Archives for category: Arizona

Laurie Roberts is a columnist for the Arizona Republic who has written frequently about frauds in the charter and voucher sectors. When I was writing Slaying Goliath, I found her reporting and her sharp to be invaluable. She read Carol Burris’s article about the Network for Public Education study of charters that double dipped in two different pots of federal funding, and she thought that their greed was ridiculous.

As Congress considers the next economic stimulus package, it’s worth mentioning that America’s charter schools snagged at least $925 million in emergency funding from the Paycheck Protection Program, according to an analysis by Network for Public Education.

In Arizona, 100 charter school operations bagged anywhere from $40 million to nearly $100 million in emergency funding, the analysis of U.S. Small Business Administration records shows.

That’s a lot of stimulation, economically speaking. Especially when you consider that the losses at publicly funded charter schools are largely a figment of the federal government’s imagination.

Unlike small businesses that saw their operations fall off a cliff when COVID-19 hit, Arizona taxpayers fund Arizona’s charter schools.

Charters already getting state, federal aid

Not only have charter operators received their regular per-student allotments of state money, they are eligible for a share of the hundreds of millions of dollars in CARES Act funding that is being pumped into public schools to cover added costs due to COVID-19 and budget shortfalls.

So, what losses?

The Arizona Charter Schools Association sent me a statement saying charter schools were concerned this spring that the coronavirus would lead to state budget cuts, requiring them to lay off teachers.

“Charter schools have not only faced questions about the uncertainty of the state budget, but also seen steep declines in charitable fundraising and programs such as before-and after-care – which are important revenue sources for our schools and students,” the statement said. “These federal funds have provided financial assistance to eligible recipients, as Congress intended.”

No word on how many of those schools returned the money when those state budget cuts didn’t happen.

Roberts notes that more than 400 charter schools had the decency not to apply for money they didn’t need.

But:

Among the 100 charters that went for the windfall was – surprise! – American Virtual Academy. The management company, which runs Primavera Online School, snagged somewhere between $2 million and $5 million in PPP money.

This is the same company whose CEO, Damian Creamer, managed to pay himself a combined $10.1 million in 2017 and 2018 out of taxpayer money set aside to educate students. Never mind that fewer than a third of his students couldn’t read or do math at grade level or that nearly half were dropping out.

Creamer’s education technology company, StrongMind, also scored a $2 million to $5 million forgivable loan from the PPP program, according to The Arizona Republic’s Lily Altavena. Meanwhile, Verano Learning Partners, which was founded by Creamer and lists the same address as American Virtual and StrongMind, snagged a PPP payout of $150,000 to $350,000.

Curtis Cardine of the Grand Canyon Institute created this updated list of the charter schools, private schools, and religious schools in Arizona that received federal grants from the Paycheck Protection Program, which was supposed to help small businesses survive the pandemic. It is a very long list. Public schools were not eligible to apply for these funds. Charter schools collected millions from funds allotted only to public schools, then collected more millions from PPP as small businesses.

You can see the dataset here.

Arizona Governor Doug Ducey—a zealot for charters and vouchers whose election was funded by Charles Koch and Betsy DeVos—has ordered the state’s public schools to reopen on August 17 as the disease rages out of control in his state. School leaders are not so sure this is a good idea.

Common sense suggests it is a very bad idea.

The Arizona Republic reports:

The school year hasn’t begun, but an Arizona teacher has already died from COVID-19, according to a school superintendent.

As President Donald Trump’s administration pushes for schools to reopen on time, a small community in eastern Arizona is reeling from the death of a teacher who contracted COVID-19 after she taught summer school virtually while in the same room as two other teachers.

The school district’s superintendent, Jeff Gregorich, said three teachers went above and beyond in taking precautions against the spread of the virus while teaching in the same room, but all three contracted COVID-19.

Kim Byrd, who started teaching the Hayden-Winkelman Unified School District in 1982, died.

Gregorich does not believe Arizona schools are ready to open and said Trump does not understand the magnitude of recent remarks insisting on reopening schools.

“The learning can be made up, but the lives will never be brought back,” he said.

On Wednesday, Arizona school and public health leaders were still processing a flurry of comments made by Trump, U.S. Secretary of Education Betsy DeVos and Vice President Mike Pence leaning on state leaders to reopen schools.

The administration’s push comes as a record 2,008 suspected and confirmed COVID-19 patients visited Arizona emergency rooms on Tuesday, according to data released by the Arizona Department of Health Services. The data showed the state reached a new high for hospitalizations related to the coronavirus that same day.

Many Arizona schools are preparing to open for in-person classes by Aug. 17, a target date set by Gov. Doug Ducey. Five weeks away, it’s unclear if Arizona is ready for that step.

Maricopa County’s leading health official on Wednesday said that data currently shows the county’s schools should not open.

“With community-wide transmission at such high levels in Maricopa County right now, it would not be a good idea to put school back in session,” said Dr. Rebecca Sunenshine, medical director of disease control for the Maricopa County Department of Public Health.

Kathy Hoffman, Arizona’s schools superintendent, has pushed back against the Trump effort to reopen schools. In an interview with The Arizona Republic on Wednesday, she called the messaging from the White House “confusing.”

“It’s out of touch with the reality here in Arizona with the severity and magnitude of COVID-19 cases,” she said.

Tulsa experienced a surge in new infections, and Tulsa health officials say that the Trump rally on June 20 was a likely cause.

Keep watch on the numbers in Arizona and South Dakota, where Trump held rallies, also Trump’s next stop, New Hampshire.

He is a Super Spreader. He is a one-man catastrophe.

In six weeks, the Republican National Convention will be held in Jacksonville, Florida. No social distancing. No requirement to wear masks. Lots of cheering and droplets in the air. Then delegates will fan out across the country, some bringing the disease home.

This is no way to fight a pandemic.

Barbara Veltri is a teacher educator at Northern Arizona University. She has mentored TFA corps members, and she wrote a book about TFA.

In this essay, she notes that Doug Ducey, Republican Governor of Arizona and a favorite of Charles Joch, is an avid supporter of Trump, school choice, and TFA.

She writes:

Tara Kini, wrote, “We’re hearing a lot of conflicting scenarios and projections related to the teacher workforce come fall. On the one hand, there is a fear of massive layoffs precipitated by the Cov-19 recession and state budget cuts. On the other, there are projections of staffing shortages and state budget cuts. (June 25, 2020).

We have been here before.

In 2012, The Center on Budget and Policy Priorities found that in fiscal year 2013, 35 states were spending less than they did during the recession. Since 2009, more than 200,000 teacher jobs vanished and in spite of teacher movements, states were still not back to pre-recession spending levels of a decade ago, which prompted national Teachers’ Movements and voter initiative to support K-12 teachers.

According to NEA job survey data from my state, Arizona teachers’ starting salaries at $30,404 in 2010 ranked 35th in the nation. Then, even veteran teachers in hard-to-staff assignments, such as special education faced reduced-in-force measures, while novice teachers without focused special needs training, were hired. Then, Arizona paid finder’s fees for Teach For America Teachers of more than 1.5 million dollars (noted on IRS Form 990 over the years 2010-2013).

And now, amid the rising temperatures and Cov-19 numbers, Governor Doug Ducey, who served on Teach For America’s Regional Board of Directors, announced in the Arizona Education Grant on Wednesday, “$500,000 for Teach For America to provide tutoring to students needing extra help.”

This when Wallet Hub (2019) ranked Arizona’s pupil-to-teacher ratio, the worst in the nation.

This when Arizona educators earn less than peers in 48 other states, yet pivoted immediately to prepare, present, and teach to support their students.

The Governor’s Education Grant also includes $700,000 for leadership and $1million for micro grants, that leave open too many questions as to just who will benefit from these funds.

Policies minimized educators in a state that has prioritized and legislated millions of dollars in funding directed towards Teach For America, over the last two decades, with friends in high places. In 2016, Wendy Kopp the founder of TFA was the commencement speaker at Arizona State University.

The Dean of The College of Education serves as a TFA Regional Board Member member. Ms. Kopp addressed the Arizona Legislature and Arizona Chamber of Commerce who overwhelmingly support her initiatives and corps member teachers.

The education non-profit reported:
$1,329,197 on lobbying (TFA IRS 990, 2019) ‘for direct contact with legislators, their staffs, government officials or a legislative body,” (Schedule C, IRS Form 990, 2017, pg. 3);
$45, 222, 433 in government grants (IRS 990, 2016, Part VII, p. 9);
$11, 255, 064 in Publicly Traded Securities/Non-Cash Contributions (IRS 990, 2017, line 9 p. 94) and $9,259 in crypto currency (Average sale price, line, 28).

The non-profit reports, “Program Service Revenue,” in the amount of $23, 415, 992 (Form 990, 2017, line 2A):

“Teach for America has contractual agreements with various school districts across the United States of America to recruit, select, train, and place corps members to teach within their school districts. Teach for America recognizes revenue related to these contractual agreement as earned, that is when the corps member is placed.”

These ‘program service fees’ are ‘finders’ fees’ that schools and districts pay to TFA (up front and in full), even if novice corps members leave their placement any time prior to their two-year commitment. And, Districts pay each TFA corps member’s salary and benefits.

Annie E. posed the question eight years ago, in a May 8, 2012 blog post, “So, is TFA’s mission still about education? If it is, then why take money from huge foundations and corporations whose missions are clearly not about education?”

But there’s more to this….

In a recent interview with CNBC, Merck CEO, Kenneth Frazier shared how he had the opportunity, as a black youth in Philadelphia’s inner city, to “change his life trajectory.”
He boarded a bus and rode 30 miles to the suburbs where he received a rigorous opportunity to learn from lifelong teachers and interact with peers who lived in middle-class and affluent professional neighborhoods.

A lightbulb went on for me at that moment.

As someone who researched, met, mentored and learned from TFA teachers and their students, I recognized that instead of the opportunity for schooling to change his life’s trajectory, corporations, lobbyists, universities, media, philanthropists and policymakers (who I term The CLUMPP Network) opted instead to jointly support, through financing, marketing, in-kind donations (i.e. office space), in-state tuition, and even taxpayer funded AmeriCorps stipends, a Caucasian, female’s undergraduate sociologist thesis in 1989 that she reworked with diligence, focus, and good intent.

The education initiatives that supported black and brown children moving out of high-poverty community schools, as Mr. Frazier experienced, instead brought in, recent college grads who knew nothing about education, weren’t trained, might’ve been idealistic, didn’t stay, uprooted veterans’ local knowledge of the community, but kept poor children of color, exactly where corporations and policymakers wanted them – in schools that were underfunded, with scripted teaching, constant assessments, police presence in schools, no frills curriculum, limited resources for arts, music, sports and, not removed from the realities of systemic poverty.

I chronicled my ethnographer’s notes from their teaching field, over consecutive years.
Then, in the middle of all of financial and environmental crisis when teachers lost jobs, not only was TFA hired, but Arizona, Mississippi, Louisiana, Texas, and others (as noted on TFA tax returns) paid millions of dollars each in finder’s fees to bring TFA novices in (and out) over multiple years – while the kids, and their communities were effected by innovation.

It didn’t matter which tag line: One Day All Children, No Child Left Behind, Race to the Top, or Every Child Succeeds – the trajectory for poor kids, no matter how many competitions or standardized tests, didn’t match the learning that Kenneth Frazier experienced.

And the reason is this – unlike the educational policies of the 60s that transported a young Kenneth Frazier, from his Philly inner city neighborhood to the suburbs, where he notes that he received a quality education that “paved the way for my admittance to Penn State University (undergraduate degree) and then Harvard law school,” three decades of young people who just happened to be born poor, black or brown, were/are recipients of another social experiment that not only made segregation popular, but profitable – charter schools.

Policies kept poor children of color localized in their communities as suburban communities, fell back on residency requirements and real estate pricing to maintain an us vs. them mindset.

In Stamford, Connecticut my kids were transported, by bus, to a public elementary magnet school, surrounded by “the projects.” The arts and critical thinking curriculum and admissions policy: 50% majority/50% minority; 50% male/ 50% female (with siblings automatically accepted) was supported by community buy-in and integrated schools. The by-product – from a young age, kids learn from and befriend kids from different religions, ethnicities, social class, and race.

So what happened?

From 1990-2020 we saw a systemic attempt to control who gets to be schooled where and by whom. And with limited opportunity for kids to interact, learn, befriend and grow up with children other than themselves, in public schools, the system promotes and finances policies that separate us and keep kids living and learning, within limited societal structures and neighborhoods by bringing in young outsiders and paying for that service.

Over the last two decades, policies embraced by both sides of the political spectrum, advanced homeschooling, tax credits for religious schools, charter schools, encouraged a police presence within low-income schools and limited financial opportunities for programs that benefitted my kids, and Merck CEO Frazier.

The result: The alignment of the “CLUMPP” network of which, TFA was/remains the cog in the wheel that moves and advances an agenda that is predetermined and particularized to keep poor children of color from leaving where they were born, to be schooled in the suburbs.

To taxpayers, teachers and parents across the other 40 U.S. states whose Governors are appropriating pandemic education support dollars…. Examine the funding and think Teachers, not TFA.

Trump spoke in Phoenix yesterday to some 3,000 Students for Trump in a megachurch. Most of the students, packed in close quarters, were maskless, like Trump.

The Arizona Republic noted that most recent polls have shown Biden leading Trump.

Trump arrived as hospitalizations and deaths from the coronavirus were spiking.

Some local physicians were unhappy about the rally:

Two Arizona doctors told The Republic they were concerned about the large, indoor event and what it could mean for the disease here.

“We’re already seeing a tremendous surge in infections here in Arizona. This is not the time to be taking chances on spreading the disease further,” Dr. Christine Severance, a family physician in Phoenix, said.

Dr. Sheetal Chhaya, a rheumatologist in Phoenix, said she appreciates rallies as part of the democratic process, but said an event at this time in Phoenix is not the most “socially responsible.”

“We are, with one event, virtually knocking out, almost nullifying, some of the efforts that we’ve made as a group of physicians, but also as a community, to be able to help mitigate this virus,” Chhaya said.

Anyone expecting Trump to express sadness about the 120,000 Americans who have died of the virus were disappointed. Trump is not one to express regret or empathy, nor did he refer to the CDC guidelines.

This is what he said about the pandemic:

The president didn’t dwell on the coronavirus or offer condolences or messages about precautionary steps the public can take. Instead, he often referred to it as the “plague” and insisted it would be gone soon.

Trump took shots at the media for what he views as overblowing the pandemic and detailed how he believed his administration had taken all the right steps to mitigate the spread of the disease, test people at high numbers and make sure equipment like ventilators were available.

Trump blamed the increase in cases on more testing, though health officials in Arizona have said the growing number of hospitalizations and cases are due to more than just an increase in testing.

“When you have all those tests, you have more cases,” the president said.

He added: “Then they’ll say, ‘We have more cases.’ We want to do testing. We want to do everything. But they use it to make us look bad.”

Trump also called the coronavirus the “Kung Flu,” embracing for at least a second time a racist phrase that has proven an applause line at his speeches, but which has prompted condemnation from Asian American members of Congress.

Trump continues to spread the dangerous message that wearing a mask is a culture war issue. Real men and strong women don’t wear masks, he suggests by his own reckless behavior. No wonder that the EU is considering banning travelers from the U.S.

The parents and educators who created SOS Arizona blocked the last expansion plan for vouchers by getting a referendum on the state ballot in 2018. They had to fight the governor, the legislature, the Republican party, the Koch brothers, the DeVos family, and other monied interests, who wanted to keep expanding vouchers until every student in the state was eligible for a voucher.

The all-volunteer SOS Arizona group gathered over 100,000 signatures to put a referendum on the ballot, fought the efforts of the Koch brothers to kick them off the ballot, and the referendum went to the public, where voucher expansion was overwhelmingly defeated by a margin of 65-35%.

Now SOS Arizona needs your help to put another referendum on the state ballot, to end voucher expansion. Volunteers must collect 350,000 signatures to initiate this referendum. They need YOUR help!

Save Our Schools Arizona (SOSAZ), the grassroots group responsible for stopping universal voucher expansion in Arizona in 2018, has gone on offense. In spite of their overwhelming 2-to-1 defeat of Empowerment Scholarship Account (ESA) voucher expansion, the Arizona state legislature attempted to pass 6 different voucher bills in 2019–all killed by SOSAZ and in 2020 is working to allow ESA vouchers to expand vouchers across state lines. Save Our Schools, once again, said “Enough!”

On February 26, 2020, Save Our Schools Arizona filed a statewide citizens’ initiative (read it here). A critical next step in fighting the privatization movement, capping the program once and for all. The Save Our Schools Act:

Limits private school vouchers to 1% of the AZ student population, allowing current students to stay in the program while blocking ALL new voucher programs in AZ FOREVER

Prevents taxpayer dollars from going to out-of-state private schools

Prevents taxpayer dollars from being deposited into personal accounts to pay for college expenses (a recent public records request by the Arizona Republic uncovered $33 million sitting in unspent recipient accounts including 9 families with a balance of more than $100,000 and dozens of others with more than $50,000.

Prioritizes existing ESA vouchers for special needs students, for whom the program was originally designed

Creates a “Taxpayer Protection Fund” to sweep remaining ESA voucher funds at the end of the fiscal year to enforce the law and increase accountability; remaining funds will transfer to the Exceptional Special Needs public school fund

To successfully place the Save Our Schools Act on the November 2020 ballot, SOSAZ has launched a statewide effort to gather 350,000 signatures by July 2. Please help by donating to this critical cause at https://secure.everyaction.com/gTzwyTPPjU2EeS_rLATvZA2

The IDEA charter chain has received hundreds of millions in federal funding to expand. It has garnered a lot of attention, however, for its caviar tastes. The IDEA board approved a management proposal to lease a private jet for nearly $2 million a year, for the convenience of its executives. Not like your average school board or superintendent!

But their luxury tastes have not been curbed by the negative reaction private jet problem.

Among other big-ticket items noted in this story, here is a notable one. IDEA CEO Tom Torkelson flew to a private meeting with Betsy DeVos in Florida, in a nine-passenger jet in which he was the only passenger. DeVos has given IDEA more than $200 million from the federal Charter Schools Program. She loves IDEA.

The Texas Monitor reports:

Last October, the CEO and president of the largest charter school company in Texas took a trip to Houston. They didn’t travel the way most public-school employees would have. Instead, they traveled by private jet, their spouses and five children came along for the trip, and they got around Houston not by Uber or rent car, but in a chauffeured SUV.

That trip was just one item in an $800,000 bill that IDEA Public Schools racked up between 2017 and 2019 on private jets and other luxe travel spending. Although IDEA received $319 million from the State of Texas and $71 million in federal money in 2018, this kind of travel would be illegal for public school district and state employees in Texas. Traditional public-school supporters and charter school advocates alike say it’s the kind of spending that gives a black eye to the charter school concept.

Charter schools receive no property tax revenue, as traditional public schools do, but are funded through state and federal grants. Like other public schools, they can also raise money from private donors. IDEA says it uses some of that private money for its luxury travel.

Records show that company CEO Tom Torkelson, his wife and three children, along with IDEA President JoAnn Gama, her husband and two children, stepped off a private jet at Sugar Land Regional Airport and jumped into the chauffeured SUV. The reason for the trip, records show, was to “visit Houston school sites.”

The flight cost is not noted in the records, nor is the reason for the spouses and children coming along on the trip. The vehicle, rented from Casablanca Limousines in Houston, cost $1,800.

At about the time of the Houston trip, IDEA was preparing to lease a private jet – the same plane that the district had used on an individual trip basis since at least 2014. But board members nixed the lease after the deal became public.

In December 2019, IDEA announced the plane lease had been put aside.

In March, Torkelson proclaimed that “IDEA will not pay for private air travel” any longer.

Four days later, IDEA released the district’s transportation records to Peyton Wolcott, a Texas-based education advocate who had submitted a request for the documents in January.

She questioned the timing and the sincerity of Torkelson’s vow to end the subsidized travel.

“Why shouldn’t IDEA’s board and executives, who enjoyed Texas taxpayers’ largesse, dig deep into their pockets and pay it back? “she said. Records show IDEA has spent hundreds of thousands of dollars on private-plane travel in the past five years.

Flights by Torkelson and IDEA staffers inside Texas between 2017 and 2019 cost, on average, about $1,300 per one-way trip, with a discount for round-trip fares. For example, a private, round-trip flight taken by Torkelson in fall 2018 from McAllen to San Antonio ran $2,340. A commercial flight on United Airlines today would cost $377 for the same route. Bills for private flights can also include lodging and meals for pilots as well as other costs. See a sample invoice here.

Torkelson took a private jet to Tampa in November to meet with U.S. Education Secretary Betsy DeVos to discuss “education philanthropy,” records show. He was the only passenger on the jet, which holds nine people.

I mean, really, do you expect such powerful people to fly economy like a public school employee?

IDEA promises that 100% of its students who graduate will enroll in a four-year college. What they don’t point out is that students are not allowed to graduate unless they have been accepted by a four-year college. And, yes, there are colleges that accept every applicant.

Nonetheless, Craig Harris of the Arizona Republic hopes that IDEA and KIPP will open in Arizona. Arizona has the most lax charter oversight in the nation. It’s the only state that allows for-profit operators of charters (many other states ban for-profit charters, but allow for-profit management, as in Michigan, where 80% of all charters are run by for-profit EMOs). It’s hard to judge whether Arizona or California has had the most charter scandals, but Arizona has had some big ones, where charter operators have made off with millions of dollars, and it was all legal.

There is the grand success of former legislator Eddie Farnsworth, who pocketed up to $30 million by turning his for-profit chain into a nonprofit chain.

Then there was Glen Way, who made millions building his charter schools.

Michael and Olga Block founded the BASIS charter chain in Arizona, whose demographics are skewed white and Asian, get very high test scores, but take home enough to buy a NYC condo for $8.4 million.

No one has accused KIPP or IDEA of fraud, so maybe Arizona needs them, that is, if you think itis a good idea to continue stripping students and resources from public schools.

The principal of the Discovery Creemos Charter School pled guilty to inflating enrollment and stealing $2.5 million from the state and federal governments. 

The former principal of the shuttered Discovery Creemos Academy pleaded guilty Friday to participating in a $2.5 million scheme to inflate enrollment at the defunct charter school.

Harold Cadiz, 55, faces up to 12 ½ years in prison after pleading guilty in Maricopa County Superior Court to two counts of felony theft during the 2016-17 and 2017-18 school years. He’s scheduled to be sentenced March 27.

Cadiz is the second administrator from the Goodyear charter school, also known as the Bradley Academy of Excellence, to admit to participating in the scheme to defraud the state and federal governments by inflating the school’s enrollment by hundreds of students.

Cadiz’s plea calls for a prison sentence of 3 to 12 ½ years and up to 7 years of probation.

Arizona public schools are funded based on the number of students, meaning each additional student a school reports to the state brings more tax dollars.

Daniel K. Hughes, president and CEO of Discovery Creemos, was the first executive at the school to cut a plea bargain with the Arizona Attorney General’s Office, admitting to theft and conspiracy in November 2018. He faces a presumptive prison sentence of five years.

The school closed January 2018, just after the 100th day of the school year, ensuring it would receive as much state money as possible before it closed.

A few months before Discovery Creemos Academy closed, Hughes had assured the Charter Board that he would turn around the financially and academically failing charter school. Reviews by the Charter Board for the 2013-14, 2014-15 and 2015-16 school years found the school did not meet its financial performance recommendations.

Hughes has admitted that during the 2017-18 school year, his school reported an enrollment of 528 students, but 453 of them were fraudulent. In 2016-17, the school reported it had 652 students, but 191 were fraudulent.

 

 

Thanks to a provision in the tax law, called the EB-5 program, wealthy foreign investors can buy green cards by investing in charter schools.

Craig Harris, award-winning investigative reporter for the Arizona Republic, took a close look at this provision in the law that allows foreign citizens to buy visas in exchange for funding charter schools.

He visited schools in Arizona and other states.

This story was published in December.

CORNELIUS, N.C. – When Lakeside Charter Academy opened five years ago in this boating community outside Charlotte, it faced the same challenge that confronts many new charter schools.

It had governmental approval to operate and the tax dollars that come with it to pay for teacher salaries, supplies and other expenses. But it had no money to build a school or lease classrooms.

Like most of the 45 states with charter schools — taxpayer-funded campuses operated largely by private businesses — North Carolina provides no money to new operators for start-up or capital costs.

So Lakeside struck a devil’s bargain of sorts. It entered an agreement with an Arizona company to renovate a former church building, funded, in part, by a federal program that allows private companies to raise money by essentially selling green cards to wealthy foreign nationals.

Arizona-based Education Fund of America secured the foreign financing and its business partner, American Charter Development, of Utah, would raise the rest of the cash, build the campus and then lease the space back to Lakeside. Lakeside put no money down.

Peter Mojica, a North Carolina businessman and founding school board member, said Lakeside had few options as parents worked to get the school built around 2012. 

“A charter school has no credit and can’t get the money unless they have a crazy endowment from a rich benefactor,” said Mojica, who still has a son at Lakeside. “So you have Chinese investors buying visas.”

Twenty-seven other campuses in eight states, mostly small charter schools, have struck similar deals with Education Fund of America since 2013, according to its website.

Those deals have put some of the schools in financial jeopardy, according an Arizona Republic investigation.

Two Florida schools closed after one year. Four others, including three Arizona charter schools, are in imminent danger of shutting their doors, records obtained by The Arizona Republic show. More than half of the schools who entered the deals are running budget deficits. And at least 10 have turned to high-interest loans to stay afloat. The majority have average to failing academic scores.

The Republic visited seven states to investigate charter schools and what ongoing shifts in the industry might mean for Arizona, the state with the largest share of charter school students in the nation.

Almost three decades after the first U.S. charter schools opened their doors promising to innovate and compete with traditional public schools, funding remains a daunting barrier for all but the biggest operators. The result, experts say, is small, entrepreneurial operators who were the backbone of the early charter movement are increasingly squeezed out or forced to take big financial risks.

The number of mom-and-pop charter operators is declining. Between 2014 and 2018, 61% of charter schools approved to operate nationwide were affiliated with a nonprofit or for-profit chain, according to the National Association of Charter School Authorizers.

The officials who grant charters to would-be school operators are more inclined to favor big chains with proven track records than independent startups, said Greg Richmond, who until recently was chief executive of the National Association of Charter School Authorizers. 

“The charter school field has become a little more risk-adverse,” he said.

‘MAKING A PROFIT OFF OF OUR CHILDREN’

Lakeside Charter Academy turned to Education Fund of America only after parents struck out trying to get private investors, including hedge funds, Mojica said.

The school has paid escalating rent to American Charter Development for a campus that is far from luxurious, according to interviews and records obtained by The Republic.

Lakeside has no gymnasium or lunch room and only a small playground. At the end of last school year, a parking lot that doubles as a basketball court was rendered unusable by a large sinkhole. Its roughly 300-square-foot library is mostly filled with donated books.

As of July, the school was more than $1.7 million in debt — most of it for unpaid rent — and enrollment had plummeted to 100 students, from a high of 400. The state gave it a “C” academic rating.

“All I wanted was a good school for my sons,” said Alyson Ford, whose boys attended Lakeside until she moved them over disgust with Lakeside’s finances and governing board.

“As taxpayers, we are not happy about this situation,” she said, citing companies “making a profit off of our children.”

She questions Education Fund’s claim that the school was built for $5.1 million, using $3 million in Chinese investment through the federal Employment-Based Fifth Preference Immigrant Investor Program — or EB-5 visa program. County assessor records value the property at $3.3 million….

The nation’s 7,000 charter schools educate more than 3 million children, according to the U.S. Department of Education. The share of public school students attending charter schools nationwide has risen from 1% in 2000 to 6% today.

Despite that growth, starting a charter school remains daunting.

Just seven states and the District of Columbia offer charter school facility grants, and nine have loan programs, according to the Charter School Facilities Center.

The Charter School Facilities Center, a Washington, D.C., group tied to the National Alliance for Public Charter Schools, found in a June research paper that one of the biggest challenges to the expansion of charter schools is state laws that place the burden of funding facilities on school operators who struggle to find affordable facilities.

Arizona Gov. Doug Ducey created a charter school construction lending program in 2016 that was billed as a way to help the “best public schools” expand by providing lower-cost financing with help from the state. It mostly assisted Basis Charter Schools Inc. and Great Hearts Academies — large, successful charter chains with close ties to the governor. After only one charter school received financing through the program in 2018, three Arizona charter schools used it this fall.

The federal government since 1994 has helped fund startup costs for charter schools through competitive grants and credit programs. But only a fraction of the projected $500 million this year is set aside for smaller charter schools, with most going to the large nonprofit companies that dominate the charter school industry.

The U.S. Department of Education last year distributed 32 multi-year grants to individual charter schools. The largest was for $1.25 million, far less than what is needed to build a comprehensive campus. Meanwhile, a single chain, Texas-based IDEA Public Schools, received nearly $117 million.

Operators who succeed in opening a school have a high failure rate, suggesting additional difficulty in finding long-term financing. Since 2000, at least 2,927 U.S. charter schools, or nearly 30%, have closed, federal records show.

The failure rate in Arizona, 41%, is even higher despite the Legislature providing charters with additional per-pupil funding to help with capital costs.

In 2018, The Republic found 1 in 4 Arizona charter schools had significant financial red flags, and that when compared to district schools, charters spend about twice as much or more on administrative costs than in the classroom.

In January 2018, Discovery Creemos, a Goodyear charter school, made headlines when it closed because of financial troubles. The ex-chief executive later admitted to defrauding the state and federal government of at least $2.2 million by inflating enrollment by hundreds of students

The Grand Canyon Institute, a private, nonpartisan think tank, found Arizona charter schools primarily fund buildings and classrooms using high-interest “junk bonds” guaranteed by schools’ projected enrollment growth. If the growth doesn’t materialize, mortgage payments will consume a greater share of the schools’ shrinking revenue, leaving less for the classroom.

Bill Honig, a researcher and California educator who runs the Building Better Schools website, found through his research that charter school closures have disrupted the instruction of at least 288,000 school kids since 2000.

Those closures take a largely overlooked toll on students.

Stanford University’s Center for Research on Education Outcomes examined school closures in 26 states over eight years, and found that fewer than 50% of students displaced by a closure ended up at a better school.

A UC Santa Barbara study, considered the definitive look at the subject, found students who changed schools between the eighth and 12th grades for any reason other than being promoted to a higher grade, were twice as likely to drop out…

Wing launched Education Fund eight years ago to help address the lack of charter school start-up funding. 

“Charter schools have a massive financial disadvantage,” he said.

As a U.S. Citizenship and Immigration Services regional center for EB-5 visas, Wing’s Education Fund essentially sells green cards to wealthy foreign nationals in exchange for an investment in U.S. charter schools.

Among its first projects was to provide $2 million in foreign investment for the Learning Foundation and Performing Arts charter school, which opened in Gilbert in 2013.

Education Fund’s website shows smiling students, 28 “EB-5 financed charter schools,” and a breakdown of foreign capital and other investments.

There are about 880 regional centers. But Education Fund, which is approved to operate in 11 states, claims to be the first to raise foreign investment for charter schools.

Its work has gone largely unnoticed, even within the charter school industry. Assistant U.S. Secretary of Education Jim Blew, one of the country’s top charter school advocates, told The Republic he was unaware charter schools have been funded through the EB-5 program.

The foreign investments must create or maintain at least 10 U.S. jobs within two years. When Lakeside Academy signed on with Education Fund, investors could get a visa with a $500,000 investment provided it was for a project in a rural or high-unemployment area.

Wing declined to say how many visas Education Fund’s investors have obtained. Nationwide, about 10,000 such visas are issued annually, but not without controversy and allegations of fraud.

Reports to Congress by U.S. Government Accountability Office in 2015 and 2016 found a lack of federal oversight of the program resulted in fraud.

Sen. Chuck Grassley, R-Iowa and then-chairman of the Senate Judiciary Committee, in 2017 raised questions about an EB-5 scheme that created no jobs while allowing operators to pocket $50 million from Chinese investors.