Curmudgucation: AZ: Leading in Charter Profiteering

Arizona may be associated with dry desert, but it is a lush, fertile playground for reformster baloney and charter profiteering.

Arizona has been at this for a while. Bill McCallum, co-author of the Common Core math standards, was a professor at the University of Arizona. When the Core turned out to be conservative kryptonite, Diane Douglass ran as a Core destroyer and then, once she won, promptly slapped a thin layer of lipstick on that pig.

Meanwhile, Arizona has wrestled with a teacher shortage, but not to the point of, say, fixing their basement level pay. Wrestling has been more about things like recruiting teachers from the Philipines. Oh, and Arizona also sits at the back of the pack for per-pupil spending. Meanwhile, Arizona is the home of the legislator who said that teachers are probably working two jobs because they want a fancy boat.  And that’s before we get to such atmosphere boosters like considering a teacher gag law and a ban on Mexican-American studies in school.

Open a charter; make a stack of money this tall.

 

But while Arizona has been doing its best to stomp public schools into the dirt, they really love them some charter schools.

Actually, those two things are closely related. Arizona has been nurturing charters for over twenty years, but Arizona is an open-enrollment state, so no child is "trapped" in a failing school just because of their zip code. So to create market pressure for their extensive choice system, Arizona's leaders set fire to public education and let it burn; parents will feel they have no choice. It's no wonder that the Network for Public Education gave the state an F.

Why throw so much effort behind the charter industry? Certainly some of the push could be ideological, but Arizona is also the state where the dreams of cracking open the education funding egg and feasting has come true. It turns out that people are using school choice to hoover up giant chunks of public tax money.

The Grand Canyon Institute ("Arizona's Centrist Think Tank") has just released a meta-study of twenty years of Arizona charters. “Following the Money" comes to some fairly appalling conclusions that suggest that Arizona is one of America's pre-eminent charter scam factories and that taxpayers are getting hosed. Here are some of the conclusions reached by this forensic analysis.

Self-Dealing

Roughly 77% of all Arizona charter schools engage in some sort of self-dealing that steers tax dollars into the pockets of charter owners, their families, or board members. Non-competitive related-party transactions are a common vehicle for this, particularly when it comes to handling real estate and other assets. The report talks about one example (American Leadership Academy) that appears to be simply a subsidiary of a real estate development company in Utah. Primavera Technical Learning Center paid $12.2 million for software it purchased from a company owned by the school's charter holder. The report points out (just in case a reader is too ethically impaired to get it) that if a superintendent of a public school awarded a no-bid multi-million-dollar contract to a for-profit company that he owned himself, that would be all kinds of wrong and a violation of various laws. However, in Arizona, it's completely legal for a charter operator to self-deal in this manner.

Ignore the ethical shadiness for a moment-- how can that possibly end up with taxpayers getting the most bang for their buck?

High Executive Salaries

Public school superintendents in Arizona make around $130/pupil as a salary. Charters were reluctant to share salary figures for the report, but of those for whom the report had numbers, a handful paid its top person a comparable salary. $200, $300, $600 per pupil payment for administrators in some charters. And on top of that, some charters had more administrators than the public system. If you take the full administrative team and lump it together, Benchmark School Inc pays administrators $952 per pupil. Crown Charter School, Inc, pays $1,885 per pupil in administrative costs. George Gervin Prep Academy pays its top two administrators $3,312 per pupil.

Questionable Profit Distribution

The for-profit charters in Arizona apparently engage in some hinky handling of their profits. 

Reduced Classroom Spending

Well, yes. Those executive salaries and dividends have to take money from somewhere. The study found that where public schools spent about 52% of expenditures on classroom instruction, for charters it was more like 45%.

Academic Underperformance

What do taxpayers get for all their money? Not outstanding school performance. But then, the law doesn't really require them to do well. The report somewhat incredulously quotes one part of the law:

A sponsor, including members, officers and employees of the sponsor, are immune from personal liability for all acts done and actions taken in good faith within the scope of its authority.

In other words, charter operators exist in the Land of Do As You Please as long  they claim they meant well. As the report puts it in one sub-heading, "Delivery or what?" The theory of Arizona's law is that the charter operators will be checked by their sense of responsibility to provide a good education. Really. The report also wryly notes that since parents actually choose charters for many reasons, there was no sudden outflow in 2013 when many charters switched to Alternative School status reporting, a means by which charters could lower their standards and get a better grade.

The report looks hard at charter performance and finds it wanting. It also looks at the theory that the free market competition would drive schools to become more excellent-- well, that's wanting, too. Or maybe just laughable. Bottom line: doing a lousy job of educating students will not hurt your profitability in the AZ charter market.

Reconciling Inconsistent Financials

Lots of charters use creative bookkeeping. In fact, as the report looks at some bad examples, some charters just lie.

Arizona's charter sector has consumed a billion taxpayer dollars and in return, it has mostly just provided wealth for people who know how to work the system. And those people don't have to be very clever because the system in Arizona includes few checks or oversight; the only reason we can't say the Arizona system is full of illegal scams is that very few things are against the law. I invite you to peruse all 90 depressing pages of the report. This is what the theft of taxpayer dollars in the name of school choice looks like.

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Peter Greene

Peter Greene has been a high school English teacher in Northwest Pennsylvania for over 30 years. He blogs at Curmudgucation.