CHARTER TAKEOVER? Public Schools Transformed to Corporate Profit Centers
December 26, 2014
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Former governor John Engler has pioneered and lobbied for charter schools in Michigan.
Have charter schools become the latest cash cow for profiteers, as some critics charge?
Led by former Governor John Engler, who reportedly received nearly $1 million in stock to join the board of K-12 Inc., the lobbyists have descended on Michigan, making it one of the centers of education privatization.
There are now more than 6,000 publicly funded charter schools in the United States -- a more than 50 percent increase since 2008.
Over that same period, 'nearly 4,000 traditional public schools have closed,' writes Stan Karp, an editor of Rethinking Schools. "This represents a huge transfer of resources and students from our public education system to the publicly funded but privately managed charter sector."
A recent report by the Center for Popular Democracy and Integrity in Education found charter schools fraught with "white collar crime of staggering proportions."
It found fraudulent charter operators in 15 states are responsible for losing, misusing or wasting over $100 million in taxpayer money.
Michigan also has become the focus of research into charter accountability because it has a large number of for-profit operators.
Some of the findings from this research are eye-opening to say the least, revealing dubious or un-verifiable educational achievement.
A study at Western Michigan University and the National Education Policy Center found that only a third of K-12's schools achieved Adequate Yearly Progress, which is required for public schools by the federal No Child Left Behind legislation.
"In Michigan, where NHA (National Heritage Academies) is the largest charter-school operator, state education regulators have voiced similar frustrations about the degree to which these private firms are shielded from having to answer to the public about how money is spent.
ProPublica, a public interest journalism project of the nation's top news media, says on its website that many charter schools are non-profit in name only since they contract with for-profit management firms that take most of the school's tax-funded income.
"I can't FOIA (make a Freedom of Information Act disclosure request) National Heritage Academies," said Casandra Ulbrich, Vice President of the Michigan State Board of Education, referring to the right to request public documents from public agencies. "I don't know who they're subcontracting with, I don't know if they're bid out. I don't know if there are any conflicts of interest. This is information we as taxpayers don't have a right to."
Last year, Ulbrich and the State Board of Education had called for more transparency to be brought to the financial dealings of charter-management firms. They specifically asked the legislature to outlaw sweeps contracts. "Unfortunately," Ulbrich said, "it fell on deaf ears."
With a "sweeps" contract nearly all of a school's public dollars -- anywhere from 95 to 100 percent -- is "swept" into a charter-management company. The contracts are an example of how the charter schools sometimes cede control of public dollars to private companies that have no legal obligation to act in the best interests of the schools or taxpayers.
Kristen Buras, associate professor of education policies at Georgia State University, has similar concerns.
"Originally, charter schools were conceived as a way to improve public education," Buras says. "Over time, however, the charter school movement has developed into a money-making venture."
Over the last decade, according to critics, the charter school movement has morphed from a small, community-based effort to foster alternative education into a national push to privatize public schools, pushed by free-market foundations and big education-management companies. This transformation opened the door to profit-seekers looking for a way to cash in on public funds
In 2010, Rupert Murdoch, whose News Corp. has been an ALEC (American Legislative Exchange Council) member, declared for-profit K-12 public education "a $500 billion sector in the U.S. alone that is waiting desperately to be transformed."
The transformation has begun.
The New York Times states the first charter schools in the United States opened in the early 1990s, and were popular among advocates interested in radically overhauling the traditional model of schooling. The schools were given freedom from regulations about staffing, curriculum and scheduling in hopes that they could devise superior models.
But that didn't happen as the profits overwhelmed the interest in sharing best practices.
"Education entrepreneurs and private charter school operators could care less about innovation," says Buras. "Instead, they divert public monies to pay their six-figure salaries; hire uncertified, transient, non-unionized teachers on the cheap; and do not admit (or fail to appropriately serve) students who are costly, such as those with disabilities."
Rebecca Fox Blair, a teacher who helped to found a small, alternative high school program in Monona, Wisconsin, says she was struck by the massive change in the charter school movement when she attended a national charter school conference recently.
"It"s all these huge operators, and they look down on schools like ours," she says. "They call us the 'mom and pop' schools."
And all that money has attracted some unscrupulous operators.
Michael Sharpe, the disgraced CEO of the FUSE charter school in Hartford, admitted in court to faking his academic credentials and hiding the fact that he was a two-time felon who had been convicted of embezzlement and served five years in prison as a result. When he was indicted he was living in a Brownstone paid for by his charter school management company, where he kept a tenant whom he charged rent.
Scott Glasrud, the CEO of Southwest Learning Centers in Albuquerque, a group of four schools including an elementary school and a flight academy, was earning $210,000 a year, as well as additional compensation for a contract he made with his own aviation company to lease planes to the flight school he administered.
But these are small-time operators compared with Ronald Packard, former CEO of K-12, Inc., the scandal-plagued online charter school company. Packard's salary was $4.1 million in 2013.
K-12 reportedly has about 20,000 students from Michigan in its cyber charters, a heavily advertised arm of its corporation.
K-12 has been charged with attempting to falsify records, using unqualified teachers, and booking classes of more than 100 students by state investigators in Florida. Education reporter Jennifer Berkshire, aka EduShyster, shared Morningstar data on her blog showing that between 2012 and 2013, executive compensation at K12 grew by $11,399,514. In 2012, executives at K-12 earned a total of $9,971,984 in compensation. Last year that figure jumped to $21,371,498.
"According to a lawsuit filed in US district court this spring," Berkshire writes, "Packard knowingly inflated the value of K-12 stock by making *overly positive statements* about the company, its performance and its prospects, then cashed out, causing his personal numbers to add up to the tune of $6.4 million large."
As a member of the American Legislative Exchange Council (ALEC), K-12 has helped pushed legislation to replace bricks and mortar classrooms with computers and replace actual teachers with "virtual" teachers, generating enormous profits from its taxpayer-financed schools.
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