The hits just keep on coming!
Betsy DeVos just hired a former dean from for-profit online DeVry University to police fraud in higher education.
DeVry was forced to pay $100 million for defrauding students.
Archives for category: For-Profit
Peter Greene reports that ECOT (the Electronic Classroom of Tomorrow) has found a way to escape its current woes and keep on collecting state money.
Having attracted the ire of the state for inflating enrollment, having lost its court battle to hang on to its profits for producing low-quality education, having been labeled the school with the lowest graduation rate in the nation, what’s an entrepreneur to do?
Go into the business of dropout recovery!
What a clever idea: First you create the dropouts, then you remediate them. Or claim to.
In the past couple of years, we have followed the fortunes of Bridge International Academies, the for-profit organization that is trying to make money by providing low-cost schools in Africa. It’s investors include Bill Gates, Mark Zuckerberg, and the World Bank. Why billionaires need to make money by collecting a few dollars a month from struggling families is unclear. The New York Times published a superb article by Peg Tyre about BIA, which continues to lose money.
Laura Chapman has compiled an excellent research summary of the marketing of BIA:
Long post. The American Enterprise Institute is using c-span to help market Bridge International in Liberia. https://www.c-span.org/video/?430887-1/charter-schools-developing-countries&start=1621
For Liberia, the marketing centers on “partnership schools” not really different from charter schoools here. If you don’t want to see and listen to the whole video, notice who participated.
George K. Werner, minister of education of the Republic of Liberia. Helped launch the for-profit “Partnership Schools.” Co-chair of Liberia’s Health Workforce Development Taskforce. Master’s in social work, University of Pennsylvania; B.A. Marist College, now the Catholic University of Eastern Africa in Nairobi, Kenya.
Seth Andrew, founder of Democracy Builders NYC (enlists parents to promote educational choice) and Democracy charter schools. Helping Bridge International Academies launch charter-like schools in Liberia, Kenya, Uganda, Nigeria, and India. Former senior adviser on technology for Arne Duncan. Began as a special educator in South Korea and Massachusetts. Ed.M. from Harvard University, B.A. from Brown University.
Amy Black, executive vice president of global education at Results for Development (R4D). Helped launch Teach For All, the international version of Teach for America. Former Washington, DC manager for Teach For America. Former State Department fellow for two years, including a six-month assignment in South Africa.
Alejandro Caballero, evaluates investments in private education companies for the International Finance Corporation (IFC), the private-sector arm of the World Bank. A former vice president with Deutsche Bank AG (worked in Singapore, India, Indonesia, Thailand and Sri Lanka). Previous positions with Booz Allen Hamilton, and Goldman Sachs. M.B.A. Stanford, master’s Stanford Graduate School of Education. Add B.A. degrees in law and in economic science/management from ICADE, Madrid.
Nat Malkus, research fellow at the American Enterprise Institute. Specializes in school finance, charter schools, school choice, and the future of standardized testing. Former senior researcher at the American Institutes for Research. Ph.D. in education policy and leadership, University of Maryland; B.A. in historical studies, Covenant College, four years middle school teaching in Maryland
I downloaded and edited the text. I was struck by several claims about the costs, profitability, and virtues of Bridge International and the reasoning of the Liberian minister of education, George K. Werner. In the 2016-17 school year, 28,000 Liberian students attended 93 “partnership” schools run by international providers.
Seth Andrew: “I just left the Obama administration where we really spent a lot of time, chief technology officer and others, thinking about technology in government. I can tell you we’re still way behind where the private sector was in thinking about technology. Most of us don’t use government tech in our daily lives. We use private tech in our lives.”
“Bridge has taken best practices from the developed world, American charter schools and delivered it through a very low-tech solution, very cheap e-reader, black and white tablet (costs $50 to manufacture in China). You get content that is the same content as kids might be getting in Washington, D.C., Boston or Cambridge, Massachusetts. You’re getting it on a 2-g signal in black and white in a rural Liberian classroom. That is not a thing the government of Liberia figured out to do….That is one of the reasons Bridge has potential not to be just an incremental change but a leapfrogging change.”
Seth Andrew. “I will say quickly about Bridge, the bulk of their schools, 500 across the world, are low fee private schools, $7 a month. They’re getting a world-class education.”
George Werner: “Let me just … add to what Seth said. With the exception of maybe of Singapore and Vietnam, I don’t know any country that educates poor children with perfection. Not the United States, not the UK. In the U.S., if government would deliver perfect public schools you would have no need for charter schools. If the UK government could do similarly, there would no need for the academies in the UK.”
“What that tells me is that governments are failing to educate poor children. There is a need for the private sector. …We’re educating a majority of our children for the private sector, for the jobs of today, and the jobs of tomorrow. All the more reason why the private sector needs to get involved in how we educate our children. “
“We chose the word ‘partnership.’ There are things government does really well, policy platform, regulation, and education as a public good. Those things government can do well. But day-to-day management—assessments, planning outcomes, systems of accountabilities—government doesn’t do as well as the private sector does. We partnered with private providers to strengthening government where it is weakest if you like. That is the essence of the partnership with us.”
Seth Andrew: (On the need for profits in the private sector). Take $50, per student for a year, $2,000 a classroom of 40 kids for a classroom a year. Wage bill, $140 a month. $1500 a year, $500 total for materials, textbooks, technology, everything else. … the tablet (for the teacher) is $50. This is doable. This is absolutely possible. We’ve shown it at scale in Kenya. Starting to get there in Liberia. But it requires a lot more students to be in systems like this…before you get to the scale point where it is actually sustainable (and profitable).
…Let me give you one more example…In Liberia, they don’t have resources for science labs….In the developed world you can see a virtual reality science lab for the cost of a $50 head-set. In the developing world we can’t imagine that, because that math doesn’t add up. But you can get a cardboard version of the same thing for $3…bringing quality down a little bit; but the content being delivered to my students in Washington, D.C. is actually the same exact content delivered to kids in Liberia and for a $3 cardboard head-set and a phone, the principal gets to download lessons plans. It is a matter of thinking how we spend money and what we spend money on.”
Here are some visual examples of the Bridge curriculum resources. (The exact same content as in the US?). This website also lists 16 key investors in Bridge International including Bill Gates Investments, the Chan/Zuckerberg Initative, International Finance Corporation of the World Bank http://www.bridgeinternationalacademies.com/academics/tools/
Liberia will still have teachers to deliver the curriculum, but in the US professional credentials are being diminished in importance, especially by cuts in funding for public schools and the promotion of low-cost online, computer-based and teacher-proof programs, “brought to scale” for profitability.
Consider ABCmouse.com Early Learning Academy for children ages 2–8. For a subscription fee of $7.99 per month or $79.99/year you receive an app (for ipad or iphone) that can be used by up to three children. The app offers “a standards-aligned curriculum (reading, math, social studies, art, music, more) intended to build “a strong foundation for academic success.”
The curriculum is being expanded to higher ages/grades levels and for use internationally through a program that teaches English as a second language. This is a patented delivery system build on a legacy of programming from the creators of the NeoPets online, sold in 2005 to Viacom’s MTV Networks Groups. Patents are noted at https://www.cbinsights.com/company/age-of-learning
In effect, the US could well be the next big market for Bridge International, with some clever up-scaling in stylistics of the “same exact content” they are delivering in Africa and elsewhere.
Bill Phillis, founder of the Ohio Coalition for Equity and Adequacy and former deputy commissioner of education in Ohio, laments the commercializations that charter schools have introduced into K-12 schooling, while claiming to be “public schools”:
He writes:
“For sale: A school–The practice of buying and selling charter schools signals the complete disconnect between school and community
“The greatest human-inspired public institution-the common school-was created as a school for all children. The nexus between the community and the common school is powerful in the lives of school children; charter schools are not community-based entities.
“Parents in a school district would be shocked if they opened the morning paper and read the headline: School district for sale. That happens in the charter world.
“Charter school organizations are bought and sold. Ron Packard, former CEO of K12-Inc. (in Ohio, K-12 Inc. operates the Ohio Virtual Academy) left K-12, Inc. and started a company that has purchased several charter schools in Ohio. This practice of buying and selling charter schools demonstrates the complete disconnect between school and community. Charter schools are not public.
“The common school is not a for-profit business enterprise. It is a community institution of the community, by the community and for the kids of the community.”
Another day, another charter scandal. This one is in Lauderhill, Florida, in Broward County.
“LAUDERHILL, Fla. – The Paramount Charter School was, by all accounts, a disaster for its young students, but now that the publicly financed, F-graded K-8 school is closed, there is a big question that remains: Where did the money go?
In all, taxpayers coughed up more than $3 million for the charter school in Lauderhill, which promised a first-rate education for its predominantly financially disadvantaged students.
“Now American Charter Development, the Utah-based charter school company that was Paramount’s landlord and primary investor, alleges it lost well over $1 million during the two years the school was in operation and suspects public funds were misappropriated.
“In our view, there’s been fraud,” Rob Giordano, senior vice president of business development at American Charter Development, told Local 10 News.
“Giordano said the company conducted its own examination of the school’s finances and found that, in addition to a nonprofit company that had been set up to run the school, called the Advancement of Education in Scholars Corp., there was a second for-profit company formed with an almost identical name.
“Giordano said his firm obtained Paramount bank documents showing large sums of money going to the for-profit company.
“It was tens of thousands of dollars in excess of $30,000 a month going to this shell organization,” Giordano said.”
Not to worry. This failed “public charter school” will be replaced by another. The taxpayers’ money? It’s gone, along with the time that children lost in this school.
Jan Resseger reports that Ohio charter law allows any non-profit to become a charter authorized, even if they have no education experience and even if they have no geographical proximity to the charters they allegedly oversee. The authorized collects 3% of the charters’ public funding, which can mean millions of dollars a year in found money. It certainly creates an incentive for authorizes to keep charters open and growing.
In the latest episode of a long-running drama called “How Charter Schools Fleece Taxpayers,” Resseger says that the Cleveland activists have called on the Ohio Department of Education to block the St. Aloysius Orphanage fromsponsoring charters in Cleveland. The Orphanage hired a for-profit corporation to manage the charters it sponsors from afar.
“In the news this week is charter school sponsor, St. Aloysius Orphanage—along with Charter School Specialists, the for-profit firm with which St. Aloysius Orphanage has contracted to provide all the services required of charter school sponsors by the Ohio Department of Education. St. Aloysius Orphanage was founded in Cincinnati, Ohio in 1837. It has evolved from a 19th century orphanage into a 21st century mental health agency, which also provides a local Cincinnati charter school for children needing special education services. St. Aloysius Orphanage has also become one of Ohio’s statewide charter school sponsoring agencies….
“There are some other serious problems with the new school planned by St. Aloysius at Orchard Park. Patrick O’Donnell, of the Plain Dealer, has been reporting for several weeks about the for-profit company with which St. Aloysius has contracted to open and manage the school, Cambridge Education Group. Cambridge’s Florida counterpart, Newpoint Education Partners has been indicted in Florida, as has the founder of both companies, Marcus May. O’Donnell explains: “Cambridge Education Group, the operator of 19 Ohio charter schools and of a new school about to open in Cleveland’s West Park neighborhood, is distancing itself from recent fraud and racketeering charges in Florida against founder Marcus May. But details are trickling out about how much that alleged fraud may have spread from Florida to the 19 schools Cambridge operates here in Ohio.
“And Cambridge and its counterpart in Florida, Newpoint Education Partners—a company that is itself under indictment in that state—have had a tight relationship for several years, besides just being founded by May. The school logos in both Ohio and Florida for Cambridge and Newpoint have the same theme…. and the two companies have shared the same officers at times, including Cambridge owner and President John Stack. Stack has not been charged in the case. His name does not appear in court filings against May… Stack said that he was unaware of any of the schemes to defraud schools of money that May is accused of.”
“Charter School Specialists, the for-profit company with which St. Aloysius Orphanage contracts to fulfill its sponsorship responsibilities, is headed by Dave Cash, who is quoted in an additional article by Patrick O’Donnell about the problems at Cambridge-Newpoint, which St. Aloysius intends to hire to run its new Orchard Park charter school: “We have been aware of the legal concerns of Newpoint in Florida and have been in contact with the prosecutor in the case… The boards of each school that utilize Cambridge Education Group have also been monitoring the case and staying abreast of the issues.”
Resseger urges the state to tighten oversight of shoddy and shady charter sponsors.
Alan Singer pulls together the threads of charter school corruption across several states in this post. The corruption is pay-to-play. Give money to a politician and turn him or her into your advocate. Florida presents a different twist on the story: charter owners and employees and family members are elected legislators who shamelessly vote to enrich themselves. In Ohio, charter owners contribute to legislators who then turn on the money spigot and shower their benefactors with riches. In New York, Governor Cuomo accepts millions from billionaires who love entrepreneurial schools and hate public schools–and Voila!, Cuomo becomes a charter champion.
“In Arizona charter schools routinely receive exemptions from state oversight requirements, despite a history of misusing tax dollars. They also receive over 25% of state education funds, although they only enroll 15% of Arizona’s school age students. The right-wing Republican governor of Arizona was accused by the even further right-wing elected Superintendent of Arizona schools of establishing a “shadow faction of charter school operators” committed to “moving funds from traditional public schools to charter schools.”
“The reasons for the lack of accountability and the disproportionate state funding are examined in a report by Arizonians for Charter School Accountability. Among other things, they found that Benjamin Franklin, a for-profit charter school, is owned by Arizona State Representative Eddie Farnsworth (R). In 2016, the charter school spent $155,106 more on facilities than on classroom instruction. It leases its schools from LBE Investments, a for-profit real estate company also owned by Farnsworth.
“Arizona has a state board that grants charter status to “qualifying applicants” and is supposed to “oversee charter schools.” The President of the board is a political lobbyist who defines her role as promoting school “choice” and “sponsoring charter schools,” not regulating them. The Board Vice-President is founder of a charter high school. Other members include the operator of a charter school, a charter school teacher, a lawyer for charter schools, a building company CEO who also serves on the Board of Directors for the local Teach for America chapter, and the CEO of a charter school network.”
For the links, open the article.
In Atlanta, teachers were sentenced to prison under the RICO statute (racketeering) for cheating on tests and are out on appeal.
When, if ever, will public officials round up the criminals who are engaged in buying influence for the enrichment of charter schools? In too many states, the public officials who should enforce the law are charter operators or receive millions from charter operators. The charter industry starts to look like the Tweed Ring. Will it clean up its own act or is public corruption now woven into its fabric?
Denis Smith once worked in the charter office of the Ohio State Department of Education. Now that he is retired, he writes often about the scams and frauds in Ohio’s charter sector.
In this article, he points out that political contributions by its founder William Lager have greased the way for ECOT to claim hundreds of millions of dollars of taxpayer money for a very low-performing cyber-charter.
The good news that he brings is that the Columbus Dispatch, an influential newspaper in the state, is all over the charter scams and is acting as a guardian of the public interest. Some Republicans even felt impelled to return charter money because it has become “radioactive.”
Smith says he once took a series of proposals for charter reform to a key legislator and the legislator was not interested.
That one proposal he thought would never happen was an outright ban on political contributions by charter schools and their management companies to state political parties and candidates, as they use public funds to craft state law to their liking, including more than 150 exemptions from the educational requirements provided in Section 3314 of the Ohio Revised Code.
Unless we’re terribly naïve about the corrupt, indeed corrosive effects of money on the legislature, the great Swedish pop group Abba said it best: Money, money, money/Always sunny/In the rich man’s world.
But with ECOT in seeming eclipse, perhaps things right now aren’t sunny in that rich man’s charter world. Indeed, the upcoming solar eclipse might in some way serve as a metaphor for the twilight of ECOT, and, hopefully, the mysterious, gloomy, overcast charterworld, where for nearly 20 years, anything goes.
Could it be that the corruption in the charter industry in Ohio has reached a tipping point?
Has ECOT finally gone too far?
This is a very positive development, if true.
Peter Greene identifies the dirty secret of the charter industry. Two words. Real estate.
In Ohio, a charter lobbyist wrote the charter law for the state. When a charter operator insisted that he owned everything the charter bought with public money, the courts upheld him. It was in the law.
In Pennsylvania, charter schools own the property where the charter school is housed, and they charge rent. They charge rents above the market rate. The state doesn’t ask questions. The state doesn’t even notice that the charter operator owns the property and pays himself rent.
Greene offers a few examples from across the nation, and he didn’t even include Florida, where the charter scams are commonplace:
Carl Paladino, the notorious bad boy of the Buffalo school board, has made a mint in charter-related real estate deals. Not only does Paladino build the charters and lease them, but he builds the new apartment buildings near the shiny new school– a one-man gentrification operation. And he sits on the public school board, where he can vote to approve and support the growth of charters.
That’s not even the most astonishing sort of charter real estate scam. A 2015 report from the National Education Policy Center outlined what might be the worst. Take a public school building, built and paid for with public tax dollars. That building is purchased by a charter school, which is using public tax dollars. At the end of this, you’ve got a building that the public has paid for twice– but does not now own.
In February of this year, researchers Preston Green, Bruce Baker and Joseph Oluwole dropped the provocative notion that charter schools may be the new Enron. It’s a lot to take in, but Steven Rosenfeld pulled out five takeaways for Alternet, if you’d like a quicker look. But just some little factoids give you a taste. For instance, Imagine Schools take 40% of the money they collect from taxpayers and put that right back into lease agreements. In Los Angeles, owners of a private school leased room on their campus for a charter school that they were also involved in running– then jacked that rent up astronomically.
His article has links. Follow them. This is the most underreported story of the charter world: The big money is in the real estate, not necessarily the students.
A school should be the anchor of its community. It should be a place where children and families feel welcome, a place where they learn to work and engage with others who are different from themselves but share common concerns. A public school is a mainstay of our democracy, because for many people, it is the first place where they have a chance to learn and work with others to achieve their goals for their community.
But read this story, and what do you see? Two charter schools were sold to an eager investor.
Colliers International Education Services Group brokered the sale of two Florida charter schools totaling 134,000 square feet. ESJ Capital Partners and MG3 Developer Group sold the properties for $30.5 million to AEP Charter KCC II LLC and AEP Charter Renaissance LLC, entities affiliated with Portland-based Charter School Capital, according to public records.
The assets included in the transaction are the 105,002-square-foot Renaissance Charter School at University located at 8399 N. University Drive in Tamarac, Fla., and the 28,998-square-foot Kid’s Community College Southeast Riverview at 11515 and 11519 McMullen Road in Riverview, Fla. Charter School Capital’s facilities arm, American Education Properties, paid $22.3 million for the Renaissance property and $8.2 million for the Kid’s Community College asset.
SKILLED MANAGEMENT ORGANIZATIONS
Renaissance Charter School at University opened in 2012 and will serve 1,426 students in the 2017-2018 school year. Managed by Charter Schools USA, the building was built in 1982 and underwent renovations in 2015. Kid’s Community College Southeast Riverview opened in 2003 and is slated to serve 397 students in the 2017-2018 school year. It is independently operated by Kid’s Community College, a charter management organization that manages a total of eight charter schools serving Pre-K through high school.
As part of the acquisition, Charter School Capital assumed the existing 20-year leases on both schools, which expire in 2032 and 2033, respectively. Charter schools have enjoyed rising popularity in the state since their inception in 1996. The deal is indicative of the continued interest in educational-based real estate.
“We enjoyed working once again with ESJ and MG3 to arrive at terms that will give the charter school operators the peace of mind that comes in knowing their facilities are securely theirs to operate for years to come,” said Stuart Ellis, president & CEO of Charter School Capital, in a prepared statement.
Todd Noel, executive vice president & national director of the Education Services Group based out of Phoenix, along with Achikam Yogev, senior vice president based in South Florida, represented the seller in the transaction. ESJ Capital Partners is the manager of ESJ Real Estate Fund LLC and focuses on investing in charter schools and medical office buildings. Charter School Capital provides growth capital and facilities financing services to charter schools.
GROWING INVESTOR INTEREST
“Because of the complexities, charter schools have traditionally sold individually and rarely as a portfolio, but the continued interest in this asset class has paved the way for more creative strategies and more complex deals being done on behalf of our clients,” stated Yogev, in prepared remarks.
This isn’t the first deal between ESJ Capital Partners and Charter School Capital. The Aventura-based investment advisor sold a portfolio of five Florida charter schools in November 2016 to Charter School Capital in a $72 million transaction.
No surprise, it happened in Florida, where charter schools open and close with unsurprising rapidity. They are not the anchor of their community. They are exemplars of commerce and consumerism.
My reaction on reading this story: revulsion. It is stories like this that persuades me that the very concept of charter schools is wrong, especially when they operate for-profit and when they are part of a corporate chain. They are not about education; they are not about learning; they are not about children; they are about money and profit.
Allowing the education of American children to be distorted by this greedy industry is a blight on American society.
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