Charter Schools USA is a very successful for-profit business. It is very profitable. Its CEO Jonathan Hage is an entrepreneur, not an educator. The company’s headquarters are in Florida but it operates 70 charter schools in seven states. It hopes to take over the entire York, Pennsylvania, school district. The money to operate the charter schools come out of money that would otherwise go to district public schools.
How does Hage and the corporation make big money? It is not the management fee of 5%. It’s the rent.
As Channel 10 learned in its investigation, charters profit handsomely by paying outsize rent to themselves.
“When the company helps open a new school, its development arm, Red Apple Development, acquires land and constructs a school. Then, CUSA charges the school high rent.
“For example, Winthrop Charter in Riverview may struggle to balance its budget this year thanks to a $2 million rent payment to CUSA/Red Apple Development. The payment will equate to approximately 23% of its budget, even though CUSA CEO Jon Hage has been quoted as saying charter school rent should not exceed 20%.”
The corporation says that as long as test scores are high and parents are happy, the profits are no problem.
“But among CUSA’s critics is the League of Women Voters, which recently released a study suggesting a troubling lack of separation between a charter school’s advisory board and for-profit management companies. It also indicates charter school teachers aren’t often paid as well and profits all-too-often play a role in educational decisions.
“That means that children aren’t getting what they’re owed by the public funding,” said Pat Hall, a retired Jefferson High department head and Hillsborough County’s education chair for the League of Women Voters.
“The study also revealed school choice creates a higher risk of disruption to a child’s education, as “statewide closure rate of charters is 20%” and “Charters are 50% of all F-rated schools in 2011.” In the last week, last-minute problems displaced a hundreds of charter school students from St. Petersburg to Delray Beach.
“Hall acknowledges many charter schools are teaching children in unique and successful ways, but says Charter Schools USA isn’t offering students anything that’s not available in public schools. She adds that the schools are so focused on FCAT fundamentals, they forego many traditional aspects of the school experience.”
CUSA schools often don’t have a library or cafeteria, but school officials tout the superiority of eating in the classroom and having a classroom library.
Diane Ravitch's blog 
TY, Diane. Good one.
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Perhaps even more disturbing is the lack of independence of their CSUSA charter school boards. CSUSA runs seven charter chains that in turn each run many schools. At least 3 people serve on all seven boards. Ties to CSUSA are direct.
The board appoints a parent representative to report to the board. Board meetings are generally held at the CSUSA headquarters in Ft. Lauderdale.
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It’s a chain of corruption, sanctioned by our government, and underwritten by public money.
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“CUSA schools often don’t have a library or cafeteria, but school officials tout the superiority of eating in the classroom and having a classroom library.”
YEP, Superior for helping to provide superior profits off the backs of the students for the very few
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If I were a charter supporter (not that I’m thinking of anyone in particular, ahem), I would be the first and the loudest to speak out about this kind of abuse. It sullies the whole idea (and ideals) of charters, even for those who believe that charters are beneficial. Or so I would think. It’s not like this is some isolated situation in a small mom-and-pop charter that can be shrugged off as a one-off. This is one of the largest charter chains – these are the people pumping money into the whole “reform” movement. Is this kind of gouging okay with the charter supporters?
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Dienne – See Education Week next month. Having said that, the silence among most commentators here to stories of district scandals, such as one I posted this week, or of teachers abusing students, is notable.
Child abuse, mis-use of public funds – whether in district or charter – strikes me as reprehensible.
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Yes, Joe, there are scandals in public education. There was a big one in my district about four years ago. That being said, what is the percentage of charter schools with financial improprieties, and the percentage of public schools with the same? Since 95% of children are educated in real public schools, it would seem that public schools would have more of these scandals than charters, but the opposite seems to be true (I read a lot of educational journals and blogs, not just this one). I don’t know if anyone has ever done a study on these numbers, but I would be interested to see a study.
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It would be interesting to know. There are a number of people dedicated to pointing out charter scandals…do you know of anyone who is doing the same with district & union scandals?
Pro-Publica has been cited several times when they question charters. Interesting that no – one of the many NYC posters mentioned this district problem.
Whether district, charter or union – misuse of public money, and mis-treatment of students is wrong and should be vigorously opposed. There is a lot of activity in the charter world to go after problems. In the district sector ?????
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Sorry, I forgot to mention the criticism of testing costs. Yes, lots of attention to those costs.
I keep looking for equal attention to district teachers who abuse kids, or teacher union corruption, or scandals like this one. Apparently many of the posters here don’t think those are worth pointing out.
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Die-hard supporters of charters make very poor mind readers.
😎
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“CUSA schools often don’t have a library or cafeteria, but school officials tout the superiority of eating in the classroom and having a classroom library.”
Sounds like NYC public schools!
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Yes Flerp… after co-locating charter operations move in and take space from NYC public school students.
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I wasn’t thinking about charter school co-locations. I was thinking of my kids’s school.
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Of course your kids…. I forgot for a moment that your kids are what we are talking about.
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Does anyone voting on these schools look a their claims? They’re touting their south side Chicago school to sell privatization in York, PA.
Karen Lewis says (on Twitter) the south side Chicago school isn’t a success.
I mean, honestly. How hard can it be to check? It’s like these states are forbidden from looking at the charter record in other states. These are national companies. Take advantage of that national profile and paper trail and reputation! Check the claims! Your state isn’t uniquely wonderful. If another state got screwed yours will too.
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“Charteracketeering”
One hand pays
The other grabs
Charter ways
To launder cash
Rent to self
At sky-high rate
Accrue the wealth
For later date
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Knowing the considerable interest many people have in commenting on education scandals, this one, described by ProPublica in NYC might interest you.
http://www.propublica.org/article/nyc-sends-30-million-a-year-to-school-with-history-of-giving-kids-shocks?utm_source=et&utm_medium=email&utm_campaign=dailynewsletter&utm_content&utm_name
I give ProPublica credit for describing district & charter scandals.
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Thank you for posting this, Joe.
Coincidentally, the following–for whatever reason–reminds me of other rotten school ventures:
1) “The Center has long fought states’ efforts to regulate it. It has won nearly every major court case and has spent substantial amounts on lobbying.”
2) “To recruit students, the Center runs radio ads and has a toll-free number, reaching parents who are desperate for help. “We get a lot of cold calls from parents,” Crookes, the executive director says. About 90 percent of the school’s kids are minorities.”
3)”In a case this year involving a Rotenberg placement, New York City lawyers argued that Papakhin’s relationship with the Center posed a conflict of interest, potentially influencing him and another lawyer to recommend placements at the Center that weren’t appropriate. The judge on the case said there was no evidence that had occurred.”
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What I get from the article is that court precedent has established that parents of kids with disabilities have a right, under certain circumstances, to send their kids to private schools and have the government pay for it. It doesn’t appear that there are too many limits on which schools in particular parents are allowed to choose for their kids, and that despite Rotenberg’s well-known and well-publicized record, there are some die-hard parents who support this “school” since it is the only place that has been able to “control” their kid. So it appears that parents are sending their kids to this “school” and then suing to have NYC pay up. It also appears that the city has tried many times in the past to fight these lawsuits and have lost many of them. So the take away is that the city is trying to simultaneously save themselves some losing battles while also making it easier for parents to send their children with disabilities to private schools and put a sunny customer service face on it all. I don’t think the city is any too happy about any kids going to this “school”, but they’ve learned to recognize a losing battle when they see one. But for those battles that are still winnable, sounds like they intend to keep on fighting. I put the blame largely on this corrupt “school”, although I’ll admit that it takes some systemic support from the government to keep private corruption going.
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Thanks Joe, but I don’t think that the article you linked to is making the point that you intended it to make. Rather it makes the point that parents insist on sending their disabled children to this school and the courts tell the districts that they must pay. What, if anything does that have to do with public school scandals? Or did I not understand the point you were trying to make?
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Betsy, some people involved think the city and other groups could be doing more to challenge placement in this questionable school:
“But Judge Rotenberg officials told ProPublica that Mayor Bill de Blasio’s administration has made it easier for New York City kids to go to school at the Center.
“I’ve seen a change since Mayor de Blasio came on board,” says Glenda Crookes, the Center’s executive director. City lawyers appear to be settling a lot of the cases, she said, adding, “It doesn’t seem like the parents have to go to hearings anymore.”
A de Blasio spokesman confirmed the Center is benefiting from a new policy in which the city doesn’t fight cases involving special needs kids in which it “is unlikely to prevail.” The change was part of an effort the city unveiled earlier this year streamlining the process for the city to cover the cost of private school or services for special needs children. Such cases have been fraught with conflict and litigation in recent years.
“The city still reserves the right to oppose families’ claims for schools that are not appropriate for the child’s need,” spokesman Wiley Norvell says.
Councilman Vincent Gentile, a longtime critic of the Rotenberg Center, says the issue goes beyond de Blasio. “I’ve said long ago that State Ed and New York City Department of Education have to take a stand on this,” Gentile says, “and up to now, they’ve been unwilling.”
“The city’s department of education is not putting up a big fight to keep kids out,” Gentile says.
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I’d wouldn’t call this a “district scandal” of the kind that would parallel “charter scandals.” I think it fits more in the category of the problems, abuses, and dysfunctions of special education contracting, with a theme that’s very similar to many of the critiques of charter schools.
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FLERP – what would you do if you were a NYC administrator charged with dealing with this situation?
Here are some things that might be done:
a. Identify what other schools are being used by other districts to meet these students needs
b. Identify some local teachers who are doing a great job dealing with some of these students
c. Ask these teachers and some families who send their children to other schools to meet with families that currently are insisting their children be sent to this highly questionable school.
When the school’s attorney is making more than $450,000 a year (for several years) and the school is doing some terrible things, I think this is a scandalous use of public dollars.
Seems that there are ways to convince at least some families that better options exist. What do you think?
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The main issue is that, in many locations, charter schools are not permitted to be for-profits, so the schools themselves are non-profits and they don’t pay taxes, but they are often run by for-profit management organizations. I have worked in a lot of non-profit and for-profit P-12 private schools and none were run by separate for-profit management companies. I think this is a rather new phenomenon specific to charter schools that developed as a method of diverting public funds to private enterprises while circumventing a number of laws, such as requirements regarding their boards, audits, etc. These charter schools are basically serving as fronts for profiteers.
This matter has spread to other manifestations of corporate education “reform,” including non-profit foundations that are arms of corporate giants, such as Pearson and Gates.
I first saw this done in higher education at a non-profit school which fronted for a number of for-profit companies involved in running and profiting from it, which were owned by Michael Milken. They managed all aspects of the school and its governance, including having controlling votes on the appointed board, as well as training large numbers of his employees from one of his companies at the school. Every faculty member was hired as an independent contractor, so he evaded paying payroll taxes, too.
Remember that the for-profits are supposed to pay taxes, so to be profitable, the for-profit management companies must take in enough money to cover their tax debts –or figure out ways to not pay them, such as by claiming that every teacher is not an employee but is an independent contractor. On top of that are the for-profits that are publicly traded, such as K12 Inc., which must take in even more money to pay both taxes and dividends to shareholders.
While state laws are inadequate, such as by not addressing how this has been allowed to play out and overlooking conflicts of interest, I think the problem has been permitted to metastasize largely because of the IRS and their failure to implement regulatory oversight of non-profits and the for-profits which have been allowed to control them. IRS is too busy going after veteran teachers like me who make $25K per year (after teaching for four decades) by garnishing my paychecks and now my Social Security.
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o.k. … I started this high school math teacher thing in 2003 at age 43, after working as a lowly support serf at Microsoft for a few years, after working 15 years as a cook from Boston fine dining to Alaskan fishing boats … this teaching job is crazy, and, I get that lots and lots of educator-people aren’t that tied into all the shenanigans of the regular ‘ol working stiff economy … BUT
This crap has been going on for decades in the food service and retail world … and anywhere else MBA parasitic management could outsource & set up sham management companies to siphon off revenue.
Anyone see the owners of franchise x,y,z telling some legislative committee how a non starvation minimum wage is gonna destroy their franchises … well, guess how much these franchise owners are paying in rent to the home company? Guess how much they’re paying for those company logo straws & napkins & Pearson text books for the Pearson Charter tests… ooops, stoopid me, I get things confused..
BTW – this is NOT a problem to be solved by everyone going to college and getting their Rodin “I’m! A!! Thinker!!! Degree!!!!”, and leaving these ‘low’ status jobs. Check out “Employment by major occupational group” http://www.bls.gov/emp/ep_table_101.htm – the occupation labels Food Preparation… & Sales…. There are appx. 11.7+15.1 = 26.8 MILLION people in these broad occupations.
While I appreciate the great analysis I see on this blog, and it essential in the fight against these bandits, a huge reason this pilfering crap continues is that us lowly know bodies are socialized to pretend like we’re all 1 phone call away from kicking it at the Dilettante Salon & Club, and you ain’t getting in The Club if you’re gonna call lying thieves what they are!
rmm.
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