by David Safier
We don't know much about what's happening in charter schools here in Arizona, because they're unregulated and unmonitored. To make an analogy to the semi-regulated world of high finance, some charters are certainly solid institutions that are working in the best interests of their "investors" — the students and their parents. But there are likely some bad actors out there as well, and maybe even a few Bernie Madoffs, who are looking out for themselves and not the students and parents they're supposed to serve. And we know how well it worked out in the financial world when the government said, "You folks don't need us looking over your shoulder. Just go out there and do what you do best."
I'm seeing more and more stories from other states about charter schools getting into various types of trouble. Here are three.
The Georgia State University report released Monday found that money problems have led at least eight charter schools to close in the last few years, but more could shut down if the schools don't find a way to operate in the black.
Initially, Georgia charter schools were public schools converted to charters. Now they allow independent charters, and those are the ones running into trouble.
2. From Pennsylvania: This is a real mess. The people who run Agora Cyber School, an online charter, have been accused of skimming lots and lots of money from the school in excessive management fees. (If that sounds like what we've been hearing lately about STOs, that's because it's the same thing. You pay yourself more than market rates for contracted services and make a whole lot of money. It's easy to do when no one is looking, and very illegal.) This has been going on for months — I've posted about it before — but it's in court now, and it's getting ugly, with lawyers asking for gag orders so lawyers from another party can't talk to the press.
That "other party" happens to be K12, Inc., who regular readers of this site will recognize as the national online schools business founded a number of years ago by Bill Bennett and others. I did some investigative reporting about Arizona Virtual Academy, which K12 owns, and its practice of outsourcing student essays to India to be graded (The company says it has stopped the practice). It looks like K12 Inc. is mostly blameless and a local Philadelphia company is the one doing the bilking. But Agora apparently accounts for about 10% of K12 Inc's total business (our own Arizona Virtual Academy is about 10% of their business as well), so they have a real financial stake in keeping it open.
3. From Lots of States (possibly including Arizona): Imagine Schools runs a string of charter schools nationwide, including over half a dozen here in Arizona. The company has a funny relationship with the actual school buildings that house the charters. A separate wing of the company buys or builds the schools, sells them to another company, who rents them back to the first company who in turn rents them to the charters. It's a complicated arrangement, but it means rent can eat up as much as 40% of the money the charter school gets from the state, which results in handsome profits for the landlord and an underfunded education for the students.
Are similar things happening in Arizona? We don't know, just like we didn't know what was going on in the world of tuition tax credits and STOs until some private citizens and journalists uncovered hanky panky that was going on under the state's nose while it wasn't paying attention. I'm pretty confident the world of Arizona charter schools is not totally pure of heart. That's why we need to rewrite the legislation to put some regulatory teeth in it.
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I am concerned with all the money the State will be receiving for more Charter Schools. Is the State Board of Charter Schools capable of handling the additional work? If this system has all these problems now, is it really smart to put $53 million more in it.
My child was in a charter school where the owners paid themselves excessive “management” fees. They also ran a for profit preschool, after school and summer program alongside the “not for profit” charter school. I was on the finance committee for the school and discovered that they charged almost all of the expenses to the charter (including the utility bills in the summer when the charter was not in session). They also had a “scholarship” program where the owners “donated” to the 501c3 non profit and then gave a grant to the only applicant, their son, to cover his law school tuition. This scholarship program had no other applicants because it wasn’t publicized, it was just a way to evade taxes so they could have the taxpayers subsidize their tuition payments.
There was nobody at the State Board for Charter Schools who was interested in investigating this “good old boy” Republican. He expanded the business, got in some trouble for hiring undocumented workers to remove asbestos from classrooms when he knew it was there and dangerous (too expensive to have it removed correctly). Again, nobody at the State Board for Charter Schools cared. It’s the Wild West out there, skim as much as you can. Very sad situation.
Wow, thanks for bringing this to our attention. I have heard that charter schools in AZ are largely unregulated. Hopefully articles like this will shine the spotlight on the necessity for more transparency and accountability.