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Bill Phillis: Who Should Be Held Accountable for the ECOT Fiasco?

By dianeravitch
September 13, 2018 //
9

Bill Phillis is a retired deputy State Superintendent of Schools in Ohio and a passionate advocate of public schools, equity and accountability.

He launched the Ohio Coalition for Equity and Adequacy of School Funding. You should subscribe to his email list.

ECOT (Electronic Classroom of Tomorrow) wasted $1 billion of taxpayers’ money, diverted funding from real public schools, and was endorsed by Ohio’s most prominent Republican elected officials. Betsy Dezvos wants more virtual charters, which have an abysmal track record.

He writes:


The ECOT scandal could have been stopped many times since its beginning

After ECOT ripped off a billion dollars from Ohio school districts and collected a couple hundred million from the federal government during a 17-year run, the corrupt operation was finally exposed. How did this business enterprise feed illegally at the public tax trough in plain sight without being held accountable? That critical question is being debated in the final days before the November 2018 election. Candidates are debating who is to blame.

One person said; don’t blame Bill Lager-he is a businessman trying to make a buck. Lager used millions of tax dollars gobbled up from the public trough to buy political favors. Public officials turned a blind eye to the corruption.

Who should have been watching ECOT and other bad actors in the charter industry?

State Board of Education
Ohio Department of Education
State Superintendents
State Auditors
State Attorney Generals
Governors
Legislators
Private watchdog groups

Over the years state officials have shut down small charter operations-the kind that had meager political campaign budgets. But ECOT wasn’t on their radar.

The ECOT scandal should prompt state officials of all political stripes to put the spotlight on the other big time charter operators such as K12 Inc., Imagine Schools, Gulen Islamic charters, Accel, etc.

“The whole people must take upon themselves the education of the whole people and be willing to bear the expenses of it. There should not be a district of one mile square, without a school in it, not founded by a charitable individual, but maintained at the public expense of the people themselves.”
– John Adams, September 10, 1785

William L. Phillis | Ohio Coalition for Equity & Adequacy of School Funding | 614.228.6540 | ohioeanda@sbcglobal.net| http://www.ohiocoalition.org

Categories Accountability, Charter Schools, Education Industry, For-Profit, Fraud, Funding, Ohio, Privatization, Virtual Charter Schools

Arizona: Legislator/Charter Operator Sells His Chain for Millions, Or, How to Get Very Rich in the Ed Biz

By dianeravitch
September 11, 2018 //
26

This is a world-class scandal. And it is all legal!

Arizona’s State Representative Eddie Farnsworth sold his for-profit charter chain to a non-profit for about $30 Million and will reap millions in profits, then get a management fee to continue to operate them.

“Yet another millionaire is made, thanks to the latest in charter school scheming.

“This time, it’s state Rep. Eddie Farnsworth, who has figured out a way to sell his charter school business – the one built with taxpayer funds – and make millions on the deal and then likely get himself hired to continue running the operation.

“Which now converts to a non-profit and thus will no longer have to pay property or income taxes.

“Sweet plan. Sickeningly so, when you consider that Farnsworth is making his millions off of tax money intended to be used to educate Arizona children.

“Other charter schools are getting rich

“Farnsworth is just the latest operator to use charter schools as his own personal ATM – one that shoots out public funds.

“The Republic’s Craig Harris has spent all year reporting on operators who are getting rich – or at least, making a tidy pile of cash – off publicly funded charter schools, aided by laughable state laws that require hardly any oversight or accountability.

“There’s the Arizona Charter Schools Association’s No. 2 guy, using his position to throw business to a company he co-owns with his wife by giving her the names of students looking for a charter school. She scores a bounty for every student (and the tax dollars that go with that student) she delivers to certain charter schools.

“There’s BASIS Charters Schools founders Michael and Olga Block, who scored $10 million in fees to manage the charter chain of schools last year.

“There’s American Leadership Academy’s founder Glenn Way, who scored at least $18.4 million profit by getting no-bid contracts to build charter schools thanks largely paid for with public money.

“Then there’s Primavera online school, where most of the public funding has gone not to educate students but to elevate the company’s investment portfolio. Damian Creamer, the school’s founder and CEO, last year scored an $8.8 million “shareholder distribution” from the for-profit company that now runs Primavera, according an audit filed with the Arizona State Board for Charter Schools.

“Taxpayers pay twice for the same schools

“Now comes Farnsworth with his Benjamin Franklin Charter School scheme, approved Monday by the Arizona State Board for Charter Schools.

“Under the arrangement, Farnsworth is selling his for-profit four-school operation to a non-profit run by a trio of handpicked pals who will now select someone to run the schools. Farnsworth has applied for the job.

“According to state records, Farnsworth will score at least $11.8 million in profit from the deal. He’ll also keep nearly $3.8 million in “shareholder equity” accumulated over the years since starting the suburban charter school chain in 1995. But Farnsworth declined to disclose the total profit he will make on the deal.

“I make no apologies for being successful,” he told the Arizona State Board for Charter Schools.

“And you wonder why Farnsworth has fought efforts to require better oversight and reform of Arizona’s charter schools?

“The Republic’s Harris reports that when the sale closes, taxpayers will have paid twice for the same schools – once to essentially pay the mortgage on the Farnsworth-owned buildings and now to assume more debt in order to buy the buildings.

“And – by the way – it’s all legal

“The most outrageous part of this outrageous story is that what Farnsworth is doing is apparently legal.”

Craig Harris of the Arizona Republic reported on Farnsworth’s meeting with the state charter board (which includes other charter operators):

“[Farnsworth] told them he was requesting the change in organization to strengthen the finances of the roughly 3,000-student school chain. Farnsworth said the new structure will allow Benjamin Franklin to avoid property taxes and to qualify for federal education funds.

“The Legislature gives charter operators up to $2,000 more per student in state education funding than traditional district schools. That’s because charters cannot access local property taxes for building debt.

“Farnsworth acknowledged he would make a profit on the deal.

“Board member Erik Twist, who runs the Great Hearts charter schools, tried to press Farnsworth on how much he stands to gain. But Chairwoman Kathy Senseman interrupted him and changed the direction of the discussion.

“Farnsworth told the board that if he had wanted to make money, he merely could have sold the schools and cashed out.

“I make no apologies for being successful,” Farnsworth said.

“The transfer plan calls for the new non-profit operator to hire a contractor to manage the schools, an arrangement similar to other charter chains like Basis and American Leadership Academy.

“Records submitted to the Charter Board appeared to show Farnsworth had already been hired to manage the schools, but he said the document was a “draft” intended to give board members an understanding of the management contract.

“That’s what happens at Basis schools, many of which rank atop U.S. News & World Report’s “best schools” lists. A private contracting arrangement has paid about $10 million in “management fees” to a private firm run by Basis founders Olga and Michael Block.

“Farnsworth told the board, however, that he had submitted an application for the contract to the company’s new three-member board, all of whom he recruited and are his friends.

“Rebecca McHood, a Gilbert resident who attended the meeting, called the board vote “crazy.”

“They just gave a charter to a non-profit, but they didn’t vet them,” said McHood, a charter school critic whose relatives attended Farnsworth’s schools. “Here we are paying for his private property with our tax dollars, and then he can sell them.”

“State to pay twice for campuses

“Farnsworth built his school chain over more than two decades ago and became its sole owner in 2017, when he used $2.2 million of Benjamin Franklin funds to buy out his partners, Sharon Clark and Roy L. Perkins Jr., records show.

“That deal also made him sole owner of LBE Investments, a Gilbert company that owns the four campuses and leases them to Benjamin Franklin. Both companies are headquartered at 690 E. Warner Road in Gilbert.

“Once the planned sale to the new non-profit business closes later this year, taxpayers will have paid for the same schools twice. That’s because Benjamin Franklin, for years, has used education funding from the Legislature to make lease payments to LBE Investments, records show.

“(A 2017 audit showed Benjamin Franklin paid $4.9 million a year in lease payments, and that the remaining lease balance for three elementary schools and one high school was $53.9 million.)

“Farnsworth told the Charter Board that an appraisal of the schools is underway, and they will be sold at fair-market value.

“Documents submitted to the Charter Board indicate the plan is to borrow $65.7 million through the Arizona Industrial Development to purchase the schools. A sale for the projected loan amount would result in an $11.8 million profit for Farnsworth by retiring the outstanding lease balance.”

Why do Arizona taxpayers acquiesce to this blatant Profiteering with money intended to educate children?

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Categories Arizona, Charter Schools, Corporate Reformers, Education Industry, Education Reform, For-Profit, Privatization, Scandals, School Choice

Steven Singer: There Is Virtually No Difference Between For-Profit and Nom-Profit Charters

By dianeravitch
September 8, 2018 //
17

Yesterday we learned that Governor Jerry Brown signed a bill to ban for-profit charters. This sounded great, but there are very few for-profit charters in California other than K12 Inc. Even K12 Inc.’s CAVA (California Virtual Academies) won’t close until their charter comes up for renewal. It can go on ripping off students, families and taxpayers until then.

The fact that the California Charter Schoools Association celebrated the ban is evidence that it will do nothing to curtail the graft and corruption that is commonplace in the California charter industry.

How timely that Steven Singer explains that there really is no difference between for-profit and non-profit charters. They all drain resources and the students they want from public schools, undermining them and threatening the future of public education.

He writes in part:

“Stop kidding yourself.

“Charter schools are a bad deal.

“It doesn’t matter if they’re for-profit or nonprofit.

“It doesn’t matter if they’re cyber or brick-and-mortar institutions.

“It doesn’t matter if they have a history of scandal or success.

“Every single charter school in the United States of America is either a disaster or a disaster waiting to happen.

“The details get complicated, but the idea is really quite simple.

“It goes like this.

“Imagine you left a blank check on the street.

“Anyone could pick it up, write it out for whatever amount your bank account could support and rob you blind.

“Chances are you’d never know who cashed it, you’d never get that money back and you might even be ruined.

“That’s what a charter school is – a blank check.

“It’s literally a privately operated school funded with public tax dollars.

“Operators can take almost whatever amount they want, spend it with impunity and never have to submit to any real kind of transparency or accountability.

“Compare that to a traditional public school – an institution invariably operated by duly elected members of the community with full transparency and accountability in an open forum where taxpayers have access to internal documents, can have their voices heard and even seek an administrative position.

“THAT’S a responsible way to handle public money!

“Not forking over our checkbook to virtual strangers!

“Sure, they might not steal our every red cent. But an interloper who finds a blank check on the street might not cash it, either.

“The particulars don’t really matter. This is a situation rife with the possibility of fraud. It is a situation where the deck is stacked against the public in every way and in favor of charter school operators.”

Categories Accountability, Charter Schools, Corruption, Deregulation, Education Industry, Education Reform, For-Profit, Fraud, Privatization

Good News! Governor Brown Signs Bill Banning For-Profit Charters! (With a Caveat)

By dianeravitch
September 7, 2018 //
17

Julian Vasquez Heilig reports that Governor Jerry Brown signed legislation to ban for-profit charters. This is very good news. In 2015,he vetoed such a bill.

Now, here’s hoping that the Legislature can pass (and the governor will sign) a bill requiring accountability and transparency in all charters, including a ban on nepotism and conflicts of interest.

The momentum for this legislation was reignited by great reporting on K12 Inc. by reporter Jesse Calefati of the San Jose Mercury News in 2016. Give credit where it is due. Be thankful for freedom of the press!

PS:

An ally in California says this is not as big a deal as it seems. She writes:

“I just can’t understand all of the excitement about this given that there really aren’t any for profit charters left in CA anyway. This bill was approved by the Callifornia Charter Schools Association who were already celebrating and promoting that there are no for profit charters in CA. For profit charters have never really been an issue in CA, we have barely had any in the past. Of course, the vast majority of online charters contract to k12 and we all know they are a huge profit machine.”

http://www.ccsa.org/blog/2018/08/california-charter-schools-association-celebrates-landmark-legislation-banning-for-profit-charter-sc.html

Categories Accountability, California, Charter Schools, Education Industry, For-Profit, Fraud, Freedom of the Press, K12 Inc., Privatization

Ohio & Florida: Charter Scam Rips Off Taxpayers in Both States

By dianeravitch
September 3, 2018 //
14

The Network for Public Education has a Twitter handle called #anotherdayanothercharterscandal, and it is hard to keep up with them. It used to be one or two a week, Carol Burris told me, now it is one or two every day.

Here is only one among many, involving a charter scam that stretched from Ohio to Florida, ripping off taxpayers in both states.

Ohio’s top public accountant is actively investigating the case of two businessmen accused of using charter schools to defraud Florida taxpayers, students and schools — and maybe here, too.

On Friday, Ohio Auditor Dave Yost acknowledged that a probe has been ongoing for a year. Meanwhile, court documents filed this month in Florida indicate 19 Ohio charter schools were overbilled nearly $600,000. Prosecutors and forensic accountants say the money was laundered through 150 bank accounts and shell companies then returned as “rebates” and “kickbacks” to Marcus May, who once ran more than 20 charter schools in Ohio.

In 2012, May used a parent company, Newpoint Education Partners LLC., to open Cambridge Education Group, a charter school operator based in Akron. To grow business in Florida, authorities say he “falsely represented” that his Ohio schools were well managed. By 2016, prosecutors say he allegedly defrauded Florida and its public schools of more than $1 million.

May has repeatedly declined to speak with the Beacon Journal.

The pattern in Florida seems to mirror transactions in Ohio.

One forensic document in the Florida case details how Ohio schools paid $1.1 million to Apex Learning, a Seattle-based company May used to bill the 19 Cambridge schools in Ohio and 15 Newpoint schools in Florida for online and hard-copy curriculum. Russ Edgar, the lead Florida prosecutor in the white collar criminal case against May, has produced invoices that show how Apex inflated pricing to siphon $229,756.57 from Florida’s education system and $456,551.92 from Ohio schools, including four in Akron.

“After the allegations in Florida came to light, Marcus May was immediately relieved of any managerial duties and later of his equity in Cambridge,” John Stack, co-owner of Cambridge, said in a written statement. He said Cambridge hired a forensic accountant to find out if Apex negatively impacted any Ohio schools. Once the schools were identified, the money was returned.

Stack said he no longer owns a stake in Cambridge. He did not say who does owns the company now.

Of the 18 Cambridge schools still open in Ohio, 13 signed new management contracts this summer with Oakmont Education. Stack founded the company with Marty Erbaugh, an investment banker from Hudson. Oakmont will take over Cambridge’s dropout recovery high schools for struggling teenagers and young adults.

“Oakmont doesn’t believe that any of the schools we manage were negatively affected by Marcus May’s actions or Cambridge’s management,” said Stack, who filed the paperwork to create Oakmont on March 20, four days after a Florida jury convicted one of May’s associates.

How reassuring to know that the charter schools are now in the hands of an investment banker. Don’t you feel better already?

Categories Accountability, Corruption, Florida, For-Profit, Fraud, Ohio, Scandals

Philadelphia: The New Teacher Project, TFA, Bain Capital, and the Leeching of $$$ From Urban Schools

By dianeravitch
August 31, 2018 //
8

Greg Windle, a journalist at The Notebook, has drawn together the many strands of the tangled web of Reformer groups in Philadelphia, as seen through the lens of a contract awarded to The New Teacher Project for principal training. TNTP, Michelle Rhee’s creation, was designed to hire new teachers. When did it develop an expertise in training principals? Were there no veteran educators, no one in the Philadelphia School System, capable of training new principals? Or were they recruiting principals who had been a teacher for a year or two?

As Windle gets deeper into the story of a contract dispute about hiring TNTP to train principals, a familiar cast of money-hungry Reform groups washes up on the beach.

“Marjorie Neff, a former School Reform Commission chair who voted against the TNTP contract to recruit and screen teachers, said that in her experience such national education vendors use an approach that is “formulaic” and doesn’t tailor well to the needs of an individual teacher or the “context” of teaching in Philadelphia, where a teacher’s needs are different than in the suburbs. Neff is a former principal at Samuel Powel Elementary and J.R. Masterman who earned a master’s degree in education from Temple University.

“They’re selling a product. From that perspective, their formula is their vested interest,” Neff said. “Their bottom line is profitability, and we need to take that into account. Is it the most effective way to do this, or is it the most profitable? I don’t think those necessarily have to be in conflict, but sometimes they are.”

“In 2017, TNTP reported that its expenses were $20 million higher than revenue. In 2016, its revenue was nearly $21 million higher than expenses, but this was entirely due to the $41 million it brought in from “all other contributions, gifts, grants” (excluding government grants). That pot includes grants from outside philanthropies, such as foundations, but also investments from venture capital firms. In 2015, the nonprofit lost $6.1 million, despite millions in outside funding.

“Shifting funding, but consistent ideology

“Bain Capital’s consulting firm has two members on the board of TNTP. Since 2009, Bain’s consulting arm has partnered with Teach for America to develop “high-impact leaders in education” by placing TFA alumni in “leadership” positions in public education. Together, TFA and Bain designed “a series of programs to inspire, prepare, match and support Teach for America alums on the path to leadership.” Bain aimed to bring leadership development practices from the private sector into public education.

“In 2012, the two organizations got together to “expand the scope of work” of their partnership — the same year that Teach for America founded School Systems Leaders to train TFA alumni to “serve at the highest levels of leadership in public school systems.”

“Matt Glickman, an employee of the Bain consulting firm and board member of TNTP, has also served on the board of the NewSchools Venture Fund. That fund has invested in free-market education reforms since 1998. The Sackler family – whose fortune is based on profits from Purdue Pharma, developer of OxyContin – decided to invest heavily in the fund.”

When will education be returned to educators?

Anyone advocating for edupreneurs should be fired. As Neff said quite well, these national vendors are in it for the money.

Categories Accountability, Corporate Reformers, Education Industry, For-Profit, Fraud, Hypocrisy, Philadelphia, Principals, Teach for America

New Jersey: How Chris Christie Allowed Charter Entrepreneurs to Rip Off Taxpayers

By dianeravitch
August 31, 2018 //
8

Bob Braun, the veteran investigative reporter who has covered New Jersey politics for many years, describes an astonishing ripoff of taxpayers.

Categories Accountability, Charter Schools, Corporate Reformers, Education Industry, Failure, For-Profit, Fraud, New Jersey, Newark, Privatization

California Legislature Passes Ban on For-Profit Charters: Will Governor Brown Sign It?

By dianeravitch
August 26, 2018 //
14

The California Legislature passed a bill banning for-profit charters. The sponsor is Assemblymember Kevin McCarty of Sacramento. The bill is aimed primarily at the virtual charter school run by for-profit K12 Inc.

Last time such a bill was passed, Governor Brown vetoed it. Having opened two charters when he was mayor of Oakland, he is very protective of them. This is a stain on his otherwise progressive record.

Even the California Charter Schools Association has endorsed this bill.

The San Jose Mercury News ran a powerful expose of K12 Inc. in 2016.

“SACRAMENTO — For-profit companies will be banned from running charter schools in California if Gov. Jerry Brown signs a hard-fought bill that won final approval from the state Legislature on Thursday.

“The proposal is the latest of several attempts to crack down on what critics say amounts to profiteering at the expense of children and taxpayers, the subject of a 2016 investigation by this news organization. Its passage came only after proponents were able to forge agreement between two groups that are almost always at odds: teachers unions and the trade association representing charter schools.

“The exposé in the Mercury News highlighted the need for reform,” said the bill’s author, Assemblyman Kevin McCarty, a Sacramento Democrat who serves on the education committee.

“That investigation zeroed in on K12 Inc., a for-profit operation based in Virginia and traded on Wall Street that manages publicly funded charter schools in California and other states. The K12-run network California Virtual Academies, the largest of its kind in the state with an enrollment of roughly 15,000, graduated fewer than half of its high school students, the news organization reported, and some teachers said they were pressured to inflate grades and enrollment records.

”This news organization’s probe also found that children who logged onto the company’s software for as little as one minute per day were counted as “present” for the purposes of calculating the amount of taxpayer funding the company would receive from California.

“As with policies from immigration enforcement to fuel standards, the Legislature’s approval of a for-profit charter school ban is at odds with the policies of the Trump administration. U.S. Education Secretary Betsy DeVos is not only a vocal supporter of for-profit education, but her husband disclosed they were early investors in K12 Inc.

“Assembly Bill 406 would change California’s charter school law to prohibit for-profit corporations and for-profit educational management organizations from running the state’s taxpayer-funded and independently run schools — even if the schools themselves are technically nonprofits.

LCalifornia currently has about 35 such charter schools, according to McCarty’s office. In 2016 K12 settled a lawsuit with the state for $168.5 million over claims that it manipulated attendance records and other measures of student success.”

Governor Brown has until September 30 to sign or veto the bill.

Jesse Calefati’s reporting for the San Jose Mercury News is education journalism at its finest, independent and owing nothing to philanthropists or investors.

Categories California, Education Reform, For-Profit, K12 Inc., Virtual Charter Schools

Bill Phillis: Those Poor, Poor, and Very Few Bad For-Profit Charters in Ohio

By dianeravitch
August 23, 2018 //
5

Bill Phillis, retired for many years as deputy state superintendent of education in Ohio and now the state’s most outspoken critic of charter fraud, writes on his blog about the Thomas B. Fordham Institute’s lame defense of for-profit charters:

“The myth of Ohio’s ‘for-profit’ charter school system”: A Fordham Institute’s damage control effort

An August 20 Fordham article suggests the charter industry is getting a bad rap because of the cronyism of a few charter operators. The article also attempts to justify the use of for-profit management companies by charter schools.

The notion proffered is that ECOT and the White Hat Management Company are the only bad actors in the charter industry. What about the 250 or so charter schools that took state and federal money and closed or never opened leaving kids in an education lurch? What about the other charter operations that have been reported as fostering gross irregularities, such as the Gulen charters, but not appropriately investigated by state officials? What about the Imagine Schools Inc. charter school chain that requires the charter schools to pay absurdly high rent to a real estate company allied with Imagine?

Corruption in the charter industry in Ohio and elsewhere is not confined to just a few bad actors. The industry is rife with low performance, cronyism and corruption.

In the article, the author equates a charter board hiring a management company to operate its school to a school district purchasing buses, books, etc. from the private sector. An absurd stretch!

A management company that operates charter schools performs a governmental fiduciary function and thus should be subjected to the same accountability and transparency measures as school district officials. Bus and book companies don’t operate the schools to which they sell products.

The Ohio charter industry seems beyond repair but Fordham keeps defending it.

Be it noted that the NAACP report on charter schools not only called for a moratorium on them, but called for the elimination of all for-profit charters and the for-profit management organizations that manage charters.

Categories Accountability, Charter Schools, Education Industry, For-Profit, Fraud, Ohio, Privatization

Arizona: CEO of Failing Online Charter School Gets a Bonus of $8.8 Million

By dianeravitch
August 23, 2018 //
19

Arizona is an amazing state. Taxpayers don’t care how their money is spent. You could collect it and burn it and they wouldn’t care.

That’s the impression you would get if you read this story about Primavera Charter School.

The online high school is a failure but the CEO is getting a bonus of $8.8 million.

“By most academic measures, Primavera online charter school is a failure.”

“Its student-to-teacher ratio is 215-to-1 — 12 times the state average — allowing little or no individualized attention.

“On recently released state standardized tests, less than a quarter of its students passed math and about a third passed English, both below the state average.

“And 49 percent of Primavera students end up dropping out, 10 times the state average.

“But by another measure, Primavera is an unmitigated success: making money.

“Beginning in 2012, the school began shifting large shares of its annual $30-plus million allotment of state funding away from instruction and into stocks, bonds, mortgage-backed securities and real estate.

“That year, 70 percent, or $22.4 million, of its state funding went into its growing investment portfolio — instead of efforts to raise test scores, reduce class sizes, or address an exploding dropout rate that is now the state’s third-highest.”

That’s in line with the usual formula for online charter schools. They fail but they are profitable. State legislatures authorize them despite their consistent record of failure. Usually they do so because a key politician or two received a campaign contribution of a few thousand dollars. Think ECOT in Ohio, which paid off important pols to the tune of a million a year, assuring a return of hundreds of millions every year.

Do taxpayers care? It’s their money.

Categories Accountability, Arizona, Failure, For-Profit, Privatization, Virtual Charter Schools
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