Tag Archives: New Report: Charter Fraud And Waste Worse Than We Thought

New Report: Charter Fraud And Waste Worse Than We Thought

960x0By Peter Greene (Senior Contributor)

Last March, the Network for Public Education released a report showing that the federal government has lost a billion dollars to charter school waste and fraud. But the organization had not stopped sifting through the data. Their follow-up report, “Still Asleep At The Wheel: How the Federal Charter Schools Program Results in as Pileup of Fraud ands Waste,” reveals that the situation is even worse than shown in the first report, while laying out more state by state details. Particularly striking—the vast amount of money that has been wasted on ghost schools that never served.

NPE is a group co-founded by Diane Ravitch, the Bush-era Assistant Secretary of Education who has since become an outspoken critic of education reform. The organization’s executive director is Carol Burris, a former award-winning New York principal. Burris was the primary author of this report.

The reports examine what happened to money disbursed by the Federal Charter Fund, a charter grant source created in 1994 as part of the Elementary and Secondary Education Act (ESEA). Since 1995, it has handed out almost $4 billion.

Some new findings in this follow-up report:

The original report underestimated the number of charters that had taken federal grant funds and then either closed or never opened at all. That report found 1,000 such charters; the number now appears to be closer to 1,800. That means the failure rate is close to 37% nationally. Michigan gave grants of at least $100,000 to 72 schools that never opened at all; California gave grants to 61 unopened schools. Those two states alone account for over $16 million dollars spent without educating a single child. A grand total of 537 schools never actually opened; tax dollars spent on literally nothing.

Between 1995 and 2005, the Department of Education did not require states to give any accounting of where the money went.

For-profit charters have never been allowed to receive monies from this grant program, but plenty of for-profit charter management companies have had their schools apply successfully. It’s a reminder that “for profit” and “non-profit” are, when it comes to charter schools, a distinction without a difference. Hot Stuff Podunk Academy may well be a non-profit school, but if it is wholly operated by Hot Stuff Academies Charter management Company, a for profit company that handles the operation of the charter, the academy is still generating profits.

The report provides a state-by-state breakdown for some of these numbers, both raw numbers and percentages. Some states have made modest attempts at charter launches, with little success. Hawaii has launched 19; 10 of those have failed. Delaware has seen 14 attempts; 8 of those are defunct. Washington state had 6; of those, only 2 are still open (one charter abruptly closed in October, months after opening).

Larger scale is no promise of better results. New York lost 23 out of 233 charters, but Florida has seen a full third of its 503 charters close. California had a similar rate, with 298 failed charters out of 802. Ohio lost 120 out of 293, and in Tennessee, 59 out of 121— just shy of 50% charter failure rate. Betsy DeVos’s home state of Michigan has a failure rate of 44%— 112 out of 257 closed, costing federal taxpayers about $22 million.

The report also includes many stories that provide striking illustrations of just how the money is wasted. While some charter operators are simply in over their heads, others are clearly far more interested in profit than education.

In Michigan, almost $110,000 was drawn to develop the Harris Academy. $72,957 of that went to a property leasing company whose sole director was Patricia Lewis. Lewis was also a project leader for the academy. Lewis had worked the same deal in Georgia with a charter school that was denied renewal due to financial irregularities and probable cheating on the state test. The Harris Academy never opened.

Consultant Lorilyn Coggins operated two consulting companies that made money from four different ghost schools. She was not the only consultant making good money from charter schools that never actually opened.

The report also provides several examples of how a non-profit charter is simply a pass through for a for profit corporation. For example, the White Hat Management company was an Ohio-based for profit charter management organization that operated sixteen Life Skills charter schools in five different states. Some of those charters paid 97% of their income to White Hat, which also operated a real estate company that leased buildings to schools. Thirteen of the Life Skills charters have ceased operations.

The report also drills down in two charter-heavy (Arizona and Ohio) to see why charters fail. In both states, enrollment was the primary cause (despite the fabled charter waiting list we often hear about) followed by mismanagement/fraud, then financial issues and academic concerns. The study also found a surprising number of charters that closed because the operator simply abandoned them. Stories also illustrate the shock and surprise that occurs when charters simply and suddenly close up shop mid year.

Among the report’s conclusion is this:

We have concluded that the practice of allowing unauthorized schools to receive funds, which has been in effect since 2001, has become a magnet for grifters, consultants and charter entrepreneurs who see an easy way to cash in.

It’s worth remembering that the report only covers the grants dispersed by the feds; this doesn’t tell us anything about how much state or philanthropist money took the school bus ride to nowhere.

Charter supporters are going to say that when charter schools close, that’s just the free market doing its magic to thin out the charter herd to leave us with stronger, better charter schools. Even if this burn and churn is a feature and not a bug, it’s a very expensive feature, costing not just a billion dollars in taxpayer money, but in the human cost of families who are disrupted and displaced by charters that leave them high and dry. As one parent of a student at the hastily-closed Detroit Delta Prep Academy is quoted in the report, “I entrusted her education to a group of people—they’re making me feel like I failed her, like I didn’t do enough research.”

It’s not just research that’s needed; the time is long past for charters to be subject to tighter regulation and accountability with bigger teeth. After twenty-five years of costly waste and fraud, it’s long past time for taxpayers’ dollars and children to get more protection from the operators who have entered the charter school business simply to fleece the public.

Via Forbes

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When we glorify impunity at the expense of integrity, a nation’s socio- fabric erodes.

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