Charter Management Organizations Cheating Students and Wasting Connecticut Taxpayer Dollars
Students, parents, taxpayers, and communities getting a raw deal; State must act
January 12, 2017
Using millions of Connecticut taxpayer dollars meant to educate children, charter management organizations (CMOs) are lining their own pockets. According to a shocking new report detailing the financial data of Connecticut charter schools, some CMOs are profiting from state taxpayer dollars allocated for students, with little or no oversight or transparency as to how the money is being used.
Connecticut has increased funding for charter schools to $11,000 per pupil—an 18 percent increase over the past five years—at the same time, combined per-pupil spending at six of the state's corporate-style charter schools operating with CMOs has decreased by $1,435, or 10 percent. While these CMOs have cut back on per-pupil spending, they have hiked up their per-pupil management fees by $576 per pupil, or 53 percent (Figure 1).
"These CMOs are shaking down the State of Connecticut," said CEA President Sheila Cohen, "and using money earmarked for our students to line their own pockets—profiting off the backs of our children and state taxpayers. Our schools and teachers are always working hard to do what's best for students, but these CMOs are doing anything but."
Public education dollars become private profits
The report, Corporate-Style Charter Schools in Connecticut, prepared by Rodriguez Data Solutions LLC, uncovered disturbing examples of financial malfeasance at charter schools operated by two CMOs. The attached charts highlight the huge management fee increases for CMOs over the past five years (Figure 2). In particular, Achievement First, Inc.—which charges a 13 percent cut off the top of the $11,000 per-pupil funding it receives from the state—pocketed $5.3 million in state funds allocated for students in FY 2016 (Figure 3).
While Connecticut residents have been forced to dig deeper into their pockets to pay higher taxes to help the state balance the budget and fund important services, Achievement First has continued to increase fees, pocketing millions of dollars in state funds.
"It is unconscionable that Achievement First's management fees have increased 139 percent or $3 million over a five year-period. Achievement First is getting rich off funds that should be used for our children, and taking valuable tax dollars away from schools that need them," said CEA Executive Director Mark Waxenberg. "The best charter schools in the state do not pilfer funds away from students," he said, referring to the Interdistrict School for Arts and Communication in New London and the Integrated Day Charter School in Norwich, the state's first charter school, founded by CEA—as well as 13 others that operate successfully without management organizations or outrageous management fees.
"Instead of cutting millions of dollars in education funding to local school districts, we have to stop wasting money and stop giving taxpayer dollars to millionaires operating charter schools in Connecticut," added Cohen.
Orlando Rodriguez, an independent research analyst and author of the report, said, "The two CMOs analyzed in this report lack sufficient oversight and transparency and fail to disclose adequate information about their financial operations. The data suggests they are making quite a bit of profit even though they are technically considered non-profit."
"Based on the evidence uncovered in this report, legislators need to take action to put an end to this excessive profiteering by prohibiting management fees and demanding that any Connecticut taxpayer dollars given to charter schools stay in the schools and not end up in the hands of millionaires and corporate reformers," said Cohen.
CEA is urging legislators to review the revenue sources and expenditures of corporate-style charter schools and is specifically calling for
- The prohibition of management fees in all Connecticut charter schools
- More accountability and transparency of all charter schools
- An investigative audit of all CMOs
- Total disclosure of CMO finances
- Public disclosure of all CMO information through the state's Freedom of Information Act
- A moratorium on future charter school expansion
"Many charter school operators keep their practices hidden, and little or nothing is being done to ensure real accountability and transparency of taxpayer dollars for these rapidly expanding corporate reform operations, allowing wealthy hedge fund managers and others, to cash in on the charter school boom. The national board of the NAACP called for a moratorium on charter school expansion, and Connecticut lawmakers must do the same," said Waxenberg.
CEA believes more oversight and real transparency will force these schools to be accountable for not only their financial decisions but also their policy decisions that result in excessive expulsion rates and practices that push lower-performing students out of their schools.
"Charter schools that were intended to be more accountable to the public are turning out to be anything but, and many CMOs have taken an 'educate the best and forget about the rest' mentality, motivated by self-gain," concluded Cohen. "That kind of philosophy has no place in public education."
Additional Reports and Information
The Connecticut Education Association represents 43,000 teachers in Connecticut.