Making money from charter schools, Pennsylvania style

by David Safier

Anne Ryman of the AZ Republic stirred the charter school purchasing pot when she wrote her story, Charter purchasing practices under scrutiny. I've seen the story alluded to and quoted in publications across the country. Some people have said the deals Ryman wrote about, "more than $70 million over the last five years," show the practice is exceptionally prevalent in Arizona. But other stories out there indicate the same thing is happening — maybe worse — around the country.

Take the story last July about Pennsylvania Cyber Charter School. Its top execs and board members are part of private companies, most of which spun off from the school, that have multi-million dollar contracts with PA Cyber.

During the 2010-11 school year, the last one for which data is available, PA Cyber got $103 million from school districts whose students opted to enroll in its home-based, Internet-delivered program. PA Cyber then paid $44 million to the National Network of Digital Schools Management Foundation, or NNDS, a nonprofit entity that once shared PA Cyber's top executive and three of its board members.

The long, detailed article (Damn, I love good investigative journalism!) describes enough incestuous financial dealings to make my head spin. Take, for instance, the guy who started the online school, then started the management company, NNDS. Three of the five members of the NNDS Board of Directors are also on the school's Board. The school turned its curriculum over to NNDS and rents it back.

During the 2010-11 school year, PA Cyber paid NNDS $13.1 million as a management fee, and $31 million for curriculum.

From 2005 through 2012, PA Cyber paid NNDS $207.2 million.

All of this may be perfectly legal, though someone may have crossed the line somewhere. The school was searched by the FBI looking for possible criminal actions, most probably related to the connections between school officials and private companies. In November, the spokeswoman for the school refused to talk to the paper writing the story, so details will have to wait until later.