Archives for category: Education Industry

The following article is by Patricia W. Hall, chair of the League of Women Voters Education team in Hillsborough County, Florida. It was originally published by La Gaceta in Tampa, Florida. The state League of Women Voters recently published a one-year study of charters across Florida.

Charter School Explosion: Follow the Money

Patricia W. Hall

Although charter schools must, by Florida law, be overseen by a non -profit board of directors, there are many ways in which for-profit organizations have begun to highjack the charter school movement. For-profit management companies frequently provide everything from back office operations including payroll, contracting with vendors for food services, textbook, etc., to hiring principals and teachers and curriculum control; so what was sold to parents and children as a local public education innovation now looks more like national charter-chains, the “Waltmartization” of public education. According to education expert Diane Ravitch, “nearly half of all charter school students are enrolled in a charter chain school” in the United States. The top four charter operators in Florida for 2011-2012 were Academica (72), Charter Schools USA (37), Charter School Associates (20), and Imagine Schools (23). These are not the small, locally run experimental schools envisioned by the original legislation.

The real profits, however, are not in the operation of the charter school, but in the real estate development. After receiving a variety of grants, loans and tax credits for building a charter school, the for- profit chain charges ever escalating rents and leases to the school district, paid by tax-payer education dollars. The for-profit then reaps the profits when the building is sold in a few years. Meanwhile the properties with high, non-taxable, values based on claimed “commercial” revenue streams from public tax-payer dollars are leveraged to borrow additional funds to build more school buildings.

Our shining local examples in Hillsborough County are owned by Charter Schools USA. My first glimpse of Winthrop Charter School in Riverview in November of 2011 was during a scheduled visit with then Rep. Rachel Burgin. When told the two story brick building was a charter school, I was mystified. The site on which it was built was purchased from John Sullivan by Ryan Construction Company, Minneapolis, MN. From research done by the League of Women Voters of Florida all school building purchases ultimately owned and managed by for-profit Charter Schools USA are initiated by Ryan Construction. The Winthrop site was sold to Ryan Co. in March, 2011 for $2,206,700. In September, 2011 the completed 50,000 square foot building was sold to Red Apple Development Company, LLC for $9,300,000 titled as are all schools managed by Charter Schools USA. Red Apple Development is the school development arm of Charter Schools USA. We, tax payers of Hillsborough County, have paid $969,000 and $988,380 for the last two years to Charter Schools USA in lease fees!

The big prize purchased by Ryan Co. at the same time, March of 2011, was the 58,000 square foot former Verizon call center on 56th Street in Temple Terrace for $3,750,000. Ryan Co. made no discernible exterior changes except removal of the front door, added a $7,000 canopy and sold the building as Woodmont Charter School to Red Apple Development for $9,700,000! Who would not love a $6 million dollar boost in 6 months? Lease fees for the last two years were $1,009,800 and $1,029,996! Are we outraged yet? Woodmont made headlines in the Tampa Bay Times this spring as an “F” rated (FCAT score) school advertising for new students and a fired teacher reporting that out-of-field teachers and uncertified teachers were on the faculty.

Similar figures exist for the last of the triumvirate for CSUSA, Henderson Hammock Charter School in Citrus Park which opened in 2012. Their lease fees are the largest of the three, $1,170,000 for 2012-3013 and $1,193,400 for 2013-2014!

These three Hillsborough schools opened since 2011 enroll more than 20% (2,799) of all charter students: Winthrop – 1,254; Henderson Hammock-895; and Woodmont-650. The other for-profit management companies in our county are Charter School Associates with 10 schools, the Leona Group with two small schools and Accelerated Learning Solutions with two virtual (online instruction) high schools. These four for-profit management companies, including Charter Schools USA, control the finances for 17 of the 42 charter schools in Hillsborough County.

In Florida, according to the League of Women Voters Statewide Charter School Study, the three largest for-profit management companies (Academica, Charter Schools USA and Imagine) control 27% of all charters. The proposed MacDill Charter School was rejected by Hillsborough County Schools because of questions regarding governance (the people running the school) which will be covered in the next article.

The high per student management fees (around $450 ) plus rent/lease fees (at least 20% of the total school budget) mean that there is less funding available for “instruction,” including teacher salaries, books, etc. In Florida Trend Magazine, Jonathan Hage, CEO of Charter Schools USA, brags his biggest efficiency is in administration. Where Miami-Dade County spends $2,036 per child on administrative costs, he spends $1,425. In Hillsborough that equates to 2,799 children times $1,425 equaling $3,988,575! That is money in his “pockets,” not instructing children who need to be educated.

In addition to direct funding of charter schools, the federal government provides tax breaks to encourage banks and individuals to invest in charter school construction. The Community Renewal Tax Relief Act of 2000 included the New Markets Tax Credit, which provides wealthy investors with a 39% tax credit that more than doubles returns on these charter school construction investments within seven years. Furthermore the head of Entertainment Properties Trust – a large real estate investment firm – David Bain, appeared on CNBC in 2012 telling the audience “how profitable charter school investment has become.”

While you are shaking your head at the implausibility of the aforementioned investment, hold on! The Immigrant Investor Program, also known as EB -5 (Employment Based to the 5 Category) Program permits foreigners who make investments in charter schools to bring their whole family to the U.S. on green cards! Wealthy foreigners can contribute just $1,000,000 toward urban charter school development or $500,000 in a rural area, they are required to create 10 jobs for Americans and the investor gets visas for the whole family!

We discovered that Ryan Construction Company, in collaboration with Red Apple Development and the Florida Development Finance Corporation, secured a mortgage and loan agreement for multiple sites with Regions Bank in Tallahassee for $55,800,000 tax-exempt series (the “Series 2012A Bonds”) and $3,520,000 taxable series (the Series 2012B Bonds ). This transaction was November 1, 2012. Red Apple Development had secured a mortgage from Church Loans and Investments Trust dba CLI Capital in Texas for $9,841,000 for the Woodmont Property in late 2011; they paid off the nearly $10,000,000 mortgage in 16 months (January of 2013) by virtue of the $55,800,000 “windfall”.

From The Tampa Bay Times opinion editorial April 1st, 2014 “Another area where the distinction between public and private is blurred for the benefit of for-profits is the issuing of bonds. Although Florida law prohibits charter schools from issuing bonds, Charter Schools USA has found a way. When naming Jon Hage as Floridian of the Year, Florida Trend in December 2012 contended that Charter School USA is the largest seller of charter school debt in the country. “It will sell $100 million worth of bonds this year (2012-13), Hage says. . . The bonds come with tax-exempt status because they are technically held by the non-profit founding boards that oversee the schools.”

As you can see “following the money” in the for- profit charter sector is very complex and, in some cases, impossible. Audits are incomplete and, because of the blurred line between the non-profit and for-profit entities, requests for information are rebuffed, as these charter chains claim to be “public” when seeking public education dollars and “private when avoiding accountability. As one of our LWV members characterizes their attitude, “Heads we win, tails you lose.”

America’s for-profit education industry is BIG BUSINESS on a global scale. Charter school profiteering is alive and thriving in Florida and many other states. Profit is the end game with profits trumping public good. What happened to “corporate social responsibility” and political ethics??

In response to a post by Peter Greene (“The Arne Duncan Drinking Game“), this reader describes the National PTA convention in Texas. The National PTA has received $2.5 million from the Gates Foundation, including $500,000 specifically for Common Core. Also, the National PTA provided a screening of the anti-public school “Waiting for Superman” at its annual convention in 2011. Odd.

She writes:

“I was at that PTA convention in Texas and I bit my tongue through his entire speech. I wanted to throw up. I have lost faith in the PTA. While I love what PTA does at a local level for our schools, I am sickened by what I see at the state and National PTA levels. Our voices as members have been sold out to corporate interests, and the top leadership is out of touch with parents today. Most of the top leaders dont even have children in public schools anymore so they think we are overreacting about the excessive testing and problems with common core. The leaders enjoy the power and prestige of their office and won’t listen to parents and teachers.

“Even more alarming, the general meetings at the national PTA convention were sponsored by Discover Card, Microsoft, and Pearson. During the general meetings, attendees were forced to sit through 15 minute commercials about their corporations and hear about their “partnerships” with PTA. The week before the convention, delegates received emails from PTA with advertisements for Pearson, telling us to be sure to stop by Pearson’s booth in the exhibit hall. How much did PTA get to spam our inboxes with marketing? We paid a lot of money to attend that convention, I don’t appreciate my email address being sold like that, especially to Pearson.”

Charter schools have been the beneficiary of a myth, the myth that a free market in schooling will produce miraculous results. Unfortunately, like most myths, it is not true. Deregulation translates into lack of supervision and oversight. In the absence of supervision of public funds, scams, frauds, and corruption flourish.

Jeff Bryant here reviews some of the egregious examples of charter school corruption in Ohio, Michigan, and Florida. Billions of taxpayer dollars are being transferred to the private sector, where no one supervises how those dollars are spent. Worse, the businesses that get the money spend large sums to hire lobbyists and to contribute to key legislators to make sure their charters remain free of oversight.

It is alarming that Congress is about to hand more money over to the same shady entrepreneurs and to encourage more of them to jump into the unregulated, very profitable charter industry.

Peter Greene proves himself a man of infinite patience. In this post, he analyzes and deconstructs a speech that Arne Duncan gave to the annual meeting of the PTA.

He writes:

“Arne opens up his speech as pretty much anybody would (Glad to be here! Your organization is great! Let’s here it for your leaders!) and then moves on to tales of his children’s schooling. Their experience was not the typical 25-30 desks in a row. His son got to work ahead in math because, technology. His daughter got to attend a constitutional convention and Civil War day.

[Duncan says]: “But it’s those kinds of opportunities that I think are so special. And why are those experiences so important? Because I think all of us – all of us as parents – want our children to be inspired, to be challenged, to be active participants in their own learning.

“This is not the last time that Arne will say something that is true, but also completely disconnected from the kind of schooling promoted by his department’s policies. I’m pretty sure we can make it a drinking game; every time Arne says something that would make a great basis for educational policy, but US DOE actually does the opposite–drink! Do I need to point out that Arne’s kids attend a school that remains untouched by the policies that are being inflicted on the rest of us?”

See if you can actually wade through this speech.

The Detroit Free Press is running a week-long series about Michigan’s charter sector. The first story was about a $1 billion industry with no accountability and poor results. Most charters in the state operate for profit.

The industry’s response? National Heritage Academies, a for-profit charter chain, bought up the advertising space around the story to tout their wares. See the screen shot.

Peter Greene comments here on the U. S. Department of Education’s decision to bail out Corinthian Colleges, Inc., a for-profit chain.

 

Not so long ago, the U.S. DOE pledged to monitor predatory for-profit colleges. Not so, it seems.  Not now.

 

Greene writes:

 

“Corinthian has a somewhat checkered past. Okay, checkered might be generous. They have grown prodigiously since being founded in 1995, acquiring around twenty other post-secondary institutions from Duff’s Business School to the American Motorcycle Institute. They operate the Everest College chain, plus a few others. They’ve been called “the nation’s worst private college chain” and have been sued more times than anybody seems to be able to count. The State of California in particular seems to be intent on driving them out of business, charging them with the usual predatory practices of marketing to poverty-level folks with promises of careers that never appear. This would also be the chain who got caught (by Huffington Post, of all people) hiring their own grads to keep their grad-employment numbers up.

They are, in short, exactly the kind of for-profit college that the feds said they were going to shut down.”

 

The announcement was made by Ted Mitchell, Undersecretary of Education, who served previously on the boards of for-profit education institutions and was CEO of NewSchools Venture Fund, which is a major supporter of privatization efforts.

 

 

 

 

After a year-long investigation, the Detroit Free Press published a scathing report on the state’s thriving charter sector.

Charter schools receive $1 billion in taxpayer funding with virtually no accountability.

They get worse results than traditional public schools.

140,000 children attend charter schools in Michigan.

Michigan has more for-profit charters than any other state. The for-profit organizations are secretive about their finances because they are private.

“In reviewing two decades of charter school records, the Free Press found:

“Wasteful spending and double-dipping. Board members, school founders and employees steering lucrative deals to themselves or insiders. Schools allowed to operate for years despite poor academic records. No state standards for who operates charter schools or how to oversee them.”

““People should get a fair return on their investment,” said former state schools Superintendent Tom Watkins, a longtime charter advocate who has argued for higher standards for all schools. “But it has to come after the bottom line of meeting the educational needs of the children. And in a number of cases, people are making a boatload of money, and the kids aren’t getting educated.”

“According to the Free Press’ review, 38% of charter schools that received state academic rankings during the 2012-13 school year fell below the 25th percentile, meaning at least 75% of all schools in the state performed better. Only 23% of traditional public schools fell below the 25th percentile.

“Advocates argue that charter schools have a much higher percentage of children in poverty compared with traditional schools. But traditional schools, on average, perform slightly better on standardized tests even when poverty levels are taken into account.”

Some examples of charter abuses of the public trust:

“Michigan’s laws are either nonexistent or so lenient that there are often no consequences for abuses or poor academics. Taxpayers and parents are left clueless about how charter schools spend the public’s money, and lawmakers have resisted measures to close schools down for poor academic performance year after year.

“The Free Press found that questionable decisions, excessive spending and misuse of taxpayer dollars run the gamut:

■ A Sault Ste. Marie charter school board gave its administrator a severance package worth $520,000 in taxpayer money.

■ A Bedford Township charter school spent more than $1 million on swampland.

■ A mostly online charter school in Charlotte spent $263,000 on a Dale Carnegie confidence-building class, $100,000 more than it spent on laptops and iPads.

■ Two board members who challenged their Romulus school’s management company over finances and transparency were ousted when the length of their terms was summarily reduced by Grand Valley State University.

■ National Heritage Academies, the state’s largest for-profit school management company, charges 14 of its Michigan schools $1 million or more in rent — which many real estate experts say is excessive.

■ A charter school in Pittsfield Township gave jobs and millions of dollars in business to multiple members of the founder’s family.

■ Charter authorizers have allowed management companies to open multiple schools without a proven track record of success.”

Investigative journalist David Sirota asks why so many of the super-rich love charter schools.

The answer, with exceptions: profits and money and union-busting, all rolled in one.

Take Mark Zuckerberg’s $100 million gift to Newark. At least $20 million went to consultants. Consultants!

Sirota writes:

“But, of course, a lot of corporate execs working for the firms who got Zuckerberg’s money did indeed personally profit off the pro-charter-school campaign. Additionally, in states where charter schools are for-profit enterprises, there are even more business interests with personal financial stakes in undermining traditional public education. And, again, there are all the profits inherent in the aforementioned tax credits. Meanwhile, there’s the whole anti-union element to the charter school movement. As any political consultant for a business group knows, if you get union-free charter schools to replace traditional public education, you damage the public sector unions – aka one of the few political forces with any resources to challenge Corporate America’s broader legislative agenda.

“Of course, this is the kind of thing you almost never hear about in the ongoing debate about education. Most often, that debate pretends the fight pits greedy self-interested teachers’ unions against purely altruistic corporate types who are so rich they couldn’t possibly have a financial motive in their education policy advocacy. Somehow, we are to believe that in the midst of their careers making as much money as possible in their chosen careers, every philanthrocapitalist suddenly is selflessly spending gobs of money with no desire to get any return on investment. Worse, we are asked to believe this even though there are myriad ways to engineer such a return on investment through the campaign to promote charter schools.”

This article in Salon tries to understand education from an economic perspective. It says that the great expansion of public education occurred when our factories were expanding and we needed more workers. Now, with outsourcing and autation, society and our elites are less willing to invest in education, and so we live in an era of austerity and privatization.

Eric Levitz writes of the Obama administration’s reluctance to address glaring inequality:

“We have an economy in which 46.5 million Americans live in poverty, the real unemployment rate is above 12 percent, and our 400 wealthiest citizens enjoy as much wealth as the entire bottom half of the population. But a political system designed for gridlock, the grossly disproportionate influence of the rich, and Americans’ ideological aversion to class politics conspire to make it politically inadvisable for a Democratic president to even speak the words “income inequality” before a national audience. Absent the political will to explore redistributive structural reforms, we’re left with “ladders of opportunity,” and a vision of economic salvation through higher test scores.”

Levitz interviews philosophy of education professor David Blacker. He asks him about how charter schools fit into the current era, and Blacker replies:

“I think the logic there is a kind of marketization logic. It’s an ideal of privatization which I think is ultimately tied to… I think privatization is the twin of austerity. Austerity being withdrawal of public commitment and public expenditure. I see those things as hand in hand, and they are symptomatic, from my point of view, of this decrease in commitment to that project of universal public education. Because the market logic sort of implies that education is this contingent matter for individuals. It’s less of a social good. It’s less of something we ought to worry about collectively, and more a commodity that individuals need to seize or take advantage of on their own. Invest in yourself. Or parents, invest in your children.”

Keystone State Education Coalition
Pennsylvania Education Policy Roundup for June 3, 2014:

In God We Trust? How about a bill that would require charter and cyber schools to post their PA School Performance Profile scores prominently in any advertising paid for with public tax dollars?

Blogger Rant:

At a recent school board meeting I voted against authorizing a payment to Agora Cyber Charter School. Why? During the NCLB regime, Agora never once made AYP; this year their PA School Performance Profile Score was 48.3 (scale of 100). In my district, our Middle School score was 94; our High School score was 96.4. Agora is run by K12, Inc., a for-profit company founded by convicted bond felon Michael Milken. K12 paid it’s CEO $13 million from 2009 through 2013 and spent our tax dollars on over 19,000 local TV commercials. I do not believe Agora should receive one cent of my neighbors’ tax dollars.

Instead of posting “In God We Trust”, how about a bill that would require charter and cyber schools to post their PA School Performance Profile scores prominently in any advertising paid for with public tax dollars?

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