In 1994, the Charter School Fund was added to the Elementary and Secondary Education Act (ESEA); in 1995 it began dispersing federal funds to states so that states could use the money to pilot charter schools. Since then, the CSP has handed over about $4 billion to support charter schools, and there are supposed to be some federal guidelines attached to the process. But a new report from the Network for Public Education charges that roughly $1 billion of that has been lost to fraud and waste in the charter school sector. Findings of the report were brought to the attention of Secretary of Education Betsy DeVos during this week's hearings; her responses were not encouraging.
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. The report was written by Burris and journalist Jeff Bryant.
The report, "Asleep at the Wheel," focuses on seven areas that are wasting taxpayer money.
Charters that never opened, or closed quickly.
In many cases, CSP awarded grants to schools that never even opened, or closed soon after opening. In 2015, Innovative Schools Development Corporation pulled in a three-year federal grant for $609,000 to open a STEM school. The school promised to enroll 250 students, but it wanted to open in a county that already had twenty charter schools, and enrollment never topped thirty students, nor did it secure the rest of its needed funding. Its charter was revoked before it even opened.
CSP had previously awarded over half a million dollars to the same company, despite internal review noting that "there is no explanation on how the curriculum will be implemented and aligned with the standards for the state." The school opened in the fall of 2015 and closed five months later. Among other problems, the school was found to be out of compliance on all 59 of its Individualized Education Plans.
In California, the state with the highest number of charter schools, between 2004 and 2014, 306 schools that received direct or indirect federal funding closed or never opened. One hundred and eleven closed within a year. Seventy-five never opened at all. The cost to taxpayers-- over $108 million.
CSP's grant process does not involve verification of application contents.
Charters have filed application touting their intention to serve poor urban students, and while a quick look at their student demographics would show that their intention is not being followed in the real world (for example, the MaST Community Charter School of Philadelphia, with a 41% low-income enrollment compared to the city's 91% low-income student population). Repeatedly application reviewers express misgivings about the reality of an application, but those reservations are not considered during the awarding of grants.
Grants have been given to schools with barriers to enrollment.
Even though they are private schools, charter schools are expected to be open to all students. The report finds that many charters funded by CPS use "policies and practices that discourage or deny enrollment by certain types of students." These barriers can be as simple as the advertising copy for some schools; Idaho's American Heritage Charter School emphasizes "patriotism" with a dress code that forbids denim and head coverings. Some charters don't provide transportation and require parents to make financial contributions to the school, thereby boxing out low-income families. Some charters strongly discourage or even turn away students with special needs. A 2016 report by the ACLU of Southern California found illegal or exclusionary practices used by over 200 California charter schools.
Ignoring the Office of the Inspector General.
Many of the issues raised by the report have been previously raised by the OIG. While charging and convicting many charter fraudsters over the years, the OIG has frequently made recommendations that oversight be increased and controls be tightened. A 2016 audit, while looking at the problems between charter schools and charter management organizations, the OIG found "The department’s internal controls were insufficient to mitigate the significant financial, lack of accountability and performance risks that charter school relationships with charter management organizations pose to department program objectives." The department noted in response that it doesn't have the resources to monitor how every charter behaves, an admission that CPS is sending taxpayer dollars out into the charter world and simply hoping for the best.
The department does not exercise sufficient oversight.
The OIG had noted that sub-grants--where state ed departments hand off money to individual charters--is the point of the worst abuse of the system. The NPE report determined that things are even worse than the OIG suggested.
Michigan is one example of a state that is wide open to abuse. For instance, ProPublica's "Miseducation" project found that at Hope Academy in Grand Rapids, with a $550,000 sub-grant, non-white students were seven times more likely to receive harsh punishment than white students. Arizona's application for CSP grants includes the objective of "improving the academic outcomes of educationally disadvantaged students," yet an ACLU study found a wide pattern or "illegal and exclusionary" practices to keep those students out of charter schools. Multiple states have been found at various times to be doing a lousy job of handling the federal funds, and yet CPS does not call for additional oversight or assurances that the state will do better.
CSP grants to charter management organizations are "beset with problems."
It has become one of the most commonly-noted problems of the charter world, and the means by which a so-called non-profit charter still enriches its owners. An entrepreneur sets up a charter school, then hires his own company or family members to provide the critical services for the school while leasing the school building from himself. This type of "sweeps contract" has plagued charters for the last two decades. Charter schools getting grants from CSP are no different--and CSP has taken no steps to make sure that they are different.
As the money level rises, the awardee quality level drops.
The amount of taxpayer money spent by CSP has increased steadily over the past twenty-five years, regardless of the party in power. The NPE report finds that the past few years have seen an increase in funding--and a decrease in the quality of the schools that apply for and receive grants. The department's own reviewers are giving applications scores in a low range (71.6 out of 108 in one case), and yet the applicants still successfully receive taxpayer dollars for their charter school.
What to do about it.
These are the broad strokes of the report; the full report is thick with details and specifics. A huge pile of taxpayer money is going to waste. NPE recommends, essentially, a hold on the CSP grant process while the history and current state of grantees is more carefully examined, with an eye to putting more safeguards in place. That seems like the least the feds could do provide better oversight of the money involved.
Whether you support the idea of charter schools or not, there is no reason for this level of waste. Charter schools can exist without having federal funding infused with little oversight or accountability. None of the abuses covered by this report (and other reports like it) are committed in the name of better education for students or more freedom for families. This is about the federal government handing money to people who have are not competent to put it to good use. This is about the federal government leaving huge loopholes in a program and a bunch of folks hoping to drive an armored car through those loopholes, load it up with cash, and stuff it all in their own pockets. We are long past the point of charter schools being an experiment that needs boundless freedom to try anything. We can see now what some of the effects of the experiment are--waste and fraud.
Confronted during hearings this week with this report's findings that one in three of the charters that CSP helped fund have shut down or never opened, Secretary of Education Betsy DeVos said she thought there should be more charters, not fewer. Even if you agree with that assertion, surely the price of having a few good charters cannot be hundreds of millions of taxpayer dollars simply paid into the void, never to be recovered and never to be used to provide for the service for which they were intended.
