Scholars Preston C. Green III, Bruce D. Baker, Joseph O. Oluwole, and Julie F. Mead published this article comparing charter schools to subprime mortgages in the University of Richmond Law Review. It appeared in 2016, but it grows more apparent by the day that its warning was prescient. The similarities are striking.
The more authorizers in a state, the less attention is paid to quality. The authorizers have a profit motive to multiply charter schools because they collect a percent of the take. The authors discuss the predatory practices used to lure students to charter schools and the inevitable fraud and embezzlement associated with lack of regulation.
My favorite example of the way that Education Management Organizations profit from charter school rentals:
With respect to fiscal stewardship, charter school boards have the responsibility to ensure that their schools spend market value for the renting of facilities.108 For-profit EMOs have sought to enhance their revenues by charging exorbitant fees for these arrangements.109
For example, the Detroit Free Press reported that the National Heritage Academies (―NHA‖) charged each of its fourteen schools more than $1 million in rent per year.110 The Free Press review of the 2012–13 audits of more than fifty other charter schools run by other for-profit EMOs revealed that only seven charter schools spent more than $500,000 in rent. By contrast, all but one of NHA‘s schools spent more than $500,000 in rent.111 The newspaper also reported that NHA collected $380 million in rent, including nearly $42 million in 2013–14, since the company began running charter schools in 1995.112
The authors may or may not know that National Heritage Academies is owned by J.C. Huizenga, a family friend of the DeVos clan, based in Grand Rapids, affiliated with ALEC and other rightwing groups, and a multimillionaire from his other business interests.
The authors describe how a “bubble” happens, how certain populations are targeted, how they clamor to get in to what appears to be a good deal, then stampede out when the bubble bursts. This may be happening now in urban African American communities. The question that is not addressed is how to restore and rebuild a stable public school system that has been destroyed by predatory charters.
This article is worth your time.
Diane Ravitch's blog 
“May be. . .”??
How about “are”.
and there have been very clear warnings about this for the last five or six years.
If the charter schools scam turns out like the subprime mortgage scam did, then those who made the most money will walk away even if they are guilty of fraud while millions of workers lose their jobs and homes.
Where’s the bucket, I need to puke.
So,basically what Green, Baker et Al are saying is that charters are subprime schools?
You would think that we would have learned from the recession, but apparently, “no.” The government has been complicit by refusing to regulate and hold charters accountable by requiring audits. While a few states have started to hold charters accountable, the government generally has turned a blind eye to all the problems of poor management, waste and fraud in charters. The EMOs have taken advantage of this lack of oversight. As the public has gained insights into all the problems with charters and the predatory practices of charters in poor neighborhoods, people are becoming more reluctant to send children to charters. I say, “Let the herding begin” so we can rededicate our efforts to the schools that serve the common good.
Our public school system is a worthy one although it can do with some improvements. The Los Angeles teachers are fighting for improvements such as less students per class, which mean much for the learning. Taking away money from the public school system seems basically problematic. Surely changes benefiting students, teachers, and parents, can be made in the public school system without giving the schools to private entities.
The problem is that too many people in power are working with billionaires and corporations that want to privatize the schools in order to monetize them. Few seem to be interested in improving public schools. Many want to eliminate them.
I think they’re more like junk bonds, which to me is appropriate considering Milken money behind K12.
The question often raised on the blog by, I think, Dienne, is that after the public system is destroyed can it ever be restored? If enough charter bubbles pop, the kids enrolled still need schools – will there be any?
In the same vein (pun noted), the NYT is reporting on the successful privatization of the VA:
Well the first sentence of the piece certainly belongs in the category of “A BIG LIE”.
I must confess to having a certain amount of Schadenfreude if the VA privatization scheme comes to fruition. The VA health care system is literally the most socialist program in the U.S. Yet during the health care wars of 2008, when advocates for universal health care coverage were essentially trying to get for all Americans what the VA was already offering, recipients of VA health care were silent; they didn’t want the rest of the country to catch on and feared “losing” their secure health care system. While 50% of Americans consider anyone who wears a uniform “a hero” regardless of whether they were in harm’s way or behind a desk pushing papers, I consider the silence of veterans to not explain what their health care system offered and linking it to coverage for all Americans to have been selfish cowardice.
I know this will rub many of you the wrong way. Sorry. When people claim that they fight for our freedom, I would beg to differ. My experience of growing up as a military brat opened my eyes to the fact that many of them saw it as a job (that’s where I learned the phrase, “Good enough for government work”) that would give them lifetime benefits that would never be threatened as they are for anyone else who works for a living.
Greg, the parallels to the ways in which public education have been destroyed are pretty frightening:
“For individual veterans, private care could mean shorter waits, more choices and fewer requirements for co-pays — and could prove popular. But some health care experts and veterans’ groups say the change, which has no separate source of funding, would redirect money that the current veterans’ health care system — the largest in the nation — uses to provide specialty care.
“Critics have also warned that switching vast numbers of veterans to private hospitals would strain care in the private sector and that costs for taxpayers could skyrocket. In addition, they say it could threaten the future of traditional veterans’ hospitals, some of which are already under review for consolidation or closing…
“The proposed changes have grown out of health care legislation, known as the Mission Act, passed by the last Congress. Supporters, who have been influential in administration policy, argue that the new rules would streamline care available to veterans, whose health problems are many but whose numbers are shrinking, and also prod the veterans’ hospital system to compete for patients, making it more efficient.”
One HUGE difference. Those of us who are aware of what’s going on with education privatization, its consequences, and its enablers are working hard to educate our fellow citizens about its dangers and threats to civil society.
In the case of veterans health care, the beneficiaries did not step up and support health care for all because they were fearful of the general public understanding just exactly what they were getting and how it was a shining example to counter the lies being spread about universal health care. Indeed, many of them were on the front lines of the so-called tea party reactionary backlash led by Fox Republicans. The fact that they are now at risk of privatizers’ greed is a direct result of their silence. For anyone paying attention, this is what Schadenfreude means. Payback is a bitch. Don’t expect me to come to their aid after their silence about the lies propagated against the Affordable Care Act or, more importantly, their abandonment of universal health care for ALL Americans, not just the few who put in some time for military “service.”
Educators for Excellence has set up here in Boston. They’re funded by the billionaires, of course, as has been discussed on the blog before. They seek to cultivate teacher voice, they say, but in reality they are trying to peel off early career teachers away from the union. They dangle merit pay instead of a pay scale for experience and education; they talk about ditching the union because it’s not for “innovators” and so forth.
The privatizers have only one ballgame, and they’re using the same MO on young veterans. As educators, we’re always teaching and mentoring, but who is reaching out to these young vets to help them see through the veil?
Privatization hurts all of us in the long run, as the common good gets trampled by greed.
I think that there is a level of misunderstanding about VA health care. As a retired veteran, I can tell you that VA care is suppose to be for those who are disabled while in military service. It is not a give me, though most vets were told upon enlistment that they would get such care. That is one of those recruiting exaggerations. There are levels of physical and monetary requirements that must be met and being indigent is far down the list. Many years ago, my income was down to $1600/m and I requested only pharmacy benefits and I was denied. Yes, it may seem like hearing aides or counseling is an unnecessary drain on government funds but these people did not sign up to have life long PTSD problems or permanent nerve damage due to gun fire, traumatic brain injuries or permanent disabling orthopedic injuries.
Getting in to get an appointment is often times a long wait and you hope your records are not lost or that an appointment request has not mysteriously jumped off the computer screen. Many vets drive many hours to an appointment and have tests repeated needlessly. The care is very good because they specialize in areas not often seen in community hospitals (ie neuro, burn and ortho). They have to jump rule hurdles to be able to see private doctors and then may have further problems getting tests paid for. I am happy not using VA services and there are many who would love to see a local medical provider and are prevented from doing so. What they say in the news is often not what the real thing is. For others–the VA is wonderful.
Do not think for a minute that these people did not earn the right to their free health care. VA eligible patients should have a choice in care. Private community hospitals are definitely more expensive that the VA. The VA has learned to operate on a shoe string and many of those fancy new pieces of equipment and nursing supplies that are hugely over priced in non military facilities you will not see in a VA hospital. The VA is usually understaffed in medical and nursing staff. They are over worked and have the same problems finding quality caregivers as many other places. Try suing the government for medical malpractice–good luck! Veterans are generally a thankful, resourceful and tough group–hardly a group seeking handouts. “Selfish cowardice”, Greg, is hardly how I would describe anyone who has offered to put their lives on the line for their country…whether they were a paper shuffler or in combat.
Military service offers a prime example of socialized medicine. I have worked in it and been a recipient. Just try calling in sick when in the military! The military offers good care but are under no need to be in competition with other facilities. You don’t like something? Too bad. Like it or leave it, at your own expense. Coddling is definitely not in their vocabulary. The name of the game is getting you well and out–no using up insurance benefits(and then you are suddenly cured) especially on medicare or medicade, or doing unnecessary surgeries or beauty enhancement procedures or housing people who should be in nursing homes. Military hospitals are well aware of expenses to the taxpayer. Civilian hospitals are more concerned about making money—not saving it.
There is a place for military and civilian medicine. Socialized medicine will put huge demands on our society that we are not prepared for. We lack the money and the providers to take care of a growing society of those who want something for nothing.
“Getting in to get an appointment is often times a long wait and you hope your records are not lost or that an appointment request has not mysteriously jumped off the computer screen.”
There is an option to apply to the VA indirectly through an agency that a federal law decades ago required the states to provide.
That’s how I was accepted into the VA. Instead of going to the VA and applying, I went to an office on the other side of the freeway that was through the state of California and not the federal government. That state agency sat down with me, then ordered a copy of my DD214. Next step was to apply to the VA. The state agency did all the paperwork and guided it through the quagmire of red tape that is the VA.
In the meantime, I was allowed medical care through the VA while I was waiting for the VA to make the final decision.
Every state is required to supply this support to help combat vets get into the VA if they qualify.
I don’t remember what it is called but I’m sure you can Google this and find out.
So far, knock on wood, I have never had an appointment mysteriously vanish and have never had to wait for a long time to have the appointment. If I need help, I always go to the service the state of California offers and they deal with the VA instead of me. It has worked every time.
This is an unfair characterization. I’ve been advocating for VA for all for decades, including when the deporter-in-chief was pushing his insurance industry friendly healthcare bill in 2008.
I have tweets from as early as 2013 advocating for VA for all, and have been making that case for much longer than that.
Eliminating the VA in favor of the woefully inefficient private sector is a tragedy.
Here’s a tweet from September.
I have often wondered what the ultimate goal of education privatization is. On one hand, I think there will always be a spigot of government money flowing to private schools in one form or another because it’s extremely lucrative for those private school managers. On the other hand, sometimes I think privatization is just the first step in eliminating any public obligation for schools at all. Once we get everyone used to the idea that “education” is something you purchase at your choice with a voucher or from an array of charter options, the next obvious question is why should the government pay people for this? Why shouldn’t education be a private expense, just like food, shelter and clothing, which are, after all, more immediately important necessities?
I’m really not sure which way it will go at this point.
I can surely imagine that scenario playing out. That’s a frightening idea.
Dienne, you just described what is the primary difference among the major players in so-called reform, between those who want to keep a vestigial public-in-name-only school sector for its profit and social engineering opportunities (the Gates//Broad/DFER/TFA/KIPP “liberal” wing) and those seeking to override Supreme Court decisions guaranteeing access to public education as a constitutional right, and set the dogs of capitalism loose. Those goals are represented by the Walton/Arnold/De Vos wing of so-called reform.
There are ideological, material and regional differences and tensions between these two camps, held together for the moment by De Vos having the strategic common sense to increase funding for charter schools, even if she sees them as a temporary expedient.
Defenders of public education should do everything in their power to highlight and aggravate these differences, and use them to expose these gross malefactors of wealth. For example, as long as Trump/De Vos are around, there’s rich pickings to shame the “liberal” wing of reform for their opportunism and connivance with Hair Furor.
This line of argument opposing charters by comparing their proliferation to the sub-prime mortgage debacle really frightens and enrages the school privatizers to no end, so much so that they tasked Peter Cunningham’s EDUCATION POST on-line magazine — funded by those same privatizing, money-motivated billionaires and millionaires — to try to discredit this with an attack piece written by a female EDUCATION POST writer, (who’s also the second-in-command at EDUCATION POST, or was when she wrote this.)
And a what incredible screed Peter’s henchwoman spewed forth. By comparison, it makes Breitbart.com or Ann Coulter seem the height of civility.
The name of the author who Peter sicced on Preston Greene is Traci D’Angela Barber:
https://educationpost.org/network/tracy-dellangela/
As her Education Post bio indicates, she did a 12-year stint at the Chicago Tribune — presumably while not producing writing like the one being cited here. It’s horribly written, quite apart from its totally off-base content.
Since leaving the Trib, she’s been employed by the corporate reform industry in a variety of positions at numerous corporate ed. reform orgs, including:
— Education Post
— Chicago Public Education Fund
— Consortium on Chicago School Research
But enough about Tracy. Let’s look at what she wrote.
It’s telling that the corporate education reform industry feels threatened enough by the work of Preston Greene and Greene’s co-authors that it cut loose one of its vicious attack dogs to attack it. This writer takes a shot at discrediting Preston’s writings — a shot that misses by a mile, by the way.
Here it is:
https://educationpost.org/are-black-parents-sheep-how-to-gin-up-charter-school-fears-with-subprime-mortgage-analogies/
Hmmm … Tracy gleefully derides Preston’s / his co-writers’ work and their …
“subprime mortgage catastrophe = charters” …
… analogy as …
— “an obscure paper”
— “a tiresome and misleading anti-charter narrative”
— an “unfortunate metaphor”
— “an absurd predatory lending analogy”
— a “troublesome analogy” that “doesn’t fit, not at all”
— a ”gem of hyperbole”
(Uhh … so which is it? A “metaphor” or an “analogy” or “hyperbole”? All three, I suppose. JACK)
— “kind of sensational outrage”
— “an assumption” that “lacks academic rigor”
— “ominous, half-baked conjecture”
— “a glorified lit review”
— has not one “shred of original research in the paper”
— a work that “doesn’t become ‘academic’ simply because four Ph.D.s put their name on it”
— “an irresponsible and condescending argument from four professors”
— written by authors who “cherry picked every charter scandal and nefarious for-profit operator to make their shaky case.”
— “rests on shaky ground when it sprinkles in anti-charter dogma published in blogs and by ideologues”
No really, Tracy. Don’t hold back. Tell us how you REALLY feel.
Of course, Tracy herself is an objective non-ideologue, blessedly free of any “dogma” favoring the corporate ed. reform version of reality. (COUGH! COUGH!)
And then she even throws in a cheap shot at ed writer and podcaster Jennifer Berkshire’s choice to give Preston a forum, because previously, Jennifer “actually edited a newspaper for the American Federation of Teachers,” implying anything Jen writes must be dismissed as the biased hack work of a teacher union shill, or that any guest on Jen’s podcast must be similarly discredited.
Indeed, according to Tracy, Jennifer “never met a charter she didn’t hate.”
Tracy then tosses in some cover for charter operators.
Unlike those “for profit” predatory lenders responsible for either the Enron or subprime mortgage catastrophes, Tracy argues, charter operators “are motivated by a far different (dare I say nobler?) cause: to give our most vulnerable children a shot at a better education, a safer school, a middle-class life.”*
Unfortunately and inconveniently for Tracy, the first comment under the article lists the incredible annual salaries of the top charter operators in just one city — New York City — effectively undermining her portrayal of today’s charter edu-preneurs as the current equivalents of Albert Schweitzer and Mother Theresa of Calcutta.
Peter Cunningham pulls down almost *$380,000-year** at Education Post, with the org itself operating on a multi-million dollar budget. Therefore, it’s likely that Tracy did not pen this screed for free.
*(Mercedes Schneider found Ed Post’s tax forms, after much on-line cyber-sleuthing)
I want to move over the lengthy and first comment underneath Tracy’s article attacking Preston Greene et al. Again, this comment provides evidence undermining Tracy’s contention that the charter operators are just wonderful do-gooders who are motivated only by the most noble of intentions — helping poor black and brown kids get a good education.
x x x x x x x x x x x x x x x x
“Charter operators—not all of them, we know, but the overwhelming majority of them—are motivated by a far different (dare I say nobler?) cause: to give our most vulnerable children a shot at a better education, a safer school, a middle-class life.”
So THAT is what’s motivating them? I never knew.
As you are a well-informed charter watcher and charter cheerleader, I’m kind of wondering how you can type such stuff with a straight face. Indeed, your nemesis Jennifer “Edushyster” Berkshire has written about ANOTHER motivation here, in her inimitably snarky prose:
http://edushyster.com/nice-work-if-u-can-get-it/
“Today’s fiercely urgent question: why do charter executives make so much money? Fortunately this question has many simple answers.
“”1)* You can’t put a price on excellence;
“2) You are a hater for even asking the question;
“and
“3) What don’t you understand about putting students fir$t?”
The local NYC press expressed similar sentiments:
https://www.nydailynews.com/new-york/education/top-16-nyc-charter-school-execs-out-earn-chancellor-dennis-walcott-article-1.1497717?fbclid=IwAR2esjOWxBc2g5HK-RmX2Ug8VBz6Gnk-7QCU_cn28IWCtZrY3piK6UDGuVY
Tracy, can’t you at least concede that getting filthy rich may also play … ohhh… at least a small, teeny-weeny tiny part in the motivation of charter school executives … along with those “nobler” reasons you cite? Will arguing otherwise really pass the smell test with the folks in the public when they are fully informed about this?
Peruse this list of charter school executives and their salaries, and perhaps consider that possibility (fron the N.Y. Daily News link above, independently verified from tax documents).
These salaries were set with exactly no input from the citizens whose money is paying those salaries … ahhh… the perils of school privatization:
Deborah Kenny, H. Village Academies —— $ 499,146
Eva Moskowitz, Success Academy —— $ 475,244
David Levin, KIPP Schools —— $ 395,350
Ian Rowe, Public Prep Network —— $ 325,002
Dennis McKesey, HCZ Promise Academy —— $ 285,273
Jeffrey Litt, Icahn Charter School I —— $ 280,323
Steven Wilson, Ascend Learning, Inc. —— $ 269,997
Keri Hoyt, Success Academy C.S., Inc. —— $ 262,264
David Rudalll Uncommon Schools —— $ 252,941
Christina Tettonis, Hellenic Classical, C.S. —— $ 245,535
Seth Andre, Democracy Prep P.S. —— $ 245,535
Brett Peiser, Uncommon Schools —— $ 238,384
Douglas McCurry, Achievement First, Inc. —— $ 237,782
Dacia Toll, Achievement First, Inc. —— $ 224,200
Rafiq Kalam Id-Din, Teaching Firms of Am. —— $ 219,348
(This list is several years old. Those salaries have most likely increased greatly in the interim — i.e. Eva Moskowitz’s has since doubled..
According to Jennifer, the last guy on that list has less than 200 students in his charter school. The public money that goes to his salary — and to the salaries of all the folks on that list — is money that is not, REPEAT not going to kids in the classroom, or God forbid, not to the teachers on the front lines, the ones doing the heavy lifting and who are delivering instruction to, and the ones on site caring for charter school students. )
And finally, the list includes then-Chancellor of the NYC public schools, who is in charge of educating 1,100,000 students — as opposed to the several hundred or at most several thousand students whom the folks above are responsible for. He — and now it’s a “she”, Carmen Farina — makes less than everyone on that list (16 charter operators) :
Dennis Walcott, NYC Public Schools —- $212,614
Mind you, this article doesn’t even broach the controversy of self-dealing that is rampant in the charter school industry, where charter executives are in charge of charter school orgs that are technically non-profit, but they nevertheless contract out services to for-profit companies for which those very same executives are the sole or partial owners. That’s a lot MORE taxpayer money on top of their executive salary that they’re raking into their bank accounts.
Nor does it touch upon the problem of nepotism, where multiple family members are each hired at six-figure salaries. Even Mike Petrilli’s enthusiastically charter-cheerleading Fordham Institute has written about how this troubling phenomenon — and outrageous charter school executive compensation in general — will damage the charter school’s brand with the general public, without which the charter industry will fail to survive, or at least expand.
Petrilli’s words of caution are below, and, as Petrilli relates, were met with severe blowback from “tone-deaf” (Petrilli’s words) charter school executives kvetching back, “None of your business, Mike! Or anyone’s business!!”:
https://edexcellence.net/commentary/education-gadfly-daily/ohio-gadfly-daily/2012/should-we-care-how-much-money.html?fbclid=IwAR3wSfFsxoU-UQGaw5NSEwI-dipZRu57pnTpnWT1ukkyBbQD7bXM0Z1olG8
“Charter schools also need to be equally aware about what leaders receive in compensation, and how this will be perceived in the larger community, which leads me to the recent story in the Dayton Daily News. That paper ran a story on the compensation paid to a family running a charter management organization that serves about 2,000 kids in seven Ohio charters.
“The paper reported that ‘Tax records obtained by the Daily News show CEO Pammer-Satow received a base pay of $168,466 in 2010 along with a $60,000 bonus and other compensation valued at $25,573. Her husband, COO Clinton Satow, received a base pay of$126,000, bonus of $45,000 and $14,000 in other compensation.’ Other members of the family are also employed by the management company in various capacities.
“The Dayton Daily News reporter called me and asked for my reaction about ‘a couple making over $400,000 a year’ to run seven charter schools?
“I said, ‘That’s tough to defend.’ I also went on to comment, ‘at a minimum they (those high-paid charter executives) are politically tone deaf to the realities of perception out in the community.’
“My comments have upset some in Ohio’s charter community who argue that as the schools perform decently, why should I or anyone else care what the leaders are paid?
“My reaction to this question is that charter schools are only viable as long as they receive political support. As such, do stories about families paying themselves more than $400,000 a year in public tax dollars to run a handful of charters hurt support for charter schools?
“I think they do, but I’d value receiving comments back from readers. Should we care how much money charter leaders make?”
I presume that’s Mike Petrilli who wrote this, but I may be wrong. I might be someone else at Fordham, but since Petrilli edits and approves all content on Fordham’s website, it may as well have been.
Jack, as always, your posts are a wellspring of information. Thank you.
Jack, Thanks for the extensions to the original post. The blowback from the article in the University of Richmond Law Review is one indication of the vulnerability of the profiteers.