Showing posts with label Baker Mitchell. Show all posts
Showing posts with label Baker Mitchell. Show all posts

Friday, December 12, 2014

Profiting from Non-Profits

There are days when it seems like the news in education is just the same news, over and over and over again.

People believe in the magic of certain words, like "non-profit." For whatever reason, when people hear the word "non-profit" they think of some philanthropic exercise in austerity and sacrifice. When the term is applied to schools, they think of teachers and administrators plugging away tirelessly, plowing every spare cent back into the work of the school.

Here comes Marian Wang in ProPublica to explain how Not True that is.

Let me start with the usual disclaimers. Not all charter schools are a blight on American public education, and not all non-profits are scams.

But the unregulated world of charters, infused with cash and boosted by politicians who are some combination of paid-for and clueless has given rise to an endless parade of charters created as money grabbing mechanisms. There's plenty of reason, for instance, to believe that Gulen charters are simply a fund-raising operation for their secretive owner-founder. Just last week, the Indy Star ran an piece about a charter high school being set up as basically a recruiting wing of a for-profit college currently under investigation for being one more predatory school (they had better watch out, or the feds might punish them by forcing them to accept a bunch of financial and political aid). You can go to high school and get college credits-- that only count at the for-profit college. I hear that heroine dealers also offer free samples.

Wang's piece is well worth the read-- she describes the practice of "sweeps," arrangement by which a non-profit school turns over as much as 95 or 100 percent of its revenue to a for-profit management company.

While relationships between charter schools and management companies have started to come under scrutiny, sweeps contracts have received little attention. Schools have agreed to such setups with both nonprofit and for-profit management companies, but it's not clear how often. Nobody appears to be keeping track.

There are so many things wrong with this sort of thing, not the least of which is the complete absence of accountability. 


Take the case of Brooklyn Excelsior Charter School, another National Heritage Academies school. In 2012, state auditors tried to track the $10 million in public funding given to the school, only to conclude they were " unable to determine ... the extent to which the $10 million of annual public funding provided to the school was actually used to benefit its students." From what auditors could tell, the school was paying above-market rent for its building, which in turn is owned by a subsidiary of National Heritage Academies. They also had concerns about equipment charges.

This is not news. It's only been a few months since Wang wrote about Baker Mitchell, a North Carolina charter operator who sets up these sorts of management contracts with himself.  

But in all these cases, the private company enjoys a shield from prying eyes. Once public funds enter this black hole, they could be doing anything from footing the bills for some other enterprise entirely to financing a second house in the Hamptons for the CEO. As Casandra Ulbrich, VP of the Michigan State Board of Education told Wang, "I can't FOIA [Freedom of Information Act] National Heritage Academies."

The practice of using non-profit charters as pass-throughs is too common to be surprising any more. It's a new sort of money laundering, in which any sniff of public interest is stripped from the money, and they become untraceable nuggets of wealth.

One thing is absolutely certain-- every dollar that is spent on actually educating students is a dollar that the management company doesn't get to put in its own pocket. Students are a Good Thing to these charters because students generate revenue, but they are also a problem because educating students drains revenue.

Bottom line-- even if you weren't bothered by the total lack of transparency and accountability, there's still another issue. In a profitable charter arrangement (whatever it's called) the interests of the students are in direct opposition to the interests of the operators. That makes this scam a bad deal for taxpayers, students, the community and everybody else who isn't making a buck from faux non-profit charterdom.

Thursday, October 16, 2014

The Public Charter School Test

If you glance through the blog, you might conclude I hate charter schools. But like many critics of the current charter wave, I don't object to the idea of charters at all. Once upon a time, charters were actually a pretty good addition to the public education landscape.

The potential is still there. But to unlock it, charteristas will have to make true the mantra they keep repeating, that charter schools are public schools.

Charter schools, the modern version as represented by K12 and Success Academies, are not public schools at all. If they really want to earn the "public" label, they need to meet these four requirements.

Transparent Finances

As a taxpayer, I can walk into my local school district office and ask to see everything there is to see about the district finances. As a taxpayer, I'm entitled to a full accounting of how my money has been spent. To be a true public entity, you can't just take public funds-- you must give a public accounting of them as well.

That also means oversight. The modern charter is all too often tied up in all too shady financial dealings. Baker Mitchell of North Carolina is only the most recent example of a charter operator who uses a non-profit charter to funnel money to his own private firms. It is Modern Charter 101 -- set up charter school, hire yourself, your family, your friends to do everything from managing the school to washing the floors. And rent the building and equipment from yourself. K12 routinely uses public tax dollars to mount advertising campaigns.

A true public school is always strapped for cash, and taxpayers are always keenly aware of where that money comes from. When negotiating contracts, spending money on big ticket items, even deciding to outsource janitorial services, our school board members are subject to plenty of input, feedback and general kibbitzing from the people who will pay for all those things.

Meanwhile, modern charters have famously gone to court to keep state auditors from getting a look at their books. That is not how a public institution behaves. If you're a public school, your finances must be completely transparent.

Accountability to the Voters

Boy, do I ever get charter operators frustration on this count. My ultimate bosses are a group of educational amateurs who have to win election to stay in charge of me. It's a screwy way to run a business-- what other enterprise requires professional experts to work at the beck and call of people whose only qualification is that they managed to garner a bunch of votes? Oh, wait. I remember an example-- the entire local, state and federal government of the entire country. Because we're a democracy.

Reed Hastings famously articulated the modern charter operator position-- elected school boards are a nuisance. They're unstable and change their composition and therefor their collective mind. What schools need is a single CEO, a kinderfuhrer who can swiftly and boldly make decisions without having to explain himself to people, particularly voting people who can remove him from power if they don't like his answers.

This is not how public institutions are supposed to work in a democratic society. Yes, as some folks periodically rediscover, democracy is terribly messy and inefficient. But the alternative is efficient long-term mediocrity or short term excellence (followed by crashing and burning). Neither is an appropriate goal for a stable society, and neither is appropriate for running a school system meant to serve all citizens, regardless of their income or social status.

If the voters of your school district do not have a say in how the school is run, you are not a public school. It does not count if your tsar or board of tsars is appointed by a state-level elected official. If there is no way for local voters to change the school's management through local means, it is not a public school.

And yes-- that means that there are places like Philadelphia and Newark where the schools are no longer public schools in anything but name. Leaving the name alone-- that's how you steal an entire public school system from the public it is supposed to serve.

Play by the Rules

The charter movement, even the traditional one, has been all about getting around bad rules. This has never made a lot of sense to me, this business of government saying, "We've tied up public schools in so many dumb rules that we need a different kind of school as an alternative." Why not say, "We've tied up public schools in so many dumb rules that we are now going to rescind some of those rules. Because, dumb."


The "we need charters to escape dumb rules" argument is like filling up your own car with Long John Silver's wrappers and empty coffee cups and one day saying, "Well, damn. This car's a mess. Guess I have to buy a new car." If you've made a mess of things, clean up the mess!

So I'll agree that there are some public school rules that charters shouldn't play by, because nobody should have to play by them. Important note: I can identify these rules because they interfere with a teacher's ability to provide quality service for students.

But there are other rules charters don't want to have to play by. For instance, "hire licensed personnel" seems to be a popular corner to cut (the Gulen folks seem to trip over this one a bunch). Likewise, modern charters like skirting that nasty union rubbish, which helps with holding onto the option to terminate any "teacher" at any time. This is not about providing superior schooling for students; this is about maintaining a more easily controlled workforce that will be cheap and kept in line.

It goes back to that whole damn democracy thing. Modern charter operators want to be able to rule their company like a Bill Gates or a Leona Helmsley. They do not want to have to govern a public service trust like a Congress or a President, held ultimately accountable to a separate court or electorate (though don't worry-- they're working on that system, too).

Public schools are a trust, a service to the communities that house them and the country that holds them. If you want to be a public school, you have to play by the public school rules. You can certainly set up a private school outside those rules, but that's what it is-- a private school, not a public one.

Serve the Full Population

The same modern charter trick has been documented over and over. Behind every charter school miracle is a charter school that gets rid of students who might hurt their numbers.

They say that home is the place where, when you go there, they have to take you in. But in America, there's another place like that-- the public school.

A public school accepts every student. A public school does not bar a student for being too expensive to educate. A public school does not push out a student who gets lousy test scores. A public school must accept every single student who shows up on their doorstep, barring only those who reach a criminal level of threat to others (and sometimes not even that).

No school that turns students away, pushes students away, counsels students out, or even has the option of considering these actions because there is some other school that must take the student-- no school that does these things can call itself a public school. No school that has a student population substantially different from the student population of the area it serves can rightly call itself a public school.

I was tweet-challenged on this point the other day with the issue of magnet schools. That's a valid point-- a school designed to focus on the performing arts cannot be expected to have the same percentage of tone-deaf, stage-inept non-performers as the rest of its neighborhood. But magnet schools have a very specific, very explicit mission that clearly defines how their population will differ from the larger group. A performing arts school mission does not say "To foster great student arts, plus keeping out any ELL students, too." The careful focus was in fact one of the things that could, and did, and does, make classic charters great.

But another characteristic of modern charters is that they rarely have such a clearly defined mission. And certainly none have a mission that makes explicit upfront, as magnet schools do, exactly which students they plan to include and exclude. As far as I know, no modern charter has a mission statement that reads, "We will give a mediocre education to all poor kids except the ones who are difficult or have developmental problems or who can't hit our numbers."

You can certainly be selective about which students make it into your school (and get to stay there), but if you do, you are a private school. A public school accepts all students.

Public School and Virtue

I am not saying that you must meet all four of these requirements to qualify as a ethically upright and educationally sound school. I can think of several private schools that flunk all four tests (though all have far more accountability measures in place than many modern charters), and they are perfectly good schools. But they are private schools, not public schools.

I can think of some charter schools that pass all four tests. They are classic versions of charter education, and they deserve to be called public schools.

But to call the Success and Imagine and K12 and Hope-on-a-Shingle and all the rest of the hedge-fund backed, politically connected, ROI ROI ROIing their big financial boat modern charters may be many things.

But they are not public schools. Not. Public. Schools.