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Wednesday, May 7, 2014

CHARTER SCHOOLS GONE WILD! Study Finds Charter Schools Vulnerable to Waste, Fraud & Abuse

A new report released yesterday—National Teacher Dayby Integrity in Education and the Center for Popular Democracy presents evidence that inadequate oversight of the charter school industry hurts both kids and taxpayers and reveals that fraudulent charter operators in 15 states are responsible for losing, misusing or wasting over $100 million in taxpayer money.

The report draws upon news reports, criminal complaints and more to detail how, in just 15 of the 42 states that have charter schools, charter operators have used school funds illegally to buy personal luxuries for themselves, support their other businesses, and more. The report also includes recommendations for policymakers on how they can address the problem of rampant fraud, waste and abuse in the charter school industry. 

According to the study, fraud and mismanagement of charter schools fall into six categories:

  • Charter operators using public funds illegally — outright embezzlement
  • Using tax dollars to illegally support other, non-educational businesses
  • Mismanagement that put children in potential danger
  • Charters illegally taking public dollars for services they didn’t provide
  • Charter operators inflating their enrollment numbers to boost revenues
  • General mismanagement of public funds
Despite rapid growth in the charter school industry, no agency, federal or state, has been given the resources to properly oversee it. Given this inadequate oversight, the fraud and mismanagement that has been uncovered thus far might be just the tip of the iceberg.

To understand why there are so many problems in the charter industry, one must understand the original purpose of charter schools. 

Lawmakers created charter schools to allow educators to explore new methods and models of teaching. To allow this to happen, they exempted the schools from the vast majority of regulations governing the traditional public school system. The goal was to incubate innovations that could then be used to improve public schools.  The ability to take calculated risks with small populations of willing teachers, parents, and students was the original design. With so few people and schools involved, the risk to participants and the public was relatively low.

This report focused on just some of the consequences of having inadequate charter regulations. In addition, it focused on just one symptom – the growing problem of fraud, waste, and abuse perpetrated by some charter school operators. 

The problem is pervasive; despite being limited to fewer than half of the states with charter schools, the report found over $100 million in public tax funds lost to waste, fraud, and abuse. (The report examined schools in the following states: Arizona, California, Colorado, District of Columbia, Florida, Hawaii, Illinois, Louisiana, Minnesota, New Jersey, New York, Ohio, Pennsylvania, Texas, and Wisconsin.)

And, more importantly, the research revealed that charter operator fraud and mismanagement is endemic to the vast majority of states that have passed a charter school law.

Here are a few examples:

-Masai Skiefs, former CEO of the Harambee Institute of Science Technology Charter School in Pennsylvania, who pled guilty to stealing $88,000 for various purposes, including a down payment on a house.

-William and Shirley Pierce, former operators of Right Step Academy Charter School in Minnesota, who were sentenced to 37 and 30 months in federal prison, respectively, for using public dollars for a Caribbean cruise vacation, $17,561.87 to pay off personal credit card debt, and $11,125.00 to purchase season tickets to the Minnesota Timberwolves, among other things. 

-Joel Pourier, former CEO of Oh Day Aki Heart Charter School in Minnesota, who embezzled $1.38 million from 2003 to 2008. He used the money on houses, cars, and trips to strip clubs. Meanwhile, according to an article in the Minneapolis Star Tribune, the school “lacked funds for field trips, supplies, computers and textbooks.” A judge sentenced Mr. Pourier to 10 years in prison.

The report reveals a number of cases where charter operators were caught using public funds to illegally support their own personal businesses. 

For example, in 2012, the former CEO and founder of the New Media Technology Charter School in Philadelphia was sentenced to prison for stealing $522,000 in taxpayer money to prop up a restaurant, a health food store, and a private school. 

In Florida, the former director of Life Skills Center Charter School, John Wyche, was sentenced in 2011 to serve more than six years in prison for misusing more than $750,000 in state education monies to sustain a failing apartment complex that he owned.

MICHIGAN CHARTER SCHOOL EMBEZZLEMENT PROSECUTION


Although the report did not include an examination of Michigan charter schools, the felony embezzlement conviction of former George Washington Carver Academy Treasurer Shantell Bell is mentioned. Bell, 37 at the time of her crime, previously served as the treasurer of George Washington Carver Academy in Highland Park.  In March 2009, Bell fabricated a check request in the amount of $25,000 to purchase "textbooks."  After receiving the check, which was made out to the alleged textbook company, Platinum Title Services, Bell exploited her authority as treasurer to have the school's bank convert it to a cashier's check.  

Bell then used the cashier's check to purchase a home in Detroit. Platinum Title Services was not a textbook company as Bell told school officials, but rather, an Ohio-based title company used to complete Bell's real estate transaction. The crime was discovered after Bell's ex-boyfriend reported her actions to the Academy.  The Academy later reported the crime to the Michigan State Police.  

Bell was sentenced in September 2011 to five years probation, with the possibility of six months in jail if she failed to meet the terms of her probation.  Bell was ordered to sell the home purchased with embezzled funds, which she used as a rental property.  The proceeds from the sale of the home were returned to George Washington Carver Academy. 

The charge was filed by Michigan Attorney General Bill Schuette's Public Integrity Unit. "Criminals who abuse the public trust for their own personal gain will be brought to justice," said Schuette in the sentencing announcement.  "We must root out corruption at all levels of government to ensure the public is served." 

TRANSPARENCY RECOMMENDATIONS

 Given the number of years, and the apparent severity of the fraud at the Grand Traverse Academy, millions of taxpayer dollars might have been saved had there been adequate oversight.

The report, available for download at this link, offers suggestions:


-Amend state charter law to explicitly declare that charter schools are public schools, and are subject to the same non-discrimination and transparency requirements as are other publicly funded schools;
 

-Require that each charter school’s original application and charter agreement be available to the public online, through the websites of both the individual school, and the charter authorizer; 

-A full list of each charter school’s governing board members, officers, and administrators with affiliation and contact information, should be available on the school’s website, as well as from the authorizer; 

-Require members of charter school governing boards, charter school administrators, charter school employees, as well as public officials to file full financial disclosure reports, as well as to report on any potential conflicts of interest, relationships with management companies or other business dealings with the school, its management company or other charter schools. These reports should be similar to or the same as the reporting requirements of traditional school district Board members. Make these documents available to the public online through the charter’s authorizer;

-Require minutes from charter school governing board meetings, the school’s policies, and information about staff to be made available on the charter school’s website; 

-Require charter schools to be fully compliant with state open meetings/open records laws, with compliance monitored by authorizers. Failure of schools to release documents pertaining to governing board meetings, school policy and data, or to allow members of the public to file formal freedom of information requests to obtain these documents must be swiftly addressed and corrected by the authorizer; 

-Charter school financial documents should be made available to the public annually, on the authorizer’s website. These documents should include detailed information about the use of both public and private funds by the school and its management entities. These reports should include full disclosure of the sources of private funds, and the duration of commitments of private funds;

-Require disclosure of all vendor or service contracts over $25,000 and prohibit any vendor or service contracts to any entity in which the charter school operator or a member of the governing board has any personal interest. 

Even Miss Fortune couldn't have said it better.

Is anyone listening?

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