New Report: Federal Funds For Charter Schools Go Into A ‘Black Hole’

Jeff Bryant

America’s experiment with charter schools has thus far generated academic results that are mixed, at best. Another promise, that these schools would be more educationally “innovative,” is also generally unfulfilled so far.

Adding to those uncertainties posed by charter schools is another: Very little is known about how these schools have spent over $3.7 billion the federal government has used to fuel expansion of the charter industry since 1995.

That’s the principal finding of a new report published by the Center for Media and Democracy, which looked for information about how much tax money coming from the federal government’s Charter School Program (CSP) goes to charters and how that money is spent and found that information is often “severely lacking.”

According to the report, the federal government, state governments, and charter authorizers have generally not provided the public with ready information about how federal funds for charters has been spent. Attempts to trace federal grant money to recipients are apt to encounter “substantial obstruction” from states reluctant to reveal how charter money is spent and how state government handles charter oversight.

The report contends, “Unlike truly public schools, which have to account for prospective and past spending in public budgets provided to democratically elected school boards, charter spending is largely a black hole.”

“A Classic Example Of Industry Capture”

What the report does reveal, though, for the first time, is a list of actual schools that received grants from the CSP for start-up and “planning” expenses.

In examining charter recipients of federal grants in just 12 states, mostly from 2010-2015, CMD investigators found millions in federal grant money going to charter schools that were closed after brief periods of service and to “ghost” charter schools that never opened.

The report authors blame the lack of oversight of charters on federal and state lawmakers who have favored “flexibility” for these schools rather than accountability to the public. “That flexibility has allowed an epidemic of fraud, waste, and mismanagement that would not be tolerated in public schools,” CMD argues.

Where there are agencies and commissions charged with oversight of charters, CMD contends, more often than not, those regulatory bodies are staffed “mainly by charter proponents.” The report calls this “a classic example of ‘industry capture’ of the agencies charged with oversight by the industry they are tasked with overseeing. With such capture comes agency devotion to protecting funding, insulated by a lack of transparency about funding oversight and distorted through agency relationships with charter industry cheerleaders.”

What’s needed, the report concludes, is for the U.S. Department of Education, which oversees the Charter School Program, to provide a list of charters receiving federal grants and to institute much more stringent regulatory requirements from states applying for the grant money.

Where Does The Charter Money Go?

Despite the obstruction to its information gathering, CMD’s report reveals startling examples of how individual charters that have received federal grant money under CSP have produced very little education benefit for students wile channeling taxpayer money to unknown pockets.

In Los Angeles, California, CMD found a charter that had been granted $375,000 in CSP funds but later had its charter revoked after the school committed various legal and financial transgressions. “There is no public accounting available online of how that money was spent,” the report notes.

Another California charter uncovered by the report “voluntarily surrendered its charter” after the local fire marshal shut the school down for being “dangerous and unsafe.” CMD notes, the school “had received a CSP grant of $575,000, but there is no public accounting of how that was spent.”

In Indiana, the CMD investigation found an Indianapolis charter that received $700,000 in planning and implementation grants but was forced to close in 2015 “because of poor student performance.” Another Indianapolis charter “lost its charter in 2014 and converted to a private religious school, but not before receiving $702,000 in federal seed money.” Another Indiana charter “was awarded a $193,000 planning grant, but never opened.

In Ohio, a state notorious for charter school malfeasance, CMD reports that out of the 88 schools created with CSP grants between 2008 and 2013, “at least 15 closed within a few years; a further seven schools never even opened. These charters received more than $4 million in federal taxpayer money.”

Michigan ‘Ghost Schools’

Revelations in the CMD report on Michigan, which obtained $34,997,658 in federal CSP funding for charters between 2010-’15, are particularly startling.

In Michigan, where flour out of five charters are run by for-profit management companies, “charter operators in the state have been accused, and convicted, of crimes.” These crimes include felony fraud and tax evasion, including an operator who received $200,000 in federal grants and “funneled $934,000 to his private account.” The charter operator eventually pleaded guilty of two felony counts for tax evasion and “conspiracy to defraud the United States.”

CMD found 25 charter schools in Michigan that received nearly $1.7 million in CSP funds for “pre-planning” and “planning” but never even opened. The report calls these “ghost” schools.

Some ghost schools in Michigan still have the appearance of maintaining viability, such as the Taylor Academy for Aviation and Aerospace. This school received $109,550 in federal funding and continues to maintain a presence on the Internet. But a phone call by this author to the number listed on the website revealed the school has no current enrollments and isn’t taking in new students.

Another Michigan charter, Oakland-Macomb Montessori Academy, which received $179,677 in federal funds, never opened at its original location in Roseville. Oakland-Macomb Montessori, along with three other Michigan ghost schools, appears to be related to an entity called Project Team, which no longer seems to exist. One Project Team charter, Explorers’ School of Science and Technology, which received $100,000, has disappeared. Another Project Team charter, Cultivating Growth Academy, which received $96,748, no longer exists on Internet searches or state records of either existing or closed charter schools.

So where does money for charter schools go if it doesn’t pay for real classrooms and education services for students? In Michigan two other ghost schools, the Bertha B. Williams Academy, and the Magna Charter (seriously, who makes up these names) received $110,029 and $99,950, respectively, in federal funding. Neither opened, but they appear to have marketed their schools through Manta, a small business promotional company in Detroit. The marketing effort didn’t make the schools viable but likely helped the marketing company.

More Reasons To Doubt Arne Duncan’s Decision

The CMD report arrives in the wake of a controversial decision by U.S. Secretary of Education Arne Duncan, made just three days prior to announcing his resignation, to send $249 million in new federal funding to the charter school industry.

Under Duncan’s watch, the charter school industry has boomed. One of the conditions states had to meet to win a Race to the Top grant, his signature program, was to raise any caps they may have had on the number of charter schools allowed to operate in the state. His department warned states receiving waivers to the onerous provisions of No child Left Behind not to do enact any new policies that would undermine charter schools’ “autonomy.”

According to a recent analysis from a charter industry organization, charter schools in the past five years have become “the fastest-growing school choice option in the U.S.” Student enrollments in charters have grown by 70 percent. In 12 generally big-city school districts, more than 30 percent of students attend charter schools. “Eleven school districts saw increases in charter school enrollment ranging from nearly 20 to almost 40 percent in a single year.” Nearly three million students currently attend charter schools.

One recipient of Duncan’s generosity is the state of Illinois. According to a Chicago news outlet, much of the $8.4 million Duncan is sending to the state is to be targeted for expansion of the Nobel charter school chain in Chicago, Duncan’s hometown and where he is planning to relocate after leaving office.

The grant, the news report notes, will enable the Noble Network to open eight more high schools in Chicago in the next five years, “despite the current financial crisis in Chicago Public Schools and increasingly organized opposition to the prospect of more charter schools.”

CMD’s revelation that federal funds to charter schools generally go into a “black hole” further calls into question Secretary Duncan’s decision to award even more money to these schools.

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