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.”

Cleveland Plain Dealer Cuts Experienced Education Reporter and Eliminates Full Time Education Beat

Late Friday afternoon, Advance Publications, the corporation that owns the Cleveland Plain Dealer, along with the separate newsroom at the cleveland.com website, finished purging the experienced beat reporters at the Plain Dealer. Patrick O’Donnell, the newspaper’s longtime education reporter, was one victim of the mass action. His loss will leave education policy, central to O’Donnell’s beat, to be covered by cleveland.com‘s statehouse reporters if education policy, primarily a children’s issue, rises to a level that will attract their attention.

Here is what has happened to the Plain Dealer in the past week.

The reporters at the Plain Dealer have long been unionized; the reporters at cleveland.com are non-unionized and less experienced. Everyone agrees that Advance Media used the pandemic-driven decline in advertising revenue as an excuse to break the union.

Covering this week’s staff reductions at the Plain Dealer as part of an article about the implications of the pandemic-driven collapse in advertising revenue across America’s newspapers, the NY TimesMark Tracy makes a careful distinction for Cleveland.  He points out:  “The near-collapse of this venerable Cleveland daily, owned by Advance Publications, coincided with the economic downturn.”  (Emphasis mine.)

The Cleveland Scene‘s Vince Grzegorek describes the two week purge at the Plain Dealer: “Fourteen Plain Dealer journalists were left after last Friday’s massive layoffs that saw 22 staffers depart. Those who remained were subjected, on the very next business day, to the cruelest and perhaps final installment of local union-busting by Advance Publications and the Newhouse family. They were told… that they could keep their jobs but not their beats, or even their geographic coverage areas. They would be dispatched to cover the hinterlands of Cleveland, not Cleveland itself.  Should they remain they would serve as a bureau covering Cuyahoga’s surrounding counties, but not Cuyahoga itself, and not so much of those counties that the news could be considered statewide in importance.”

After 10 reporters resigned on Friday, an editor brought in two weeks ago to accomplish the staff reductions, Tim Warsinskey spun the story: “Today, 10 of our reporters and photographers made the decision to voluntarily ask to be laid off. This comes a week after we regretfully parted ways with some (22) talented journalists… Over the years in any newsroom, there are waves of personnel changes. Folks who cover beats for decades move on. New and sometimes younger journalists step in and usually wind up surprising us all. ”

In a statement late Friday afternoon, the Plain Dealer News Guild contradicted the new editor’s spin: “Tim Warsinskey… said the 10 journalists leaving today made voluntary decisions to be laid off. That couldn’t be further from the truth. It was the Plain Dealer who decided to lay off these union workers.  The Plain Dealer and its out-of-state owners put dedicated and seasoned journalists in an impossible situation earlier this week in a blatant attempt to embarrass them by banning most of them from reporting on Cleveland, Cuyahoga County and the state.  For many, that meant being kept from covering the topics they know best and in many cases are regarded locally and nationally as experts.”

Here’s why the loss of education reporter, Patrick O’Donnell, will matter to Northeast Ohio.

In 2016, Cleveland’s alternative paper, the Cleveland Scene named Patrick O’Donnell as that year’s best Cleveland news reporter: “O’Donnell has guided Clevelanders through the data-rigging by state superintendent Richard Ross of low-performing online charter schools. He’s also kept CMSD (Cleveland Municipal School District) CEO Eric Gordon on his toes, reporting on the botched collection of E-rate rebates. He’s a crisp, prolific writer and a dogged reporter. And, much like the PD’s Brie Zeltner and Rachel Dissell, who reported on lead poisoning, and Michelle Jarboe, who reports on real estate, O’Donnell represents the value of hard-hitting, in-depth beat reporting…”  (All of these reporters have now been purged from the Plain Dealer newsroom.)

O’Donnell has kept readers in Northeast Ohio well-informed about the fraught policy environment for the state’s public schools over recent decades when Ohio’s Republican-majority legislatures have expanded charter schools, instituted five different statewide voucher programs, and pursued standards-based, test-and-punish school accountability.

O’Donnell doggedly tracked the 18 year, Electronic Classroom of Tomorrow scandal in which William Lager scammed the state by more than $1 billion by extravagantly inflating the enrollment numbers at his online school. O’Donnell drove a hundred miles to Toledo in January of 2018 to the meeting where ECOT’s sponsor, The Educational Service Center of Lake Erie West formally shut down the school.  O’Donnell broke the story before any other reporter tracked down the news.

And in the months after the notorious ECOT was shut down, O’Donnell covered the legal efforts by the state to recover some of the money.  He described, for example, an Ohio Supreme Court hearing in which the state charged that masses of so-called ECOT students were never logging in to the school’s website. ECOT’s attorney Marion Little “claimed that it should be paid by its enrollment, not by how long students spend in their online classes… Chief Justice Maureen O’Connor had pressed Little, after he argued that state law requires the school to be paid regardless of how little time students spend online. ‘How is that not absurd?’ O’Connor asked.”

In 2014, economist Margaret (Macke) Raymond, a fellow at the Hoover Institution and wife of prominent, far-right economist Eric Hanushek, stunned the audience at the Cleveland City Club by confessing that marketplace choice doesn’t really work in education, O’Donnell was there to cover it: “Her reasons for why states need to exert more control raised a few eyebrows. A self-described supporter of free markets, Raymond said a totally free market is not appropriate for schools. ‘It’s the only industry/sector where the market doesn’t work…Parent’s can’t be agents of qualify assurance.'”

In June of 2015, O’Donnell punctured Ohio’s claim that the state was cracking down on some of its charter school sponsoring agencies, which had been known for years for their lax oversight: “It turns out that Ohio’s grand plan to stop the national ridicule of its charter school system is giving overseers of many of the lowest-performing schools a pass from taking heat for some of their worst problems.”

Later that summer, he extensively covered the Legislature’s surreptitious takeover of the Youngstown City Schools, a move made without hearings in the middle of the night.  O’Donnell has also exposed the Plain Dealer‘s readers to research demonstrating that the theory of school district failure—on which the state takeovers are based—is itself flawed: “State test scores continue to rise right along with a school district’s affluence, and fall as poverty rates increase.”

And in the past two months, as the Ohio Legislature has refused to address the secretive expansion in last summer’s budget bill of EdChoice, a private school tuition voucher program, O’Donnell has reported on the confusing implications as school districts are being forced to pass school levies just to pay for private school vouchers.  EdChoice vouchers are funded not by the state but instead out of local school district budgets. As the pandemic shut down the state and legislators determined merely to freeze the program, as it is currently operating, for another year, O’Donnell explained:  “For public school teachers, school boards and school officials, keeping the status quo on vouchers continues a drain on school district budgets… School districts… which saw a large increase in voucher use this school year, will have no relief….Their costs could even increase….”

It is devastating when a newspaper rids itself of a reporter like Patrick O’Donnell, whose background includes in-depth knowledge about complex public policy. And it isn’t just the purging of a more expensive unionized reporter. The Plain Dealer, it appears, is entirely eliminating education as a specialized beat. The change will leave Northeast Ohio less informed. Education policy is nuanced and politically fraught. Expert and experienced education reporters matter.

Ohio’s ECOT Mess—Like a Sink Full of Dirty Dishes

Exactly five months ago today, on February 13, 2018, the Ohio Supreme Court heard the final legal appeal by the Electronic Classroom of Tomorrow (ECOT) trying to keep itself in business.

  • You may remember that ECOT, perhaps the nation’s largest online charter school—at least according to what we now know were its inflated attendance numbers—had already been shut down (on January 18, 2018) by its sponsor, the Education Service Center of Lake Erie West, and the Ohio Department of Education because it hadn’t enough money to pay its teachers in upcoming months along with what it owed the state.
  • And you may remember that the state has been trying to recapture money ECOT had collected in public tax dollars—$80 million overpaid to ECOT for only the two most recent school years after the state strengthened its oversight procedures in 2015— despite that everyone knows ECOT has been cheating the state since its founding in 2001.
  • And you may remember that William Lager, ECOT’s founder, has been milking profits out of the nonprofit school via his own two for-profit companies—IQ Innovations that provided the curriculum—and Altair Management that ran the operations.

Here is how the Ohio Supreme Court hearing—five months ago today—concluded, according to the Columbus Dispatch‘s Jim Siegel:  “As ECOT attorney Marion Little finished his arguments for why, under the law, the online school should get full funding for students even if they only log in once a month and do no work, Chief Justice Maureen O’Connor interjected. ‘How is that not absurd?’”

Now, you would think that by now the Ohio Supreme Court could have arrived at a decision on ECOT’s final appeal to stay in business—a case in which lower courts had found against ECOT at every level.  But as citizens of Ohio, we await ECOT’s death without any kind of closure even though we all know that the school has already been shut down—totally. The school’s assets have been sold off in a widely publicized auction and it no longer provides services for students.  The Supreme Court decision matters, because ECOT’s officials hope—if the Supreme Court finds for ECOT—the school wouldn’t be required to repay as many tax dollars and because the same officials say they hope to resurrect the school.

In just the past month, as we await the high court’s decision, and the state remains mired in the ECOT scandal: here are some things we’ve been learning.

For the Associated Press, Kantele Franko reports that 2,300 of ECOT’s supposed students are apparently unaccounted for.  Nobody knows whether they have dropped out or left the state or perhaps re-enrolled someplace else.  Franko explains that a thousand of the students were likely 18 years of age or older, but that 1,300 were school-age youngsters who ought to be considered truant if they are not re-enrolled.  Franko quotes Peggy Lehner, chair of the Ohio Senate Education Committee: “I think this just illustrates the whole problem that we’ve had with ECOT… You not only can’t tell how long the students signed on, you can’t even tell for sure if they even exist, so I am not surprised that there are students that they can’t track.”  So far, however, the Ohio Legislature hasn’t passed any new laws to better regulate attendance at Ohio’s e-schools.

***

The Ohio Legislature has taken steps, however, to protect schools where ECOT’s former students are known to have enrolled—giving them safe harbor from stringent oversight because ECOT’s former students were known to be so far behind. The Plain Dealer‘s Patrick O’Donnell reports: “Leaders of both houses said it wouldn’t be fair to punish schools that absorbed the 12,000 students left without a school after budget problems forced ECOT, once Ohio’s largest charter school, to close mid year. The primary beneficiary of ECOT’s closure and of this new law is Ohio Virtual Academy, a for-profit online school that took in 4,000 ECOT students mid-year. That boosted its enrollment more than 40 percent, along with its income and potential profit.  With 12,000 students, the school is now Ohio’s online giant, replacing the mammoth ECOT.”  Ohio Virtual Academy is the state’s affiliate of the notorious K12, Inc., a national, for-profit, online-charter empire.  The legislation to protect schools serving students abandoned when ECOT closed was added quietly as an amendment to another bill just before the Legislature adjourned for summer break, and was opposed by several prominent Democrats. O’Donnell quotes Toledo Representative Teresa Fedor, the ranking Democrat on the House Education Committee: “Children move in and out of schools because of choice every day.  It’s outrageous that Ohio taxpayers have to foot more profits for e-schools and then give them safe harbor.”

***

Now the ECOT scandal is creating political trouble for the Ohio State Attorney General Mike DeWine, who has suddenly filed in court to recover money from ECOT’s founder, William Lager under Ohio’s Corrupt Practices Act.  The Dispatch‘s Jim Siegel explains: “ECOT founder Bill Lager could be forced to personally pay back millions of dollars to the state, which plans to go after him for some or all of the $200 million in taxpayer money paid to his for-profit companies. Lager, who went from broke businessman to multimillionaire after opening the state’s largest online charter school, could face claims of breach of fiduciary duty, conflicts of interest in public contracts, and civil claims under Ohio’s Corrupt Practices Act.”

In other words, suddenly the Attorney General has noticed that Lager, who founded and served as an agent for a publicly funded online charter school, had a conflict of interest as he steered contracts to his own for-profit businesses. The Plain Dealer‘s Patrick O’Donnell explains: “Lager, as a legal agent of ECOT, has a fiduciary duty to the school, DeWine and his staff say, which was violated by contracting with companies he owns for key services.”

What everybody wonders is why DeWine, who has been Ohio Attorney General since 2011, only decided to go after ECOT now in the summer of 2018—as he, Ohio’s 2018 Republican candidate for governor, actively campaigns. DeWine claims to have waited until another case set a precedent for cracking down on such conflicts of interest involving a charter school—this time a smaller charter school in Cincinnati. Now, says Mike DeWine, he can be assured that as the State Attorney General he has standing to crack down on charter school fraud.

Clearly, the ECOT scandal has become a hot potato for Republican candidates seeking state office in the November 2018 election.  Democrats across the state, reminding the public of William Lager’s huge political investments in Republican campaigns over the years, are also reminding voters that key Republicans including Mike DeWine—currently attorney general and Ohio’s Republican gubernatorial candidate in November, and Dave Yost—currently state auditor and Ohio’s Republican candidate for attorney general in November, have been ignoring for years Lager’s compromised position as the founder and agent of nonprofit ECOT who is also making huge profits by steering business to his own for-profit contractors.  And, as Patrick O’Donnell explains, Democrats are finding clever ways to use years of sordid Republican support for Lager to undermine DeWine’s bid for Governor.  When ECOT’s assets were auctioned online, the liquidator offered a costume worn by Eddy the Eagle, ECOT’s mascot—a giant Big Bird sort of character sporting an ECOT t-shirt. A still-mysterious purchaser acquired the costume for $153 plus taxes and fees.  Now Eddy the Eagle has been appearing at political rallies—still wearing his ECOT t-shirt, but now carrying a sign that reads, “Ask Me about Mike DeWine.”

***

The Akron Beacon-Journal, The Toledo Blade, and the Columbus Dispatch have editorialized against ECOT and Lager this week, noting that while Attorney General Mike DeWine’s court action may seem timed politically to distract voters from the years when Republicans did nothing to crack down on ECOT, it remains a good thing DeWine is taking action, however belatedly. The Dispatch is clearest in defining the importance of DeWine’s recent action. Ohio’s ECOT scandal symbolizes a much larger problem that remains unaddressed by the Ohio legislature:

“Lager might have been among the most brazen, but he’s not the only charter school founder to abuse the process to enrich his companies and himself.  While all Ohio charter schools are by law nonprofit, many, like ECOT, contract with for-profit companies to operate them, and in many cases the for-profit companies are controlled by the founders of the schools. Ohio lawmakers have failed to change charter school law to explicitly ban these clear conflicts of interest. Having a court rule on them would be a welcome push in the right direction.”

Ohio’s Notorious ECOT Tries to Make Its Case In Court

Attorneys for the Ohio Department of Education and Ohio’s largest and most notorious online charter school, the Electronic Classroom of Tomorrow, have been in court all this week tussling, as the Columbus Dispatch‘s Jim Siegel explains, “over ECOT’s lawsuit to block the state from using new attendance standards to impact funding….”  “As the state’s biggest online school, ECOT has taken the lead in fighting efforts by the Ohio Department of Education and Gov. John Kasich to use log-in durations to determine whether students are getting state-minimum ‘learning opportunities.’  ECOT, which has claimed the state requires it to provide 920 hours of (annual) curriculum but not prove that students are actually participating in ECOT’s education program, could lose $80 million or more based on an initial attendance audit in March, which found students were logging in for only about an hour per day.”

The problem across Ohio’s very large on-line sector is that the schools—and there are several operated by specific school districts as well as the huge ECOT and the Ohio Virtual Academy, an affiliate of K12, Inc.—have not been keeping careful records to confirm full-time participation. Ohio, which says students at e-schools ought to be online for five hours per day, pays the schools over $6,000 every year for each full-time student. In the past, the state has not pressed this matter, but last fall the legislature enacted House Bill 2, a very basic law to begin to regulate charter schools. ECOT’s lawsuit claims that the state is applying the new HB2 retroactively and without sufficient warning.

Widespread press coverage of the scandal at ECOT has put pressure on the all Republican legislature that has, in the past, been more lenient. Siegel quotes the chair of the Ohio Senate’s Education Committee, Peggy Lehner commenting on this week’s trial: “This is obviously a significant problem with online schools that we’re going to have to resolve. Clearly we have an obligation both to the students and the taxpayers that they are taking advantage of the learning opportunities for which we are paying.””

The Associated Press quotes the common sense of the attorney for the state, Douglas Cole: “Students deserve to actually receive an education, not merely be offered the possibility of one. ECOT is claiming it is entitled to a money tree that never stops growing and never stops bearing fruit.”

Plain Dealer reporter, Patrick O’Donnell describes how ECOT’s attorney, Marion Little, framed ECOT’s case to avoid oversight: “In opening arguments… lawyer Marion Little said the state rules and a 2003 contract with ODE only require the Electronic Classroom of Tomorrow to prove that students are enrolled, not that they are engaged in their lessons.  Little said that e-school funding is set by enrollment but the state this year has tried to ‘merge’ the ‘distinct’ and separate ideas of participation with enrollment to audit the school and put its funding at risk… He said that having to prove that students are participating is a much higher standard than traditional schools have to follow. Those schools receive state aid, he noted, even if students skip class.”

In a later report, Patrick O’Donnell describes the stonewalling of ECOT’s superintendent Rick Teeters, who “testified that the school has never tracked how many hours students spend on their lessons because it has never had to. ‘To my knowledge, we don’t have a tool to do that. We haven’t needed to. We haven’t been told that was something we needed to keep.’ ”

O’Donnell describes the response of Douglas Cole, the attorney for the state, who said ECOT should have noticed “at least three warnings before this year that the state could seek this ‘durational’ documentation: (1) The state’s funding manual for last year that said the state could seek it… (2) The school’s contract with its oversight agency known as a sponsor requires ECOT to itemize and record attendance daily… (3) House Bill 2, the charter school reform law passed last fall, requires participation of online classes to be documented in detail.  That law took effect Feb. 1.”

Mysteriously, when asked about the application of the legislature’s new law, HB 2, to ECOT, Teeters replied: “My view is that HB2 had no impact on ECOT.”

Teeters’ primary worry seems to be the penalty for ECOT if it is eventually required by the state to count its students accurately: “If the state requires ECOT to pay money back to the state—a ‘clawback’ of as much as 80% of its funding, by some estimates—the school would likely never be able to pay it back.  Even paying it back over time, he (Teeters) said, would put it in a financial ‘death spiral.’ ”

In a follow-up report Jim Siegel explains that on Tuesday, Aaron Rausch, director of the Ohio Department of Education’s Office of Budget and School Funding, spent five hours on the stand: Rausch said department officials initially got the idea to ask for detailed records of student participation in 2013, when state reviewers visited four charter schools and found the buildings void of students.  Each was operating as a correspondence school—a surprise to state officials. Schools showed no proof of student attendance, and each was ordered to repay a portion of its funding. Then in 2014, the state found that online Provost Academy had an operating manual that said students get five hours of credit for one hour of log-in time. When the problem was not fixed a year later, the state asked for log-in durations and eventually ordered the school to repay about 75 percent of its funding for that school year… Eight other online charter schools this year failed to document student attendance, putting portions of their funding at risk. Rausch said a number of the schools supplied additional data to the state last week.”

The ECOT case is important because ECOT has been receiving over $100 million each year in tax dollars—money coming from state and local public school budgets. In his court testimony Teeters pegged the money due to ECOT this year at $106 million. Much of this money has accrued in profits to William Lager, who owns the two privately held corporations that provide curriculum and operational services for ECOT.  Lager is deriving these profits from fees ECOT is collecting for phantom students.

Why do ECOT’s operators imagine they can win in court when other online charter schools have been capitulating by correcting their attendance figures and playing back money to the state?  Catherine Candisky and and Jim Siegel reported in February that: “William Lager, ECOT founder and operator, was the second-largest individual donor to legislative Republicans in the last election cycle, giving $393,500, plus another $202,000 in 2015.”  (This blog has covered the ECOT scandal here.)

Fine Press Reporting Leads to Long Overdue Regulation of Ohio Charter Schools

Yesterday afternoon, a House-Senate conference committee of Ohio’s legislature met to work out a compromise to regulate Ohio’s notorious charter school sector.  In Ohio, Republicans dominate both houses of the legislature, occupy the governor’s mansion, and even dominate the elected state supreme court.  Despite a year of negotiations and a long delay, the members of the conference committee voted unanimously to support a bill that will be submitted today for approval by both houses of Ohio’s legislature.

Everyone had worried that several months’ of lobbying by Ohio’s charter czars would weaken the bill. The Cleveland Plain Dealer’s  Patrick O’Donnell reported late yesterday, however, that the bill does not appear to have been weakened by the House-Senate conference committee: “Still intact, with only minor adjustments, are changes designed to distance the often-cozy relationships between for profit charter school operating companies and the school boards that govern the schools.”  The big charter management companies that have had “sweeps” contracts that forward over 90 percent of the schools’ operating budgets to the management company without reporting about how the money is used will now be required “to provide more information to the public about how they spend tax dollars they are paid to run the schools.”  And there is a new “White Hat” rule designed to correct the situation that arose last month when “an Ohio Supreme Court ruling… allowed prominent for-profit charter operator White Hat Management to keep desks and computers it bought for schools using tax dollars, even after the schools closed.  The court let White Hat keep the property because its contract with the school allowed it.  The new provision blocks any such agreement and requires that leftover assets from closed schools, after bills are paid, go to the Ohio Department of Education to distribute to school districts.”

The conference committee was under enormous pressure yesterday not to cave in to the online charter czars who are described by Ohio’s Plunderbund: “For a long time, it hasn’t been a secret that the entire charter system is well protected by the state’s two top managers, David Brennan’s White Hat Management and Bill Lager’s Altair Learning based in Columbus.”  Altair is the firm, privately-held by Lager, that provides the curriculum for the Electronic Classroom of Tomorrow (ECOT), Ohio’s largest and one of its worst charter schools.  Plunderbund continues: “Together, they have been enriched with $1 billion in taxpayer money.  That arrives via their control over their ‘investments’ in Republican politicians who form the pro-charter chorus in the legislature without much prodding.”

Besides the well publicized Ohio Supreme Court ruling that permitted White Hat to keep assets purchased with tax dollars, four additional events converged—along with massive press coverage—to pressure the House-Senate conference committee not to cave in to what is known to be ongoing political pressure from Brennan, Lager, and their army of lobbyists.

First: Here is how the Plain Dealer‘s Patrick O’Donnell reports on his own discovery earlier this summer that the state’s Department of Education omitted disastrous academic ratings for the big e-schools and “dropout recovery” schools from a statewide evaluation of charter school authorizers: “Former school choice chief David Hansen resigned in July after The Plain Dealer reported in June that he had excluded the F grades of online schools from the academic evaluations of their sponsors.”

Second: The legislature, which had been debating for months new rules to regulate the charter school sector, failed to vote out a bill at the end of last spring’s legislative session.  The Senate had agreed on a bill, but the House leadership chose not to bring it to the House floor for concurrence.  The process of regulating charters was left to linger until fall—several months for the lobbyists representing the charter sector to work their magic. (Remember that when former House Speaker Bill Batchelder was term-limited out of office at the end of 2014, he opened a Columbus lobbying firm and took on a very prominent client: Bill Lager of ECOT and Altair Learning.)

Third, on the final Wednesday of the spring legislative session, Senator Peggy Lehner introduced an amendment to a popular bill designed to expand full-service, wrap-around Community Learning Centers in Ohio. (Such schools locate medical, dental and mental health clinics right at school, along with social services to support families and after school and summer enrichment programs.)  Lehner’s amendment had nothing to do with the bill being considered; her amendment was for the state takeover of the Youngstown City Schools.  The amended bill was immediately voted out of committee, subsequently affirmed by both Senate and House, and sent to the governor all within hours. There was no scheduled debate, and opponents of the plan were not permitted to testify.

Fourth, last week the U.S. Department of Education awarded grants to seven states in addition to the District of Columbia to expand charter schools. Ohio won the largest of those grants, $71 million, specifically, it turns out, to pay for expanding charters as part of the Youngstown takeover. Doug Livingston, the Akron Beacon Journal’s crack investigative reporter, continues to explore who was involved in secret negotiations to arrange for the Youngstown takeover and who wrote the federal grant proposal to fund the takeover and transformation of Youngstown’s public schools into charters. Livingston reports that David Hansen, the guy who was fired in July for withholding the grades of Ohio’s failing online charters from the state’s rating of charter school sponsors, apparently wrote the federal grant proposal, while his wife, Beth Hansen—then Governor John Kasich’s chief of staff, but who has since resigned to head up Kasich’s presidential campaign—apparently helped negotiate the Youngstown takeover during a period of several months: “Documents released by Tom Humphries, the president of the Youngstown-Warren Regional Chamber of Commerce, show Beth Hansen met privately in October 2014 with Kasich, State Superintendent Richard Ross and a group of Mahoning Valley leaders to develop the takeover plan, which allows a private board appointed by Ross to dissolve the local school board and replace the system with charter schools… Personnel at the federal level say the state’s proposal spelled out a plan to use grant money to support charter schools in Youngstown, the only ‘recovery district’ identified in the state takeover plan. ‘Ohio’s application states it will reserve funds specifically for the creation of high-quality charter schools in ‘recovery districts’ designed by the state,’ explained Elaine Quesinberry, a spokeswoman for the U.S. Department.'”

While neither the state nor the U.S. Department of Education has been willing to release the federal grant application that won the $71 million to expand charter schools in Youngstown, Catherine Candisky, a reporter for the Columbus Dispatch, has seen drafts of David Hansen’s application, drafts in which he bragged about the evaluation scheme for charters—the scheme that omitted the ratings of on-line and dropout recovery schools—and the same scheme for which he was eventually fired.  He also bragged about charter school regulation as though it had already passed in the legislature: “In draft applications, he touted the faulty evaluations and new legislation designed to increase charter-school accountability and performance even though that bill had stalled in the state legislature.”

Five interwoven concerns about charter schools, if you count the Supreme Court’s decision to award school assets to White Hat Management instead of returning them to the public, have threatened to discredit prominent Ohio politicians including Governor John Kasich, who is running for President. Thanks to discerning and persistent reporting by Ohio’s major newspapers, there was intense pressure on the House-Senate conference committee. No wonder the members of the conference committee agreed to send to the full legislature today a bill designed to provide some oversight of Ohio’s charter schools.

Ohio Charter Regulation Goes On Life Support, Will Likely Die

Benjamin Barber is a political philosopher, and his observations are usually pretty abstract, which is why is it so fascinating to observe what his words mean in the real life drama of everyday politics—a drama that turned to tragedy this week in the Ohio legislature as the bill to regulate charter schools and their sponsor-authorizers collapsed and went on life support, though it hasn’t quite died.

Consider Barber’s reflection on the way privatization undermines the common good: “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…. 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….” (Consumed, pp. 143-144)

Here is what happened earlier this week as Ohio’s public governing body left on break before reigning in the for-profit, privatized charter management sector, according to Patrick O’Donnell, the Plain Dealer‘s education reporter: “The Ohio House will head off on summer break without voting on the new accountability and financial reporting rules for Ohio’s $1 billion charter school industry that have been in the works for months.  House leaders skipped a vote on the package late last week and have left it off the schedule for Tuesday, the last session before leaving for recess.  Brittany Warner, spokesperson for Ohio House Speaker Cliff Rosenberger, confirmed today that there will be no vote before break… Warner said that leaders want more time to study some of the changes and that differences between the House and Senate versions should be sorted out in a conference between leaders of both houses.” O’Donnell concludes: “Republican leaders say the delay is to clear up some issues with the just-revised bill.  Others call it an attempt to buy time to water down the bill to please charter school operators who donate to Republican candidates.”

Here is the meaning of the delay, according to an e-mail on Monday afternoon from Stephen Dyer, former member of the Ohio House and former reporter for the Akron Beacon Journal:  “It looks like the Ohio House won’t take up the charter reform package that cleared the Ohio Senate last week before the end of business tomorrow (Tuesday).  So now, it’s being slow walked, which means at best we wait until mid-July…. We know that the powerful Ohio poor performing charter operator lobby would love for both chambers to bog this bill down so nothing changes.”

The Plain Dealer’s report quotes the ranking Democrat on the House Education Committee, Rep. Teresa Fedor, who is more blunt: “They never will call a vote, which means the tax dollars will continue on the ripoff train.”

Charter schools have always been conceptualized, to use Benjamin Barber’s language, around “the lure of private liberty and particular interest.”  They were designed to be free of the regulations (described as the constraints of bureaucracy) that, some believe, limit innovation in the traditional public schools that are held to particular standards and required to provide sufficient and appropriate services for all kinds of children.  The idea was to free up charters, and Ohio did just that, so much so that even charter advocacy organizations have condemned the academic malpractice and financial malfeasance that have been documented again and again.

Last December the Stanford Center for Research on Education Outcomes (CREDO) released a study of the academic effectiveness of Ohio’s charters (as measured by standardized test scores). CREDO has been a charter supporter, but its Ohio report is scathing: “First, recent efforts across Ohio to improve the quality of charter school performance are only dimly discernible in the analysis.  Overall performance trends are marginally positive, but the gains that Ohio charter school students receive even in the most recent periods studied still lag the progress of their traditional public school peers… 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.”

Margaret Raymond, director of the Stanford Center for Research on Education Outcomes (CREDO), followed up by coming to speak  at the Cleveland City Club, where she announced that it has become pretty clear that markets don’t work in what she calls the education sector: “This is one of the big insights for me because I actually am a kind of pro-market kind of girl, but the marketplace doesn’t seem to work in a choice environment for education… 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.”

The legislation that the Ohio House declined to vote on this week was already so watered down that it would have addressed only a few of the most serious academic and financial problems across Ohio’s charter sector.  Jim Siegel of the Columbus Dispatch explains that last week the Senate did add provisions to strengthen transparency and oversight: “Key Senate additions… include giving the Department of Education more effective authority to oversee charter school sponsors, more transparency of operator spending, and a stronger provision aimed at preventing sponsor hopping, where a poor-performing school quickly seeks to re-open under a new sponsor to avoid being closed… The bill also seeks to improve the way the state evaluates charter sponsors, nix the potential conflicts of interest that exist between schools and sponsors, and provide more assurance that sponsors are actually spending state money on their school oversight role.  New additions also would require online e-schools to keep more accurate attendance records, implement annual sponsor ratings with consequences for low scores, and establish stronger contracts between the state and the sponsors.”

Here, however, is some of what Ohio’s legislature entirely neglected to address—even in the proposed legislation that has now been hopelessly delayed.  Doug Livingston, in the Akron Beacon Journal, reported last week that the state, “has removed all test scores for online and computer-based dropout recovery high schools when grading sponsors.  These are the lowest-performing types of charter schools… Though there are only 24 online schools among the more than 380 charter schools in Ohio, they receive nearly one in three state dollars set aside for charter schools, or $267 million… The two largest—the Electronic Classroom of Tomorrow (ECOT) and Ohio Virtual Academy—received $185 million in state funding… Two are run by influential for-profit companies: White Hat Management, which operates Ohio Distance and Electronic Learning Academy founded by Akron industrialist David Brennan; and Altair Learning, which operates ECOT and is owned by Bill Lager.  Brennan and Lager have given more than $1.4 million in political contributions to state lawmakers since 2009…. In addition to his online school, Brennan’s Life Skills dropout recovery schools also are not included—at least this year—in sponsor ratings.”

It is worth noting that Ohio House Speaker William Batchelder—when he was term-limited out in January of this year and revolved directly into a lobbying job—took on a very powerful and influential client: William Lager and the Electronic Classroom of Tomorrow.

Ohio is the exemplar of Benjamin Barber’s critique: “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…. 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….”

Charter Titans’ Political Contributions Keep Ohio Charters Unregulated

In Policy vs. Politics: Which Will Prevail in the Looming Ohio Charter School Reform Fight? researchers from the Ohio Charter School Accountability Project examine the connection between political contributions made by David Brennan and William Lager—Ohio’s two largest charter profiteers—to prominent Republican state legislators and the passage of Ohio laws that keep Ohio’s charter schools unregulated. The Ohio Charter School Accountability Project is a joint effort of the Ohio Education Association and Innovation Ohio.

The new report documents the profits reaped by Brennan and Lager and the size of their political donations over the years: “Between the two of them, they have contributed about $6.4 million to Ohio politicians and committees since 1998. Of that, less than 3 percent went to Democrats…. Since charters were launched in Ohio in the 1998-1999 school year, taxpayers have sent charter schools $7.3 billion.  Of that, $1.76 billion have gone to schools run by Brennan and Lager.  Schools run by these two men have collected 1 out of every 4 dollars ever spent in Ohio since charter schools first opened.”

Founded by William Lager, the enormous Electronic Classroom of Tomorrow (ECOT) serves 14,561 students, reports the Columbus Dispatch. “ECOT, whose students take classes from home on a computer, grew by 122 percent during Ohio’s eight-year moratorium on new online charter schools. Some of its strongest growth was in elementary grades, including kindergarten.  ECOT now has more students than Canton, Dayton, Dublin or Westerville schools. It is the state’s 10th-largest district. And growth came for ECOT despite its consistently low state report-card results: It ranks among the worst-performing schools in the state.”  While the average high school graduation rate across Ohio’s school districts is 77 percent, ECOT’s graduation rate is only 38 percent. The Dispatch reports that 90 percent of funding for ECOT—$112.7 million last year—comes from Ohio tax dollars.  Here is how ECOT spends some of that money: ECOT paid $21.4 million in 2013 to the two for-profit companies Lager established to provide all services to the school—IQ Innovations and Altair Learning Management. Plunderbund has documented that Lager has earned profits of over $100,000 million from these companies (via Ohio tax dollars) since 2001.

David Brennan owns White Hat Management, the for-profit company that provides all services for 32 supposedly non-profit Life Skills Academies and Hope Academies in Ohio.  In what Pro-Publica has called a “sweeps contract,” privately held White Hat collects—up-front—over 95.5 percent of the funding for the schools it manages, leaving a very small percentage of the state’s money under the oversight of the board.  Ten schools managed by White Hat were forced to sue the management company, a case not yet decided.  They wished to fire White Hat and choose new management companies.  They were forced to sue to try to recover equipment purchased with state funds, but White Hat Management claims ownership of the equipment it says it has purchased.  The Akron Beacon Journal adds that, “Because White Hat had trademarked school names and bought up real estate through affiliate companies, the renegade boards couldn’t force White Hat out of the building.”

The Ohio Charter School Accountability Project’s new analysis connects the political influence of Lager and Brennan to specific laws that have protected charter schools from regulation.  For example: “Perhaps the most insidious example is one Brennan had the legislature institute for dropout recovery schools—of which his Life Skills centers constitute the state’s largest group.  Life Skills had been consistently the worst-rated schools in the state…. However, the state couldn’t close them because they had been exempted from the state’s closure law…. Brennan will have no difficulty living up to state standards.  That’s because a loophole in the law allows a dropout recovery school to stay open even if it doesn’t meet state standards as long as the school improves its graduation rate by 10 percent a year for two consecutive years.  However, that would mean Life Skills of Northeast Ohio would only need to improve to a 1.52 percent graduation rate, or graduate 2.4 students rather than 2 out of 155.  In other words, Bernnan doesn’t have to graduate even a single new student to meet this ‘standard.'”  And as reported by Brent Larkin in the Cleveland Plain Dealer, in the state budget correction bill passed in 2014, the legislature inserted language that 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.