May I Have the Envelope Please. And the Pulitzer for Education Reporting Goes …

November 19, 2012

... to Anne Ryman of the Arizona Republic for her investigative journalistic report of November 18, 2012, entitled “Insiders benefitting in charter deals.”

Seriously, this is one of the finest pieces of education reporting I have seen in years, maybe decades. In a 3,200 word article on the front page above the fold, Ryman exposed the unbelievable corruption in the Arizona charter school system. Of course, Arizona leads the nation in charter schools—leads it right into the cess pool, that is. With 535 charter schools and 14% of all public school children in charters (including more than 15,000 in cyber-charters), Arizona entrepreneurs are discovering untold opportunities to line their pockets with public monies intended to educate children.

Through exhaustive research that must have taken months and involved numerous FOIA requests and pouring over multiple IRS tax returns, Ryman tallied more than $70 Million having gone to board members and family members of charter school operators. The blatant disregard of rules and regulations governing conflicts of interest between the schools and administrators’ family members and cronies staggers the imagination—indeed it is difficult to imagine it existing in places with any modicum of ethical governance.

“Non-profit” charter schools are purchasing materials and services from companies owned by their own board members at staggering costs. Desert Heights Charter School with 720 students has paid out $1 Million over several years to Waterhouse Management, which company is owned by a board member. Primavera Technical Learning Center, a cyber-charter with more than 3,000 students in Grades 6-12, has purchased more than $42 Million of “curriculum” from American Virtual Academy. The directors of the school are also the owners of American Virtual Academy. It gets worse. Read the article.

Does anyone in power in Arizona really care? Of course not. ALEC writes the laws, and probably the regulations too. Their friends, the legislators, turn their heads. And Arizona law conveniently permits charter school owners to apply for exemptions to the competitive bidding regulations for purchase of goods and services. Ninety-percent of the schools have received such exemptions.

This convivial arrangement of laws and entrepreneurs’ financial interests is what Alex Molnar of NEPC labeled “crony capitalism.” Capitalists who rant about government intrusion into the affairs of business actually seek out government regulations that favor their businesses over all others. Take Michael and Olga Block, for example. (I will come back to these individuals in a subsequent blog piece.) These creators of the widely honored Basis charter schools of Tucson and Scottsdale—non-profit schools, as are all charter schools in Arizona—just happen to be the only two principals in a for-profit company that is selling the Basis schools nearly all their goods and services. Last year the Blocks’ non-profit schools paid the Blocks’ for-profit company almost $10 Million. They even contracted for some bookkeeping to a relative in the Czech Republic—Olga was raised in Czechoslovakia. Michael Block is a current or former —I don’t care which—economics professor at the University of Arizona, a free-market ideologue, and great good friend of the Goldwater Institute: Where Freedom Wins (indeed it does). What delicious irony that the laissez faire economist turns out to be just another crony capitalist!

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Education in Two Worlds

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Gene V Glass

Gene V Glass is currently a Senior Researcher at the National Education Policy Center and a Regents' Professor Emeritus from Arizona State University. Trained originally in statistics, his interests broadened to include psychotherapy research, evaluation methodology, and policy analysis. He was...