The State Auditor in Pennsylvania decided to take a look at the ties between charter schools and the buildings they rent or lease. He found several that are renting space from the charter school’s owner, which is forbidden in state law. This is actually one of the most lucrative and overlooked aspect of the charter scam: The charter owner buys a building, opens a school, and charges high rent, which he pays to one of his shell corporations.
Pennsylvania’s fiscal watchdog on Wednesday questioned millions of public dollars paid to charter school landlords and called for the state to more closely monitor such lease payments.
At a news conference, Auditor General Eugene DePasquale highlighted more than $2.5 million in lease reimbursements to nine charter schools, including the Propel Charter School System in Allegheny County, the Chester Community Charter School in Delaware County and School Lane Charter School in Bucks County.
Without offering details, Mr. DePasquale said his office found ties between the schools and their property owners that could contradict state guidelines that deem buildings owned by a charter school ineligible for lease reimbursement.
“What we found in some of our audits is that the same people who own and operate charter schools, they themselves create separate legal entities to own the buildings and lease them to charter schools,” Mr. DePasquale said.
Pennsylvania enjoys the dubious distinction of having the most permissive charter laws in the nation, one that enables profiteers to score big without regulation or oversight. Pennsylvania is home of about 16 cyber-charters, which are known for their woeful performance. CREDO reported in 2011 that the virtual charters were the worst-performing of all types of schools in the state. In addition, two virtual charter operators were charged with fraud, including the founder of Pennsylvania’s first cyber-charter school, which had annual revenues of $100 million.
Under former Republican Governor Tom Corbett, the charter industry was given free rein to expand and exploit the taxpayers of the state. At one point, the Secretary of Education was a former executive of Michael Milken’s K12 Inc., the online virtual charter that has received numerous negative reviews by researchers.
The current Auditor General wants to get to the bottom of the real estate scam:
He said the education department in about 2010 asked the Auditor General’s Office to review such connections, and that the auditor’s staff has done so.
“We keep finding it and supplying the information to the department, and they do nothing with it,” he said.
Mr. DePasquale made a similar call for scrutiny in March 2013, when he said that audits of six charter schools found they had improperly received more than $550,000 in lease reimbursements from the state for properties related to or owned by the schools. It was not clear if that money was ever repaid.
Pittsburgh’s counsel agreed that oversight is nearly non-existent:
Ira Weiss, solicitor for Pittsburgh Public Schools, said the district agrees with the auditor general’s concerns about lease reimbursements.
“These schools are paid millions in tax dollars with little or no oversight by PDE,” Mr. Weiss said. “It is more evidence that the charter school law, one of the most permissive in the nation, needs a complete overhaul.”
Diane Ravitch's blog 
Ohio’s Plunderbund reports the much-investigated on-line schools, employ their relatives’ firms for advertising campaigns. Poor Ohio, Pennsylvania,… schmucks, robbed by their politicians.
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The current auditor general of this state is going to become a target of the fraudsters running the corporate charter school industry. Break him, buy him or get rid of him will be their goal.
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This is at minimum double dipping into public funds
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Auditor General Eugene DePasquale is rare. The deceptions and illegal activity in charters, in addition to serious ethical breeches are too often accepted as perfectly fine.
Apart from the self-dealing in real estate, furnishings, and services there are other scams, like charging parents/caregivers up to $35 and hour if they do not “volunteer” the required number of hours in their “contracts” with the school. A recent report from the ACLU on violations in California’s Charter laws and Federal laws, shows the variety of scams. But it also shows that charters are flying under the radar by various means, and in plain sight it only they were being monitored. Among the problems in California are charters that market themselves as “magnet” schools and therefore entitled to have selective admissions, with charter schools of the arts and “advanced academics” among those who have special requirements. Among these are interviews with parents, auditions/portfolios for arts-centered charters, and submissions of report cards or GPA information and “persuasive essays” written by students and/or parents caregivers (I deserve to attend this school because….). There is probably no fraud as lucrative as on-line programs were no one is seriously monitoring participation and learning. These are the real cash cows for profit-seekers.
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There a lot of slight of hand going on that is perfectly legal.
Buffalo has a pro charter School
Board member who purchases properties to rent to charter schools. Perfectly legal although it’s ethics is questionable – should one be in the position to make decisions which directly puts money in your pocket?
Unfortunately it’s done all the time. Think Cheney and how he profited off the wars in Iraq and Afghanistan through the dealings of Halliburton.
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Reblogged this on Matthews' Blog and commented:
A sad tale I dare say.
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This is a common practice in Michigan. Three Free Press series in charters two years ago delved deeply into this financial strategy and its shady qualities. But no way this administration and Tea Party Devos con trolled legislature ever lifts a finger.
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States should regulate charters. Charters should not be permitted to run a scam on the school children of the state. After all, they are wasting public money that should be going to the state’s students. Anyone caught defrauding the state should have to pay back the money with interest.
With transparent, accountable public schools there are annual audits. There is relatively little waste and fraud. Communities know where the money is going, and they have a right to review the district’s budget. With charters funds disappear into a big black hole, and no one has a right to know.
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Sorry to interrupt, but — breaking news — Donald Trump just now spoke about education, parroting, no, doubling down on, no, overheating President Obama’s positions. Last straw. I’m voting for Hillary Clinton. With enthusiasm. No nose holding required.
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LCT,
Keep your expectations low.
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Thank you, Diane. You say the right thing. You are thoughtful and true.
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Even the staunchly pro-charter school Los Angeles Times complained in an editorial that “the only serious scrutiny that charter operators typically get is when they are issued their right to operate, and then five years later when they apply for renewal.” Without needed oversight of what charter schools are actually doing with the public’s tax dollars, hundreds of millions of tax money that is supposed to be spent on educating the public’s children is being siphoned away into private pockets.
In addition to the typical practice of charter schools paying exorbitant rates to rent buildings that are owned by the charter school board members or by their proxies who then pocket the public’s tax money, another unbelievable practice is that although charter schools use public tax money to purchase millions of dollars of such things as computers, the things they buy with public tax money become their private property and can be sold by them for profit…and then use public tax money to buy more, again and again.
So far, one state supreme court has ruled that charter schools aren’t really public schools because they aren’t accountable to the public through a school board that’s elected by the public. Similar lawsuits should be filed in all other states.
Still, charter schools insist that they are public schools. Well, if they are as they claim, then charter schools should (1) be under the direction of a school board that’s actually elected by the public, and, (2) be required to at least file with the state board of education the same quarterly and annual audited public domain financial reports that real public schools file so that the public can see how charter schools are actually spending the public’s tax dollars. That’s only reasonable, isn’t it? It’s certainly not an undue burden since real public schools file such reports without complaint.
Meanwhile, hundreds of millions of taxpayer dollars are being diverted away from educating America’s kids and are ending up in private pockets.
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Well … PA finally realizing the obvious??? Why did it take PA so long? The “ed frauds” will just go to a new strategy and this strategy will be allowed to continue ridiculously long. This strategy alludes to “justice being served” but it is an illusion in that this flagrant disregard for law took FOREVER to discover??? Don’t know how we can expect any honesty these days. The DNC and Clinton are a perfect example! Just read this latest discussion of the DNC’s role in Clinton’s nomination in the Huff:
http://www.huffingtonpost.com/entry/debbie-wasserman-schultz-and-the-dnc-favored-hillary_us_57b365a4e4b0b3bb4b0800bd
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Always remember that in so-called education reform, It Takes a Pillage.
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Enjoyed the wit.
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