Charter school operators

Charter Schools Gone Wild: Study Finds Widespread Fraud, Mismanagement and Waste

By Joshua Holland

Charter school operators want to have it both ways. When they’re answering critics of school privatization, they say charter schools are public — they use public funds and provide students with a tuition-free education. But when it comes to transparency, they insist they have the same rights to privacy as any other private enterprise.

But a report released Monday by Integrity in Education and the Center for Popular Democracy — two groups that oppose school privatization – presents evidence that inadequate oversight of the charter school industry hurts both kids and taxpayers.

Sabrina Joy Stevens, executive director of Integrity in Education, told BillMoyers.com, “Our report shows that over $100 million has been lost to fraud and abuse in the charter industry, because there is virtually no proactive oversight system in place to thwart unscrupulous or incompetent charter operators before they cheat the public.” The actual amount of fraud and abuse the report uncovered totaled $136 million, and that was just in the 15 states they studied.According to the study, fraud and mismanagement of charter schools fall into six categories:

• Charter operators using public funds illegally — outright embezzlement
• Using tax dollars to illegally support other, non-educational businesses
• Mismanagement that put children in potential danger
• Charters illegally taking public dollars for services they didn’t provide
• Charter operators inflating their enrollment numbers to boost revenues
• General mismanagement of public funds

The report looks at problems in each of the 15 states it covers, with dozens of case studies. In some instances, charter operators used tax dollars to prop up side businesses like restaurants and health food stores — even a failing apartment complex.

The report’s authors note that, “where there is little oversight, and lots of public dollars available, there are incentives for ethically challenged charter operators to charge for services that were never provided.” They cite the example of the Cato School of Reason Charter School in California, which, despite its libertarian name, collected millions of tax dollars by registering students who actually attended private schools in the area.

Perhaps the most troubling examples of mismanagement were those the report says actually put kids in danger:

Many of the cases involved charter schools neglecting to ensure a safe environment for their students. For example, Ohio’s State Superintendent of Public Instruction, Dr. Richard A. Ross, was forced to shut down two charter schools, The Talented Tenth Leadership Academy for Boys Charter School and The Talented Tenth Leadership Academy for Girls Charter School, because, according to Ross, “They did not ensure the safety of the students, they did not adequately feed the students, they did not accurately track the students and they were not educating the students well. It is unacceptable and intolerable that a sponsor and school would do such a poor job. It is an educational travesty.”

Integrity in Education and the Center for Popular Democracy aren’t the first to warn of problems plaguing an under-regulated industry fueled by billions of tax dollars. A 2010 report to Congress by the Department of Education’s Inspector General’s office warned of the agency’s “concern about vulnerabilities in the oversight of charter schools” in light of “a steady increase in the number of charter school complaints.” It blamed regulators’ failure “to provide adequate oversight needed to ensure that Federal funds [were] properly used and accounted for.”

Read the full report for the watchdogs’ recommendations for how policymakers could strengthen oversight and bring real transparency to the charter school industry.