may sound like a good way to give young adults a second chance, it is far from the ideal plan.  Governor Kasich himself had already proposed a better state program that would, at state expense, enable community colleges and career-technical schools more suited for adults to begin serving Ohio’s adult high school dropouts who have already earned at least ten credits toward high school graduation.

Here is how the Plain Dealer‘s Larkin describes the story of what happened as the legislation was crafted: “The House approved paying White Hat and other schools $5,000 per student to attend schools that have ‘already failed’ those students.  Recognizing this as a total scam, the Ohio Senate removed that language from the bill.  Unfortunately, when legislators met to reconcile the differences, the House version resurfaced.”  On Monday, when Governor Kasich failed to use the line-item veto he is permitted in a budget bill, he preserved the House’s reward for David Brennan.

In a short editorial update, the Akron Beacon Journal comments: “The Republican majority in the House, led by Speaker William Batchelder, pushed for the provision, the item resurfacing in the conference committee.  What explains its presence, if not the merits?  The speaker invites the impression of his team doing the bidding of David Brennan, an influential donor to Republicans whose White Hat Management includes in its portfolio the operation of dropout recovery programs.  So a set of charter schools with a lousy record of achievement now has an additional avenue to public money.”

William Lager and Ohio’s ECOT: Parasite Feeding on Tax Dollars

In Ohio’s First Public School Hundred-Millionaire: ECOT Founder William Lager, Plunderbund, the Columbus Ohio blog, continues to track the riches in tax dollars being siphoned by William Lager, owner of the Electronic Classroom of Tomorrow (ECOT), Ohio’s largest on-line academy, and the two private companies Lager owns that provide all curriculum and services for ECOT.

ECOT’s 13,836 students fare poorly on standardized tests, and its four-year graduation rate is only 35 percent, rising to 38 percent in five years.  Plunderbund has updated all numbers as of the end of 2013.  Since 2000, William Lager’s political donations to Ohio legislators total $1,444, 242.46.

Altair Management Company and IQ Innovations, Lager’s private companies that provide services for ECOT have each received over $50 million in tax dollars since 2001.  In December of 2013, ECOT won an Ohio Straight-A Fund innovation grant of $2,951,755, approved by a State Control Board, three of whose members, according to Plunderbund, have shared $57,000 in campaign contributions from William Lager.

In Ohio political contributions continue to protect ECOT at the expense of traditional public schools.  Ohio’s school funding takes from state and local tax dollars for traditional public schools to support charters including the on-line academies like ECOT; see this post.  And the federal government that has created incentives for the authorization of a growing charter sector has at the same time made no attempt to regulate them.

Local Activist Exposes How Ohio Charter Funding Undermines Traditional Public Schools

Susie Kaeser, a long-time public school supporter and activist in Cleveland Heights, Ohio, just researched the way Ohio funds its public schools and siphons local as well as state funds away from public school districts to pay for children attending charter schools.  She has published her conclusions in a local community paper, The Heights Observer.

Her lucid explanation is shocking. It is amazing what we can choose not to see and what the press continues to avoid pointing out.

“Each year the legislature determines the funding level for charter students and those in traditional public schools. According to a 2013 Department of Education report, the funding level for every charter student was set at $5,732. By contrast, state funding for traditional public school students is specific to the school district they attend, based on the property wealth of each district. Because I live in the Cleveland Heights–University Heights City School District, I thought I’d focus on its funding. According to CH-UH treasurer Scott Gainer, our per-pupil allocation in 2012–13 was $1,741, or just 30 percent of the amount promised to charter students.

“Not only do charter students receive more state funds than their public school peers, but the difference comes out of the per-pupil contributions for public school students. This is how it works. The state creates a pot of money for each school district that will pay for both charter and traditional students who reside in that district. While the state promised $5,732 to charter students living in Cleveland Heights, it only put $1,741 in the pot for each of those students. This is the same amount that is added to the pot for each of the 5,787 public school students who live in the district.

“When it is time to pay for charter students, the state subtracts the guaranteed amount—$5,732—for each student and sends it to their charter school. Public school kids get what is left. The $4,000 shortfall for each charter student comes out of what was put in the pot for the public school students. In 2012–13, about $2.5 million was sent to pay for 371 Heights charter school students, even though they only brought 30 percent of that money into the pot. In effect, traditional public school students subsidize 70 percent of the cost of charter school students.”

Kaeser also understands that traditional public schools are publicly owned, publicly operated, and publicly accountable, while in Ohio charter schools are poorly regulated.  “Charter schools—no matter their quality—operate without adequate safeguards to protect public funds and undermine authentic public schools by draining away resources and children.”

Duncan Offers No Way to Regulate Bad Charters Like Ohio’s ECOT

In June of 2010, I was part of a group that met with Education Secretary Arne Duncan. Some of us challenged Secretary Duncan about the fact that to apply for grant funding from his Race to the Top competition, states had to get their legislatures to pass laws to remove any caps on the authorization of new charter schools.  Duncan replied, “Good charters are part of the solution. Bad charters are part of the problem.”  But Secretary Duncan did not suggest any ways that he thought the federal government ought to regulate or oversee the bad charters.

The problem of the bad charters remains. A case in point is Ohio’s Electronic Classroom of Tomorrow (ECOT).  ECOT’s on-line students score abysmally below students in  the majority of the state’s traditional school districts and other charter schools.  ECOT’s five-year graduation rate is 37.8 percent, far below other school districts.  And the massive investment of tax dollars is being turned into profit for its CEO/owner/operator, William Lager.

These facts are documented by Ohio’s Plunderbund  blog in a searing indictment of ECOT and William Lager, one of Ohio’s largest political contributors.  According to Plunderbund, from 2010 to 2013, Lager made over $700,000 in political contributions to Ohio’s legislators.

Plunderbund explains that, “William Lager is connected to ECOT in three different ways.  First, he is the school’s CEO…. Second, William lager is also the CEO of Altair Learning Management Company….  And third, William Lager is the CEO of IQ Innovations….”

Altair manages personnel and human resources, instruction, purchasing, strategic planning, public relations, financial reporting… equipment and facilities.  In 2012, Altair’s management fee was $3,157,964.  IQ Innovations provides curriculum services.  In 2012, ECOT paid IQ Innovations $12,631,856.  “In total, that means that Lager’s school, ECOT, is paying Lager’s other two companies Altair and IQ Innovations, over $15.7 million annually.”

Now, ECOT has won an Ohio competitive innovation grant beyond the state’s per-pupil allocation for each of its 13,836 on-line students.  ECOT applied for one of Ohio’s new Straight A Fund innovation grants and was just awarded “their full request of an additional $2,951,755.” Plunderbund  provides details from the budget of the proposed project that will be largely managed by IQ Innovation Services . “ECOT is being given an additional $2,951,755 by the state (legislature), of which $2,725.250, or a whopping 92%  is going directly into Lager’s IQ Innovations company. That means that next year, William Lager, as CEO of ECOT, will be funneling over $18.5 million dollars in state funding directly to his own private companies.”