BOULDER, CO (February 25, 2021) - The number of private education management organizations (EMOs) and the schools they operate has more than doubled in the past decade and the number of students they serve tripled in the past decade, according to the 15th Edition of the EMO Profiles report published by the National Education Policy Center.
The new report finds that student enrollment in EMO-operated schools has grown from 600,000 in 2008-09 to 1.95 million in 2018-19. The growth of nonprofit EMOs has outpaced growth of for-profits. The size of the EMO virtual school sector is also increasing and is likely significantly larger than reported as a result of the pandemic. The EMO Profiles report provides a comprehensive inventory of close to 650 EMOs and more than 3,700 EMO-operated public schools across the country.
Identifying and profiling EMOs is challenging, given the interconnected webs of nonprofit and for-profit organizations and trusts, corporate or organizational owners and fundraising entities that provide services, own property, and play other roles.
More than 90% of EMO public schools are charter schools. In fact, EMOs have been the key vehicle driving charter school growth over the past two decades. This stands in stark contrast to the claims of proponents that charter schools would be locally run, innovative, autonomous, and highly accountable. While these promises prompted widespread initial support for charter school reform, the evidence presented in the EMO Profiles report suggests that EMOs have undermined local control and the autonomy of charter schools, restricted innovation, and created obstacles for transparency and accountability.
The 2017-18 school year marked the first time that a majority of charter school students were enrolled in privately managed schools. By 2018-19, just over 53% of all charter students were in schools operated by private EMOs. If policies remain as they are and current trends continue, approximately 66% of charter school students will be enrolled in privately managed schools by 2025 and close to 80% of charter school students will be in privately managed schools by 2030. Rather than addressing school reform with local, autonomous, and highly accountable public schools, charter schools have instead been used as a vehicle for privatization of our public-school sector.
Currently, an overwhelmingly large proportion of new charter schools are started by private EMOs. These for-profit and nonprofit EMOs make key decisions about when and where to start new schools in furtherance of their monetary interest in increasing market share. Another striking pattern is the consolidation of the sector. New or existing EMOs are aggressively purchasing independent charter schools or charter schools that are owned by other EMOs, further cementing the private-sector behavior of those operating charter schools.
What are EMOs?
EMOs are private companies or organizations that operate public schools. They can be either for-profit or nonprofit entities, and as documented in the Profiles report, the differences between for-profit and nonprofit EMOs are small and largely inconsequential. To establish whether a private entity has executive control of a public school and is therefore an EMO, the following factors are among those Profiles researchers considered: who started the school; who owns the facilities, equipment, and materials; who employs the teachers, administrators, and staff; who recruits and enrolls students; who prepares and controls the budget; and who owns or is responsible for the school model and curriculum.
Some in the charter school establishment have argued that the term “EMOs” should not be applied to nonprofit entities. Instead, they have coined the term charter management organizations, or CMOs, for nonprofit entities that run charter schools.
NEPC’s EMO Profiles report refers to both for-profit and nonprofit operators as EMOs for a number of reasons. Management contracts reveal similar conditions and fees—excessively high management fees and salaries for EMO executives are similar across both types of EMOs. Both for-profit and nonprofit EMOs undermine local control and centralize governance in often-distant HQs. Transparency and access to information is hampered in both nonprofit and for-profit EMOs. Profiles report authors, for example, sent FOIA requests to “public charter school” boards and were told that the school does not need to comply. Another reason for broadly referring to for-profit and nonprofit management companies as EMOs is that many self-identified CMOs have diversified their business models—just as the for-profit EMOs have done—and now provide services and management for both charter and district schools. Finally, the boundary between for-profit and non-profit EMOs is fluid. Nonprofits have coverted to for-profits and vice versa. This fluidity was no doubt influenced by the decision of some states to impose restrictions on for-profit EMOs.
Given the trends and the ways in which EMOs have developed, we make the following recommendations:
- To ensure genuine accountability, a charter school board should be in place before an application for charter status is submitted. Such boards should have control and oversight of budget.
- Authorizers should not permit charter applications from EMOs.
- If charter school boards contract with an EMO, the authorizer should be required to approve both the management agreement and leases or other agreements related to facilities and property.
- Charter school boards should be required to receive training relative to their legal and fiscal responsibilities, ensuring they function as intended as responsible representatives of public charter schools and the taxpayers supporting them.
- When contemplating a relationship with an EMO, a school board should require three or more bids from potential contractors.
- School boards should refuse “sweep contracts,” which allow an EMO to secure all revenues with a guarantee to leave a small year-end balance. Sweep contracts mask the actual budget and limit transparency by the governing boards and the public.
- EMO contracts should have stringent requirements for transparent reporting.
- States should not exempt nonprofit EMOs from restrictions placed on for-profit EMOs.
- Federal and state agencies should award start-up grants and financial support only to independent charter schools.
Find Profiles of For-Profit and Nonprofit Education Management Organizations: Fifteenth Edition, by Gary Miron, Charisse Gulosino, Christopher Shank, Najat Elgeberi, Caryn Davidson, Fanny Hernandez De Alvarez, Brandy Jurdzy, Judith Larsen, Dung Pham, Kelly Ruder, Laura Urdapilleta, & Jessica Urschel, at: