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AlterNet: A Flood of New Charters Shows How the Industry May Try to Thrive — Despite the Pandemic

As the COVID-19 pandemic began closing school buildings and forcing schools to quickly ramp up online learning programs in April, an op-ed by Alex Medler, the executive director of the Colorado Association of Charter School Authorizers, made an appeal to Betsy DeVos's Department of Education to change the guidelines of her department's grants for new charter school startups to allow the money to go to existing charter schools. Medler justified the request to address "immediate needs during the pandemic." But when Chalkbeat broke the story that DeVos would agree with Medler and approve Florida's request to repurpose about $10 million in grant money for new charter schools to be redirected to existing charters, Medler made the curious admission to Chalkbeat reporter Matt Barnum that another reason for the need to change grant requirements was because "there aren't enough new [charter] schools being created across the country to spend all the… money on the one purpose of funding the start-up of new charters."

Is the charter school industry, even before the current crisis, really on the skids?

The annual rate of charter school growth nationwide from 2014 to 2016 was half of what it was between 2008 and 2014, according to a 2019 report from pro-charter nonprofit Bellwether Education Partners. And in some states where charters have proliferated, these schools are seeing student enrollments drop.

Many communities that have been reliable markets for the charter industry are now having fewer new charter school openings. Some of these cities are getting no new charters at all.

But this negative view of the charter market is contradicted by evidence of new charter schools proliferating in some places.

One of those places is northeast Wake County, North Carolina, a suburban sprawl outside Raleigh that includes Rolesville, Wake Forest, Wakefield, Zebulon, and other rapidly growingbedroom communities. The generally affluent region—the sixth-wealthiest zip code in the state—is now home to 11 out of the 24 Wake County charter schools. And more are scheduled to open.

In 2019, local school officials and school PTAs implored the North Carolina State Board of Education not to approve the two newest charters coming to Wake Forest, a community in northeast Wake County, arguing that charter "saturation" was adding to racial segregation in local schools and threatening to financially destabilize the district. The state board approved the schools anyway.

In 2020, Wake County parents have written letters to local news outlets saying new charter schools aren't needed, and they've protested at public hearings considering whether to open the new charters.

One of the charters the state had approved to open in Wake Forest, Wake Preparatory Academy, was rejected by the town's Board of Commissioners, the Wake Forest Gazette reported, because the board found the school's site plan and subdivision proposal had not met the town's requirements. The school is appealing the ruling to the state.

Why are new charter schools opening in northeast Wake County?

"Charter schools can open where they choose," Christine Kushner answered. Kushner, a Princeton graduate in public policy who has lived in Wake County for more than 20 years, has been on the school board of the Wake County Public School System since 2011.

In our phone conversation, Kushner asserted the schools are not needed, "academically or for capacity reasons." She disputed claims charter operators have made that the northeast part of the county "needs seats," and she called that claim, "not an accurate statement."

One reason why charter schools are expanding in northeastern Wake County seems to be because they can.

In 2011, when the North Carolina state legislature voted to lift the state's maximum limit of 100 charters allowed in the state, there was little to no consideration of where charters should expand to. Ten years later, with the number of charters nearly doubled, it seems that the charter industry itself has been allowed to determine that.

The state's light regulatory hand consists of a Charter Schools Advisory Board that receives and reviews charter applications and renewals and makes recommendations to the State Board of Education, which makes the final decision.

It is not uncommon for members of the advisory board to have close associations with charter schools, including Joe Maimone who co-founded a charter, NC Policy Watch's Progressive Pulse reported; Jeannette Butterworth who served on the board of a charter school, Blue Ridge Now reported; Cheryl Turner who was a principal of a charter school, Movement reported; and Lindalyn Kakadelis who was an employee of a state-based right-wing advocacy group that promotes charter schools, Nonprofit Quarterly reported.

Another member, Steven Walker, was appointed by Lieutenant Governor Dan Forest, who the Asheville Citizen-Times and the Courier-Tribune reported has repeatedly tried to squelch information from the state's education department showing charter schools serve disproportionately larger percentages of white and affluent students.

The Charter Schools Advisory Board sets "a pretty low bar" for new charter applicants to gain approval, Kushner told me, and the State Board of Education "often follows the advisory board's recommendations," according to NC Policy Watch.

A Policy Mystery

From a policy standpoint, the geographic placements of charter schools are murky.

The shifting policy justifications for charters—whether they're a civil rights cause, an agent for improving the performance of public schools, or a necessary choice for choice's sake—don't clearly explain why charter schools show up where they do.

If charters are necessary for equity, then why are they showing up in affluent northeast Wake County? If charters are needed in places where the state's public schools are the lowest-performing, then Wake County is well down the list of districts in need. And if choice for choice's sake is the goal, then the state's many rural school districts—where schools are often few and far between, and parents don't have the wherewithal for private school or homeschooling—seem much more in need of new state-supported education options.

Another reason the choice for choice's sake argument seems especially misapplied to Wake County is that the district already offers more choices than are typical of most school districts.

Kushner pointed out that the district has adapted to the "culture of choice," as she put it, by expanding its magnet programs, adding 12 new ones in the last eight years. In her mind, many of the new charters that have recently opened amount to a "duplication of seats" because they're not offering anything more innovative than what the surrounding district schools offer.

In a 2019 letter to the state education board, Wake County school board members note one of the new charters offers a Chinese immersion curriculum, despite the district already having a Chinese immersion school and several schools "where significant portions of the instructional day are provided in Chinese."

The letter also points out that another new charter, Doral Academy, is located within 5 miles of 22 schools, two of which are charters and 10 of which are public magnet schools, each with its own diverse curricular theme.

Kushner is skeptical of charter school proponents who claim these schools have long waitlistsof parents who want to enroll their children but can't. Although some of these claims may be true, the numbers often can't be confirmed, as pointed out in a 2014 National Education Policy Center memo about charter waitlist numbers generally.

"I've heard there are waitlists," Kushner said of charters in northeast Wake County, "but I don't know if those lists are verified. [District schools] have to be transparent about our enrollments."

The Education Imperative

The argument that schools are needed in northeast Wake County for academic reasons seems thin too.

Based on an analysis of NC Department of Public Instruction data conducted by nonprofit education advocacy group EducationNC, the state's school performance report card from 2018-2019 grades about 82 percent of Wake County schools either A, B, or C. Only two schools were rated F.

School performance in the district based on EducationNC's data tends to trend downward going from the western part of the county to the eastern, with more C and D-rated schools in the northeast corner, which could bolster the case for charters in these communities.

However, these school ratings are deceptive. As state-based advocacy group Public Schools First NC explains, the ratings are calculated based on 80 percent of the weight drawn from test results and 20 percent from year-over-year growth. This gives a significant advantage to schools serving higher-income students who tend to get better results on standardized tests. So schools serving greater percentages of low-income students are at a distinct disadvantage even if they produce greater gains with their students from year to year.

Going back to the EducationNC analysis of state ratings, when the growth rate is adjusted to 50 percent of the ratings, almost 90 percent of Wake County schools are A, B, or C rated, and none are F schools. The number of D-rated schools in the northeast corner is significantly reduced.

When income is taken into account, many more schools with 50 percent or more of their students receiving free or reduced-price lunch, a common measure of poverty, are located in the eastern part of the county than in the western.

So if public schools in northeast Wake County have a performance problem, it likely correlates to the population of students they serve and not their ability to serve them.

The Business Imperative

So why are new charters converging on these communities?

A few of the more than 900 parents who signed a petition calling for an end to new charters told me their ideas.

Julie Raftery said, "[The] area has become a cash cow for charter schools."

"All these charters are setting up in northeast Wake County because they've likely done market research that convinced them to set up here," Brad Saunders, another parent and petition signer, told me. "They probably have some sort of data."

"It seems like it's mostly a financial decision," Kushner ventured after being pressed.

Charter schools are, after all, businesses, and businesses have existential needs and interests, and when they decide to expand to new markets they can pick a market with evidence of higher consumer demand or a market that offers prospects for higher profitability.

Also, rather than being under the regulatory umbrella of democratic school governance, charters are operated by private boards that have intentions that aren't as well known to the surrounding community. And charters often employ private, even for-profit, organizations to manage their schools, adding yet other motivational factors that can drive expansions.

So if the charter industry is experiencing growth declines in its traditional markets, as Medler and Bellwether have stated, charter entrepreneurs have gradually turned to new markets in suburban America.

Another Bellwether report found that in 2015-2016, before the decline in charter growth set in, 57 percent of charter-school students lived in cities, versus just 25 percent of public school children.

In a 2015 article for the Atlantic, Laura McKenna observed that charter schools were "less popular in suburbs than in cities" due to policy decisions and high levels of dissatisfaction urban parents had for their public schools. Many states, such as Missouri, confined charters only to the largest urban school districts, and charter advocates have been lobbying to eliminate those restrictions.

McKenna also noted charter advocates were eagerly eyeing states that had recently lifted restrictions on charter expansion, where they expected new markets would open up in suburban communities.

When charters were legalized in North Carolina in 1997, early charter startups were mostly in urban communities—including DurhamCharlotte, and Raleigh. But as elsewhere, new startups and enrollment growth in these communities have been slowing down. So when the state lifted the cap on the number of charters, suburban communities became logical targets for the industry.

Charter School Retail Strategies

But if business imperatives demand that charters move to the suburbs, why Wake County suburbs?

"It's an easier entry point to get into the school business," Kushner offered.

She suggested that by expanding in these communities, charters can attract marginal-cost students who are less likely to require special services, which can lower the school's outlay per student without affecting revenue. They can also attract parents who have increased mobility because they have a car and time to transport students to and from school.

Kushner's hunch is supported by research.

In one of the few empirical studies of why charters locate where they do, University of Illinois professors Christopher Lubienski and Peter Weitzel and Brown University professor Charisse Gulosino found that "market competition induces most charter schools to locate in areas where they have a competitive advantage (often on the periphery), capitalizing on the opportunity to target students with less risky socioeconomic and demographic backgrounds."

Especially when communities are being targeted by for-profit-oriented charter schools, as is the case in northeast Wake County, the study found, "key decisions about where to locate appear to be driven by the willingness to pay high real estate costs in exchange for appealing to less riskier students in neighborhoods with low need indices, utilizing the incentives that arise from choice and competition. For-profit charter schools frequently avoid areas with students who may be most likely to damage their market position."

When I first contacted Lubienski about the study for an article I wrote in 2016, he described to me how charter operators, especially those operated by for-profit management companies like the ones moving into Wake County, employ "ringing strategies" in which they'll locate schools on the outskirts of communities with more disadvantaged students to lure the more-advantaged families with time and access to transportation to enroll their children in suburban schools.

Lubienski described how this strategy often leads to the creation of "white flight" schools that serve higher concentrations of white and more well-off families, which is what parents say seems to be happening in northeastern Wake County.

"Charters have become a vehicle for which we see more forms of student sorting," he said, "not just by race, but that's easier to see."

One of those harder-to-see student characteristics is when the appeal of attending a sparkling new charter that has just shown up in a neighborhood of well-worn public schools attracts the attention of parents who generally have higher aspirations for their children—what I called, and he agreed, a "bright flight" of students more inclined toward striving academically.

Another obvious strategy charter school operators use is to cluster near other schools, including charters. Clustering is a well-known strategy used in the retail industry to more effectively and efficiently market all sorts of goods.

The most obvious uses of the clustering strategy are food courts, where food vendors actually benefit from being located close to their competitors. But clustering also works for higher order purchases too, like car dealerships that often locate nearby each other on the outskirts of a metropolitan area to enable families to quickly compare different makes and prices of cars.

A Land Rush

"Obviously, businesspeople are doing the analysis to determine locations of charters," Lubienski surmised, "and there are a lot of considerations, including the availability of buildings and land" that can influence where to site new schools.

"Land is still generally available in the eastern part of our county," Kushner confirmed, "which is not true of the western part."

Not only is land available in eastern Wake County, it's also rapidly increasing in value. Communities being targeted by charters are some of the fastest-growing in the state, with housing markets that are booming.

Even though charter schools are financed with public money, they often own their land and school buildings and can lease them to a subsidiary and eventually sell them at a profit.

This is a reason why many charter operators have their own associated real estate development businesses.

Charter Schools USA, which operates two of the new charters Wake County parents are objecting to, has its own development firm, Red Apple Development. Doral Academy (which Wake County school board members pointed out in their 2019 letter was redundant to existing schools nearby) is operated by Academica, which is also a landlord to charter schools it manages, according to In the Public Interest.

Both of these companies are based in Florida, where charter schools have become a hugely lucrative investment and real estate enterprise.

It's also not at all unusual to find charter school boards populated with people who have connections to the real estate industry.

Hilda A. Parlér, for instance, is owner of Parlér Properties LLC, founder and president of Wake Forest Charter Academy, and founder and president of Wake Preparatory Academy, accordingto her business's website. She also briefly served on the state's Charter Schools Advisory Board where she had the opportunity to make money operating and building charter schools, according to the News and Observer.

"Charter schools are mostly looking for places where they can locate and sustain their revenue sources," Lubienski said. In the case of northeast Wake County, the more lucrative revenue source by far could be in real estate.

Better Schools or Better Marketing

In their applications to open new campuses, charter operators justify the need for their schools with multiple reasons, often by including an analysis showing the need for more seats in a given area or an argument about the low performance of a district's current schools compared to the charter's supposed superior instructional model—an argument that is often unsupported by any third-party research.

However, charter school applications often seem to read as if they were conceived after the decision was already made about the education market to be targeted.

Applications for two new schools managed by Charter Schools USA—North Raleigh Charter Academy and Wendell Falls Charter Academy—include the statement, "The information we have provided in this application may be similar or identical to information that you will find in the application of other applicants who have also partnered with CSUSA."

The application for North Raleigh Charter says the school "plans to focus on the student population residing in and around the Wake Forest community located in north Wake County," while the application for Wendell Falls pledges to "focus on the student population residing in and around the Wendell community located in northeast Wake County."

"Wake Forest was chosen due to its current student-aged population and population growth rate, as well as the overcrowding and below-average performance of the public schools," one application states, while the other declares, "The community of Wendell was chosen due to its population growth and lack of school choice in the area."

Much of the rationale for the perceived need for charter schools often seems to boil down to marketing.

"Charters have honed their message to attract Black and Latinx students over the years, particularly with the ploy that charters can provide students with a private school educational experience," Preston Green told me. "It is quite possible that this messaging might also sway suburban parents."

Green, a University of Connecticut professor, is the author of numerous critical studies of charter schools, including one in which he argued that the charter industry's operations resemble the business practices of Enron, the mammoth energy corporation that collapsed under a weight of debt and scandal.

"Some of these charters are also marketing themselves as a vehicle for students to attend well-regarded universities," Green said. "This advertising can be very attractive to parents who want to give their children every possible advantage."

Some Wake County parents also attributed the allure of charters to a narrative created by news media.

"You hear the nightly school reports about bad things happening in public schools like a student bringing a knife to school or a student calling in false alarms about a shooter," said Saunders, whose work is in sales and marketing. "Some parents just don't want their children to be exposed to this. People think these kinds of things never happen in charters."

A new narrative pushed by pro-charter media outlets in North Carolina is about how during the pandemic local public schools struggled to provide remote learning to their students while charter schools "haven't missed… a step."

Yet, many new charter schools that were scheduled to open during the pandemic have chosen not to open, Kushner said. And existing North Carolina charters that have stayed open have become sites of cluster outbreaks, report WFAE and the Charlotte Observer.

'What Gets Lost'

When I reached out to Lubienski to see if there was an update to his 2009 study of charter school geolocation, he replied in an email that he and his coauthors were completing a statewide analysis of charter schools in Indiana and weren't ready to share results.

But consistent with his previous findings, he continues to find that charters, especially the ones that count on making profits, tend to "focus on the bottom line by limiting costs" and "locating in places that tend to filter out the 'less desirable' students."

"There are certainly a lot of charter operators trying to do good, and do it the right way," he wrote. "But the amazing amount of financial scandals we've seen with many charter operators suggests that some are in it for the money, and not for the kids."

Ferreting out the intentions of charter school operators may or may not be something government officials or parents are very good at. But in the meantime, having the decision of where to locate charter schools solely left up to the business plans of charter entrepreneurs seems like a less than effective way to ensure all families and taxpayers are well served.

"What gets lost in the discussion," said Kushner, "is that schools need to be accountable to the whole of the community, not just to the parents who may happen to choose them."

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Jeff Bryant

Jeff Bryant is a communications consultant, freelance writer, advocacy journalist, and director of the Education Opportunity Network, a strategy and messaging cen...