Mercedes Schneider here describes a new entity that has joined the corporate reform movement. It is called SEN, the School Empowerment Network. It seems to be funded by the Walton Family Foundation, the billionaires who want to privatize all of public education and get rid of teachers’ unions. It is based in Brooklyn, New York, but gained its first contract in Michigan.
Michigan is the state where 80% of the charters operate for-profit. It doesn’t really need more charters. It does need accountability and transparency. The Detroit Free Press published a week-long series in 2014 about taxpayers being fleeced by the charter industry, which gets $1 billion a year and is never held accountable.
Diane Ravitch's blog 
Has anyone nominated Mercedes for a Pulitzer Prize for her incredible work exposing the shenanigans of the billionaire wizards?
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Can bloggers get Pultizer’s? If so, she should DEFINITELY be nominated, as her ability to get at the truth through all the walls put up by the “reformers” is astonishing.
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Click to access PSAQA_54517_7.pdf
From the Michigan Department of Education. See the section of financial accountability. Either I am missing something, or…
“A charter school may receive federal grant funds directly from the Michigan
Department of Education by following the same procedures that traditional school districts are required to follow…”
“Charter schools are required to follow a uniform chart of accounts. The chart of
accounts is found in the Michigan School Accounting Manual. RSC §380.1281(c) of the
Revised School Code requires the Michigan Department of Education to:
“Prescribe appropriate uniform pupil and finance accounting records for use in
school districts, public school academies, and intermediate school districts and
promulgate rules for their adoption.”
Charter schools are to submit an annual comprehensive financial report into the
Financial Information Database (FID) maintained by the Center for Educational
Performance and Information (CEPI) using the chart of accounts prescribed in the
Michigan School Accounting Manual. The report is submitted electronically, and is filed
with MDE by November 15 of each year. The penalty for noncompliance is the
withholding of state school aid payments. See Sections 388.1618(3) and (5) of the State
School Aid Act.
Charter schools are required to have an independent audit of their financial accounting
records conducted at least annually by a certified public accountant. The audit reports
are filed with MDE no later than November 15 of each year. Guidance for the audit is
given in the Michigan School Auditing Manual. The penalty for noncompliance is the
withholding of state school aid payments. See Sections 388.1618(2) and (5) of the State
School Aid Act.
All charter school financial audits are subject to Government Auditing Standards (GAS).
The book describing the standards is available online by visiting http://www.gao.gov.
Charter school boards shall adopt a budget prior to the commencement of the fiscal
year, using the minimum levels of appropriation described in Section IV of the Michigan
School Accounting Manual.
Charter schools are not to adopt or operate under a “deficit budget” (State School Aid
Act, MCL 388.1702. MDE closely monitors entities that violate this statute). In the event
a charter school falls into a deficit, they are required to file a deficit elimination plan and
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post it with the transparency items under “the mitten.” Deficit elimination plans are
approved by and monitored by the _____ office within MDE. It is important to note that
fiscal viability is one of the criteria for reauthorization, and schools that run a deficit may
be closed by their authorizer.
Charter schools should always seek competent legal counsel before entering into any
binding legal or borrowing agreement.
Charter schools must provide the same transparency information on their website that
all public schools provide [MCL 388.1618(2) and RSC 380.503(6)(1)]…”
===
So, if, according to the State of Michigan, Charter school are required, by law, to follow the exact same set of rules public schools have to follow, than where is the lack of transparency??
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What you are missing is the Emergency Manager Law, which gives anyone with enough payola a Get Out Of Jail Before You Even Get Arrested card.
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Rudy,
The Detroit Free Press ran a series about charter schools in Michigan and said that they are a $1 billion a year industry that has no transparency or accountability, and that perform worse than public schools.
Do you know more than the Detroit Free Press?
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Well, I read the Law… And it stated that the oversight and financial reporting requirements are the SAME as the public schools are bound by…
If that s not happening, the State government should have stepped in a long time ago. The data is there, for the public to see…
And, you may not believe this, but the press is not always impartial – at least, that is what a number of people have stated on this site, that you can’t trust such-and-such paper (WP, NYT etc.) because they would no know the truth if it hit them over the head…
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Here is the story Rudy. Apparently you think it is fine that more than 80% of charters in Michigan are for-profit. Just like public schools? Baloney.
http://www.freep.com/story/news/local/michigan/2014/06/22/michigan-spends-1b-on-charter-schools-but-fails-to-hold/77155074/
The story, which capped a one-year investigation, starts like this:
Michigan taxpayers pour nearly $1 billion a year into charter schools — but state laws regulating charters are among the nation’s weakest, and the state demands little accountability in how taxpayer dollars are spent and how well children are educated.
A yearlong investigation by the Detroit Free Press reveals that Michigan’s lax oversight has enabled a range of abuses in a system now responsible for more than 140,000 Michigan children. That figure is growing as more parents try charter schools as an alternative to traditional districts.
In reviewing two decades of charter school records, the Free Press found:
Wasteful spending and double-dipping. Board members, school founders and employees steering lucrative deals to themselves or insiders. Schools allowed to operate for years despite poor academic records. No state standards for who operates charter schools or how to oversee them.
And a record number of charter schools run by for-profit companies that rake in taxpayer money and refuse to detail how they spend it, saying they’re private and not subject to disclosure laws. Michigan leads the nation in schools run by for-profits.
“People should get a fair return on their investment,” said former state schools Superintendent Tom Watkins, a longtime charter advocate who has argued for higher standards for all schools. “But it has to come after the bottom line of meeting the educational needs of the children. And in a number of cases, people are making a boatload of money, and the kids aren’t getting educated.”
According to the Free Press’ review, 38% of charter schools that received state academic rankings during the 2012-13 school year fell below the 25th percentile, meaning at least 75% of all schools in the state performed better. Only 23% of traditional public schools fell below the 25th percentile.
Advocates argue that charter schools have a much higher percentage of children in poverty compared with traditional schools. But traditional schools, on average, perform slightly better on standardized tests even when poverty levels are taken into account.
In late 2011, Michigan lawmakers removed limits on how many charters can operate here —opening the door to a slew of new management companies. In 2013-14, the state had 296 charters operating some 370 schools — in 61% of them, charter boards have enlisted a full-service, for-profit management company. Another 17% rely on for-profits for other services, mostly staffing and human resources, according to Free Press research.
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Thanks Mercedes. U do deserve a prize. I send a hug instead. Wish U of Mich Ed School would speak out on Charters. Anyone else out there a U of M grad with Teaching cert from state? Mine long expired.
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The Obamacare markets are a regulated, private choice system. They’re essentially a federal voucher to purchase health insurance. They’re running into trouble remaining solvent while offering plans to all comers in a “competitive marketplace”- they get some expensive people to cover.
Does this worry public education privatization enthusiasts? Would this be a problem if they achieve the goal of “school marketplaces” where contract providers offer school services?
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It’s beautifully echo-chambery.
Eli Broad created the EAA and Walton is running it.
Now all we need is Gates and Zuckerberg and it’s 100% insiders.
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Speaking of Eli and the Waltons close cooperation….here is an article on the head of the Broad Foundation/Academy, Bruce Reed, that tells too much of it for sanity to prevail.
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Here’s Why Bruce Reed Is Now One of the Most Powerful People in Education
Author L.S. Hall
In his two months as the Broad Education Foundation’s new president, Bruce Reed has spent much of his time with Eli Broad, learning about Broad’s vision for education reform and examining the work the foundation has supported in years past. It’s been a quiet transition. But don’t be fooled; this may well be the lull before a major new spending spree by Broad and a hugely influential role for Reed in U.S. education policy.
The Broad Education Foundation approaches school reform at the system level, funding projects that design new schools and education systems. That includes staunch support of charter schools, but also big investments in bolstering the management skills of public education leaders. The foundation favors reforms that are designed to reduce what Eli Broad sees as bureaucratic barriers that interfere with teaching and learning. The foundation also supports value-added teacher appraisal models. And there’s more: the foundation gives generous scholarships to high schoolers who graduate from urban school districts that have made big improvements. And it has a initiative to connect schools to new digital resources for “personalized learning.”
That’s a big agenda, and one with serious money behind it: Forbes’ most recent billionaire list estimates Eli Broad’s wealth at $6.9 billion. After the Gates Foundation and the Walton Family Foundation, Broad has been the biggest spending education philanthropist of recent years.
Now he seems poised to ratchet things up further. Eli Broad has always favored what he describes as a national education system. “Rather than having 14,000 school boards across America, it would get governors involved, big city mayors involved, and it would have a longer school day and a longer school year,” is how Broad described his idea of the perfect education system to California radio station KPCC.
In Bruce Reed, the 80-year-old Broad may have found the perfect man to expand the foundation’s national scope and impact. Reed has the knowledge and political clout to ramp things up. He’s been chief of staff for Vice President Biden, a speech writer for former Vice President Gore, and a top policy expert in the Clinton administration.
Ideologically, Reed looks like a perfect fit for Broad, whose political affiliations lean Democratic but who is an ardent foe of teachers unions, a traditionally reliable Democratic constituency. Reed’s political resume includes a stint as CEO of the Democratic Leadership Council (DLC), the centrist Democratic organization whose founders included Bill Clinton. In its quest to remake domestic policy, the DLC supported some forms of school choice, such as charter schools, and didn’t hesitate to ruffle the feathers of organized labor, including teachers’ groups.
If the Broad Education Foundation does rachet up its work nationally under Reed, its first president, one question is whether it will also begin moving a lot more money out the door. In 2012, the Eli and Edythe Broad Foundation gave out a total of $153 million for all its activities (which also includes giving for medical research and the arts), putting it among the top 35 foundations by giving that year. Yet at this rate, the Broads—who signed the giving pledge—won’t make much of a dent in giving away even half their fortune while they’re still alive.
That’s why bigger giving for education—maybe much bigger—seems highly likely. Perhaps that’s how Broad convinced Bruce Reed to move across the country to take a foundation job, when he surely could have snagged more prestigious positions.
If Broad really opens the floodgates, it could mean major opportunities for groups that have already gotten Broad money, but also for new organizations and school districts. If you’re an educator who’s yet to get Broad funds, now’s a good time to suddenly remember that you and Bruce Reed knew each other in college. Or whatever. Reed is likely to become one of the powerful figures in U.S. education philanthropy starting, well, now.”
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http://www.freep.com/story/news/local/michigan/2014/06/22/michigan-spends-1b-on-charter-schools-but-fails-to-hold/77155074/
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Here’s some highlights from Mercedes’ article. She sure did a bravura “close reading” of the public filings of Students Matter, the organization behind the Vergara and other corporate ed. reform lawsuits.
In its public filings, the organization’s full name is:
“Students Matter, the Students First Foundation (SFF)”
She found some statements that were very interesting, to say the least, emanating from this (in Mercedes’ words) “corporate reform lawsuit factory”:
StudentsMatter Is Millions in Debt from Vergara Lawsuit, Yet It Keeps on Suing
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MERCEDES SCHNEIDER:
“This next part is my favorite:
“Creating grass-roots-ish buy-in for top-down-birthed education litigation. Also included on the second 2012 tax form:
Students First public filing:
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“THE ORGANIZATION ENGAGED IN A PROGRAM OF COMMUNITY OUTREACH TO CREATE A GRASSROOTS EXPANSION OF ITS EDUCATIONAL PHILOSOPHY AND STRATEGY WITHIN THE COMMUNITY. THE ORGANIZATION SUCCESSFULLY CREATED AWARENESS OF ITS VISION, MISSION AND THE BENEFITS ITS ACTIVITIES WOULD BRING TO THE COMMUNITY.”
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That sure perverts, or at least, contradicts the meaning of “grassroots.”
https://en.wikipedia.org/wiki/Grassroots
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Wikipedia: “Grassroots movements are associated with bottom-up, rather than top-down decision making, and are sometimes considered more natural or spontaneous than more traditional power structures.”
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Mercedes’ article also states how Students Matter /Students First Foundation (SFF) now has millions of dollars of legal expenses, with much less money taken in for fundraising, leaving it now millions of dollars in the red.
Other than those hefty legal fees, which constitutes the bulk of that debt, what else did David Welch & Co. spend money on?
Well, like Eva in NYC, they sure blow a lot of money on public relations and rallies:
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MERCEDES SCHNEIDER:
“The second highest expense was to a Los Angeles-based organization,
“Rally: $809,955 for ‘public relations.’ ”
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Quick review on SFF Founder David Welch (from a Capitol & Main article):
http://capitalandmain.com/david-welch-the-man-behind-vergara-versus-california
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EXCERPT: (how Welch cashes in on corp. ed reform… read the whole thing)
“What may be unique about Vergara is David Welch himself, a man who prior to creating Students Matter in 2010 — the same year as the Reed case — had virtually no background in education policy or any direct financial stake in the multi-billion-dollar, for-profit education and standardized testing industries.
“… (Welch’s) reported 2012 income was $2.23 million, (Welch) lives in a $12.5 million estate nestled in the bucolic Silicon Valley enclave of Atherton, which ranks first on Forbes’ annual list of America’s most expensive ZIP codes.”
“Yet Welch and his nonprofit play a special role among a group of other nonprofits and personalities whose legal actions, school board campaigns, op-eds and overlapping advisory boards suggest a highly synchronized movement devoted to taking control of public education. The David and Heidi Welch Foundation, for example, has given to NewSchools Venture Fund, where Welch has been an ‘investment partner’ and which invests in both charter schools and the cyber-charter industry, and has been linked to the $9 billion-per-year textbook and testing behemoth Pearson. ”
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Another thing that I noticed from Mercedes’ piece is that David Welch, the Silicon Valley multi-millionaire and entrepreneur who “founded” Students Matter (SFF) and initiated the Vegara lawsuit, differs from big-money corporate education reform funders such as Eli Broad, Gates. and the Waltons in a least one key respect.
Like those others, David and Heidi Welch made an initial donation of $320,000 to Students Matter (SFF), which David founded — money which they will not get back.
Unlike those others, however, EVERY CENT that the Welch’s personally kicked into Students First AFTER THAT has actually been “a loan” from them to the separate entity “Students Matter /Students First Foundation (SFF).”
This is a loan, mind you that Students Matter / Students First Foundation (SFF) is required to pay the multi-millionaire Welch’s back, albeit “without interest.”
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MERCEDES SCHNEIDER:
“By the close of 2012, SFF still owed Welch a total of $949,122, which it listed on its 2013 990 as its ‘total liabilities.’ ”
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According to Mercedes, the Students First /Students First Foundation (SFF) has already paid the Welch’s back some of that:
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MERCEDES SCHNEIDER:
“SFF managed to reduce its debt to Welch from $949,122 to $480,429. However, it also took out a line of credit to the tune of $4,249,122 with Bancorp for SFF operating expenses.
“In 2014, SFF received $6,441,741 in total revenue and had $5,510,409 in total expenses. Of course, it also still had the Welch and Bancorp debt as liabilities ($5,576,311 total). The result was another year of negative total net assets: -$4,196,936.”
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Hmmm … after that initial $320,000, the multi-millioniare Welch’s have not exactly been sticking their necks out, money-wise. We never would have known that detail without Mercedes’ tenacious on-line gumshoe efforts.
To cope with all that debt to the Welch’s, to Bancorp, and to SFF’s sub-contracted law firm, those in charge of the SFF have “apparently notified the IRS that it plans to convert its status from private foundation to public charity.”
And why is that?
Because once it is re-classified as a “public charity,” SFF can choose to have its donors “remain anonymous.” According to Mercedes:
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MERCEDES SCHNEIDER:
“Perhaps SFF will draw more corporate-reform billionaire cash if those billionaires are able to hide even as they still benefit from the nonprofit-donor tax breaks.
“To keep feeding (law firm) Gibson, Dunn and Crutcher, the SFF behind StudentsMatter must attract more money. Much more.”
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Here’s the end of Mercedes’ article, with that information, and its significance:
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MERCEDES SCHNEIDER:
“Looming question:
“How is SFF able to afford its astroturf ed. litigation?
“SFF owes Bancorp over $4 million, and SFF paid (the law firm handling its lawsuits) Gibson, Dunn and Crutcher a total of $10,652,620 from 2012-2014, with Vergara alone, pre-appeals.
“SFF has apparently notified the IRS that it plans to convert its status from private foundation to public charity. One of the benefits of doing so is that the public charity allows for donors to remain anonymous. As a private foundation, SFF must include details about its donors (including names, addresses, and amounts) as part of its 990 tax reporting.
“Perhaps SFF will draw more corporate-reform billionaire cash if those billionaires are able to hide even as they still benefit from the nonprofit-donor tax breaks.
“To keep feeding Gibson, Dunn and Crutcher, the SFF behind StudentsMatter must attract more money. Much more.”
“Can’t wait for the continuing saga as told by SFF’s 2015 990 tax forms.”
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Michigan is the state with the governor who said he would not push “right to work” agenda because it was too divisive and yet did, is dealing with the lead in water in Flint, MI, is pro emergency managers, took $$ from teachers and refuses to return it despite the fact that courts have ruled it illegal, and on and on. His daughter attended an expensive private school with small classes and individual support and experiences, yet doesn’t think teachers in Detroit need to be licensed.
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