How To Profit from Your Non-Profit Charter School

Occasionally politicians and policy leaders will try to thread the needle on charter schools by saying that they support nonprofit charters, but not those for-profit ones. Candidate Clinton tried that trick for keeping both sides happy back in 2016. But it's a distinction without a difference. Running a nonprofit charter school can still be a highly lucrative undertaking-- all financed with taxpayer dollars.

Here's how to make a bundle with your nonprofit charter school.

The Real Estate Business

There is such a thing as a business that specializes in charter schools and real estate. In some states, the government will help finance a real estate development if it's a charter school, and in general developers have noted an abundance of cash. Though, as one charter real estate loan bond financier told the Wall Street Journal, "There's a ton of capital coming into the industry. The question is: Does it know what it's doing?" Many states have found a problem with charters that lease their buildings from their own owners as well.

Why such interest in charter real estate? One reason: the Clinton-era Community Tax Relief Act of 2000 made it possible for funds that invested in charter schools to double their money in seven years. And the finance side can become so convoluted that, as Bruce Baker lays out here, the taxpayers can end up paying for a building twice-- and the building still ends up belonging to the charter company.

Management Companies

Once you've set up your nonprofit charter school, hire yourself as a for-profit charter management organization. Over the last decade, there have been numerous examples of this arrangement, sometimes called a "sweeps contract," where the charter school hands as much as 95% of its revenue off to a for-profit management organization. As with real estate, there have been instances where the school's assets (books, furniture, computers, etc) have been ruled to be the property of the management company-- so even if the school tanks, the organizers walk away with assets they can cash in.

Not every CMO is run by the same folks who own the charter school, but it's not an uncommon arrangement. Eagle Arts Academy in Florida not only paid its founder to develop a curriculum, but paid him for the rights to the school's name and logo.

Depending on your state, some of this is legal and some of it might not be. If we get into the grey areas, then we start seeing some really crazy stuff, like the Gulen charters. One of the largest chains in the US, the Gulen charters are connected to Fethullah Gulen, a Turkish religious opposition leader. The schools have been dogged by controversy, including allegations that their mostly-Turkish immigrant faculty are required to kick a portion of their salaries back to the movement. The Gulen schools are potentially using US taxpayer money to finance a government-in-exile. These schools are mostly nonprofit charters.

Charter schools, whether nominally for-profit or nonprofit, face the same basic problem-- they are businesses that do not control how much they charge for the service they provide. This means that every dollar spent on students is one dollar less to go into the bank account of the business; the interests of the students and the interests of the businesses involved in the school are in opposition to each other.

Nor can you assume that the laws protect taxpayer dollars in any meaningful way. In some states, the laws against self-dealing are strong and well-enforced. In other states, not so much. Eagle Arts Academy is a disaster by any measure, and local school authorities know it-- but state law does not give them, or anyone else, the clear authority to shut it down.

There are charter schools out there that are neither directly nor indirectly attempting to profit from the taxpayers via the students they are supposed to serve. But if you are shopping for a charter school for your child, knowing that it's nonprofit is not enough. Ask if there is a for-profit business operating the school, and if there is, think twice. If that for-profit business is operated by the same people that run the school, don't think twice-- just walk away.

Originally posted at Forbes.

What Privatization Really Means

We're living through an unprecedented age of privatization, filled with ongoing attempts to turn public spaces and public institutions into privately owned and operated businesses.

The first impulse is to ascribe this to corruption and greed-- surely the goal of privatization is to grab more money, to profit from institutions and endeavors that used to be for the shared public good.

But that doesn't entirely scan. The accusations are common, but I don't believe that Betsy DeVos is in the secretary of education's chair because she sensed a money-making opportunity-- certainly nothing that would make a perceptible difference to her family fortune. I don't think Bill Gates is one of the point men on the privatization of education for the benjamins; the man already has more money than he will ever spend.

Are people pursuing privatization simply out of a desire to rake in mountains of money?

I don't think so.

It's mine. All mine. 

You can look at Donald Trump, who, I would argue, has privatized the office of the President. Sure, this lifelong grifter is finding plenty of ways to make a buck from the office, but not everything he's doing is about money. He'd like to arrest Omarosa for running her mouth. He likes to hire and fire based on loyalty. He threatens Google because he doesn't like his self-googling results. He doesn't want to keep the flag lowered for John McCain because he never liked John McCain. None of this is about money; it's about exercising his personal will, making what should be public Presidential decisions based on his private personal preferences.

We've heard it over and over in the modern ed reform movement-- schools should be run more like businesses. Yes, that means watching the money side of things, but it also consistently means, "I want to be able to run this school like my own personal private business. I don't want the government to tell me there are rules I have to follow. I don't want unions telling me what I can or can't do. I just want to exert my will, unfettered and unrestrained, like I would over any personal, private operation I owned."

Throughout the Trump administration, in fact, we've seen a rush to do away with government regulations and "protections." But Betsy DeVos won't get richer because she canceled oversight of the predatory for-profit college industry. She's just making the world work more like she thinks it should, with business owners able to exercise their personal, private will over the things they own.

Privatization is not (just) about profiteering. It's about the exercise of will. It's about being able to treat public goods like private property, and about being able to exercise more unrestrained will over private property.

It's important to understand this, because if we simply look for profit motive, we'll miss much of the privatization that's taking place. Modern venture philanthropy doesn't have nearly as much to do with profiteering as it does with buying influence and compliance. Bill Gates appointed himself the Chief of Education in the United States, and he never had to stand for election. This is the Reed Hastings (Netflix) approach-- there shouldn't be elected school boards; those of us who know better should just be in charge.

Charter schools do not have to be operated as a private business. We've been hoodwinked into thinking that private ownership and operation is somehow a defining feature of charter schooling. There's no reason it has to be. But for the privatizers, that's really the only detail that matters-- the public school should be operated as a private possession.

Yes, money matters. It matters as a means of keeping and exercising power, and it's also a means of keeping score-- if I'm filthy rich, that proves that I'm wiser, smarter, better than. "Follow the money" doesn't just mean to follow the flow to the beneficiary, but also to follow the strings and see who is pulling them.

At its root, privatization is about taking possession of spaces and institutions that used to be shared public good. Your hospital is no longer a shared community service-- it now belongs to somebody. Your schools are not a shared community good-- they are now someone's possessions. The privatization dream is without boundaries. Let us own the roads. Let us own the water supplies and services. When we want to, let us take possession of the land. In a privatized world, everything belongs to somebody (certified worthy by his wealth), and that somebody is free to exercise his will over his possessions as he wishes. That somebody doesn't have to stand for elections, though elections themselves have been privatized, just as your tax dollars have been privatized, earmarked for the people who now possess the services and institutions that used to be operated by government on behalf of the public who once owned them. The 1% don't simply want more money-- they want to be in charge, and they don't want to have to listen to the 99% backseat driving.

Privatization is not (just) about profiteering. It's about the rich taking possession of a country and all its assets. It's about dividing society into people who get to exercise their own personal will and those who will have to decide whether to comply or resist, because they no longer have a voice.

Resistance to privatization can't just be about asking, "So who will make money on this deal." We also need to be asking, "So, once this has happened, who will be the decider? Who will decide who gets treated at the hospital? Who will decide who and what get taught at the school? Who will decide when the roads are plowed and paved? And what can I do if I don't like their decision?" The pitch will always be, "Well, the government decides that stuff now and they do a lousy job, amiright?" That may be true, but it doesn't answer the question. Get an answer to the question, because we're seeing the answer demonstrated right now in the White House-- "I'll decide. I'm the only one that matters. I'll decide, and if you don't like it, tough, and if you complain, I'll find some way to use my personal power to punish you."

Privatization isn't always about money, but it is always about power. This country was set up so that power would be hard to get and hard to keep and hard to exercise without restraint. Privatization is about getting past all of that, and back to modern version of feudalism. We should keep resisting.

Are You Ready for the First Day

This week will see the first day for the school year in many communities. Time to ask teachers this question:

Do you feel prepared?

Periodically we get a survey of teachers about this question, and typically a fairly large number of teachers say, "No, I don't-- or didn't-- feel prepared when I first stepped into a class room."

This is most typically offered as evidence that teacher preparation programs are stinky and need to be overhauled or replaced. I'm never going to declare that no teacher preparation programs are stinky (a few, in fact, are extraordinarily stinky), but I do think the survey results have an alternate meaning.

I had 39 first days of school in my career, and I never felt fully prepared for any of them.

There are plenty of reasons for that. For one, even if you've taught in the same school for your whole career, even if you know some of your incoming students by reputation or even previous contact, you never know what a class is going to be like until you are dealing with them, and even then it will take a few weeks, minimum, to lock things in. You can have big plans for your content, your pace, your scope and sequence, even things like how you're going to organize the room this year. But your students will be deciding which parts of the wish list you call a plan are actually going to happen. And you won't know until you know. This does not change, ever. You just develop a clearer picture of what range your classes are most likely (but not certain) to fall within.

Another reason to feel less than fully prepared is because you're not a dope. Seriously. If you walk toward your first day of school (whether it's your first or your twentieth) thinking, "I have nothing to worry about because I have a total lock on this and I'm prepared for everything," then you simply don't understand the situation. Nor do you understand yourself.

A good teacher can tell you the list of things she needs to work on. One of the surest signs that someone is a lousy teacher is anything along the lines of, "I've got this class down to a science now and I can just breeze through like a well-oiled machine. There's nothing I really need to work on-- I've got this down pat." Those are the words of a lousy teacher.

A good teacher is always working on getting better, because a good teacher always feels, acutely, where she is coming up short. It's what many teachers focus on, perhaps excessively. Teachers have a tendency to be humble, and that may be part of the professional ethic, but teachers are often focused on the very things they need to be humble about, and not their areas of mighty excellence.

My first choice for a teacher will always be one who answers, "I'm not sure. There's so much more I want to do before that first day, so many things I'm not positive about" over a teacher who answers, "Totally prepared. Haven't even thought about the first day because I'm so totally ready."

Teaching is a profession of limits. There's never enough. Never enough time, never enough resources, never enough of you as a teacher. You spend your whole career bumping up against those limits and figuring how to push them back or move around them. The preparation you get from your college just sort of plunks you down in the middle of that space, but it takes a lifetime to find the barriers, push the barriers, figure out how to stretch and simplify your practices so that you can get a little more accomplished.

So, no, you're not fully prepared. You're never fully prepared. That's not how this works. That's not how any of this works. Your training is not to get you to the destination-- your training is to help you understand how to make the journey, a journey that you will never actually complete. And that's as ready as you're ever going to get.

How Deep the Data Mine

My health care provider is a little bit terrifying.

I live in Northwestern PA, which means my health care all occurs under the shadow of one of the most giant "on-profits" on the planet. Pittsburgh's main industry might once have been steel; now it's health care.

The behemoth is digitized to the max. I can get on line and order prescription refills, set up a doctor's appointment, and do all that annoying paperwork that you usually do on a clipboard balanced on your knee while sitting in the waiting room. But to do all that, you need an account. So I went on line to set one up and now I feel... queasy.

Since the account is tied to my health care records and my various drug prescriptions, I needed to answer some security questions on the way in, and they were... well. Creepy.

What city is [my daughter's name] associated with? How much land does my house sit on? And something about my wife.

Mind you, these were multiple choice questions, and not questions I had previously provided the answers to. The system already knew where my daughter lives and how big my property is. This is a system that has already collected all my medical information; it knows that I had my appendix out fifty years ago, and it knows that I was once on valium (but not why-- I had hiccups for three days straight, which is not nearly as funny as it sounds).

It's a deep thorough data mine, and I will confess that I have mixed feelings about it. I'd just as soon that, should a medical emergency occur, my health care provider knows something about my history. I appreciate the convenience of not having to call the doctor's office for little things like prescription refills.

But there is so much data there.

Honestly, part of how I deal with the reality of data mining is age-- I'm old enough that it's already too late to collect data on my third grade achievement tests and the time I got paddled in sixth grade and the time I split open my knee. I can almost-- almost-- make my peace with giant data mine because I've mostly-- mostly-- escaped.

But my twins are not even two years old yet, and I worry about the giant assortment of data-gathering machinery arrayed against them, the many fights going on to hold it back. I worry about a huge unelected system that is unaccountable to anyone and yet is far from dependable (click here to read the story of how my ex-wife's mail gets delivered to me). I worry about who will have access, who will be sold access, and what sort of decisions will be made about my children and grandchildren's lives based on that giant pile of sort-of-accurate, previously-considered-nobody's-business data.

We mostly live with this without thinking about it, and then every once in a while something comes along to remind you just how much your digital record knows about you.

My health care provider, just like my twins' future schools, has the opportunity to collect deep and deeply personal data. There are so many dangers that go with that, from misuse of the data to theft of the data to use of the data against my own best interests. And my health care provider is a super-rich behemoth, which is in a way comforting because what would happen if my data was held by a poor-struggling institution looking for any kind of revenue-generating scheme to survive?

I don't think there's a more critical issue in our world about which there has been less discussion-- which is just how our Data Overlords like it. The mines have been dug really deep, and we continue to dance around on the surface, happily oblivious to just how much ground has been dug out from under us.

Opportunity Costs Are Shot

Transcript of school staff meeting.

Principal: We've been handed a small pile of money, and I thought we'd meet to discuss what best to do with it.

Ms. Wattlestop: Well, we haven't replaced the textbooks in the science department for a decade. It might be time to get the students some books that aren't falling apart. And maybe we could get enough of them so that all students can have them.

Miss Bowenflava: The heat in my room doesn't work. The faucets in the student restrooms don't turn all the way on or off. There's a leak in the roof over the west hall. We need to get some repairs done around the building.

Mr. Jones: How big a pile are we talking? Because we could add a couple of staff people, we could get class sizes down below thirty, and that would be a huge help to the students.

Mrs. McSmith: We haven't put a new book in the library in fifteen years. Let's buy books.

Mrs. Galumpke: There are so many cool new programs out there that would really be exciting and helpful for our students. Maybe we could get one of those...?

Mr. O'Plenty: Our computer system is dependent on servers that are held together with duct tape and bubble. Let's strengthen our tech system

Ms. Stengle: Hiring some to run an after-school intervention program would really help our students who are behind.

Ms. Flex: You want to help me out with some of the $1,200 I'm spending to get my classroom necessary resources?

Miss Fleagle: There are only two certified people who will even think about substituting here. Maybe we could raise sub pay.

Miss Arbuckle: We could pilot an home and school visiting program, to help give at risk students a little more support.

Ms. Swayne: We could hire a counselor.

Mr. Flurgle: I don't want to sound selfish, but we don't even pay teachers a living wage any more, and I think it's beginning to affect the hiring possibilities[indicates the forty-three empty chairs at the meeting]. Maybe it's time to look at that.

Ms. Teanuttle: Really, it's the whole package. Our students are dealing with a wide variety of traumas and issues that they bring into the building, and we need to be doing more to help them both academically and emotionally. The building is falling down around our ears, and we desperately need more and better resources. The staff is being eroded by the lack of support and the absence of resources. And we are consistently underfunded because the state doesn't even want to give us enough money to keep up with providing the basics for our students. I hope you've been given enough money to do all of this, but if you haven't-- well, I really don't envy you this difficult decision.

Principal: Those are all very good ideas, and after careful consideration, I've decided we need to spend the money to buy some guns.

Staff: What?

Principal: Yup. Of all the things we could do, I think arm a couple of you guys would be the best possible use of the money. Thanks for coming.

Mr. Flurgle: Money for training us, too?

Principal. No. No, just the guns. Just point and shoot. How hard can it be?

Ms. Flex: But what about all these other ideas?

Principal: Trust me. Once you've got that gun in your hand, you won't even care about the rest of this stuff.

Mr. Jones: The opportunity cost here is just so tremendous!

Principal: The what now?

Mr. Jones: Never mind, Principal DeVos.

ICYMI: New School Year Edition (8/26)

In my neck of the woods it's that time again, and my wife is all set and ready to go. But in the meantime, here's some reading for you today.

Mission Accomplished

Privileged policies to privilege the already privileged. An important read.

Vouchers Are a Failed Experiment

I always appreciate it when someone outside the education debates world figures it out.

Success Academy Slashes Special Needs Classes

Oh, those pesky students with special needs. Leonie Haimson spots Eva Moskowitz cutting corners again

How Newarks Former Schools Chief Used a Victory Lap and Paid Consultants To Secure His Legacy

From Chalkbeat, a look at how a reformster used a pile of money to do PR for himself.

Mainstream Journalism Can't Handle the Truth

Paul Thomas explains how journalism is doomed to fail in covering education.

Response To Intervention's Role in the Texas Special Education Scandal

I definitely don't say it often enough-- you should read Nancy Bailey regularly. Here she drills down and looks at some of the detail behind the Texas plan to cut special ed costs by just not giving services to students who need them.

Beware Rich People Who Say They Want To Change the World

From the New York Times, a blistering look at the modern world of fauxlanthropy-- and yes, that includes education.

   

Can Scott Wagner Buy PA?

We'll be talking about Scott Wagner often in the months ahead, because he's running for Governor of Pennsylvania, and it would really be better for the Commonwealth if he did not succeed.

There are many things to know about Scott Wagner. People like to note that he has explained global warming-- it's either that the earth is moving closer to the sun, or possibly all those humans giving off body heat. He's a wealthy business man who has launched several businesses, but it's the trash biz that really made him wealthy. He's anti-union, and pretty sure that poor people are poor because they're lazy.

This frickin' guy

He recently made it clear that he would not be releasing his financials. His reason is simple-- he doesn't want his employees to know how much he makes because they might get the crazy idea that they should be paid more.

Wagner is a Cinderella story of sorts-- he made it to the PA Senate by beating both the GOP and Democratic candidate with write in votes. Granted, the voter turnout no more than 17%, but the GOP went from trying to box him out of the race to embracing him as a powerful new voice, and he quickly acquired clout in Harrisburg.

Some folks attribute that to a "no-nonsense style" with pronouncements like:

I'm gonna be sitting in the back of the room with a baseball bat. And leadership is gonna start doing things for [sic] Pennsylvania needs done.

Comments like that strike me as all-nonsense, but Wagner is one more millionaire who sells his common touch. It's part of his package, along with his multiple marriages and rocky personal history that his opponents have tried-- and failed-- to use against him (e.g. Wagner once had a protection abuse order brought against him by a daughter for choking her-- they are now tight and she works on his campaign).

But Wagner has another not-so-common touch feature-- he throws around a lot of money.

Wagner may seem like a political novice, but he was in the game well before he ran for Senator. The York Daily Record (his home town paper) figured in 2016 that since 2007, Wagner had spent more than $3.2 million dollars on political races. The 49th state Senate race in Erie County resulted in a seat flipped from Democratic to Republican; Wagner was the single largest contributor with a whopping $595,250 spent on the race. And he has spent aggressively on primary races, to make sure that the Right Kind of Republican is elected.

Wagner has spent more than $100,000 on several causes, including individual campaigns and to several PACs, including one that he's set up on his own and another that aims specifically to end teacher pensions in PA (you'll be unshocked to know that Wagner also opposes teacher tenure and other job protections). He hates taxes, and he wants Pennsylvania to be organized around what businesses want, and he has thrown a lot of money at campaigns for those causes.

At the same time, Wagner has become more pragmatic. Where he once railed against lobbying firms-- particularly those that served as PR firms for the campaigns of officials they would later lobby-- he now employs exactly that kind of firm. If you want to take over the state government, you have to be willing to pay up. Wagner promised he would throw seven figures worth of his money at the campaign, and there's no reason to doubt him.

Wagner is as clear an anti-labor, pro-rich guy candidate as you're going to find. He's a fan of Trump and Scott Walker. He hates unions, particularly the teacher union, and would like to gut them from every possible angle. He's a very rich guy who thinks that his money should give him the power to reshape the state to suit his own preferences. If you care about teachers or public education, it is not too early to start working to support Governor Tom Wolf.