Soaking the Public

At the White House education policy session on Friday, the Superintendent of the Lancaster School District, Pedro Rivera, offered an idea that received immediate support from those in the room. “Put a cap on for-profit charter schools,” he said, “just like the federal government is now doing with insurance companies.”

To understand the enthusiasm for this suggestion, we have to back up a little and talk about charter schools. There is much to say, and we may need to devote several blog posts to this topic alone. But let’s start with the issue of public money going to unregulated, private (for-profit) companies. Not all charter schools are for-profit, but all charter schools are paid for by local school districts. And one of the huge cuts in the proposed state budget this year eliminates charter school reimbursements, meaning that school districts will shoulder the entire burden of charter school enrollments. (We’ll say more on that another time.)

Let’s make this clear: not all for-profit companies are bad, and not all for-profit charter schools are necessarily bad. But without regulation, transparency, and accountability, private charter schools are free to soak up enormous public resources with stunningly poor educational results.

For example, Vahan Gureghian owns the Charter School Management Corporation, a private, for-profit company that manages the finances for Chester Community Charter School. Gureghian was Governor Corbett’s single largest individual campaign donor and a member of his Education Transition Team. In the first ten years after the school was founded in 1999, he had already collected $60.6 MILLION from the public coffers. While salary data for public school employees is public information, we don’t know what Gureghian is paid – or his wife, who is general counsel for their company.

The Philadelphia Inquirer filed a right-to-know request in 2006 asking for salary figures: the Commonwealth Court ruled they had to disclose that information, but the Gureghians have appealed and the case is going to the State Supreme Court. [Philadelphia Inquirer, 2009-06-11] Meanwhile, Mr. and Mrs. Gureghian have recently purchased two Florida beachfront lots for $28.9 million where they plan to build a 20,000 square foot “French-inspired Monte Carlo estate.” [Palm Beach Daily News, 2011-11-18]

The Keystone State Education Coalition reports that “the portion of the school’s expenditures going to business and administration was consistently among the highest for Pennsylvania charter schools, and its spending percentage on instruction was among the lowest.” Which may explain its mixed educational results. Compared to the AYP status of five traditional elementary schools in the Chester Upland School District, the Chester Community Charter School “does better than some and worse than some.” That’s a whole lot of public dollars going into beachfront estates with questionable benefits to students.

K12, Inc., the nation’s largest operator of on-line schools, represents another egregious example of public funding going to line the pockets of private corporations. In December 2011, the New York Times ran a front page article describing how K12 manages to pull in enormous profits while its students perform well below agerage, explaining that the company uses “education as a source of government-financed business, much as military contractors have capitalized on Pentagon spending.” With 105,000 enrolled students in 29 states plus the District of Columbia, K12 took in $522 MILLION last year in revenue – those would be public tax-payer dollars that were not going to the vast majority of students still being educated in their district schools. [Education Week, 2012-2-21]

In Pennsylvania, K12 runs Agora Cyber Charter School, which has performed quite poorly. According to Education Week, “The school’s average growth index, which measures performance on state tests, is minus 12.1, among the lowest in the state.” In fact, shareholders have brought a lawsuit against K12 arguing that they were misled and that the company “inflated stock prices by not disclosing data showing that K12 Inc. students perform below state averages and by not being truthful about student-to-teacher ratios and student-recruitment practices.”

Yet school districts have to pay top dollar for their own students who choose to enroll in K12’s Agora Cyber Charter School, even when they operate their own charter schools for half the cost. For example, in East Penn school district in Lehigh County, superintendent Thomas Seidenberger explains that “his district pays $8,800 for each student who attends a cyber school, including Agora, despite ‘dismal’ test scores,” while the district’s own cyber charter school costs only $4,400 per student. Pedro Rivera, the Lancaster superintendent who suggested the cap on private charter school payments, told the White House his district faces the same situation: he runs a cyber charter school for half what he is forced to pay to private companies.

In an interview last month, K12’s Chief Executive Officer Ronald J. Packard said, “For reasons I don’t fully understand, there are a lot of people who don’t like for-profit companies in education.” I would say beachfront estates that come at the expense of student achievement in one of the state’s most distressed school districts top my list of reasons why I don’t like for-profit companies sucking up public education resources. Talk about soaking the public. Also on my list: exorbitant price tags, political cronyism, and lack of accountability and fiscal transparency.