Disclosure differs for charter schools run by for-profit firms
N.C. law doesn’t require schools run by management firms to account for all taxpayer dollars
Public school districts must account for every dollar they spend. Charter schools operated by for-profit companies often do not have to.
Charters can keep salaries of supervisors, academic consultants, back-office staff – sometimes even school administrators – secret and still abide by North Carolina’s public records law despite being funded by tax dollars. These positions are often considered employees of the management company instead of the school, and therefore not subject to disclosure.
These companies also are not required to disclose how much profit they’re making while running schools with public money. The discrepancy has frustrated traditional public school district advocates in North Carolina who consider this a double standard. In other states, that lack of transparency has contributed to abuse.
“Our budget is 3 inches thick, and you all get a copy of it,” said Charlotte-Mecklenburg Schools board member Rhonda Lennon. “Why is there so much difference if we’re all funded by tax dollars?”
Six private charter school management firms currently oversee millions in state dollars for public education in North Carolina.
The structure of these schools has benefits. The financial backing a company provides offers stability, and management organizations bring refined curriculums and training programs, said Eddie Goodall, executive director of the Charlotte-based North Carolina Public Charter Schools Association. They also often have strong records of academic performance.
But other states with longer charter school track records have had problems. In many cases, the lack of transparency at their management companies has made it more difficult to detect issues. Among the examples:
▪ The founder of Bay City Academy in Michigan was convicted of three counts last month related to tax fraud for shuffling money intended for the charter school through his management business and personal accounts to avoid taxes.
▪ A charter school in Washington, D.C., had its charter revoked in Februaryafter authorities accused it of improperly shifting public money to the management company. D.C. charter school officials said they had a hard time obtaining financial records from the company. Earlier, D.C. officialshad accused another management company of receiving exorbitantly high prices for services at several charter schools.
▪ In New York, the Office of the State Comptroller sought to get informationfrom National Heritage Academies after saying state officials couldn’t determine how $10 million in taxpayer money was being used. The company refused to provide full financial reports. New York no longer allows new charter schools to contract with for-profit companies.
“Transparency is a serious issue,” said Gary Miron, a professor at Western Michigan University who has studied charter schools extensively. In Michigan, nearly 80 percent of charter schools are run by for-profit management companies. “Transparency laws would help, but they must invade the proprietary space of (management companies) because of the public need to know.”
‘Competitive disadvantage’
Charter school advocates say that as long as students receive a quality education, it doesn’t matter what type of organization runs the school. Company executives say the fees are needed to recoup substantial startup costs. Every school that a charter management company builds is one less that taxpayers fund in the public school system. The state doesn’t provide money for charter school buildings.
Management executives say that information such as profit margins and central office staff salaries are trade secrets that need to be private.
“It becomes a competitive disadvantage,” said Doug Haynes, president of Mastermind Prep and administrator of Rocky Mount Prep. A lawyerDisclosure differs for charter schools run by for-profit firms | The Charlotte Observer The Charlotte Observer:
