logo
    • Magazine
    • Membership
    • Donate
  • Racial Justice
  • Economic Justice
    • Collections
  • Climate Justice
  • Health Justice
  • Leadership
  • CONTENT TYPES
  • Subscribe
  • Webinars
    • Upcoming Webinars
    • Complimentary Webinars
    • Premium On-Demand Webinars
  • Membership
  • Submissions

Blending For-profit Organizations into Public Education Can Be Problematic

Martin Levine
May 3, 2017
Share
Tweet
Share
Email
Print
“Money” by Andrew Czap

May 1, 2017; Tampa Bay Times

As state and federal policymakers have added “parental choice” and “creating an open market” to their goals, funding public education has become even more challenging for localities across the country. Adding charter schools and voucher programs to the traditional public school system enlarges the scope of public education that a static level of available funding has been stretched to cover. Almost invisibly, the push to an open educational marketplace has added a confusing and potentially costly new element to the funding picture: the blending of private for-profit businesses into public education.

PolitiFact Florida spotlighted this when it recently looked at the legislative debate in Florida as it considers bills to expand the state’s number of charter schools. Florida law requires all publicly funded charter schools to be incorporated as 501(c)(3) nonprofit organizations. But in Florida, as in many other states, a nonprofit charter school can contract the actual operation of the school to for-profit businesses. How those relationships are managed can become very problematic.

As reported in the Tampa Bay Times, Audrey Walden, the Florida Department of Education press secretary, said that while the charter governing board can choose to enter into contracts with private entities to provide services and support, “Ultimately, performance and accountability rests with the nonprofit governing board—which, when it enters into a charter agreement with its local school district, is subject to the same Sunshine Laws and School Accountability System that pertains to all public schools in Florida.”

Sign up for our free newsletters

Subscribe to NPQ's newsletters to have our top stories delivered directly to your inbox.

By signing up, you agree to our privacy policy and terms of use, and to receive messages from NPQ and our partners.

Not all nonprofit school boards seem capable of meeting that responsibility. The potential is there, however, for a for-profit organization to exert too much control and siphon scarce educational resources away from the school’s educational mission and the children they teach. Back in 2011, the Miami Herald found examples where “some schools have ceded almost total control of their staff and finances to for-profit management companies that decide how the schools’ money is spent.”

The Life Skills Center of Miami-Dade County, for example, pays 97 percent of its income to a management company as a “continuing fee”…. Many management companies also control the land and buildings used by the schools—sometimes collecting more than 25 percent of a school’s revenue in lease payments, in addition to management fees.

The line becomes even hazier when the same people control both the nonprofit school and the for-profit service provider. Blogger Mercedes Schneider looked at the Basis School network, whose Arizona high schools rank, according to U.S. News and World Report, among the nation’s finest. She found that Basis’ two founders, Michael and Olga Block, created a network of for-profit service corporations that provide management services and teachers to Basis’ schools. Reviewing available information, she found that in 2014, the nonprofit “BASIS Schools’ total revenue is $68.5 million—and its total expenses are $72.7 million. Plus, there’s the previous deficit of -$6.5 million. Sooo, by the end of the year, BASIS Schools, Inc., has a fund balance of -$15.3 million. Still, BASIS Schools pays BASIS Educational Group [the Blocks’ for-profit corporation] $10.5 million in management fees and $44.3 million in employee leasing costs.” With these contracts in place, though the schools are doing well academically, their financial health appears to be quite poor.

When for-profit businesses enter the public education arena, their drive toward profitability has the potential to weaken our investment in public education. For-profit organizations can be more proficient and more efficient managers than either traditional or charter schools. When they are, they become very valuable assets. But when they are neither, their very profitability uses up scarce educational resources and harms the schools they claimed to help.—Martin Levine

Share
Tweet
Share
Email
Print
About the author
Martin Levine

Martin Levine is a Principal at Levine Partners LLP, a consulting group focusing on organizational change and improvement, realigning service systems to allow them to be more responsive and effective. Before that, he served as the CEO of JCC Chicago, where he was responsible for the development of new facilities in response to the changing demography of the Metropolitan Jewish Community. In addition to his JCC responsibilities, Mr. Levine served as a consultant on organizational change and improvement to school districts and community organizations. Mr. Levine has published several articles on change and has presented at numerous conferences on this subject. A native of New York City, Mr. Levine is a graduate of City College of New York (BS in Biology) and Columbia University (MSW). He has trained with the Future Search and the Deming Institute.

More about: charter schoolsNonprofit NewsPolicy

Become a member

Support independent journalism and knowledge creation for civil society. Become a member of Nonprofit Quarterly.

Members receive unlimited access to our archived and upcoming digital content. NPQ is the leading journal in the nonprofit sector written by social change experts. Gain access to our exclusive library of online courses led by thought leaders and educators providing contextualized information to help nonprofit practitioners make sense of changing conditions and improve infra-structure in their organizations.

Join Today
logo logo logo logo logo
See comments

Spring-2023-sidebar-subscribe
You might also like
Cancelling Student Debt Is Necessary for Racial Justice
Kitana Ananda
To Save Legal Aid, Expand Public Service Loan Forgiveness
Zoë Polk
No Justice, No Peace of Mind and Body: The Health Impacts of Housing Insecurity for Black Women
Jhumpa Bhattacharya, Maile Chand and Andrea Flynn
The Human Impact of the Global Refugee Crisis Must Be Understood—And Acted Upon
Anmol Irfan
Black Americans Need Reparations: The Fight for the CTC Highlights the Roadblocks
Jhumpa Bhattacharya and Trevor Smith
Edgar Cahn’s Second Act: Time Banking and the Return of Mutual Aid
Steve Dubb

NPQ Webinars

April 27th, 2 pm ET

Liberatory Decision-Making

How to Facilitate and Engage in Healthy Decision-making Processes

Register Now
You might also like
Cancelling Student Debt Is Necessary for Racial Justice
Kitana Ananda
To Save Legal Aid, Expand Public Service Loan Forgiveness
Zoë Polk
No Justice, No Peace of Mind and Body: The Health Impacts of...
Jhumpa Bhattacharya, Maile Chand and Andrea Flynn

Like what you see?

Subscribe to the NPQ newsletter to have our top stories delivered directly to your inbox.

See our newsletters

By signing up, you agree to our privacy policy and terms of use, and to receive messages from NPQ and our partners.

NPQ-Spring-2023-cover

Independent & in your mailbox.

Subscribe today and get a full year of NPQ for just $59.

subscribe
  • About
  • Contact
  • Advertise
  • Copyright
  • Careers

We are using cookies to give you the best experience on our website.

 

Non Profit News | Nonprofit Quarterly
Powered by  GDPR Cookie Compliance
Privacy Overview

This website uses cookies so that we can provide you with the best user experience possible. Cookie information is stored in your browser and performs functions such as recognising you when you return to our website and helping our team to understand which sections of the website you find most interesting and useful.

Strictly Necessary Cookies

Strictly Necessary Cookie should be enabled at all times so that we can save your preferences for cookie settings.

If you disable this cookie, we will not be able to save your preferences. This means that every time you visit this website you will need to enable or disable cookies again.