Jessica B. Swencki of the Brunswick County schools in North Carolina knows a scam when she sees one. With the near total deregulation of charter schools in that state, the corporate charter chains are moving in to where it’s easy to run a school and skim huge profits.

Here’s the deal. A big for-profit operation finds a local board to act as its front during the application process.

One doesn’t have to look any further than the Eastern part of the state for a case study in how savvy companies use this loosely regulated system to pocket millions of taxpayer dollars.

Here’s how it works: A for-profit educational management organization “helps” the nonprofit board write the charter application. Once the charter is granted, the nonprofit board hires the same EMO to operate the charter school. The charter school pays the EMO sizable fees to “manage” the schools – those fees added up to over $15.7 million taxpayer dollars for one EMO in Eastern North Carolina over the past five years.

Coincidentally (or not), in at least one case, the founder of the EMO also happens to be the organizer of a second company that leases facilities and equipment to the charter school (i.e., landlord).

Now, remember, the nonprofit board hired the EMO to track and report all the financial data; and it is the EMO that advises the nonprofit board as to whether the landlord’s fees are reasonable. But don’t forget, the landlord also runs the EMO.

This deal got even sweeter for the landlord this summer when the General Assembly amended a statute. Now the landlord is no longer required to pay any state tax on the land the landlord rents to the charter school. I suppose from a business perspective nothing could be finer. Why isn’t this making headlines? Isn’t this illegal? Surprisingly, no. There is little to no public accountability for the financial decisions made by charter schools, and there is no transparency mandate from the General Assembly.

In a time of shrinking financial markets, charter schools remain an excellent marketplace for savvy corporations looking for consumers.


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