Alleged DC Charter School Scam: Who Says There's No Money in Education?

The mantra about how "there's no money in education" keeps encountering inconvenient details which question the chant's veracity. Elements of the for-profit world, which has eyed the taxpayer funded education funding as so many chickens to be plucked, has entered the K-12 school arena. Its alliances with politicians, "committed" millionaires, and dim media reporting (The Today Show, come on down) offer formidable clout, especially against a fragmented collection of interested parties, such as local interest groups like the characteristic school district PTO.

According to a report in The Washington Post, attorneys for the District of Columbia Office of the Attorney General have filed new allegations against a local charter school enterprise. The filing claims corporate officers of Options Charter Public School (OCPS) "diverted more than $3 million from the Northeast Washington school for at-risk teens to companies they founded." The brief noted a parade of self-dealing including a school bus "ridership bonus" of $100,000.

J.C. Hayward
(Image: wusa9.com)

The accused apparently owned a firm called Exceptional Education Services (EES), which effectively served as a shell company designed as a collection device for skimmed funds. One key player in the OCPS/EES scheme was J.C. Hayward, a very visible DC television personality who happened to be board chair and part-owner of EES. The TV talking head's attorney has claimed his client had no knowledge of any illegal activity. That's a curious claim for someone deeply connected to DC's power structure and is presumably worldly wise.

LAUSD students using iPads
(Image: ktla.com)

The larger issue in this story goes beyond a cautionary tale of local corruption. The K-12 education "reformers" have made a case that strong CEO-style business management and teacher "accountability" would lead to improved K-12 education. All of this would be accomplished through increased online content, data-driven teaching and supervision, and relentless testing. The goal of redirecting the flow of public funds to private gain goes unstated. Meanwhile, the imperative to make technology and its products a key educational tool has gone forward without any serious vetting.The stampede into gadget purchases has led to some troubling situations, such as the Los Angeles Unified School District (LAUSD) purchasing hundreds of thousands of iPads at consumer market rates. At the same time, LAUSD did not buy keyboards for the devices. Oops...that would be "an extra expense," which the school district had to add on after the fact. Software? Well, various programs were sold as a three-year lease, after which LAUSD would have nothing to show for its rental costs.


Where was the strong CEO management in the LA and DC episodes? How did these initiatives advance the cause of K-12 education "reform"? Where was the senior management accountability? Where was the "community input" reformers are so keen to advance as one of their positive developments?

Image: mainepressherald.com

Bottom line: who says there is no money in K-12 education? The record suggests there's plenty of gold in the K-12 hills, and it's being mined now. The fact that the gold is taxpayer money, largely committed without genuine transparency or community participation is kept largely quiet. (Cory Booker and Facebook boss Mark Zuckerberg's money to the Newark, New Jersey schools comes to mind as Exhibit A. It took a Freedom of Information Act request to obtain any useful information about this situation.) The understanding of the profit motive in the K-12 world could illuminate inconvenient details, the knowledge of which would interfere with profitable revenue streams that could continue for a generation. Now, who would want that situation brought to light?

Three Florida Charter Schools Close After School Year Opens

According to a story in online editions of the Miami Herald, three Broward County charter schools closed their doors two days ago. The enterprises (yes, that's what they are, folks) had -- ahem -- financial issues, mostly related to significant enrollment declines. That did not stop the trio of schools from registering students and starting classes for the 2012-13 year. Once the schools ran out of money and bad checks, they said "sorry" and told parents and kids to go elsewhere. One school didn't even bother with an apology: it simply locked the doors.

One obvious issue is that it's tough to transfer into another desirable school. Notably, the Florida charter trio are in tough communities whose residents hold the public schools in suspicion. Teachers from the three schools are now without work and, of course, full-time teaching slots elsewhere are now filled. One school's instructors lost pay they were owed. Meanwhile, the charters' CEOs have been less visible, and less talkative, than Greta Garbo.

Life Force Arts & Technology, a charter school in the Tampa, FL area.
It was closed more than a year ago. At one point,
school staff distributed materials
written by Scientology founder L. Ron Hubbard.
(Photo and link via Tampa Bay Times.)

One issue with privatization, which both Obama apologists and the right-wing have equally avoided, is trusting profit-driven business people with the development of children's minds. It's fair to accept enterprise "solutions" for school furniture. It's quite another to believe someone principally (no pun intended) motivated by financial rewards will put kids' interests ahead of his or her own. However, between the savage political ideologues and technology's smug high priests, there is no choice in the matter. They have already determined the fate of the public school system, and some collateral damage in the process is, from their perspective, "regrettable."

The Miami Herald story noted that "about 12 percent of charter schools in the past 20 years have closed, but in Florida, the closure rate is doubled, according to state figures." That stubborn fact hasn't stopped the pro-charter school drum beaters to spread their version of reality to anyone dull brained enough to listen and believe. Unsurprisingly, the Herald noted comments from a charter school advocate that indicated the Broward closures were far from the end of the world.

"'Parents at these schools voted with their feet,'" the spokesperson asserted. She just couldn't leave well enough alone: "A closure, although it's terrible from a parent point of view...I see it as a system that's working."

Light Shined on Financial Dark Sides of Private and For-Profit Schools

The growth and current state of private and for-profit schools deserves a look under the hood.

Today's Washington Post takes the high road by reporting on itself. For those unaware, the Washington Post, Inc., associated with the august newspaper, in fact is a hybrid enterprise in which its educational arm makes most of the firm's money. Lately, the school side of WP, Inc., through its Kaplan brand, has come under scrutiny for its enrollment tactics. They are in many ways the education world's equivalent of subprime mortgage marketing, as the long Post story makes clear. From Kaplan's perspective, an essential component to its business model was the nearly guaranteed, low-risk funding to which their student pigeons had access. The revenue stream's key driver was Title IV of the Higher Education Act, a federal program designed to aid financially challenged students make their way through the arrogantly expensive world of higher education. One could reasonably characterize Title IV funds as a gift that kept giving to the for-profits such as Kaplan.

The for-profits' cousin, the K-12 private schools, also needs more light cast on its management philosophy and practice. This is a burgeoning market attracting private equity investors, as a recent New York Times story on private school demand in Manhattan south of 96th Street noted. "Executive" compensation is an especially sharp thorn in this tale, as is middle-class aspirational agida.

Meanwhile, the private schools' most recent black eye occurred in southern California. The LA Times reported today on allegations that the director of a private Santa Monica high school "misused" approximately $1 million in school funds. The institution has recently declared bankruptcy and is trying to work with its existing students in what sounds like makeshift facilities. One item of note was the school director's $300K annual salary. For a small, one-school enterprise, that's a hefty reward for services rendered. To put this in some perspective, New Jersey governor Chris Christie demanded public school superintendents who manage districts including thousands of students and multiple schools cap their pay at either $175K or $225K, depending on an individual district's size. Meanwhile, Christie has notably not commented on the pay scales of charter school administrators, some of whom reputedly receive compensation packages rivaling or surpassing those of public school superintendents.

The three articles reveal an educational world where ethical corruption and shameless gaming of the fiscal system is covered in a phony, feel-good veneer. Underlying the drive for this false "progress" is what one Kaplan employee precisely characterized as "FUD" -- fear, uncertainty, doubt. Kaplan and the Santa Monica school are hardly the only two institutions where FUD hovers like a vampire's shadow. The charter school "reform" movement leverages FUD against the perceived (and sometimes quite real) failures of public schools. At times, religious zeal finds a home with FUD tactics in efforts to create charter schools where voucher payments essentially encourage the development of taxpayer subsidized religious education. However, the charter schools generally don't like to talk about compensation packages for its "management" team. They would rather tout its "dedicated," and generally underpaid instructional staff, most of whom are doomed to burnout and employment churn. That tactic happens to be a tried-and-true way to keep salaries down and control high.

The world of higher education at "reputable" four-year colleges and universities isn't much better. In some ways, they are laboratories for corruption, through their shameless leveraging of cheap teaching assistants, an embrace of an irrelevant, profoundly misguided tenure system, and outrageous tuition and fee demands that routinely, dramatically exceed the cost of inflation every year, year after year. Essentially, when students now reach the Promised Land of higher education, the promise is entirely on the students to pay for the privilege or obtain federally guaranteed funding. Keep in mind the NCAA just generated for higher ed an enormous payday from the Final Four men's basketball tournament and its "unpaid" student athletes. Top coaches now expect multi-million dollar contracts and perks. Does the collegiate world, given these scenarios, strike one as "clean"?

Meanwhile, the drumbeat continues for education "reform," except where it is most needed, and least wanted, by those who play education's darker, inside game. With a handful of exceptions, it's all about the money. Mark Zuckerberg, when he made his showy demonstration of faith in education by contributing unvalued Facebook stock to Newark's school "reform" movement, grasped this concept. He knew what money could buy, and so did his media and "reform" backers. He looked under the hood and understood what the purchase was really all about. Then, and only then, did the face of Facebook give funds to the 'hood.