Archives for category: Michigan

In a continuing series of articles about charter schools in Michigan the Detroit Free Press reports that the state’s weak charter legislation enables unscrupulous charter organizations to engage in self-dealing and conflicts of interest.


The article yesterday said that Michigan’s nearly 300 charter schools collect about $1 billion and have almost no accountability. The Michigan charters do no outperform the public schools.


The story about the weak law begins like this:


In September 2005, Emma Street Holdings bought property on Sibley Road in Huron Township for $375,000. Six days later, Emma Street sold the parcel to Summit Academy North, a charter school, for $425,000.


Who made the quick $50,000 at the school’s expense? The founders of Emma Street, two men with close ties to the school — one was president of Summit’s management company, the other was married to Summit’s top administrator.


The deal is emblematic of how friends, relatives and insiders can find ways to cash in on the nearly $1 billion a year state taxpayers spend on Michigan’s charter schools.


The law does not bar insider deals:


Boards are free to give contracts to friends and relatives of the school’s administrators and founders. Privately owned management companies that run charter schools don’t have to disclose whom they’ve hired as employees or vendors, so they are free to hire board members’ friends. School founders are not prohibited from running both a school and its management company.


The new law also does not bar a transaction such as the Summit land deal.


The article provides many examples of conflicts of interest that are legal in Michigan.




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.

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.”

This is a fascinating bit of history.

This short article tells the story of one day in 1993 when Michigan eliminated all funding for public schools and started the system that exists today. The new system was the work of Governor John Engler, a staunch advocate of school choice.

Looking back 21 years, it is hard to conclude that Michigan’s choice system has improved education. Districts continue to go bankrupt. Charters have proliferated, mostly unsupervised. About 80% of the state’s charters operate for-profit. Only 11% are not operated by an EMO. Entire districts have been turned over to for-profit management corporations; in Muskegon Heights, the charter corporation didn’t make a profit, ran a deficit, and its contract was canceled.

The original promise of charters was that they would get freedom from regulations in return for heightened accountability. Where’s the accountability?

According to Eclectablog, John Covington will leave Governor Rick Snyder’s controversial Educational Achievement Authority for another job. The story was reported by the Detroit News.

Covington, a graduate of the unaccredited Broad Superintendents Academy, previously led the Kansas City district, which lost accreditation after his abrupt departure.

This is an astonishing story from Michigan. There, a persistent blogger named “Miss Fortune” discovered that a charter manager was indicted on multiple charges, including tax evasion and bank fraud. His wife and brother plus a local contractor and his wife diverted nearly $1 million of a $1.8 million construction loan to his personal bank accounts. Miss Fortune began digging, as persistent bloggers sometimes do, and found that the indictment said he had used some of the money to “repay an indebtedness to the Grand Traverse Academy for money he’s advanced himself.” GTA is one of the charters he manages. It seems he owed the charter school the tidy sum of $2,338,980. He planned to repay this loan by taking deductions from his management fee.

Miss Fortune broke the news on her blog.

The local media didn’t find any of this interesting. After all, don’t school superintendents borrow a million or two from their district’s bank accounts? Isn’t that, like, routine? Miss Fortune wrote a follow-up post about the events. She is betting that federal officials will follow up on this most curious set of arrangements. We shall see if anyone cares.

In Michigan, nearly 90% of charter schools are managed by an EMO (education management organization). for-profit EMOs operate 79% of charter schools, and nonprofit EMOs operate 10%. Only 11% of Michigan’s charter schools are without an EMO.

Legislators called for an investigation of the Educational Achievement Authority after the Detroit News revealed that Governor Rick Snyder’s favorite “reform” had piled up $240,000 on credit card debt.

“Among the findings: $178,000 was spent on hotel and airfare to 36 cities from April 2012 to February, while another $10,000 was spent on gas for Covington’s chauffeured car, $25,000 for IKEA furniture and $8,000 combined at, Wal-Mart, Sam’s Club, Meijer, Home Depot and Lowe’s.”

From The Detroit News:

A blogger named Democracy Tree reports that TFA is putting up recruitment posters in the toilets at the University of Michigan.

Probably it is to recruit teachers for the financially strapped Educational Achievement Authority, where 27% of the teachers are TFA.

The blogger reports:

“Yep, that’s Teach For America (TFA) hustling young adults while they pee — Geez, talk about lowbrow recruiting tactics. Surely it’s every graduate’s dream to say “I discovered my life’s calling in the third stall on the left in North Kedzie Hall”.

“What makes this so interesting in Michigan is that 27 percent of the teachers hired by the state’s controversial Education Achievement Authority (EAA) are from TFA. The EAA is a special school district, established by fiat, which took-over 15 academically failing schools from Detroit Public Schools. The new district lacks democratically elected leaders and is instead run by a “Chancellor” — John Covington, who readily admits that fully 51 percent of his teaching staff has less than three years experience in the classroom. Covington came to the EAA from Kansas City Public Schools where, under his watch as superintendent, the district lost its accreditation. As chancellor, he currently enjoys compensation to the tune of over $353,538.

“How does the EAA pay for that salary? In part, by hiring college graduates on the cheap. They receive a whopping five weeks of TFA training before being thrown into a classroom full of academically struggling students. Last year, Detroit-area Senator Bert Johnson (D-2) reported numerous problems with the schools — mostly due to inexperienced teachers, including one school where a dozen TFA recruits walked-off the job out of frustration.

“TFA recruits are not required to have a degree in education. In fact, the only education-related training they typically receive is the TFA summertime crash course immediately prior to their fulfilling a two-year teaching contract. Fewer than a third of them go on to pursue a career in education. With the soaring cost of higher education, and lack of jobs, TFA becomes an attractive short-term alternative to grads much in the same way as the military.”

It seems like only yesterday that Governor RickSnyder appointed an emergency manager for the public schools of Muskegon Heights, which were running a deficit.

The emergency manager turned the district over to Mosaica, a for-profit charter chain.

But Mosaica didn’t make a profit, instead they ran a deficit, and their contract has been canceled“.

“Muskegon Heights Public Schools Emergency Manager Gregory Weatherspoon said the separation came down to an issue of finances. Mosaica, a for-profit company, was running a deficit budget and not making a profit. School officials said the split is not the result of dissatisfaction with academic progress of students in the K-12 Muskegon Heights Public School Academy.

“Weatherspoon said both Mosaica and the charter district board agreed the separation agreement was necessary.

“They came here to do a service for the children,” Weatherspoon said. “They got the job done, but it didn’t fit their financial model… The profit just simply wasn’t there.”

“At the core of the financial problems were investments into the school buildings, which Mosaica leased from the public school district for $1, as well as higher-than-expected special education costs and lower-than-expected enrollment. As the first charter school district in the nation, school officials have acknowledged there was a lot of uncertainty about costs when Mosaica took on the management role two years ago.

“Mosaica recently has had cash flow troubles that resulted in it seeking emergency advances of state aid in order to make payroll, which had to be delayed earlier this month. The management company, based in Atlanta, fronted $761,000 so that staff could be paid, Weatherspoon said.

The company will be repaid that money with a portion of a $1.4 million emergency state loan that Muskegon Heights Public Schools expects to receive on Monday, he said.

“Mosaica’s contract calls for it to receive about a $1 million annual management fee. It was paid the fee the first year of the contract, but not this year. This year, the company will receive $84,000 split over the next three months, which will help cover administrators’ salaries for the rest of the year, said John Gretzinger, an attorney for the charter district.

What do you say? Job well done? No profits to be found? Try, try again? What next?

A few years ago, Michigan governor Rick Snyder decided that the best way to fix the financial problems of districts in deficit was to put them under the control of an emergency manager to straighten out their finances. Some districts, however, are so poor that they don’t have enough money to educate their children. It is the state’s duty to help them.

In 2011, an emergency manager decided to give the Muskegon Heights school district to a for-profit charter chain, called Mosaica. It has not been profitable, and the district’s deficit continues.

Mosaica just received an emergency bailout from the state because it couldn’t meet its payroll. The corporation ended its first year in deficit because of the cost of repairs.

Years of deferred maintenance required expenditures of $750,000 to bring the buildings up to code. Meanwhile revenues have shrunk as enrollment dropped from 1400 to 920.

Lingering question: why did the state allow this impoverished, largely African American school district to fall into such shabby condition? Will for-profits be more cautious in the future about taking over neglected districts? Or will they have a commitment from the state for subsidies that were not available to the school district when it had an elected board?


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