Denis Smith is a retired school administrator who worked both as a sponsor representative for charter schools as well as a consultant in the state charter school office. In this five-part series, he offers his perspective about charter school governance and how this mechanism designed to provide transparency and accountability for public entities is sorely lacking and may in fact be the “fatal design flaw” of these schools.
Part Four
Previously, we looked at the legal duties of governing board members as they serve as stewards of charter schools. In their positions, these individuals are expected to perform the duties of Care, Obedience, Disclosure, Custodian and Diligence as they were detailed in yesterday’s column. While there have been far too many scandals associated with Ohio charter schools, one school in particular serves as the perfect model for examining the importance of governance and how this element remains as the critical design flaw or broken genetic code that may ultimately end or influence long-needed radical reforms to this costly experiment with public education.
The Cleveland Academy of Scholarship, Technology and Leadership Enterprise, or CASTLE, was founded for the purpose of serving high school students in Ohio’s second largest school district. But there was a major problem with the school that was there for anyone to see. The governing board president just happened to be a partial owner of the building which housed the school. Did anyone – other board members, parents, the school’s sponsor, state officials – see a problem here?
Ultimately, the Cuyahoga County prosecutor did, when in 2013, ten individuals associated with the school, including the school’s CEO, his brother, treasurer, board president and another board member were named in a 33-count indictment for corruption and the theft of nearly $2,000,000 of Ohio tax dollars.
At issue was the creation of thirteen shell companies that received funds for services that were not performed or otherwise documented. The board president, a part-owner of the building, also benefitted from school payments that were in excess of the stated lease amounts. Clearly the duties of Care, Obedience, Disclosure, Custodian and Diligence were violated in every way by the board and its retinue, and there was no knight in shining armor that defended this CASTLE nor anyone that served to protect the students or serve the public interest.
In examining the systemic conflicts of interest and atmosphere of corruption associated with the school and its governing board, state auditor Dave Yost framed the issue very clearly. “The rules are clear – you can’t be on both sides of the transaction,” he said. “In our schools, the top priority should be the children, not the pocketbooks of the administrators.”
For news coverage of this story and a link to the State Auditor’s report of CASTLE that led to the 33-count indictment by the Cuyahoga County prosecutor, go to this link: http://stateimpact.npr.org/ohio/2013/04/30/indictments-filed-for-corruption-and-theft-at-cleveland-charter-school/
The murky dealings of the CASTLE board reminded me of several other experiences I had in assisting the public with finding out information regarding the operation of Ohio charter schools and their governing boards. One parent called to inform me that she had stopped by her son’s school and went to the office to find out information about the school’s board, when and where they met, and contact information for the members. She was told that the information was not available and then contacted the state department of education to ask if in fact a “public” school could refuse a parent such basic information.
In another case, a parent, upset with the lack of materials in the school, requested information about the salary and benefits for the school director. She was told that the information requested was considered proprietary by the school management company. When the school sponsor was contacted for assistance with the parent request, the management company gave the same answer.
Here’s what we have seen as part of this picture. Hidden boards operating in the shadows. Hidden salaries for school directors. Governing board members approving school payments and profiting from services billed to companies allegedly doing business with the school. National and state charter school chains determining who will represent them on the board rather than individuals who advocate for students and parents. What will be the scope of information that will be provided to school stakeholders and state oversight officials.
What’s wrong with this picture? Why have we allowed this to happen? Who is paying attention to what is happening to public schools as a result of the charter school experiment? Where do we start in cleaning up this mess? When will the public react to the sheer volume of issues created by hundreds of unregulated, ungoverned, and underperforming charter schools? How can these schools be fixed, if at all?
The who, what, when, where, why and how questions have now been posed. Unfortunately, complacent and compliant print and electronic media have not asked these basic questions about charter school issues that are part of reportage. The watchdogs – supposedly the media and perhaps the legislature – are not watching, nor are they hearing the sounds of growing discontent about deregulated education as represented by the charter school industry.
Tomorrow, in the concluding part of this series, we’ll look at some remedies aimed at providing needed safeguards that can improve school governance and better protect the public.
Diane Ravitch's blog 
Their propaganda machine is in full swing now, and are bullying legislatures for public money. Charter schools are entrenched and they are not leaving. We couldn’t make the public entity accountable to the the parents , to the children or to the teachers. How are we going to bring these private entities into compliance with best practice. Bringing accountability after the fact is going to be impossible, I think.
Actually, there is an active movement to refine charter laws to make illegal a variety of conflicts of interest. There’s also a national organization dedicated to showing how authorizers should be holding these schools accountable.
http://nacsa.mycrowdwisdom.com/diweb/catalog/item/id/194990/q/n=9&c=82
“dedicated to showing how authorizers should be holding these schools accountable.”
But that’s the problem, Joe. Lawmakers just pass the buck. They write a statute ceding all authority to “authorizers” and they’re done with “improving public schools”. “Authorizing” isn’t a regulatory process, it’s a deregulatory process.
It’s the best thing that ever happened to lawmakers. All they have to do is provide funding and set up a “choice” system and they can wash their hands of responsibility for charter schools, which is what they’ve done.
The Ohio auditor admitted he has no legal authority over these schools:
“The plan is to “follow the money and try to figure out what had happened,” Yost said. “Under the Ohio setup, to the extent that anybody has line responsibility for oversight, it appears to be the sponsors.”
The auditor said he has the authority to investigate sponsors because they receive state money. Sponsors can keep up to 3 percent of the $780 million in state education aid that flows to charter schools annually.
The Dispatch reported in January that an unprecedented 17 Columbus charters had closed this school year — nine of them just a few months after they opened. Yost said he wants to know if the charter market is saturated, or if there are systemic financial problems.”
There’s another part of this that no one talks about: sponsors keep 3% of the public dollars that flow thru this system. They have a huge incentive to keep “authorizing” schools, which is what they’ve done. I have no idea how or if they earn that 3%. The child support agency in Ohio takes 2% of child support payments, and they issue every child support check in the state, conduct reviews, hold hearings, pursue claims, and on and on. What can the charter school “sponsor” possibly be doing to earn 3%?
In nearly every newspaper piece bashing public schools the Fordham Institute are quoted, opining endlessly on what public schools need to do. What a joke. They set up the Ohio charter system! Why would anyone take advice from them on public schools? Their charter system is a disaster. Why would I ever want public schools to follow charters?
http://www.dispatch.com/content/stories/local/2014/02/12/Yost_investigates_charter_sponsors.html
Yes Joe, we all know how private industry and the financial sector were held accountable to the tax payers after they caused the financial collapse in 2008.
I thought that you were one of those libertarian types who believes that the government (public) sector does not have the right to oversee or regulate private capitol, especially if it is being used to destroy the public sector.
I went to your link. The information there seems purposefully vague. Looks like this is a private entity currently in the process of suggesting laws to regulate themselves. We all know how that kind of system works….. wink; wink;
Actually the National Alliance is very specific about ways to hold charters accountable to goals that they and their authorizers develop.
And, Joe, the laws ed reformers lobby for put paid to their rhetoric on “accountability and transparency”.
You’ve pushed charter school governance up the state level, because you’re impatient with the local democratic process. The rubes at the local level might get in your way, so you went around them.
It’s good government 101 that the regulator stays close to the money. You’re plunking these schools down all over the state and the regulator is in Columbus. One. One person. The Ohio auditor.
When you complete the ed reform project of “transforming school governance”, when you’re conducting these “thought experiments” in DC, you might want to take a look at what 150 years of local governance has taught us. The regulator stays close to the money. There was a reason we set up local, elected school boards where the county auditor and treasurer has authority. The deregulatory approach ed reformers are imposing didn’t work.
When you were pushing laws to obviate local control, did anyone ask who would be watching the money? Or is that too boring and “status quo”?
“Rubes” is your word. Having grown up in the South, I’m fine with some limits on local control.
Yes, Joe.
We have federal laws and a constitution.
We did not need charter schools to right the wrongs of the deep south.
But nice try conflating the two.
Ang, in the Deep South, it was the segregationists calling for choice.
Now charter schools give them what they wanted in the 1960s.
At that time, the federal courts blocked choice, knowing it was a cover for segregation.
But the federal courts have stepped back from enforcing desegregation.
Apparently a number of people of color and white people who live in the South disagree. They are glad that state legislators in states like Mississippi, Texas and Florida have provided the charter option.
No one is saying that charters solve all the problems. There are some great district options in those states too.
It’s true that southern segregationists promoted school choice. It’s also true that many progressive educators have worked to create public school options since the 1960’s – all over the nation, including the south.
It’s also worth taking a look at a Harvard Education Review article that African American psychologist Kenneth Clark wrote that was published in 1968, called “Alternative Public Schools.” Clark was the co-author of the doll test that the US Supreme Court used to help justify its decision in Brown v. Board. By 1968, Clark was calling for alternative public schools developed outside of the local school board structure. These he suggested, might be operated by a variety of groups, including teacher unions. An abstract is available here. Unfortunately it will cost $10. to have access to the entire article:
http://hepg.org/her/abstract/1081
This description sounds exactly like Michigan. The charters are cash cows to the CEO and his/her family. The unqualified CEO and family are given free rein to run a school and rip-off the public. At least Ohio has done some reporting on the rip-off. The media here are cheerleaders and do nothing to end the theft. Could Denis possibly write about why a charter would lose their tax exempt status? The saddest part of all of this is the fact that our elected officials do nothing. In Michigan they went out of their way to degrade the teaching profession and do nothing about charters. I wonder if there is any group in Michigan or Ohio that have kept a running list of the charter rip-offs that could be given to the public?
It will change. It took ten years for Ohio newspapers to report on it. Until then, they were cheerleaders.
The Cleveland Plain Dealer went so far last week to say charters in this state have been “mostly a bust”, which is just a huge change from the decade-long pom pom waving we had prior.
Ohio kids were literally the first people to take the CC tests on the CC tests last week. I followed it on the non-governmental agency website that lawmakers have “authorized” to run the testing. I have no idea who is running “PAARC” nor do I know who they are accountable to, but they have a website and they’re “non profit” so I guess we’re good to go.
Ohio public schools were getting all kinds of atta boys for taking this test, and I have to say, it burns me up. For more than a decade, Ohio public schools have been the designated punching bag of both state and federal lawmakers. They push each other out of the way to get to a microphone to opine on our “failed and failing schools”.
Until ed reformers need them for their national project, and all of a sudden it’s all sweetness and light and teamwork. Of course, the kids don’t know their schools have been systematically defunded and undermined by the same people pushing these tests.
What a betrayal by these adults. Public schools are only fashionable when they’re running an experiment on the kids. Now that we’ve done that, performed that service for them, I guess they go back to completely ignoring these kids and their schools until it’s time for the next ed reform mandate.
Thank you for posting this excellent series by Denis Smith.
Readers might also like to take a look at this set of suggested reforms assembled by THE top Gulen charter school authority in the country. They have the potential to serve as a corrective to many other crooked charter school situations as well.
http://gulencharterschools.weebly.com/reform-laws-needed.html
Good for them. They have apparently realized they need an auditor a the county level. They could have looked at 150 years of experience and gotten there a lot faster, but they get credit for finally figuring it out.
Ed reformers regulate charter schools at the state level, and that will never work.
It doesn’t work for any other public entity, which is why every OTHER public entity in this state has a county-level office, and it goes down from there, county to city to smaller political subdivisions.
Health department, child support, law enforcement, public schools, voting, and on and on.
That was by careful and deliberate design.
Only charter schools are exempted from this scheme. Because the people who designed charter school “governance” in this state are much, much smarter than the dopes that designed the governance system, apparently. They decided to regulate charter schools by “authorization”, which is why no one knows where the money goes, and why cities get no warning when the schools close, and have absolutely no idea what is going on in there.
If the private sector—for profit no matter how you look at it—charter schools are here to stay, then the goal should be to make them as transparent and accountable as the real public schools.
No double standard. The same standards must be applied to all schools supported by taxes.
For instance, teachers who pay into teacher retirement plans can’t collect Social Security—even if they qualify—because the feds call this double dipping due to federal taxes that the public schools get.
The same principal applies in this case. If a private school gets any tax money, that same private school must be treated the same as every public school. No double standard.
This is what happens when “tiny government” is the objective above all else – no oversight, free reign to capitalism at it’s worst. I can’t wait to vote in November.
Joe Nathan
March 30, 2014 at 12:49 pm
“Rubes” is your word. Having grown up in the South, I’m fine with some limits on local control.
What did you think was going to happen when you got rid of local regulatory authority over your schools? People made off with the money.
Now there’s a shocker. No one could have predicted that! Nothing and no one except 150 years of hard-won experience in local government that ed reformers were either ignorant of or ignored.
You won’t be able to regulate hundreds of local schools at the state level. You’d have to hire an army of regulators. That’s why local school budgets are NOT regulated at the state level. The regulator has to be close to them money.
It’s a dumb and unworkable idea. The next time you set out to “transform” local government, maybe you should have some understanding of how it works, and why we did what we did, over 150 years.
My understanding is that you are an attorney. Is that correct? Assuming yes, there are many examples of state regulations on local districts.
And since there is great interest in what other high performing countries like Finland are doing, please note that Finland does not have local school boards.
There’s nothing magic about local boards.
“Finland does not have local school boards.”
Of course the US is exactly like Finland in size, diversity and social safety net.
We should do exactly what they do.
Of course.
Perfectly logical.
Funny! I admit it. I burst out laughing.
What works in Finland probably won’t work in the US. And it has nothing to do with the teachers or public schools in the US.
It has to do with a lot of other factors outside of the US schools that Finland doesn’t have to deal with. For instance, a poverty rate that’s nine times the population of Finland.
That’s just one of the challenges.
:o)
Some people cite Finland as an example of what the US should do.
What they should do is look at what Finland is doing that works and then make a list of the differences between the United States and Finland followed by a collaborative critical thinking, problem solving discussion among educators and involved parents to see what each school has to do to make it work.
For sure, a school that is located in a middle class or upper middle class community that’s mostly white and/or Asian will not have the same challenges that will be found in schools located in communities mired in poverty with high rates of Latinos and Blacks.
Finland has local school boards. There are national, regional and municipal boards, and every school has their own board, each with a minimum of five parents.
http://www.ncee.org/programs-affiliates/center-on-international-education-benchmarking/top-performing-countries/finland-overview/finland-system-and-school-organization/
According to Pasi S – Finland does not have the equivalent of US locally elected school boards. Note that this citation does mention that Finland has some private (religious) schools that do receive state funds. We would call this vouchers. I’m not suggesting vouchers for the US – just noting that Finland does provide funds for religious schools.
The Finnish school boards sound like local school councils (LSCs) here, such as those mandated in Illinois for Chicago schools, which must also have a specific number of parents, as well as teachers and community members (and a student in high schools), who are elected.
Note Sahlberg wrote in his book, Finnish Lessons, “This book speaks against those who believe that the best way to solve chronic problems in many education systems is to take control away from school boards and give it to those who might run them more effectively, by charters or others means of privatization” (2011, p.6.)
Also, unlike most private and religious schools in our country, the few private religious schools Finland has are regulated.
References
Sahlberg, P. (2011). Finnish lessons: What can the world learn from educational change in Finland? NY: Teachers College Press.
Yes, Pasi has his views – but there also are facts about what is happening in Finland. Finland does offer options and part of the respect for teacher autonomy is to give educators the opportunity to create those options. Families have options other than the neighborhood schools.
Sahlberg said, “In Finland parents can also choose. But the options are all the same.” That’s because competition and choice were not the focus of school reform there; cooperation and equity were. We have very serious equity issues here that are NOT being resolved by competition and choice. We should also be focusing on cooperation and equity.
http://www.theatlantic.com/national/archive/2011/12/what-americans-keep-ignoring-about-finlands-school-success/250564/
It’s not either collaboration or competition. Colleges constantly both compete and collaborate. Some school districts do the same – recognizing that they can not do all the things that they want.
Pasi is welcome to say that the schools in Finland are all the same. But having talked with a variety of students from Finland, I’ve heard quite a different story.
In any case, given the development of suburbs and long established magnet schools, there is going to be school choice in America. A key question is how much will be available to students from low income families who can’t afford to live in affluent suburbs, and whose youngsters are not able to get into the elite “magnet” schools in many American that use admissions tests.
Some of the most encouraging cooperation & collaboration I’m seeing is in some places where district & charter educators are collaborating.
You are seeing through rose colored glasses. Our current K-12 system is set-up to promote competition between charters and neighborhood pubic schools, not cooperation. I have never seen them collaborating in my area and for good reason. Why work cooperatively when it’s competition that determines survival and politicians have determined there are always going to be winners and losers?
The focus should primarily be on equity, but those in power refuse to address that nor our obscene child poverty rate, and they rarely even articulate the words poverty and poor, including Obama:
http://www.washingtontimes.com/news/2013/jul/8/obama-gets-poor-ranking-on-mentions-of-poverty/?page=all
Care to share “what area” you live in? I ask not to be nosy but there may be some collaboration going on that might interest you.
Ignoring the charter issue, school districts in many states compete (and collaborate) with each other. Real estate agents in many states have material suburban districts have given them to convince people that they should like in the district.
Instead of supporting win/lose business tactics that do not belong in education, where low income children are virtually always the losers, in every country, get your beloved Obama to do something about equity for the working poor parents of all these kids in poverty.