Michigan spends $1 billion on charter schools, but fails to hold them accountable: Detroit Free Press

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CONTROLLING CHARTERS: Integrity Education Group Urges State Regulations

Industry "Incapable of Self-Policing," Report Charges

December 31, 2014
By: Dave Rogers

The Center for Popular Democracy and Integrity in Education has issued a series of recommendations seeking regulation of charter schools in every state.

A report, entitled "Charter School Vulnerabilities to Waste, Fraud And Abuse," echoes a warning from the U.S. Department of Education's Office of the Inspector General.

The report draws upon news reports, criminal complaints and other evidence uncovered to detail how, in just 15 of the 42 states that have charter schools, charter operators have used school funds illegally to buy personal luxuries for themselves, support their other businesses, and more.

The report states:

"Charter schools generally operate as independent entities that are subject to oversight by a Local Education Entity (LEA) or authorized chartering agency. Our investigations have found, however, that LEAs or chartering agencies often fail to provide adequate oversight needed to ensure that Federal funds are properly used and accounted for.

"The type of fraud we identified generally involves embezzlement. The schemes that are used to accomplish this are varied. For example, we have found cases where charter school executives falsely increased their schools' child count, thus increasing the funding levels from which to embezzle.

"We have also unraveled schemes where owners or employees of the charter schools created companies to which they diverted school funds and misused school credit cards for personal expenditures...We believe it is vitally important for the Department to take affirmative measures to ensure that State Education Agencies and LEAs (local education agencies) provide adequate and appropriate oversight to charter schools that operate within their jurisdictions."

The report also includes recommendations for policymakers on how they can address the problem of rampant fraud, waste and abuse in the charter school industry. Both organizations recommend pausing charter expansion until these problems are addressed.

"We should not have to wait until more students have been harmed, or millions more in taxpayer dollars are stolen or lost, before addressing this problem," the Center says in the report that documented about $100 million in fraud in 15 states.

Although Michigan was not one of the 15 states studied in an investigation last year, the Center quoted Michigan Attorney General William Schuette, of Midland, after charging the former treasurer of the George Washington Carver Academy Charter School with felony embezzlement:

"The theft of resources from Michigan's children will not be tolerated. We must root out corruption at all levels of government to ensure the public is served. Nobody will get a free pass when they break the law."

"Public officials must take a more proactive approach," the report stated. "This is especially urgent given that the fraud and mismanagement uncovered thus far has been the result of an unsystematic, reactive investigatory approach."

Abetting the fraud and abuse in charter schools is the fact that there has been insufficient regulation.

"In other words, no agency, federal or state, has been given the resources to fully investigate the true depth of the problem, let alone prevent future problems.

"Over 20 years of lax charter oversight, and the resulting fraud and mismanagement that has accompanied it, is all the proof we need that the charter industry is incapable of self-policing. While some authorizers and some charter organizations may be well run and offer strong accountability mechanisms, clearly others are not. The public deserves common-sense laws that protect their children and their tax dollars from incompetent or unscrupulous charter operators. The debate in our legislative halls should not be whether or not to regulate the industry, but how, and how soon."

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