Martin Levine reports in “Nonprofit Quarterly” that charter frauds are multiplying, yet the U.S. Department of Education fecklessly plans to increase charter school funding by 48%.
The frauds are facilitated because of inadequate supervision by state or local agencies. Unscrupulous charter operators take advantage of deregulation to steal taxpayers’ dollars or make lucrative contracts with friends, relatives, or their own corporations.
Levine reports:
“Six distinct categories were needed for this report to capture the practices of the charter school operators that were studied:
*Charter operators using funds illegally for personal gain
*School revenue used to illegally support other charter operator businesses
*Mismanagement that puts children in actual or potential danger
*Charters illegally requesting public dollars for services not provided
*Charter operators illegally inflating enrollment to boost revenues; and
*Charter operators mismanaging public funds and schools
“At the federal level, despite the apparent misuse of such large sums of scarce funds and the lack of adequate oversight mechanisms, the 2016 budget that is working its way through Congress includes a significant increase in funding with little if any increase of management. According to Jonas Persson of PR Watch, “Despite drawing repeated criticism from the Office of the Inspector General for suspected waste and inadequate financial controls within the federal Charter Schools Program—designed to create, expand, and replicate charter schools—the U.S. Department of Education (ED) is poised to increase its funding by 48 percent in FY 2016.”
Diane Ravitch's blog 
One of my REBT trainers once gave us the definition of a “true believer”. He asked, “How many reindeer do you have to throw off a roof before a true believer will realize and admit that reindeer don’t fly?” Then he said, “The answer is that it doesn’t matter how many reindeer you throw off the roof”. Unfortunately, proponents of privatization have gotten a lot of “true believers” in the right spots in government, including in the post of Secretary of Education, and probably the White House as well. Even if it’s just “true believers” in that old faulty adage that the private sector can always do things better, and for less. For sure there are true believers in the office of mayor of Chicago, and now the governor’s office. Or maybe they’re just “true believers” in capitalism, and the ends justifies the means, with the end always being a few getting richer.
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These zealots should take a look at the impact of privatization on Chile, Honduras or Sweden. I think Forrest Gump said it best, “Stupid is as stupid does.”http://www.theguardian.com/world/2015/may/04/sweden-school-choice-education-decline-oecd
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Are they true believers, or just truly evil? You can throw reindeer off a roof because you believe they can fly, or you can throw them off the roof because you’re getting rich off of reindeer hides.
While some of the privatizers are true believers, I think plenty of them know perfectly well that they’re selling snake oil. They don’t care because that snake oil is making them fabulously wealthy.
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Of course, many know they are selling snake oil; they don’t care. I seriously doubt that Micheal Milken has a burning desire to improve education in our country. He is is an opportunist looking to exploit the loopholes in the system to make money, and he is only one of many such vulture capitalists in this game.
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Great comment!
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For those of us diagnosed as AI, what is REBT?
TIA!
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Bill Bennett is his partner, you know those gambling debts must be paid!
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A taxonomy of types of charter school fraud is a very good idea, in addition to state by state reports by variety of fraud. One problem is getting firm data on who is reporting to whom, source and credibility of report, action taken and outcome.
I just checked on fraud reports filed at the USDE Office of Inspector General. The last OIG report I could find on charter school fraud is dated 2010.
Excerpts “ Since January 2005 the OIG has opened 40 charter school criminal investigations which have resulted in 18 indictments and 15 convictions of charter school officials. Twenty four of these investigations are still open with criminal prosecutions actively pursued generally against multiple subjects in each case. Of the cases that have been fully adjudicated OIG has secured $4.3 million in criminal restitution for public education funds that were embezzled. There were another 47 additional complaints received by OIG that were also preliminarily investigated, but were not opened for full investigations. There has been a steady increase in the number of charter school complaints for our office to examine.
The type of fraud OIG has been identifying generally involves some form of embezzlement of funds from the school by school executives or officials. The schemes that were used to accomplish this were varied but with same result : theft of Federal, State, and local education funds. We have found charter school executives have falsely increased their school’s child count, thereby increasing funding levels to embezzle. We have also found an alleged grade-changing scheme allowing failing students to pass. This would ensure that Adequate Yearly Progress was met so the LEA allowed a school to continue its operations, thereby continuing a funding strean from which to embezzle. ….We have found schemes where owners or employees created companies to divert school funds, and the misuse of school credit cards for personal expenditures. Examples:
California: In 2007 the founder of the California Charter academy, which ad multiple locations through out the State, a board member of Herperia City Councilmen were indicted for misappropriation of public funds and grad theft. They were alleged to have stolen in excess of $5,000,000 in funds from a now-closed charter school The alleged thefts were discovered by a State audit into the school’s private management firm Education Administrative Services Corporation, which revealed that millions had been spent on personal expenses, spa treatments, and personal vehicles. This matter is still pending a criminal trial. (That was in 2010).
Minnesota: in 2006, the two former owners of the Right Step Academy, one of the first charter schools in Minnesota were sentenced to periods of incarceration and order to pay $489, 240 in restitution. Out investigation uncovered evidence that the owners set up a corporation to divert schools for their personal use. The funds were used to purchase luxury cars, vacations, personal real estate, clothing, and house furnishings.
Illinois: Edited Excerpt: In 2008 the principal of the now defunct Triumphant Charter School in Chicago allegedly used a school American Express Card to purchase over $55,000 from stores such as Louis Vutton, Elan Furriers, Saks fifth Avenue, Coach and others. This matter is still awaiting trial. (That was in 2010).
USDE replied to this 2010 OIG report saying it needed more information about the particular authorized chartering agencies in charge of overseeing each school in order to determine the proper measures for “appropriate accountability for Federal funds. For example, the funds could be from the Charter Schools Fund, Title I, IDEA, etc. or from a subgrant to a state, in which case “the particular State would bear the responsibility for ensuring the funds were spent properly.” USDE said that if the funds were from the Charter Schools Fund that “ the problems may extend to school’s status as a “charter school.”
So USDE has no obvious obligation to do oversight of charter schools except as these are created/authiorized by the Charter School Fund and do not pass through to states–and as far as I have determined, almost all do.
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Like I always truth and facts only matter when they matter and to the progressives the truth and facts about Charters are of little concern as providing a good education is not their concern either. The agenda is to privatize public education come hell or high water. There are lots of folks just wringing their hands and salivating at the prospects of privatizing public education. Whatever Charters are today they will not be the same 20 years from now. They will all be owned by big business cartels and profit will be the main course not education. They will become training centers for the human capital to address the needs of the global economy. One thing Americans fail to do and that is think like a visionary. If more people would have done that Charters would never have gotten off the ground but we all listened to the flowery words from people we trusted (but should have) and we got screwed. Another golden rule to follow…….”if it sounds too good to be true it probably is.”
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Knock it off with the “progressive” insults. There’s nothing progressive about Obama, Duncan, Emanuel, Cuomo, etc., who happen to be largely in agreement with Bush, Christie, Walker, etc. It’s the real progressives – people like Zephyr Teachout in New York and Chuy Garcia in Chicago who tried to challenge entrenched power – who are fighting charter schools. Few Republicans have any real problems with charters, although they tend to prefer vouchers (which have had their own fair share of scandals and corruption).
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The frauds are facilitated by the governance systems non profits and charter companies are writing. There’s no direct regulation.
Ohio’s has “the charter” (state to sponsor) and then the contract between the sponsor and the school and then the contract between the school and the management company. One would have to examine all three contracts.
Maybe lawmakers could see their way clear to start drafting laws again, instead of “relinquishing” that job to unaccountable private entities.
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“Relinquishing” is a perfect way to describe how the government has treated charters. That is one reason the system is so corrupt since it has little oversight. How can the government justify spending more on schools that have spotty results and too much waste and fraud? They have chosen to ignore reality and abrogate their responsibility to the public. These corporations believe public money is their own personal ATM.
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Also, can we get some information on the authorizers and sponsors? What are they paid? What do they do for a cut of each student’s funds?
In Ohio they are presented as entities: “Buckeye Children’s Org” (or whatever). Who are these people? Why are some of them making 250K? Do they have names and histories and qualifications?
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Bill Black, government regulator during the Savings and Loan debacle in the late 1980s, has developed a powerful idea relating to banking that also captures this reality: “control fraud,” according to Black is the looting of banks by the people who own them, by using their control of deposits (some of which are FDIC protected and thus put the taxpayer on the hook to correct the fraud) to lend depositors’ money to crony friends, to pay for fraudulent “enterprises.”
This “control fraud” model is now being applied to the nearly annual trillion dollar government subsidized public education system in this country. The business upside here is staggering.
Follow the money, follow the money, follow the money…………………………
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All should read Bill Black’s work.
The “accounting control fraud” that he writes about is the fact that everyone in a given system sees the work they are doing as normal and legal, banal in Arendt’s sense. The ones who know it is a fraud are those at the very top doing the orchestrating with pretty much everyone else in the organization “not in the loop”.
Charter schools are rife with this type of “management account control”.
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Regarding the lack of oversight for charter schools: did you see that the Chair of the SUNY Charter Institute is demanding more funding for oversight given that they are the only entity the charter school industry will allow to have oversight of the schools they approve. The chair said he would not approve a single new school until more money for oversight is forthcoming. They are barely doing oversight for the schools they now have and are supposed to approve 50 more with no delay. The charter industry has given SUNY their marching orders – who needs oversight anyway? The rich charter chains and their billionaire donors apparently are in charge, not SUNY and I feel confident SUNY will be approving every charter school the big donors demand should be approved.
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