Reports of Charter School Fraud Grow as Oversight Continues to Lag

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June 19, 2015; Education News

When charter schools appeared on the educational scene, they were envisioned as a way for public schools to experiment with new and better systems and methods to teach our children. While across the country their numbers have grown dramatically, they have transformed from educational laboratories into the bulwark of an alternate educational system designed to give every family the ability to choose a school that meets its unique perspective of what is best for their children and a mechanism through which power of the marketplace can be channeled to solve the problems in public education.

Given the ability to operate outside the traditional public school bureaucracy and often freed from many of the mandates and requirements that traditional public schools are required to fulfill, charter schools have all too often also become laboratories for ways to misuse public funds and mislead their supporters. Examples of mismanagement and worse make headlines regularly; two new ones hit the news just a few weeks ago.

In Dayton, Ohio, the Education News reported:

A recently-closed charter school in Dayton, Ohio now owes taxpayers close to $1.2 million after it was said to have falsified its attendance records and received state funding for students who never attended the school. An investigation by state auditor Dave Yost found that almost half of the reported 459 students enrolled at General Chappie James Leadership Academy had either never attended the school or had already left the school. Of the alleged students found by investigators, some had been incarcerated, moved out of state, or had been working and not attending school.

Across the country, in San Francisco’s Bay Area, ABC News recently uncovered that the FAME charter school had not been paying many of their vendors. “County officials say as of March, the school had enough funds in its reserve to make payments to vendors and their recent attempts to get financial statements from FAME have been unsuccessful.”

Over one year ago, the Center for Popular Democracy and Integrity in Education issued a report in response to one from the Department of Education’s Office of the Inspector General that had raised concerns about vulnerabilities in the oversight of charter schools, pointing out that “state level agencies were failing to provide adequate oversight needed to ensure that Federal funds [were] properly used and accounted for.” The CPD report found “charter operator fraud and mismanagement is endemic” and “at least $100 million in public tax dollars has been lost due to fraud, waste, and abuse.”

Six distinct categories were needed for this report to capture the practices of the charter school operators that were studied:

  • Charter operators using public funds illegally for personal gain
  • School revenue used to illegally support other charter operator businesses
  • Mismanagement that puts children in actual or potential danger
  • Charters illegally requesting public dollars for services not provided
  • Charter operators illegally inflating enrollment to boost revenues; and
  • Charter operators mismanaging public funds and schools

At the federal level, despite the apparent misuse of such large sums of scarce funds and the lack of adequate oversight mechanisms, the 2016 budget that is working its way through Congress includes a significant increase in funding with little if any increase of management. According to Jonas Persson of PR Watch, “Despite drawing repeated criticism from the Office of the Inspector General for suspected waste and inadequate financial controls within the federal Charter Schools Program—designed to create, expand, and replicate charter schools—the U.S. Department of Education (ED) is poised to increase its funding by 48 percent in FY 2016.”

There are also concerns at the individual state level, but little progress seems to have been made in limiting the losses.—Martin Levine

  • Aurelio Montemayor

    #CharterChicanery continues…

  • chad mccain

    A former teacher of FAME, I can say that I have taught there for FAME’s final two years; and I have witnessed most of the bullet points mentioned in this article, firsthand. What’s unnerving to me is this news that a bill is making its way through congress to increase funding to such ventures. If it is failing it needs fixing, not more money to do damage. Since this is not attended to, we must logically conclude, that is, it is false thinking to conclude anything otherwise, but that the political will is in glutting Public Schools, by creating the Charter Cancer, and feeding it. Certainly, it’s a rouse created by politicians and corporations to dismantle public education and turn it into their newest open market.