The Washington Post’s Michael Allison Chandler wrote yesterday about the most recent financial review of the 60 charter schools operating in the nation’s capital, and her story included the recommendation by the A.D.C. Fiscal Policy Institute that the DC Public Charter School Board create a report card on each institution around their balance sheets similar to the tier system utilized with the Performance Management Framework. The hope is that such a system would increase the transparency around how schools utilize their money.
I have long called for the financial performance of charters to be included in the same P.M.F. that is issued concerning academics. My reasoning has been that a charter cannot really be graded as a high performer if their books are a mess. In preparation for this story I then quickly scanned the individual school reports to see what they revealed. What I noticed was fascinating.
With the closure of Options PCS and Dorothy I. Height Community Academy PCS our city only has three remaining schools that utilize for-profit management companies. These are Basis PCS, Imagine Hope Community PCS, and Somerset Preparatory PCS. One reason this information is important is that the firms associated with these schools do not have to file an Internal Revenue Service Form 990 that lists their highly paid employees. The compensation of leaders of the for-profits associated with Options and CAPCS was a major reason that the charters they were associated with ran into serious trouble.
The 2014 Financial Audit Review details that Imagine for the year paid School House Finance Inc., their for-profit CMO, 18.9 percent of its total revenue or almost $2.8 million for rent. Somerset, on the other hand, reimbursed CMO Academica 2.9 percent of its funding, or $93,000 in administrative fees.
The most interesting case to me concerned Basis PCS. The report details that the charter pays 87.3 percent of its total revenue to CMOs. Basis School Inc. received almost $2 million or 26.2 percent of cash, for rent, and another $1.5 million, or 20.1 percent of revenue, in management fees. An additional 41 percent of revenue, over $53 million, went to the Basis Educational Group for leased employee wages and benefits.
The Post article goes on to explain the the PCSB is seeking authority from the D.C. City Council to examine the financial books of for-profit CMO’s. I think with all of this taxpayer money going to these groups doing business with charter schools, and the recent experience with Options and CAPCS, that time has definitely arrived.