Monday, September 10, 2018
One of the major critiques of charter schools, although not the only one, is that they allow private entities to profit off the education of children. Some say the possibility of profits is a good idea because it brings new players into the education "market," incentivizes efficiency, and creates competition that might drive down the cost of quality education. In theory, I suppose that is possible, but in reality, we have seen far more evidence to the contrary. And the possibility of profit taking without sufficient state oversight also opens the door to downright corruptions. Preston Green has done an excellent job of tracking scandal and corruption in the charter school sector. I argue here, however, that what we call "corruption" is often actually legal when charters do it. The self-serving contracts and leases are the type of behavior that would land public school officials in jail, but which are relatively common with some charter school operators.
That is what makes California's new statute barring for-profit charter school operators so significant. On their face, most charter schools are non-profit. Many states will not issue a charter to a for profit entity. If Big Box Stores, Inc., for instance, applies to operate a charter in Kentucky, they state will reject it. This, however, does relatively little to block for profit entities. All Big Box Stores, Inc. needs to do is form a non-profit. They can call it Big Box Academies. If Big Box Academies gets a charter, it can then simply enter into a contract with Big Box Store, Inc. to supply all the labor and supplies for the charter school. In fact, non-profit charters regularly turn over their entire budget to for-profit management companies. Those companies can then take as much profit as they can manage. As Tom Kelley has shown, they develop "sweeps" contracts that are so egregious that the charter schools are probably running afoul of non-profit rules.
California's new charter law takes a big bite out of this problem. It makes it clear that only non-profits can receive a charter in the state. It also prohibits those non-profit charters from transferring responsibility and management to a for-profit entity. The law states:
On and after July 1, 2019, a petitioner that submits a charter petition or a charter school that submits a charter renewal or material revision application shall not operate as, or be operated by, a for-profit corporation, a for-profit educational management organization, or a for-profit charter management organization. For purposes of this section, a for-profit educational management organization and a for-profit charter management organization are entities that manage or operate a charter school.