Outcry Grows Over Charter School Waste, Fraud, and Mismanagement

Once you have a burgeoning, unregulated private sector in a democracy,  how do you build sufficient political will to get some regulation in place, especially when the unregulated sector is using its profits in savvy ways to contribute to the campaigns of the politicians who are responsible for imposing the regulation?

There are a lot of people grappling with this challenge right now in relation to the charter schools that have sprung up across America’s big cities.  Although I have personally heard Arne Duncan, the U.S. Secretary of Education, say, “Good charter schools are part of the solution; bad charter schools are part of the problem,” I have never heard Secretary Duncan make any proposal for regulating the bad charters.  This despite that Duncan’s Department of Education has had a lot to do with the rapid increase in the number of charters. In order even to apply for Race to the Top funding, states had to remove any statutory caps they might have previously imposed on the authorization of new charters in any one year.

Even Robin Lake, whose Center on Reinventing Public Education at the University of Washington has promoted the expansion of charter schools through “portfolio school reform,” worried about lack of regulation of charter schools when she visited Detroit.   In Detroit, Lake said charters “have created a lot of new opportunities, and a lot of great new schools are up and running as a result,”  but “not enough attention has been paid to quality and equity access in Detroit.” She said that today Detroit has a massive oversupply of schools but “a lack of high-quality seats.”  She said parents “are having a difficult time navigating their options.”  “What’s happening in Detroit is very messy right now.”  “It’s not clear who’s keeping an eye on the city’s schools and making sure that every neighborhood has access to a high quality school.”

In a new article in The Nation, Pedro Noguera describes charter school operations as too often not open to public scrutiny despite the receipt by these schools of public tax dollars: “Charters were supposed to be laboratories for innovation  Instead, they are stunningly opaque… In several cities throughout the country, there is a fierce conflict raging over the direction of education reform.  At the center of this increasingly acrimonious debate is the question of whether or not charter schools—publicly funded schools that operate outside the rules (and often the control) of traditional public-school systems—should be allowed to proliferate.”

Last week three organizations—the Center for Popular Democracy, Integrity in Education, and Action United—released a report on Fraud and Financial Mismanagement in Pennsylvania’s Charter Schools.  The report, which documents $30 million in outright fraud that has been uncovered in Pennsylvania’s charter schools since 1997, declares: “The current system of oversight relies heavily on information provided by charter schools themselves and traditional audits that are designed to check accuracy rather than detect and prevent fraud.”  The authors note the burden that falls on under-funded public school districts like Philadelphia’s to uncover and investigate charter school fraud within their district boundaries, a project that cannot be adequately staffed in a financial crisis when public school school counselors, school nurses and thousands of teachers have been cut by the district.  The report suggests that Pennsylvania’s legislature “establish a moratorium on new charter schools until these recommendations are met.”

The Ohio Education Association and a public policy organization, Innovation Ohio, have just launched a website that, while it does not expose outright fraud, documents the total amount of public tax money flowing away from each of the state’s more than 600 school districts to particular charter schools:  knowyourcharter.com.  This is an interactive site, where anyone can explore the flow of funds from a particular school district to any of the state’s charter schools.  One can learn, for example, that this year over $9,821,390 is flowing away from the Cleveland Municipal School District to two of Ohio’s most notorious virtual academies—the Electronic Classroom of Tomorrow (ECOT) and the Ohio Virtual Academy (a K12 affiliate).

Jeff Bryant, in a far-reaching investigation for salon.com, The Great Charter School Rip-Off, traces growing public awareness about poor regulation of charter schools from state to state.  Too often, says Bryant, parents and citizens have no democratic input into the process of authorizing charter schools when instead, “charters are being imposed on communities—either by legislative fiat or well-engineered public policy campaigns.”  Bryant describes a new plan to charterize York, Pennsylvania’s public schools, where the two charter companies being considered are Mosaica—which just left Muskegon Heights, Michigan halfway through its contract to run that district when it was unable to turn a profit—and Charter Schools USA, reported by the Florida League of Women Voters to have been “running a real estate racket…” that partnered Charter Schools USA with Red Apple Development Company “in a scheme to lock in big profits for their operations and saddle county taxpayers with millions of dollars in lease fees every year.”

It seems there is lots of awareness of widespread problems in the way charter schools are operated in one state or another, but fraud or mismanagement in one state does not seem to prevent gullible charter authorizers in other states from hiring the very same management companies.  Too many charters seem to be able to find  dollars to invest in extravagant advertising like the nearly half-million dollars raised from venture capitalists by Eva Moskowitz’s Success Academy for TV ads aired across New York City last week.  And charter school owners like William Lager of Ohio’s ECOT, who has made over $100 million since 2001 in profits from two privately held companies he owns—Altair Management Company and IQ Innovations that provide all services for ECOT—continue to be able to invest heavily in the political campaigns of candidates for the state legislature.  Plunderbund, the Columbus Ohio blog, reports that since 2000, William Lager has contributed $1,444,242.46 to the political coffers of Ohio legislators.

One can only hope that increased reporting of misspending and outright fraud will stimulate a growing revolt by citizens who want to protect public education as well as the public’s right to ensure stewardship of tax dollars.  Martha Woodall in the Philadelphia Inquirer, reports that public officials in Pennsylvania expressed gratitude for last week’s report from the Center for Popular Democracy, Integrity in Education, and Action United: “State Auditor General Eugene De Pasquale said, It’s ‘good that they put this together.  To me, the more voices on this the better.  I think in the next term in the legislature, there is going to be a charter-reform bill move forward.'”  Woodall quotes Philadelphia City Controller Alan Butkovitz: “We certainly agree with the need for greater oversight and auditing.  That’s been one of our constant themes.”