At some point, the Wall Street money behind the charter movement will not be sufficient to cover up the escalating number of frauds and scams reported almost daily across the country. In this article in Salon, Jeff Bryant writes about some of the most recent financial abuses perpetrated by charter founders. Open his article to find links providing sources for all his statements.
Bryant writes:
What fun we had recently with North Carolina’s recently elected U.S. senator, Republican Thom Tillis, who insisted we didn’t need government regulations to compel restaurant employees to wash their hands in between using the toilet and preparing our food.
His solution to proper sanitation practices in restaurants – “the market will take care of that” – was roundly mocked by left-leaning commentators as an example of the way conservatives uphold the interests of businesses and moneymaking above all other concerns.
Fun, for sure, but it’s no laughing matter that the Tillis plan for public sanitation appears to increasingly be the philosophy for governing the nation’s schools.
Rather than directly address what ails struggling public schools, policy leaders increasingly claim that giving parents more choice about where they send their children to school – and letting that parent choice determine the funding of schools – will create a market mechanism that leaves the most competent schools remaining “in business” while incompetent schools eventually close.
Coupled with more “choice” are demands to increase the numbers of unregulated charter schools, especially those operated by private management firms that now have come to dominate roughly half the charter sector….
For instance, in Charlotte, at least three charter schools abruptly closed down this year alone, some after having been in operation for only a few months. The most recent shutdown was particularly noticeable.
That school, Entrepreneur High, focused on teaching students job skills, so they could be financially independent when they graduated. Turns out the school had its own financial problems with only $14 in the bank and $400,000 in debt. In fact, the school never even really had a financial plan at all.
In other news from the front of “school choice” in the Tarheel State, left-leaning group N.C. Policy Watch recently reported about a state auditor who checked the books of a Kinston charter school and found the school overstated attendance–thereby inflating its state funds by more than $300,000.
The school shorted its staff by more than $370,000 in payroll obligations, according to reports, while making “questionable payments of more than $11,000″ to the CEO and his wife. And the CEO’s daughter was being paid $40,000 to be the school’s academic officer even though she had zero experience in teaching or school administration.
When the reporter, Lindsay Wagner, tried to contact the school’s CEO to question him about the auditor’s findings, she discovered he had left his position and was working elsewhere in the state – running a different charter school.
Meanwhile, the state has rolled out another school choice venture: vouchers, called Opportunity Scholarships, that allow parents to pull their kids out of public schools and get taxpayer funding to enroll the kids in the schools of their choice. Wagner, again, wondered where the money was heading and found 90 percent of it goes to private religious institutions….
Also, Wagner reported, voucher funds come with “virtually no accountability measures attached … Private schools are also free to use any curriculum they see fit, employ untrained, unlicensed teachers and conduct criminal background checks only on the heads of schools. For the most part, they do not have to share their budgets or financial practices with the public, in spite of receiving public dollars.”
North Carolina is not unique in tolerating charter school corruption.
Bryant writes:
In Ohio, for instance, a recent investigation into charter schools by state auditors found evidence of fraud that made North Carolina’s pale in comparison. The privately operated schools get nearly $6,000 in taxpayer money for every student they enroll, but half the charter schools the auditor looked at had “significantly lower” attendance than what they claimed in state funding.
One charter school in Youngstown had no students at all, having sent the kids home for the day at 12:30 in the afternoon.
This form of charter school fraud is so widespread, according to an article in Education Week, many states now employ “‘mystery’ or ‘secret shopper’ services used in retail” that pose as inquiring parents to call charter schools to ensure they’re educating the students they say they are.
Enrollment inflation is not the only form of fraud charter schools practice. In Missouri, a federal judge recently fingered a nationwide chain of charter schools, Imagine, for “self-dealing” in a lease agreement that allowed it to fleece a local charter school of over a million dollars.
“The facts of the case mirror arrangements in Ohio and other states,” the reporter noted, “where Imagine schools pay exorbitant rent to an Imagine subsidiary, SchoolHouse Finance. The high lease payments leave little money for classroom instruction and help explain the poor academic records of Imagine schools in both states……”
In Washington, which was late to the game of charters and choice, the state’s first charter school is already under investigation for financial and academic issues.
Investigators in the District of Columbia, recently uncovered a charter school operator who “funneled $13 million of public money into a private company for personal gain.”
A recent report from the Center for Popular Democracy looked at charter school finances in Illinois and found “$13.1 million in fraud by charter school officials … Because of the lack of transparency and necessary oversight, total fraud is estimated at $27.7 million in 2014 alone.”
One example the CPD report cited was of a charter operator in Chicago who used charter school funds amounting to more than $250,000 to purchase personal items from luxury department stores, including $2,000 on hair care and cosmetic products and $5,800 for jewelry….
While charter school operations continue to waste public money on scandals and fraud – all in the name of “choice” – newly enacted school vouchers divert more public school dollars to private schools….
In Louisiana, over a third of students using voucher funds to attend private schools are enrolled schools “doing such a poor job of educating them that the schools have been barred from taking new voucher students.”
In parts of Wisconsin, “private schools accepting vouchers receive more money per student than public school districts do for students attending through open enrollment.”
Despite the obvious misdirection of taxpayer money, more states are eager to roll out new voucher plans or expand the ones they have. As the Economist recently reported, “After the Republicans’ success in state elections in November, several are pushing to increase the number and scope of school voucher schemes,” including Wisconsin, where probable presidential candidate Scott Walker has proposed to remove all limits on the number of schoolchildren who could attend private schools at taxpayer expense.
Of course, not all voucher-like schemes are called “vouchers.” According to a report from Politico, some states are considering voucher-like mechanisms called Education Savings Accounts that allow parents to pocket taxpayer money that would normally pay for public schools to be used for other education pursuits, including private school and home schooling. Two states – Florida and Arizona – already have them, but six more may soon follow….
Support for vouchers extends to Congress, as another Politico article reported, where Republican, and some Democratic, lawmakers are “proposing sweeping voucher bills and nudging school choice into conversations about the 2016 primaries.”
According to a report from Education Week, congressional Republicans leading the effort to rewrite the nation’s federal education policy, called No Child Left Behind, are “intent on drafting the most-conservative version of the federal K-12 law possible,” which would include a voucher-like scheme allowing federal money designated as Title I funds, the program for schools with low-income students, “to follow those students to the school of their choice, including private schools.”
In fact, working its way through the U.S. House of Representatives currently is a bill called the Student Success Act that would provide for this “Title I Portability.” In the U.S. Senate, according to Education Week, Title I Portability is also included in a draft bill to rewrite NCLB introduced by Sen. Lamar Alexander of Tennessee.
“Everyone should care and learn about Title I Portability,” warns public school advocate Jan Resseger on Public School Shakedown, a blog site operated by the Progressive magazine.
Resseger points to a statement by the National Coalition for Public Education stating, “This proposal would undermine Title I’s fundamental purpose of assisting public schools with high concentrations of poverty and high-need students.” Resseger also cites, from the Center on American Progress, a brief opposing Title I Portability. “According to CAP,” Resseger explains, Title I Portability would be “Robin Hood in Reverse … taking from the poor and giving to the rest,” ignoring the long-known fact that socioeconomic isolation has a devastating impact, as, on average, “school districts with highly concentrated family poverty would lose $85 per student while more affluent school districts would gain, on average, $290 per student.”
Despite the damage that Title I Portability could do to public schools serving our most high-needs students, charter school advocates appear to back the measure, according to a recent post at Education Week. “By and large, we feel that when the dollars follow children to the school that they select, you create a better marketplace for reform,” the president of the National Alliance for Public Charter Schools Nina Rees is quoted.
Nina Rees is a supporter of both charters and vouchers; she served as education advisor to Vice President Dick Cheney during the George W. Bush administration.
With today’s school choice crowd, children’s guaranteed access to high-quality public education appears to be no longer the goal – either by policy or practice.
Under the Tillis Rule, it’s assumed some schools will be allowed to remain lousy at least for some substantial period of time (how long is anyone’s guess), while “the money follows the child,” “people vote with their feet” and “the market works.”
Any negative consequences to those students and families unlucky or unfortunate enough to be stuck in the not-so-good schools – after all, it’s impossible for every family to get into the “best school” – seem to not matter one whit.
And that’s really sick.

Here is one hustle that really bothers me:
Eva Moskowitz’s students supposedly have some of the highest test scores in the state of New York and yet the New York Times reports that very few, if any, of these students pass the exam to the elite public high schools. Now how can that be?
Also, why isn’t the Times asking questions about those “miracle” scores?
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None of the 32 graduates from the eighth grade in Eva Moskowitz’s Success Academy passed the exam for entry into NYC’s selective public high schools.
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Yes, I had heard this, but wasn’t certain. If this is so, it seems like some journalist would want to find out why. Diane, why do you think no one is investigating this? Thanks.
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Linda, it’s pretty simple. Eva has lots of friends in the Lame Stream media. She also has lots of thugs and trolls to use in harassing any who dare question her. Eva is a charter crime boss.
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I’m no charter school defender, but I need to know more about this situation before I gasp in horror: “One charter school in Youngstown had no students at all, having sent the kids home for the day at 12:30 in the afternoon.”
Was this a scheduled day or unscheduled? If unscheduled, what was the reason? I mean, public schools have early closings too, and I just have a hard time believing that even a charter is in the habit of randomly closing on unscheduled days unless there’s some kind of emergency like a building problem. Parents would quickly get perturbed if they regularly had to pick up their kids early on an unscheduled basis.
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If I remember correctly, the folks who did the investigation just showed up at the school in question and there were no kids present. Oh, they were told, we dismissed today at 12:30, by way of explanation.
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I don’t mind Ohio being the poster child for bad government re: charter schools, because it’s well-deserved, but people in some other states are kidding themselves if they think this is limited to Ohio. It reached a tipping point in Ohio and finally got attention. It had been going on for 15 years, and people have been yelling about it for at least 5.
Ohio is the first “poster child”. It won’t be the last. Michigan now looks like Ohio did 5 years ago, and Pennsylvania is a disaster too. If your state is busily deregulating and “lifting caps” you’ll end up in the same place. Take a good hard look at the replacement before you throw your public school governance system in the trash, because what replaces it might be flimsy, cheap garbage that was thrown together by lobbyists.
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Thanks Diane. I’m getting some grief on Twitter for not being balanced enough — specifically, not calling attention to some recent efforts in Michigan and Ohio to pass new legislation that would impose more accountability and transparency on charter schools in those states. My feeling though is that there is some proportionality to keep in mind here. The volume of news about charter school scandal and malpractice, along with the well financed push to expand charters, far outweighs any of these attempts to reign them in so far. You and your readers may be interested in weighing in on that.
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Jeff, I can tell you that here in Michigan those are only proposals and they are unlikely to see the legislature’s floor.
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Thanks Steve
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Jeff, another thing to consider is the amount of waste, fraud and abuse in the charter sector vs. it’s size, as in lots of corruption in a small “market sector”. It’s a wild west gold rush mentality, dig up that gold before the next hedge funder does.
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Good point Jon
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If you base the need for charters on the rationale (and faith-based belief) that the monopolistic “government schools” are inefficient, ineffective, and corrupt and “market-based” schools will be “naturally” efficient, effective and less corrupt there is no need whatsoever for regulatory legislation. Don’t you know that government is the problem? Regulatory red-tape will squelch innovation!
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In 2006, Ohio based Fordham Institute published a paper underwritten by the Gates Foundation, “Turning the Corner to Quality: Too Many Poorly Performing Charter Schools (and online schools).”
That was nine years ago and, as of, March 8, 2015, nothing has changed, except more tax dollars have been wasted, the GOP has received more money from the charters and, public schools have had to absorb the failures.
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So many charter schools are a patchwork of scams, schemes and conflicts of interest designed to funnel taxpayer dollars into greedy, private pockets. It’s no wonder that someone like Michael Milken has jumped on the bandwagon. When states hand out money with little or no oversight, the corrupt line up to collect. For a nation whose Constitution created a system of checks and balances, our leaders seem to have forgotten they have a responsibility to be stewards of public funds. The reform movement has caused our leaders to abandon any sense of responsibility to civic duty and our young people, as they follow the money.
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Jeff, Nevada is also seeking to join the party. The tea party crew in charge now wants to make up for lost time and create a district like New Orleans. The next step, which they plan on implementing simultaneously, is to put vouchers on tap to any and all charters, parochial schools, and private schools. Nevada definitely wants to dive into the money pool and join the party.
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Thanks for the heads up about that state
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This article pertains to vouchers but the questions of agency and equality of information are relevant to all issues that supposedly can be market corrected. http://horacemannleague.blogspot.com/2013/01/asymmetric-information-parental-choice.html?m=1
The next article refutes any question of the existence of the “invisible hand”. I always like to say it’s invisible because it doesn’t exist. http://blogs.hbr.org/2012/04/there-is-no-invisible-hand/
The last link I’ll share has to do with the abject stupidity of Milton Freidmans ideas (hallucinations) on the primacy of shareholder value being the prime mover of business decisions. How many of the ideas described are we seeing promoted not only in education but in the country as a whole? http://blogs.hbr.org/2012/04/there-is-no-invisible-hand/
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Jeff, you left out my personal favorite from NC: Concrete Roses STEM Academy. Here’s one story:
http://www.charlotteobserver.com/news/local/education/article9166709.html
Fortunately, Entrepreneur High–the one with $14 in the bank account–has been denied state permission to reopen.
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I know. Even a 2,800 word piece can’t do the subject justice. So much stupid, so little time.
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http://ny.chalkbeat.org/2014/01/31/beginning-with-children-charter-school-to-remain-open-but-still-without-long-term-plan/#.VPsS14Y8KK0
This school which should be closing is actually being kept open as the DOE is going to force it into a public school close by. Why? Although it was once a respected community school, all kinds of underhanded maneuvers have taken place. Now they are told they can force themselves on my school, PS 157; a school that is predominately English Language Learners and special needs, a school whose children need small class sizes to meet their needs and provides a friendly learning environment, a school that will not be able to grow if co-located, a school whose clase sizes will increase as we lose classroom space. We will be competing for a similar population. In fact many of our higher performing students will be lured to the charter by the dangling grapes they will provide. We know there is money waiting in the shadows to support this s hill after they are relocated. And my school is starved. We asked for more Pre-K classes, an extension of ou JHS as well as a magnet grant. The DOE denied all our requests. But they will support a charter that is in turmoil, failing and at odds with the UFT over teacher contracts ( their other schools are not ionized). At their last parent meeting, Beginning With Children told their parents that after they move, they will request to get a Pre-K and move their JHS into our building.
We were co-located once before for about four years. The experience was not pleasant. It was forced on my principal before she even knew what happened. They moved out to their own building after causing much destruction to our physical plant.
Let our public schools grow. provide with funding so we can upkeep our buildings, buy books and materials and provide the best learning spaces for our children. These charter schools need to stop pretending they are providing a better education than the public schools.
I have been associated with/worked at PS 157 for 30 years. I have seen our children go on to good middle schools and then high schools. Many of them get professional jobs, stay in the neighborhood and send their children to our school. I am a product of public education. We need well funded schools and our profession respected, not phony alternatives that are really private, draining our pubic system.
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Sorry, that’s public school system.
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