Archives for category: For-Profit

The Center for Popular Democracy released a bombshell report on the financial consequences of charter deregulation and lack of public oversight. It is called “The Tip of the Iceberg: Charter School Vulnerabilities to Waste, Fraud, and Abuse.”


When public money is handed over to private corporations or individuals to operate schools, there must be regular monitoring of  and audits. Absent financial monitoring, the result is predictable: waste, fraud, mismanagement, and financial abuse. Does this help education? No, it enriches people who are either in the education business for the money or incompetent to manage the finances of a school.


Here is the executive summary released with the report:


A year ago, the Center for Popular Democracy (CPD) issued a report demonstrating that charter schools in 15 states—about one-third of the states with charter schools—had experienced over $100 million in reported fraud, waste, abuse, and mismanagement. This report offers further evidence that the money we know has been misused is just the tip of the iceberg. Over the past 12 months, millions of dollars of new alleged and confirmed financial fraud, waste, abuse, and mismanagement in charter schools have come to light, bringing the new total to over $200 million.


Despite the tremendous ongoing investment of public dollars to charter schools, government at all levels has failed to implement systems that proactively monitor charter schools for fraud, waste, abuse, and mismanagement. While charter schools are subject to significant reporting requirements by various public offices (including federal monitors, chartering entities, county superintendents, and state controllers and auditors), very few public offices regularly monitor for fraud.


The number of instances of serious fraud uncovered by whistleblowers, reporters, and investigations suggests that the fraud problem extends well beyond the cases we know about. According to standard forensic auditing methodologies, the deficiencies in charter oversight throughout the country suggest that federal, state, and local governments stand to lose more than $1.4 billion in 2015.b 1 The vast majority of the fraud perpetrated by charter officials will go undetected because the federal government, the states, and local charter authorizers lack the oversight necessary to detect the fraud.


Setting up systems that detect and deter charter school fraud is critical. Investments in strong oversight systems will almost certainly offset the necessary costs. We recommend the following reforms:


Mandate audits that are specifically designed to detect and prevent fraud, and increase the transparency and accountability of charter school operators and managers.
Clear planning-based public investments to ensure that any expansions of charter school investments ensure equity, transparency, and accountability.
Increased transparency and accountability to ensure that charter schools provide the information necessary for state agencies to detect and prevent fraud.
State and federal lawmakers should act now to put systems in place to prevent fraud, waste, abuse and mismanagement. While the majority of state legislative sessions are coming to an end, there is an opportunity to address the charter school fraud problem on a federal level by including strong oversight requirements in the Elementary and Secondary Education Act (ESEA), which is currently being debated in Congress. Unfortunately, some ESEA proposals do very little reduce the vulnerabilities that exist in the current law. If the Act is passed without the inclusion of the reforms outlined in this report, taxpayers stand to lose millions more dollars to charter school fraud, waste, abuse, and mismanagement.



To read the full post:


It contains a long list of examples of charter fraud, waste, abuse, and mismanagement. And it is only the tip of the iceberg.






The burgeoning of the for-profit college industry has wasted billions of taxpayer dollars, sent many thousands of students out into the world with shoddy educations, and made a few people very rich.

One of the organizations that should have been closed down by the U.S. Department of Education is Corinthian Colleges. Here, Peter Greene reviews its sordid history, including the fact that the U.S. Department of Education bailed it out when it needed money, and Corinthian sold off many of its campuses to be run by a DEBT COLLECTION AGENCY. I put that in caps because it is incredible but true.

Greene writes:

“Folks who find themselves in debt for Corinthian educations, but without any marketable skills that would allow them to make money– those folks got in this mess by driving past a dozen corners where there should have been big bright neon red flags. But there were no flags there, because the gatekeepers had taken the flags down and stuffed them in their back pockets.

“Corinthian has a repeatedly gotten in trouble for lying, false advertising, misrepresenting itself, and promising what it could not deliver. But the feds did not shut them down, did not demand they put a warning label on their applications, did not publicly chastise them in a manner that might have given applicants pause. And when Corinthian actually started to suffer the free-market consequences of bad behavior, the feds stepped in to protect not the students, but the investors and operators. They actually crafted a plan to allow Corinthian to draw in more students!

“And the loans? If I go to buy a house, and I visit the bank for a mortgage loan, generally speaking the bank (excepting the years between, say, 2002-2008) will make sure that they don’t lend me more than I can pay, and they will also demand an assessment of the house so that they know I’m getting their money’s worth in my purchase. Who was exercising such oversight of these college loans? Apparently, nobody.”

Kathleen Oropeza leads a statewide parent group in Florida called “Fund Education Now,” which advocates on behalf of public education. She sends the following report of the latest news from the state legislature, which is very charter-friendly. The head of the house education appropriations committee is related to the family that owns the Academica charter chain, one of the wealthiest charter chains in the state. (It is under federal investigation for conflicts of interest.) According to the Miami Herald, Academica has cleverly accumulated a real estate empire worth more than $115 million through its charter acquisitions. To really understand this charter miracle story, read Jersey Jazzman’s analysis.


Digital learning is, of course, one of the priorities of Jeb Bush’s organization, the Foundation for Educational Excellence, which is funded by tech corporations (Jeb stepped down as leader of FEE when he announced for the presidency and was replaced by education expert Condoleeza Rice).


For the definitive guide to Florida’s politically active charter schools, see this report by the Florida League of Women Voters, especially pp. 13-14, which describes conflicts of interest.


Oropeza writes:
Charter Expansion/Open Enrollment/Transfers millage dollars to charters

HB 7037/SB 1552/SB 1448/HB 1145 School Choice/Charter Expansion

The massive HB 7037 passed out of the House. It’s been sitting in Senate messages and there’s talk of pulling it back to the house to add amendments. It builds on the efforts of previous sessions to accelerate the expansion of charters, regardless of need through funding a pseudo-marketing/oversight arm, at Florida State University called the Florida Charter School Innovation Institute. It erodes the power of local school boards by allowing “open enrollment” across district lines, allows students to transfer to another classroom based on concerns about the teacher, creates a “charter school district” giving principals increased autonomy from local district rule, allows unrestricted replication of high performing charters in high-need areas. Removes eligibility requirements for enrollment in public K-12 virtual education and allows more charter school systems to act as a Local Education Agency for purposes of administering Federal funding.
In addition, this bill requires districts to give charter school developers a portion of the money raised through millage levies to fund district capital school improvements and new construction. Charters received $100 M and $50M over the past two years via PECO. The issue is two-fold: PECO dollars must be allocated each year to charters by the legislature and so far this has not happened in 2015. Second, Voter-approved millage increases are the sole source of capital funding for district schools. HB 7037 states that charter chains must be given a percentage of local tax dollars to pay for & improve buildings the public may never own.
This vastly increases the money sent to Charter chains to purchase real estate and develop schools. It represents approximately $137 million dollars. If the legislature does not designate PECO to charters this year or in future years, districts will have to pay millions of dollars that they cannot possibly afford in locally raised tax dollars to support unfettered charter school growth.



Digital Learning

SB 1264 – Digital Classrooms by Legg is scheduled for its last committee stop on 4.21.15. This bill is significant because the technology was not addressed in the testing bill/HB 7069. This bill establishes requirements for digital classroom technology infrastructure planning by the Agency for State Technology or a contracted organization; requires the Office of Technology and Information Services of the Department of Education to consult with the Agency for State Technology in developing the 5-year strategic plan for Florida digital classrooms; specifies conditions for a school district to maintain eligibility for Florida digital classrooms allocation funds.



Allocates $10 million to be spent by the Agency for State Technology (AST) on a vendor of their choice. Look for amendments to this bill to address the technology funding deleted from the testing bill.



HB 7069 was signed into law by Gov. Scott this week. The bill address some issues raised by districts, teachers and parents, which is good. The fact remains that the law does not go far enough. Most of Florida’s standardized tests and the rules used to punish students, teachers and schools remain intact. That said, public education advocates have made an impact regarding Florida standardized testing and HB 7060 reflects that. Read a full description of what this bill does and does not do here.

This arrived in my email box today. The author, who owns a literacy company, asked to remain anonymous. He is describing an entrepreneurs’ conclave at Arizona State University, cosponsored by GSV Capital, whose leader, Michael Moe, has been bullish about the education sector as a profit opportunity for many years.


My correspondent writes:


Dear Dr. Ravitch,

I’m a longtime fan of your work and your blog (which I have recommended to many colleagues and in my company’s blog).
My name is ……


I’m writing to you today to tell you about a conference I just returned from called the ASU GSV Summit. It should really be called the Taxpayer Funded Education Business Con-ference (with an emphasis on “con”), because it was filled with entrepreneurs and venture capitalists claiming to want to do “social capitalism” but who actually were participating in an event filled with corporate dominated “school reform” propaganda that placed its focus on charters, accountability (ie testing), and corporate solutions such as Teach For America. While a great deal of lip service was paid to the great work of teachers (including an appearance by the hip-hop star, Common, along with his mother, a Chicago school board member), far more attention was given to pro-corporate propaganda. For instance, one of the hosts, GSV’s Michael Moe ( gave a lengthy keynote in which he compared education reformers to former Notre Dame coach, Lou Holtz and then extolled the virtues of companies such as Dreambox Learning, an online math program, that owes its existence to the fact that its owners also own a chain of charter schools that purchase its software. Not coincidentally, Dreambox won their ROE (Return on Education) award for the 3rd year in a row.


I think Dreambox is well worth a look because it exemplifies the kind of corporate reform darling that has success based completely on smoke and mirrors. If you read this report:, it outlines Dreambox’s relationship with the Rocketship Charter Schools. It also details how: “When the U.S. Department of Education reviewed DreamBox in December 2013, researchers found 11 studies claiming to assess the program’s impact, but immediately rejected 10 of them as statistically meaningless. While the 11th study used sound methods and reported “significant gains in overall mathematics scores,” DOE staff found that the authors—whose work was commissioned by Rocketship—had arbitrarily excluded students they deemed “outliers.” When DOE staff reran the study with all students included, they concluded that DreamBox has “no discernible effects on mathematics achievement for elementary school students.” Following publication of the DOE’s report, the Rocketship-commissioned authors produced additional data that convinced federal researchers to upgrade their assessment of DreamBox’s impacts to “potentially positive effects” based on “small evidence.” (You can see the DOE report here:
I can’t keep track of how many awards Dreambox has won – all based completely on fraudulent studies and fraudulent marketing claims (e.g., “analyzes over 48,000 data points per student, per hour” – how on earth could any elementary school math program have over 48,000 data points in one hour? They used to say that they had “millions” of data points, so I guess 48,000 is their way of being conservative).


Another particularly odious presentation was made by billionaire Vinod Khosla who regaled the audience with his fact-free, research-ridiculing view that “We spend too much on education – if we cut education funding in half we would get a better result.” He also told us how “tenure” is a dated concept, and he lamented how teachers using Teacher Created Materials charge around $5 for their lesson plans, because “they should be free” and produced “from passion and not a desire for profit.” This from a man worth $1.7 billion! Apparently, the only people who should make a decent living in the education field are VCs like himself and the tech companies he chooses to fund.


I could go on, but you get the point. I’ve been to many, many education conferences that promote entrepreneurialism and technology solutions (SIIA, ISTE, NSBA, FETC, etc.). This one was the most overtly pro-corporate I have ever seen.

Three families of children with disabilities sued to prevent the state from closing down the Tennessee Virtual Academy.

TVA is one of the lowest performing schools in the state. The virtual charter school is operated by K12, Inc., the for-profit corporation founded by Michael and Lloyd Milken and listed on the New York Stock Exchange.

Under state law, Tennessee’s education commissioner has the authority to close the school if it ranks among the worst performers for three consecutive years. The school has consistently been ranked 1 on a 5-point scale, with 1 being the worst and 5 the best, since it opened in 2011. Critics have called it a failure and said the for-profit corporation that provides the curriculum is more interested in making money than educating children.

It would be interesting to learn who is paying the legal fees for these families.

Thanks to Valerie Strauss for reporting that the University of Phoenix is experiencing a huge enrollment decline and a consequent drop in its profitability and stock price. I am not at all sorry to see this, as I am not an aficionado of online “colleges” or for-profit education institutions.


She writes:


The University of Phoenix, the largest for-profit university in the United States, has lost a few hundred thousand students in the last five years, according to its parent company.


Apollo Education Group, which owns the University of Phoenix, announced Wednesday that revenues and enrollment had fallen in the last quarter about 14 percent compared to the same period in 2014. What’s more, the school’s enrollment five years ago was 460,000 students and now it is 213,000, CNN Money reported. The news on Wednesday sparked a 30 percent drop in Apollo’s stock. (Apollo stock was at $19.57 a share in Thursday morning trading, down 2.4 percent.)


The University of Phoenix, which started in 1976 in the Phoenix area, delivers education largely online but also has brick-and-mortar classrooms. In recent years it has been forced to close some of its classrooms and has faced competition from traditional universities that have started their own online courses.


Studies have shown that many of the for-profit institutions are predatory and concerned more with profit than with learning. Education should be profitable but intellectually and spiritually, not on the stock exchange.



Student privacy activists are outraged by the legislation that’s being rushed through Congress that would legalize industry’s right to confidential data about children without parental consent.


This is from Leonie Haimson and Rachel Strickland of Student Privacy Matters:


Rep. Luke Messer (IN) and Rep. Jared Polis (CO) are introducing a bill in the House that would allow vendors of online programs used in schools to collect, share and commercialize the personal information of students. Rep. Polis has said that they intend to rush this bill through the House, without amendment or debate. Parents and privacy advocates CANNOT let this happen.

We need your help. Please visit our action page to send a letter and then make a quick call to your US Representatives.

For more information, see articles in POLITICO and The New York Times, and read the comments of the Parent Coalition for Student Privacy available here.


Rachael Stickland and Leonie Haimson

Co-chairs, Parent Coalition for Student Privacy



Here is today’s story in by Stephanie Simon:



“STUDENT PRIVACY BILL UNDER FIRE: A bipartisan student privacy bill to be introduced in the House today aims to reassure parents that their children’s data is safe. But the bill lets companies continue to collect huge amounts of intimate information on students, compile it into profiles of their aptitudes and attitudes – and then mine that data for commercial gain. It also permits the companies to sell personal information about students to colleges and potential employers, according to a near-final draft reviewed by Morning Education. Microsoft has already endorsed the bill. And the chief sponsors, Republican Rep. Luke Messer and Democratic Rep. Jared Polis, say they’re confident it will quickly earn bipartisan support in both chambers. It will likely get a push as well from the White House, which worked closely with Messer and Polis on the language. But privacy advocates and parent activists see the bill as deeply flawed. It’s riddled with “huge loopholes” and “escape clauses,” said Khaliah Barnes, director of the Electronic Privacy Information Center’s student privacy project.


– Consider a provision barring companies from selling personal information about students. That seems rock-solid. Yet there’s an exception: A company can sell data if a student or parent requests it be shared “in furtherance of post-secondary education or employment opportunities.” An online textbook, tutorial service or gaming app could likely fulfill this requirement by asking kids to check a box if they want to hear from colleges or employers interested in students just like them. I have more here:


– Industry has opposed any federal privacy law, out of concern that it would stifle innovation. Hoping to showcase the benefits of that innovation, the Software Information and Industry Association and the trade association TechAmerica have launched the “Smarter Schools Project,” which highlights classrooms using technology wisely. More:


– Some ed-tech start-ups, meanwhile, are moving aggressively to showcase their own commitment to protecting privacy. The company Kickboard is sharing privacy protection advice with other start ups. Clever posted its privacy policy on GitHub, which lets readers track any changes. And when parent activists took to Twitter to question how a startup called LearnSprout was using student data, the company responded by asking them for help making sure the data was protected. Months of dialog followed. LearnSprout unveils its new approach today: The company promises that it will never sell or rent personally identifiable information about students and will never use that information to improve or market its own products. Read more about the dialog from LearnSprout Marketing Director Paul Smith: and from Rachael Stickland and Leonie Haimson of the Parent Coalition for Student Privacy:”

I am on the email list for an organization called “In the Public Interest.” It follows privatization in every sector, including education. The current newsletter is eye-opening. If you want to know how private interests have finagled their way into making a killing off public sector dollars, read this e-newsletter and subscribe (free).


Here is my favorite privatization story of the week:


National: Top executives of the Blackstone Group, owner of the janitorial services company GCA Services Group, pull down massive annual compensation. Stephen Schwarzman, Blackstone’s CEO, received $656 million in dividends and pay; and its real estate chief Jon Gray took in $205 million, for a combined total of $861 million. GCA has faced repeated accusations of low pay. The New Haven Register reported in 2011 that “a proposed GCA contract for custodial services would plunge 200 New Haven, Connecticut, Public Schools custodians into poverty, according to a research report by the Political Economy Research Institute at the University of Massachusetts.”


I have trouble understanding why some billionaires refuse to pay workers a living wage. Why was it so hard for the Walton family, each of whom is a billionaire, to agree to pay their workers $9 an hour? Why are so many of their workers part-time, even when they are eager to have full-time jobs? The billionaires pay great compensation to their executives, apparently, but think that the people who do the daily work of the corporation can get by on 20 hours a week at $9 an hour.


Open the link about GCA. It isn’t just accusations of low pay that have been a problem:


GCA Services placed two custodians with drug and sex offense criminal records in schools. One of the custodians, in Tennessee, was charged with the rape of a 16-year-old student in a closet on school property during school hours. It was later discovered the employee had a criminal record for aggravated battery, assault and theft of property. Another, in Texas, was a registered sex offender who was found in a school locker room dead, with his pants down and a bag over his head. A GCA official said about the incidents, “You have to understand, we hire a lot of people. I think a couple of incidents with 20,000 employees is a pretty good batting record” (“Ky. district hiring service, despite problems,” Associated Press, June 6, 2010; “Teamsters: Outsourcing custodians is a bad idea,” Naples Daily News, May 30, 2008).

A GCA Services custodian stole $900 from a day care center at Pasco-Hernando Community College in Florida that he was hired to clean after-hours. The GCA employee was arrested (“Police: Janitor Cleaned Day Care Out of $900,” St. Petersburg Times, November 26, 2008).

Rockford, Illinois, School District parents, teachers, principals and other staff were unhappy with GCA Services’ custodial work there. Reports complained that “trash wasn’t removed from classrooms, carpets weren’t cleaned and tile floors weren’t swept. The reports also indicate chemicals had been mixed improperly, resulting in health issues with students and teachers. There also were allegations of thefts from the schools, with custodians suspected,” reported the Naples, Florida, Daily News (“Documents: Custodial group gets poor marks,” June 19, 2008).

A GCA custodian had been working for four months at a Tennessee middle school before she was arrested in January 2011 as a fugitive from Texas. The employee had violated her probation on a felony drug conviction. A GCA official said the company had conducted two background checks including a fingerprint check before hiring the woman (“Company to review workers after fugitive found,” Associated Press, January 16, 2011).

The University of Tennessee in April 2012 decided to end its contract with GCA and move all cleaning work in-house. The university said that although the base cost was $500,000 higher than what it paid to GCA, it would break even after accounting for extra services like carpet care or hard-floor maintenance (“UT to use in-house custodial services,” Knoxville News-Sentinel, April 18, 2012).

Ohio has been a profitable state for the charter school industry. Charter leaders make huge contributions to politicians. Politicians make sure that the industry’s cash cows are lightly regulated, if at all. With the right political connections, charters may be rated D or F without any consequences. Should charters be audited? Should they be held accountable for their academic and financial performance? Bear in mind that the essential premise if charter schools was that they were willing to be held accountable inexcjangefpr producing “results.” (Higher test scores.). You might say that this deal has actually warped almost all discourse about the purpose of schooling. It rests on the premise that higher test scores are the fundamental goal of education.

Ohio State Auditor Dave Yost wrote a thoughtful newspaper article describing the dilemma of auditing public-private partnerships.

When does public money trigger public audits? Not when the money flows to a purely private business, like a janitorial service. But what about charter schools?

He writes:

“There’s a messy place where the public and private meet, and the old ideas about accountability aren’t good enough to sort it out. The subject is lurking in the background of the debate over charter-school reform, but it’s wider than that and needs some hard thinking.

The distinction between what’s public and private drives many things in the law. A public entity is subject to open-meetings laws, public-records requirements, public audit and stringent ethics requirements. A purely private entity, such as a sole proprietorship or your family, is not.

But that neat set of labels doesn’t work as well when a thing is both public and private. Lawmakers here and elsewhere are deliberately blending the two — and it seems to be the trend, not the exception.

So, when an entity is a little private and a little public, which rules apply?
For example, a government office generally is cleaned by a contract service, not by government employees. Joe’s Janitorial Service shouldn’t have to open its books to public audit or abide by public-records law. The government is buying services from Joe, and as long as he provides the promised quality of service, it’s no business of anyone’s how he does it or how he spends his money.

On the other hand, if Brave New World, Inc., contracts to be the police department for your town … well, that’s a different story. Brave New World is no longer simply selling services; it is functioning as the government. Lawyers and political philosophers would say it is exercising the sovereign power of the state — and Brave New World probably ought to be subject to the traditional transparency requirements we impose upon our government.

And in between, there are all these other entities that aren’t quite private, but aren’t really public, either.

There are good reasons for blending the public and the private. Government, because its decisions apply to all of us, is designed to go slow. We shouldn’t make decisions at the speed of business when it’s about liberty, or education, or spending money that was collected by law (taxes).

On the other hand, the private sector has the freedom to move quickly, to react to market forces, to innovate — and to fail. So in certain areas where the government process has become bogged down, it makes sense to bring those private-sector virtues into the mix. That’s the idea with many hybrid organizations empowered by state government (and our tax dollars), from charter schools to privatized prisons to the Ohio Air Quality Development Authority.

But then, what does accountability look like?

In Ohio, like elsewhere, the answers are all over the board. There are custom mechanisms drawn into contracts, such as the contract with the state’s private prison contractor. Charter-school management companies are required by statute to provide certain financial information to their schools. The schools then import that information into their own financial statements — which are subject to public audit….

At the same time, it’s mostly or all our money and, therefore, the public’s business. Somehow, treating these entities — usually private corporations — as though they were a sole proprietorship, operating in private, doesn’t seem right, either.
The ongoing debate over charter-school reform is going to happen smack in the middle of this disorganized space in our public life.

How do we protect the public interest while harnessing the best qualities of a mostly private-sector actor? I don’t have a comprehensive answer, but meaningful reform will have these characteristics:

• Information. Although making all the papers of a private corporation public is the wrong answer, the law should require certain relevant information to be provided at particular intervals.

• Independent verification. Some information needs external, independent verification. This could be provided by a firm’s certified public accountants or subject to review by another body. But corporations are used to dealing with this — banks require audited financial information to ensure the numbers are adequate. It’s not growing government to make sure that the information is true. As President Ronald Reagan urged: trust, but verify.

• Segregation of duties. Businesses and governments both make sure that certain duties are done by different people. The IRS has published some criteria for how to think about segregation of duties, which I cited in our report on charter schools earlier this year.

• Governing Board independence.

“Outside directors” — board members who are not otherwise affiliated with the organization — have become a best practice in the private sector, ensuring divergent points of view and oversight of management decisions.

How to approach these factors, and how much weight should be given to them, should be driven at least in part by how much discretion the entity has in exercising the authority of the state. In our examples, Joe’s Janitorial exercises no government discretion, and Brave New World exercised a huge amount.

The details are matters for serious debate. One thing seems utterly clear to me, though: the oval peg of accountability for these hybrid organizations fits neither the square nor the round peg holes we already have. We owe it to Ohio taxpayers and families to fill that hole and repair their doubts about this public-private part of our system of government.

Peter Greene uses the example of Coke to show how market competition does not produce a better product. When faced with a loss of market share, Coca-Cola decided to put the same product into smaller cans. Maybe the failure of “Néw Coke” in 1985 taught them not to mess with the formula.

Similarly, in education, competition has not produced better education. Vouchers are used to send children to schools that teach creationism, that have no curriculum or certified teachers or to charter schools that push out low-scoring students and spend inordinate time on test prep.

Our slavish devotion to competition is destroying education.


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