Shocking Report: US Privatized Charter School Program Riddled With Fraud, Abuse And Waste


The Center for Media and Democracy has released a disturbing year-long report on the lack of accountability, transparency and oversight in the $3.7 billion given to charter schools instead of public schools since the 1990s.

The report looked at over two decades of appropriations for 11 states and Washington, D.C. The way the process works is the annual budget allocates funds and states apply for the funds which are distributed to the schools. The schools in some states have the ability to apply directly to the Department of Education. What you see when you look specifically at Michigan, who received more than $3.5 million, is that 20 percent of the schools who applied for funding never actually opened. So where did the money go? Does the state or federal government get that money back? No. It just disappears with no accountability. When someone proves they can’t manage funding they get from the government, generally they lose that funding. At the very least there’s a hearing. In Michigan, you can just start another charter school.

The state is arguably one of the worst when it comes to accountability of its charter schools. The Detroit Free Press did an extensive expose last year that details $1 billion in funding to the charter schools in the state with zero accountability or transparency for where the funds go. Some of these schools do well and perform on the level with public schools, but many do not do well but are allowed to stay open year after year. The Free Press investigation found “a majority of the worst-ranked charter schools in Michigan have been open 10 years or more.”

According to the CMD report, Michigan scored $34,997,658 between 2010-15 under the Department of Education’s Charter School Program (CSP) funding umbrella. This money came in addition to the state’s $43.9 million award under the CSP expansion in 2010. As of today, 297 charter schools operate in Michigan and 108 have closed either from a lack of “academic viability” meaning they can’t actually teach, “financial viability” meaning no one enrolled or they couldn’t afford to actually run the school. Due to the lack of transparency, taxpayers in Michigan don’t know how much money has been lost due to these 108 schools blowing through cash and not opening. We can assume it was at least $1 million, though.

What’s the story about these schools? Why did they close? Why couldn’t they make it work? Where did the money go? There aren’t a lot of answers. Some have closed due to allegations of fraud. There are even cases of people who started charter schools, got funding, closed the school down either before it opened or just after it opened and then turned around and started up another charter school. It’s literally an education racket.

If you think the fraud in Michigan is bad, look at Ohio which received one of the largest sums. Fun fact about Ohio: there’s a huge investigation into testing results which might be fraudulent. Governor John Kasich’s school-choice chief in the Ohio Department of Education, David Hansen, was found to have coordinated efforts to “falsely inflate evaluations of charter schools” according to The Columbus Dispatch. He was forced to resign this summer in disgrace and everyone has scrambled to prove that Kasich didn’t know this was going on. The problem is, Hansen is married to Kasich’s chief of staff and campaign manager. So, it’s a pretty cozy relationship.

Ohio is different in that it does actually have some lax oversight and charters are obviously required to be rated which is why its public that so many schools earned an F grade and Hansen’s needed to try to “fix” the grades. “Those F grades for schools with thousands of students and run by major Republican donors would have dragged down the rating of the oversight agencies, possibly costing them access to new perks from the state,” reported.

Between 2007 and 2012, Ohio charter subgrantees scored $32.6 million in CSP funds, but more than $4.6 million went to schools that later closed or never opened. If you broaden the scope of the funding years, Ohio has received more than $195 million in CSP SEA grants between 2004 and 2015. Again, no idea where that money went. The plot thickens, however. The National Association of Charter School Authorizers (NACSA) was one of the most critical of Ohio’s charter program and the fall from grace. Their spokesperson even went so far as to call it “more broken than the Wild West.” How do you get NACSA to shut up?

“The [Ohio Education] Department will partner with NACSA to develop a series of tools and trainings to be made available for authorizers across the state with the goal of improving authorizer practices statewide at a cost of $40,000 per year,” the DOE said in a released statement. Funny how that works.

The same is true for California. The state is huge, so it should surprise anyone that it is the largest recipient of funding to expand charters under the U.S. Department of Education’s CSP grants. California was given up to $254 million between 2010-15, the report says. “With that level of funding the state education agency has created [a] bureaucracy that is invested in and advocates for charters rather than engaging in robust oversight of them.”

In California nearly 1 out of every 5 charter schools closes. “Their failures have included stunning tales of financial fraud, skimming of retirement funds, and financial mismanagement, material violations of the law, massive debt, unsafe school conditions, lack of teacher credentials, failure to conduct background checks, terrible academic performance and test results, and insufficient enrollment,” the report says. Some schools didn’t even have basic fire protections. No one in California knew where the funding for these schools went in the case of closed schools when auditors looked. These schools will close mid-term or mid-year with no notice and nothing more than a message on the website. Doesn’t exactly speak to responsible oversight.

If that isn’t bad enough, one public interest group has filed claims with the state about how specific charters require parents do unpaid work as a condition for their families being admitted to the school. So, families that are already distressed financially, working as much as they can, now they must give unpaid labor to the charter to save the school money so their children gain admission.

These are just three states out of the 11 plus Washington, D.C. The report, as much as the investigators wanted to, didn’t include states like Louisiana where charters have taken over since hurricane Katrina. They did select a broad range of eastern, western and central states as well as large states and small to ensure they got a variety.

When you talk about getting a huge funding award from the United States Department of Education, these should be the cream of the crop. These schools should be the best and the top schools in the country. Yet, some of these are so bad they can’t even open. Some open and quickly close. Some stay open for a year and then close mid-term the year following. If this was any other organization that was being given funding in the US budget, it would have been shut down by now. If Planned Parenthood had these kind of financial problems and outright fraud, they wouldn’t just lose their funding, Congress would try to have them executed.

The funding process has been captured by the charter school industry where they’re basically helping each other get more and more money for these privately run schools. They get money from the feds and from the state all the while enjoying inadequate transparency, lax regulations and almost no accountability for their big checks on the taxpayer dime.

Let’s also not forget this money is going to these schools instead of public schools which do have oversight, respond to a freedom of information request and if you don’t like the way schools are run you can run for school board. With these corporate education farms, you end up with a black hole of cash hogs and a void of accountability. If the Department of Education is going to insist on funding corporate education, the last we can do is put a system in place where parents can search and find out information to make decisions for themselves on if they want their kids to go to school there. Maybe something like the Yelp for schools where parents can check if it is a legitimate school or not. As it stands, that doesn’t even exist.

Feature image by Phil Roeder/Flickr.

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