Charter Schools: A Few Bad Apples, Or a Whole Barrel?

Charter school advocates are not happy about John Oliver's last show, in which he documented the many problems with charter schools:



Profit-taking, corruption, lack of transparency, mediocre-to-poor performance... doesn't sound like "freedom from the education bureaucracy" is all that great after all.

Predictably, the professional charter cheerleaders rushed to disavow all that Oliver had uncovered. Here's a statement from the National Alliance for Public Charter Schools, as reported by Valerie Strauss in The Washignton Post [all emphases in this post are mine]:

“The August 21 episode of Last Week Tonight with John Oliver examined the critical importance of strong charter school authorizers and laws. The program began by spotlighting one of the thousands of high-performing charter schools that are opening doors of opportunity for students – especially those living in low-income communities. High-quality charter schools like these are the norm, giving families access to local, public, and effective educational options in communities where traditional district schools aren’t meeting the needs of students.

“Most of the program focused on charter schools in three states that were engaged in practices that were either questionable or unethical. These practices are unacceptable, but are not representative of charter schools nationwide. Furthermore, many of the examples featured are years-to-decades old, and fail to reflect the significant progress that the charter school movement has made in the areas of oversight and accountability.

Nelson Smith, Senior Adviser to the National Association of Charter School Authorizers and former CEO of the National Alliance for Public Charter Schools, feels likewise:

If this stuff were actually typical of charter schools, I would have bailed out of the movement years ago. But it’s not, and I haven’t.

Now, the writers at Last Week Tonight probably aren’t statisticians, but this is known as an Unrepresentative Sample. Except for a brief nod to KIPP’s graduation rate, the entire segment was a parade of horror stories, including one dredged up from 2010. Not since Dick Cheney got hold of the Iraq briefings have we seen cherry-picking on this scale.

Why, it's just not fair for Oliver to focus on the "bad apples" -- look at KIPP! It's the real representative of the charter sector! Sure, we need to get rid of those few bad actors, who might be moving funds away from the classroom and into profits. But the charter sector as a whole is full of "high-quality" schools!

Right?

As I've explained repeatedly, it's difficult to make any claim, positive or negative, about charter operators when the vast majority are running mom-and-pop schools with small numbers of students. KIPP, beloved by the sector's defenders, enrolled about 1.7 percent of all charter students in 2011-12 (the last year for which I have a reliable database of Charter Management Organizations, or CMOs). That is a tiny portion of all charter school enrollments.

As I've also repeatedly pointed out, we have plenty of research on the effects of KIPP schools on student performance. They do a decent job, although no one, so far as I'm concerned, has shown their effects can't largely be explained by extra spending and a longer day -- things we could conceivably do with any school -- as well as peer effects and self-selection -- things we couldn't bring to scale.

It's also worth noting that KIPP isn't exactly squeaky clean in its own operations:

Here are some of the key details from KIPP's 2013 tax filings (uploaded below):

• KIPP received more than $18 million in grants from American tax dollars and more than $43 million from other sources, primarily other foundations;
• KIPP spent nearly $14 million on compensation, including more than $1.2 million on nine executives who received six-figure salaries, and nearly $2 million more on retirement and other benefits;
• KIPP also spent over $416,000 on advertising and a whopping $4.8 million on travel; it paid more than $1.2 to the Walt Disney World Swan and Resort;
• It also paid $1.2 million to Mathematica for its data analysis; that's the firm that was used to try to rebut concerns about KIPP's performance and attrition rates.

But I'll set that aside and admit here that, whatever qualms I may have, KIPP is one of the better actors in the sector. But are they "the norm"? For every shiny, red KIPP, how many "bad apples" are there in the charter world?

Let's make this simple and compare KIPP to all the other large CMOs for 2011-12 (click to enlarge).

First of all, let's be clear: KIPP is not the largest CMO in the sector. That distinction belongs to K12 Inc., the virtual charter operator. Further, if you put all of the charters linked to the Turkish expatriate cleric Fethullah Gulen together, they make the largest chain of brick-and-mortar charters in the nation.

Now, it's a funny thing: whenever I hear charter cheerleaders mention a charter chain that represents "the norm," they never seem to mention K12, or the Gulen-linked charters, or Imagine Schools, Inc., or any of the others -- save KIPP -- in the chart above. Why is that, I wonder?

K12 Inc.

At K12, Inc.'s stockholder meeting in December, its own investors criticized the schools' lamentable academic performance and voted down its executives' proposed salary increases. This is just the latest piece of bad news, which has been coming in rafts for K12 since 2013.

Gulen-linked charter schools:

The government of Turkish President Recep Tayyip Erdogan has asked education officials in Texas and California to investigate publicly funded charter schools in those states that it says are linked to a Muslim cleric living in the United States, a man the government alleges was the mastermind of a coup attempt this month. The Turkish government also is planning to bring more complaints in other parts of the U.S. 

[...]

Turkey alleges that the Harmony schools are part of a network of more than 160 charter schools in more than 25 states started by Turkish men, all said to be inspired by Fethullah Gulen, the preacher who lives in seclusion in Pennsylvania. The complaint in Texas alleges, among other things, that the schools have abused public funds, funneled money to Gulen’s movement — known as Hizmet (or Service) — violated legal requirements surrounding open and competitive bidding, and discriminated against employees on the basis of national origin and gender.

Here's some more on Gulen-linked charters.

Imagine Schools, Inc.:

A national charter school chain under fire for its management practices has been ordered to pay nearly $1 million to the local board of the now-closed Imagine Renaissance Academy in Kansas City.

Virginia-based Imagine Schools Inc. recruited and manipulated the local school board, according to a federal court ruling, then profited from a “double-dealing” lease scheme.

National Heritage Academies:

National Heritage Academies, Michigan's largest charter management company, has an unusual arrangement with its schools. The for-profit company — and not the schools — owns the contents of its school buildings, even though those desks, computers, books and supplies may have been purchased with taxpayer money.

The company also owns most of the buildings where it manages schools. NHA fronts the money to build or renovate those properties, recouping its investment through rents charged to the schools. Those rents, paid with public dollars, generally don't come down even after NHA has recovered its initial investment, according to an eight-part series — "State of Charter Schools" — the Detroit Free Press published in June.

Ownership of both the school building and its contents means charter school boards have little leverage to remove the company if they are unhappy with NHA's stewardship. If NHA is fired, it could take school property with it.

More on NHA's practices here.

Academica:

Cozy political connections, favorable tax treatment and little public oversight has allowed Miami charter school chain Academica to exploit Florida's laws, build a successful chain of schools, and profit off taxpayer dollars, a Miami Herald investigation has found.

[...]

Highlights:

* The South Miami company receives more than $9 million a year in management fees just from its South Florida charter schools — fees that ultimately come from public tax dollars.

* More than two dozen other companies are controlled Fernando and Ignacio Zulueta, including more than $115 million in South Florida real estate — all exempt from property taxes as public schools — and act as landlords for many of Academica’s signature schools, records show.

* These companies collected about $19 million in lease payments last year from charter schools — with nine schools paying rents exceeding 20 percent of their revenue, records show.

Charter Schools USA:

UPDATE: School board members on Wednesday denied the Renaissance Charter School chain’s application to open its first high school in the county. The vote was 6-0, with board member Mike Murgio absent.

ORIGINAL STORY: The Palm Beach County School Board is poised Wednesday to deny the Renaissance Charter School chain permission to open its first high school in the county, heightening tension with a company it has been in a legal and rhetorical battle with for nearly a year.

Tired of the spread of the Renaissance schools and their for-profit management company, Charter Schools USA, county school board members in December rejected the management company’s application for a new school on the rationale that it was not “innovative.” That decision was overruled by the state and is now tied up in the courts.

A little more:

Picture this: the superintendent of your public school system makes so much money that he’s tooling around in his own 43-foot yacht on the weekends.

Hard to believe, right?

A public school superintendent has to report to his board of directors, the school board, who would think twice about paying lavish sums of money on the taxpayer’s dime. However, if you’re the founder of Charter Schools USA, no one bats an eyelash.

Charter Schools USA founder Jonathan Hage and his first mate Edward Pozzuoli, attorney for Charter Schools USA who is also president of the law firm Tripp Scott, have registered a yacht under the name of “Fishin’ 4 Schools” as well as formed an LLC under the same name.

 The Leona Group:

The charter school where Ana Rivera sent her two sons, Cesar Chavez Academy, added a second elementary school, even though its existing one fell below 98 percent of schools on the most recent state rankings, in 2014. The Leona Group, the Arizona-based for-profit operator that runs it, also runs some of the worst-performing schools in Detroit. Stanford University’s Center for Research on Education Outcomes, considered the gold standard of measurement by charter school supporters across the country, found that students in the company’s schools grew less academically than students in the neighboring traditional public schools.

Edison Schools:

Twelve years later – and 20 years after the national Edison experiment began – the company was fired in Dayton. There was none of the fanfare and public notice that accompanied Edison’s entry. In that sense, Edison’s experience in Dayton ended better than it did in other places, where there have been heated public meetings and recriminations.

But the rationale for the firing was not a new one: the company, now known as EdisonLearning, never delivered.

So there you go: In the largest charter management organizations, profit-taking, mediocre-to-bad performance, a lack of transparency, and self-dealing are "the norm."

Why would anyone be surprised at this? As Gary Miron and Bruce Baker point out, the system is set up to reward this sort of behavior:

In this brief, we identify four major policy concerns:

1. A substantial share of public expenditure intended for the delivery of direct educational services to children is being extracted inadvertently or intentionally for personal or business financial gain, creating substantial inefficiencies;
2. Public assets are being unnecessarily transferred to private hands, at public expense, risking the future provision of “public” education;
3. Charter school operators are growing highly endogenous, self-serving private entities built on funds derived from lucrative management fees and rent extraction which further compromise the future provision of “public” education; and
4. Current disclosure requirements make it unlikely that any related legal violations, ethical concerns, or merely bad policies and practices are not realized until clever investigative reporting, whistleblowers or litigation brings them to light. 

[...]  

It seems clear that the financial incentives embedded in state law, combined with the need for most of the companies to make a profit, have led EMO-run schools to operate in ways that are often at odds with the goals of charter school reforms and, ultimately, the public interest.  

When it comes to large charter school managers, KIPP isn't "the norm" -- it's an outlier. It's one of the few (relatively) unspoiled apples in the barrel -- so far as we know.

And maybe that's the biggest problem in all this: How can we be sure all the mom-and-pop charters operating today are actually behaving in the public interest? Given what we know about the biggest charter operators, aren't we taking a huge, unwarranted leap of faith to believe that the charter sector, as a whole, is serving us well?

Maybe we should stop focusing only on KIPP, cut a few more of these charter school apples open, and find out what's inside.

Is the charter sector ready to reach into the bottom of the barrel?

ADDING: Here's the predictably reformy Richard Whitmire:

 

Richard Whitmire‏@richardwhitmir

Finally saw J Oliver. Puzzled. If I strung together the six worst tradit pub schools and called that the norm, would that be good reporting?

No, Richard, it wouldn't. But when the largest CMOs are engaging in profit-taking and/or self-dealing, and when the entire system is marked by a significant lack of transparency, I'd say "the norm" was unacceptable. And it's amazing to me that you're just fine with it.