We have recently heard from political candidates who claim they oppose “for-profit charter schools” but support “non-profit charter schools.”
What they don’t know is that this is a distinction without a difference. Many “non-profit charter schools” are managed by for-profit EMOs (Education Management Organizations). Some are theoretically “non-profit” but pocket big money on their lease agreements (paying exorbitant sums to lease their space from a real estate company who is owned by the charter owner).
Peter Greene explains here how non-profits make a profit. It is legal graft, in which entrepreneurs figure out how to profit from taxpayers’ money intended for students and teachers.
His article originally appeared in Forbes.
He writes:
There is such a thing as a business that specializes in charter schools and real estate. In some states, the government will help finance a real estate development if it’s a charter school, and in general developers have noted an abundance of cash. Though, as one charter real estate loan bond financier told the Wall Street Journal, “There’s a ton of capital coming into the industry. The question is: Does it know what it’s doing?” Many states have found a problem with charters that lease their buildings from their own owners as well.
Why such interest in charter real estate? One reason: the Clinton-eraCommunity Tax Relief Act of 2000 made it possible for funds that invested in charter schools to double their money in seven years. And the finance side can become so convoluted that, as Bruce Baker lays out here, the taxpayers can end up paying for a building twice– and the building still ends up belonging to the charter company.
Management Companies
Once you’ve set up your nonprofit charter school, hire yourself as a for-profit charter management organization. Over the last decade, there have been numerous examples of this arrangement, sometimes called a “sweeps contract,” where the charter school hands as much as 95% of its revenue off to a for-profit management organization. As with real estate, there have been instances where the school’s assets (books, furniture, computers, etc) have been ruled to be the property of the management company— so even if the school tanks, the organizers walk away with assets they can cash in.
Diane Ravitch's blog 
“What they don’t know….”
Citation needed. Maybe they know perfectly well, but they think we don’t. Makes a nice talking point anyway.
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just imagine being able to find out and directly cite what is so strategically hidden in scam after scam.
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With so little accountability and oversight, both for-profit and non-profit private charter schools have abundant opportunities to monetize education through EMOs or CMOs and real estate deals. In addition, the attractive deal of tax credits available in some areas gives private charter schools an opportunity to profit from their schools. The charter industry often claims it needs “flexibility” so they eschew accountability. What happens is that the industry is riddled with fraud, waste, embezzling and general mismanagement.
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Good day, class, and welcome to Florida Man Five-Minute University, where we teach you the inside secrets that made Florida the Capital of the Con. It’s not just selling swampland to Yankees anymore, folks!
Today’s topic: how to run a nonprofit charter for profit.
Here’s the deal: because you are pretending to be a type of public school, you get a set allocation, per student, from the state. So, anything you don’t spend on students and teachers, you can divert to your own enrichment. So, the two keys to making you rich enough to buy a membership at Mar-a-lago are a) to spend as little as possible on students and teachers and b) to divert funds to yourself.
But first, a few preliminaries:
Locate your new charter school in a fairly affluent district with conservative, middle-class parents. Because standardized tests measure socioeconomic status, doing this will save you a lot of headaches later on. You won’t have to worry about low test scores and school grades. This will keep the state department out of your business.
Create admissions tests and forms that are complex enough to exclude challenged students. They will bring down your test scores. Let the actual public schools deal with these students.
Create a no-excuses, three-strikes-and-you’re-out discipline policy that provides you with another means for kicking out low-performing students and students with disabilities.
Make 80-90 percent of the curriculum, in math, English, and other tested areas test prep, because that’s all that matters. Depersonalized education software is GREAT for this.
Now, to get down to specifics:
SPENDING AS LITTLE AS POSSIBLE ON STUDENTS AND TEACHERS
Keep class sizes as high as the law will allow. Again, there’s no union for teachers to complain to.
Build a large, impressive-looking structure with good signage outside, but furnish it minimally with student desks. Used school furniture can often be bought in bulk, at bargain prices, from failed charters around the nation.
Don’t build or furnish a gymnasium, science labs, art labs, a library, an auditorium, or a theatre. An empty field for track and calisthenics and field sports like football and soccer will do. If you must, build a combination tennis court and basketball court outside—simply some asphalt with a carport-type (but taller) aluminum cover will do. Your golf team can practice at local golf courses, and parents can pay for that. Your baseball team can practice at community facilities, and again, parents can pay any necessary fees. School meetings can be held at the cafeteria. Tell parents that the lack of a library is because you are an ultra-modern digital learning school.
Keep staff to a minimum. One or two part-time janitors doubling as audio-visual supply persons is enough, and one or two part-time cafeteria people.
Order premade frozen lunches and charge a large markup for these. Place lots of vending machines in the cafeteria. These are real money-makers. You don’t need a school psychologist, nurse, security guard, or librarian. You will need a guidance counselor to deal with student schedules.
You will need a testing center and an internet connection so that students can take standardized tests. The cheapest alternative, there, is to buy dumb, refurbished terminals from a third-world country. You will need a computer company to service these and keep them operating. For the benefit of parents, refer to your testing center as the Media Lab and Library.
Don’t provide supplies for your teachers beyond a bare minimum at the beginning of the year. When your teachers arrive, they should find in their mailboxes, say, s small box of paper clips, one row of staples taken from a box of staples, one red Bic pen, one black whiteboard marker, and one ream of low-grade white paper. That will be it for the year. What are the teachers going to do? Complain? They don’t even have a union. Tell your teachers that they can request that their homeroom students bring in classroom supplies. Teachers can distribute a list of needed supplies to these students at the beginning of the year. Otherwise, teachers can supply their own.
Require your teachers to decorate the school hallways and classrooms with bulletin boards and student work (always approved by you), at their own expense.
Keep class sizes as large as the law will allow and larger if you can get away with it.
Arrange with textbook companies to get new free or reduced-cost textbooks in exchange for piloting new textbook programs. Where you can’t do that, purchase cheap online depersonalized education software in lieu of texts. Students can access these from their computers at home. Furnish every teacher with a refurbished laptop and a projector for displaying text or online software in the classroom.
Don’t purchase dedicated whiteboard projection systems. Create a parent committee to run fundraisers to purchase these over several years. Similar parent fund-raising committees can be used for science supplies, art supplies, and sports equipment.
Pay your teachers the least allowed under the law and provide minimal benefits.
DIVERTING FUNDS TO YOURSELF
Raise money from investors to build a building and outfit it. Tell your investors that you are not in the school business, really, but in the real-estate business. Start a for-profit construction company and pay yourself to build the building. Better yet, pay your cousins, golfing partner, mistress, or spouse do this. Lease your building to the school at considerably more than the cost of your repayments to investors.
Start a for-profit management company to manage the school. Staff it with your cousins, golfing partners, mistresses, spouses, and yourself; pay all of these people very large salaries; and provide them with handsome benefits packages. Make the management fees adjustable so that at the end of the year you can zero out any balance in the school coffers, leaving just enough to pay your principal and assistant principal during the summer.
Start companies to do janitorial services, tech services, heating and air conditioning, accounting and personnel services, and so on for the school, or have your cousins, golfing partners, mistresses, or spouse do this. Charge the school a management fee for managing these services.
Build that equity in your building and property at taxpayer expense!
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BINGO!
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The Ed Deformer Oligarchs love to apply their business “wisdom” to public schools.So, here’s a bit they might try out:
You get what you incentivize. So, what is incentivized for owner/managers of charter schools?
See above.
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Business wisdom = make as large of a profit, avoid taxes on that profit and everyone else that pays taxes is a sucker.
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Private charter schools
Private charter schools
Private charter schools
Private charter schools
Private charter schools
Private charter schools
Private charter schools
Private charter schools
Private charter schools
Let’s start referring to them for what they are. . .
ALL OF THE TIME!
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