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: http://populardemocracy.org/sites/default/files/Charter-Schools-National-Report_rev2.pdf
It contains a long list of examples of charter fraud, waste, abuse, and mismanagement. And it is only the tip of the iceberg.
Diane Ravitch's blog 
There’s a great new series on Ohio’s charter schools, here:
http://www.10thperiod.com/2015/05/ohio-charters-just-dont-work-part-iii.html
I’m really grateful to the author because he outlines what has happened to our public schools as a direct result of the laser-like focus of politicians on charters. Our schools were simply never considered.
He also clears up some myths, one of which is that these kids are coming from “failing” district schools and and the other is that charters perform better.
“Remember that 45% of charter school students do not come from Ohio’s urban core — one of the myths dealt with in yesterday’s post.”
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We have to hope the Public cares, because all the Corporate Congressional Concubines are thinking when you tell them this stuff is, “How can I get a piece of that action?”
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The “governance” schemes” are so bad I have to think they don’t want them regulated.
It’s just bad government to push regulation of hundreds of schools up to the state level. It isn’t going to work. The regulator has to be closer than that. It’s like getting rid of the county health department and saying “oh, the state will regulate all that”.
No, they won’t. Even if they wanted to (and they don’t, in Ohio) they don’t have near enough people to do the job properly.
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Regulation of chrters, effective regulation will not happen. Why? The agencies, govrnmental units that are mandated to do oversight don’t even do it for public schools.The amount of noncompliance with state, local, federal laws is off the chart in public schools. Charter regulation is worst and as some have said, thereis not a will to regulate.The only time regulation is imposed comes down to politics or some type of public disclosure that has to be acted on. Since the chrter people have bought politicins and the news media, imagine how much that happens.Look at LAUSD, it has been allowed to deprive hundreds of older teachers due process and no oversight agency has done anything. Forcing low paid teachers to go to court to force LAUSD to comply with laws already onn the books. Oversight is a joke for public schools and charters.
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Facts don’t matter anymore. Ideological fervor is in vogue.
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“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.”
They lack the political will and they have been blessed with foundation and charter industry perks for ignoring the problem. They are co-conspirators in fraud, on a scale that is systematically denied, and difficult to document. Much of it is aalogous to the repackaging of mortgage loans with backscratching and rip-offs of public funds in financial deals where conflicts of interests are routine.
The same thing is happening with for-profit education where USDE could, but wil not, hold the corporate profiteers accountable and students are systematically defrauded and put into serious debt.
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We can add Marco Rubio to the long, long list of powerful people in both Parties who benefited from brutally ripping off poor people and saddling them with lifetime debt that will include wage garnishment.
They should be ashamed. Instead of garnishing debtors, they should be leading these politicians and lobbyists out in handcuffs. They’re robbing their most vulnerable constituents.
“As a wealthy, private chain of schools called Corinthian Colleges faced scrutiny for what the government said were predatory practices harming students, U.S. Sen. Marco Rubio of Florida asked the feds to “demonstrate leniency,” according to a new Bloomberg Politics report.”
http://www.cleveland.com/rnc-2016/index.ssf/2015/04/marco_rubio_went_to_bat_for_pr.html
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By calling fraud and waste on the part of charter schools a “vulnerability,” the authors of this study are using an unduly polite euphemism, making it sound as if waste and looting were bugs, rather than the features of the system.
Charter school waste and fraud is not an anomaly or outlier, it’s not only about “a few bad apples,” it’s not a few “unfortunate exceptions;” they are the very reason for the unregulated promotion and expansion of charter schools as currently constituted. They’re being pushed, despite the ample evidence that they are not real public schools, don’t serve the same students as the public schools, and more often than not do no better than the public schools, to destabilize and drain funding from public education, while feeding the bank accounts, egos, will-to-power and self-interested delusions of the Overclass and their factotums, who try to convince themselves and others that they can “do well by doing good.”
We have daily evidence that the so-called reformers are doing well financially. As for “doing good,” well, if the consequences of their aggressive delusions and falsifications weren’t so destructive, I’d laugh.
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It’s surprisingly easy to co-opt politicians, media and educational leaders. Money talks especially unsupervised public monies. Demonizing the least powerful but most concerned part of the eduction community is easy and diverts the public’ attention from the widescale fleeciing by privateers.
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Like its previous iterations (https://dianeravitch.net/2014/12/01/audits-new-york-charters-wasting-millions-every-year/comment-page-1/#comment-2266273), this report’s findings rely on a trade group’s rule-of-thumb estimate that *any* business or organization loses 5% of its annual revenues to fraud. Using the exact same “methodology,” it can be assumed that the nation’s traditional school districts will lose *$30 billion* to fraud this year, with $1.3 billion of that occurring in mayoral-controlled New York City alone.
Three guesses as to why the Center for Popular Democracy is less interested in making the public aware of that “bombshell”.
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Reblogged this on David R. Taylor-Thoughts on Texas Education.
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When I first heard of the salaries the operators of these privately run, public financed charters, I understood there appeal to the sudden altruism of these people. How many had volunteered at their local school? How many had given money to their local school? And how many want their staff to earn prevailing wages? Yes, there is fraud, waste, and misuse in the public system but it isn’t legal and it might be caught. Ask L. A.
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