Charter schools need better transparency, accountability, study says
The growth of for-profit management companies operating charter school has led to "scandalous" financial practices that steer money away from students and into the pockets of private business, according to a study released Thursday.
"The Business of Charter Schooling: Understanding the Policies that Charter School Operators Use for Financial Benefit" is co-authored by Gary Miron, a professor at Western Michigan University, and Bruce Baker of Rutgers University.
Policymakers should demand more fiscal oversight and transparency from educational management companies such as National Heritage Academies, according to a study being released today. The study was co-authored by Gary Miron, a professor at Western Michigan University.
The 56-page report says public money meant to educate children "is being extracted inadvertently or intentionally for personal or business financial gain" and current disclosure requirements allow such practices to occur with a minimum of accountability or transparency.
While the report cites examples from other states, the report is applicable for Michigan taxpayers and policymakers, Miron said.
"Michigan is by far the leader in privatization of education — 90 percent of charter school students attend a school operated by a for-profit EMO," or educational management organization, Miron said.
He also said that Michigan-based EMOs such as National Heritage Academies in Grand Rapids have pioneered some of the problematic practices that have become popular nationwide, such as "sweep" contracts in which the EMO collects all the revenues coming into a charter school save for a 3 percent fund balance.
Miron said that allows the EMOs to disguise how much is being charged as a management fee.
Among the some of the other specific practices cited in the report:
• EMOs often use public funds to buy school buildings, which become privately controlled. The EMO then charges the charter school an above-market rent to lease the building.
• Some EMO contracts state that any computers, textbooks and other supplies and equipment purchased by charter schools become the property of the EMO. That means if the charter school board ends its contract with the EMO, it has to buy back equipment and supplies purchased with public funds.
• High management fees steer money from student instruction. Miron said most Michigan charter schools spend a lower percentage of their budget on instruction than traditional public schools.
• EMOs tend to rely on hand-picked boards that fail to offer independent scrutiny of contracts. Miron said this is often the case in Michigan, where charter schools are proposed by an EMO that than hand picks the board of directors. Having a weak board that is not accountable to voters leads to boards signing off on contracts that clearly "not in the charter school's best interest," Miron said.
• Because EMOs are private companies, their contracts and expenditures are not subject to the Freedom of Information Act, Miron said. "It's been harder and harder to get access to how money is being spent," he said.
An especially egregious example of charter school mismanagement in Michigan is the controversy that has engulfed Grand Traverse Academy, a K-12 charter school with about 1,200 students near Traverse City.
The school was founded in 1999 by Steven Ingersoll, a Bay City optometrist who Charter schools need better transparency, accountability, study says | MLive.com:
