Baltimore City charters have also filed a funding inequity lawsuit

Erica Green of the Baltimore Sun reports that eight of the Baltimore City’s highest performing charter schools have sued Baltimore City over its recently revised funding formula.  These schools enroll 3,600 of the city’s 13,700 kids that attend charters.

The new formula provides charters with about $9,300 per student with the school system spending about $13,000 a pupil.  The problem with the change is that 26 of the Baltimore City’s 34 charters would receive drastically less money under the plan.

One interesting point Ms. Green makes in her story is that in Baltimore City charters by law must receive cash in lieu of services that the central office provides to traditional schools that they don’t receive.  Perhaps this is a solution to D.C.’s charter school funding inequity problem.

The charters are seeking $75,000 as a remedy.

Meanwhile, Baltimore City Mayor Stephanie Rawlings-Black has asked University of Baltimore president and former Baltimore Mayor Kurt Schmoke to mediate the revenue dispute.  If he is successful there, perhaps he could just come down to D.C.

Charter board asks D.C. council for right to examine financial records of management organizations

In a long anticipated move, the DC Public Charter School Board has requested that the Council amend the School Reform Act to allow, in certain circumstances, inspection of the financial records of charter management organizations.  Scott Pearson, executive director of the PCSB, explained in a hearing yesterday when his organization would have access to fiscal records:

“This would extend to all contractors providing management or educational services with a public charter school if the value of the payments to the contractor equals or exceeds 20% (versus the currently proposed 10%) of the public charter school’s annual revenue; or the value of the payments from DC public charter schools exceeds 25% of the total revenues of the contractor.”

The change is intended to avoid the controversy that erupted around the for-profit management companies associated with Options PCS and Dorothy I. Height Community Academy PCS.  Both schools have since been closed due to the severe irregularities discovered regarding the use of public funds paid to firms contracted with these schools.  In his remarks yesterday, Mr. Pearson appears frustrated that the PCSB had requested the books from one of these charters but was only given the most superficial information in return.  He does not name the individual school but the Washington Post’s Michael Allison Chandler states that he is referring to Community Academy.

The PCSB executive director commented that millions of dollars in taxpayer money could have been saved if the charter board had been able to see how these CMOs had been allocating their revenue.  But the need for this revision to SRA goes far beyond increasing accountability for charter school spending.  The Options and Community Academy cases created a gigantic loss of confidence by D.C. residents in the legitimacy of a sector that now educates over 39,000 pupils or 44 percent of all public school students in the nation’s capital.

D.C.’s charter schools have been the fountainhead for desperately needed school reform that has literally turned the lives around of kids in this city, particularly those at the low end of the socioeconomic spectrum.  Therefore, to strengthen this movement, and to protect its sustainability long into the future, the the Council should quickly approve this legislation.

D.C. charter school funding equity lawsuit lives on another day

Yesterday, the Washington Post’s Michael Allison Chandler revealed that U.S. District Judge Tanya Chutkan refused to throw out the charter school funding inequity lawsuit brought against D.C. by the Association of Chartered Public Schools, Eagle Academy PCS, and Washington Latin PCS.  Washington Latin PCS agreed to be a party to the legal action when I served on the school’s board of directors.

Stephen Marcus, the attorney for the FOCUS coordinated lawsuit, according to Ms. Chandler, referred to the finding by the federal judge as a “favorable opinion.”

As you may recall, when we last discussed this issue former Attorney General Irvin Nathan had asked the court to dismiss the lawsuit on the grounds that the Mayor and D.C. Council had the authority to make spending decisions regarding DCPS, the school system it oversees.  There is only one problem with this argument.  The law states that all funding for both the traditional schools and charters must come through the Uniform Per Student Funding Formula.  It has been estimated that DCPS receives about $100 million a year more than charters get outside of this statute.

The new Attorney General Karl Racine and Mayor Muriel Bowser have not officially commented on the funding challenge by charters.

The Judge did, however, get part of the law wrong.  She ruled that the city had not violated the U.S. Constitution’s supremacy clause which designates acts by Congress the “law of the land.”  The UPSFF legislation originated with Congress and if this opinion was correct then the D.C. Council could have thrown out the federal law that first created charter schools in the nation’s capital as well as the Opportunity Scholarship Program written in part by U.S. House Speaker Boehner.  Perhaps Mr. Marcus should appeal this part of the decision.

National charter movement needs to take criticism of funding seriously

The Washington Post’s Lyndsey Layton has a story today revealing the Federal Government’s plan to award $157 million to charters mostly by providing grants to States so that they can finance expansion of these alternative schools.  There is only one problem according to Ms. Layton:

“The inspector general discovered dozens of charter schools received federal dollars but never opened their doors to students. The schools received millions in federal funds, but there was no record of what happened to the equipment, supplies or anything else purchased with the federal dollars for schools that never opened, the audit said.”

Those interested in the success of charters need to take findings such as these with the utmost seriousness.  If anything can stop this movement that is helping children overcome the impact of living in poverty it is financial irregularities.  The Post reporter points out that since fiscal year 2005 the U.S. Department of Education has provided charters across the country with over $5 billion.

It would be better in my opinion if government funding went to charter school authorizers instead of to the States or to individual schools.  Authorizers are better equipped to track dollars and academic performance. Perhaps the Center for Education Reform or the National Alliance for Public charter Schools can make this argument at the federal level.

The Obama Administration and Education Secretary Arne Duncan have consistently been strong supporters of charter schools through the Race to the Top Competition and through the waivers that have been offered to the No Child Left Behind Legislation.  Let’s not let this support hurt the very schools that they are intending to help.

Inequity in D.C. charter school fundraising caused by inequity in city financing

The Washington Post’s Michael Allison Chandler this morning focuses on fundraising in D.C.’s charter movement and brings to our attention what she describes as “a serious inequity between schools that raised millions of dollars and many that raised little or none.”  In fact between 2012 and 2014 just three charters, E.L. Haynes, KIPP DC, Maya Angelou raised a total of $14.5 million, almost half of what all 60 charter schools brought in during this period.

I know what the leaders of all the other schools are saying to themselves because I have mouthed these words as well.  “We should be so lucky.”

Running a charter school in the nation’s capital is like being placed into jail for helping a senior citizen cross the street.  You start out with no place to begin operating.  Shuttered DCPS facilities are off limits.  Commercial space is too expensive and frowned upon as an option because it is seen as lining the pockets of private developers with public money.  After you have gone through the seemingly requisite failure of three potential deals you face neighborhood opposition to the building you have identified.  In addition, you better not locate near an exiting traditional school due to the fear that you will steal their kids.  This total lack of faith in the programs being offered by DCPS is all you really need to know about education in Washington, D.C.

Of course, the structure you find will need to be renovated.  Here you have to convince a bank that the $3,072 per pupil is sufficient to borrow $20 million.  These days that amount of money doesn’t go nearly as far as you would think when you have to replace air conditioners and water lines.  This is why charters often have to open without gymnasiums, or libraries, or sufficient space for teachers to be able to plan their lessons.  Also do not forget that no charter opens with their final enrollment and you have an all encompassing puzzle that can only be described as possessing an intractable solution.  Finally, the DC Public Charter Board states that academically you need to be Tier 1 on their Performance Management Framework on day 1.  The fact that so many school leaders have been able to figure out how to do all of this proves there is a heaven.

There is much Mayor Bowser and Deputy Mayor for Education Jennie Niles could do to help this situation so that charters don’t need to resort to fundraising.  Can we reach a settlement in the FOCUS coordinated funding equity lawsuit so that charters receive the same operating dollars that the regular schools get?  The shortfall is estimated at about $100 million a year.

Could we please get access to closed DCPS facilities?  This is such an easy part of the solution that it is a total mystery why it has not already taken place.  People are confused because the Deputy Mayor directly faced this issue as the founder and executive director of E.L. Haynes PCS.

Lastly, we need to being some fairness to the dollars the city spends on school renovations.  Charters are public schools like the traditional ones and it cannot be that the Mayor and D.C. Council plan upgrades to their system’s schools in the hundreds of millions in cash while charters are restricted by the facility allotment tied to enrollment.

Perhaps if we tackled the problems detailed above charters would not have to ask anyone for an additional dime.

Only 3 D.C. charters now utilize for-profit management companies

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.