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Charter schools are a ‘gravy train,’ say researchers

A new report examines the methods charter school operators can use to enrich themselves

The policy framework for U.S. charter schools encourages “privatization and profiteering,” a research institute said in a report released Thursday.

Charter schools are able to siphon off large quantities of public money for private gain — and only substantial changes to state policies regarding charter schools can stop this, according to the authors of the report from the National Education Policy Center (NEPC) at University of Colorado Boulder.

Many education reform advocates argue that the charter school model — under which publicly funded schools are administered by bodies other than the school board, such as private Education Management Organizations (EMOs) — promotes experimentation and newer, fresher teaching methods. But the same permissive charter regulations intended to boost innovation can also help EMOs pocket cash better spent elsewhere, the NEPC report said.

“What we found is that there are a host of real estate and tax laws that were not put in place with charter schools in mind, but that the owners of charter school enterprises are using in order to profit,” NEPC Director Kevin Welner said. “I think that understanding the nature of the charter school gravy train, as I call it, is extremely important for the public and policymakers."

For example, charter schools are sometimes able to purchase publicly owned real estate for their school facilities through a private, third-party entity. The report highlights how charter operators can make these purchases with taxpayer money, thus acquiring formerly public property at public expense. The third-party purchaser pockets overhead costs associated with arranging the sale.

“This particular type of transaction is usually legal and it can be very logical from the perspective of each of the parties involved,” said Rutgers University professor Bruce Baker, one of the report’s authors, in a statement. “But we should be troubled by the public policy that allows and even encourages this to happen.”

The report also contends that labor costs at charter schools tend to be unusually top-heavy, as EMO executives conserve funds by hiring young, relatively inexpensive staff — and then add the savings to their own salaries.

“Early studies of charter schools in Pennsylvania found charter teacher annual salaries to be on average $18,000 lower than teacher salaries in district schools,” the report said. In contrast, top EMO heads can draw comfortable six-figure salaries, the report said. Eva Moskowitz, a high-profile New York charter advocate and CEO of the city’s Success Academy network of charter schools, was found in the report to earn more than $475,000 annually.

In New York and other cities across the United States, charter schools have become a flashpoint for political fights between community activists, elected officials, teachers unions and EMOs. Over the past few years, Chicago Mayor Rahm Emanuel’s support for charter schools has become a major point of contention and was one of the underlying grievances that helped drive a 2012 strike by the Chicago Teachers Union.

NEPC Director Welner said that it wouldn’t be realistic to eliminate the charter model, but that it could be markedly improved through reforms.

“I think a much more likely scenario wouldn’t be eliminating charter schools, but designing the rules around charter schools so that they accomplish the goals that we as a society have for our public education system,” he said.

The NEPC report suggests that state authorities impose stricter financial disclosure rules on charter schools, and that school districts should “maintain control over public lands and facilities,” among other policy recommendations.

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