Waste, Fraud, Abuse, And Charter Schools… Shocked? No.

Right now, charter schools are not meeting the need they were created to fill.
11/20/2016 09:52 pm ET Updated Nov 21, 2016

In Casablanca, Captain Renault says to Rick Blaine, owner of Rick’s Café Américain, “I’m shocked, shocked to find that gambling is going on in here,” after learning German soldiers are on their way to the nightclub. His attempt to bring law and order to the establishment is driven by his concern about being discovered as complicit in several illegal activities taking place.

Some policymakers and people in the education community were similarly “shocked” at the results of the recent charter school audit by the Inspector General of the U.S. Department of Education. Many of us are not surprised that public funds distributed to charter schools are at risk of “waste, fraud and abuse,” as stated in the audit. Sadly, some in the education community are playing the role of Rick and the Education Department is dutifully carrying out its responsibility as was Captain Renault.

The Education Department findings have been echoed by other organizations. According to a new report by the Independent Media Institute, the privatization of charter schools—particularly through for-profit charter school management firms—has led to a “national track record of fiscal management and self-dealing involving more than $200 million in wasted or stolen taxpayer subsidies.” The abominable actions by some charter management firms have caused the good actors to call for greater oversight.

Charter schools are public schools, even if their day to day operations often are contracted to private companies. These schools can and do play a role in K-12 education, serving as a valuable addition to the public education options available to families. Indeed, it may come as a surprise to some people, but the majority of school boards support charter schools provided the taxpayer-funded schools are authorized by them and are accountable for both their academic and financial performance, the same criteria that applies to public schools.

Right now, charter schools are not meeting the need they were created to fill—including to serve as lab schools to develop new teaching techniques—and many are failing their students and families, while squandering taxpayer dollars. Scholars, elected officials, local school boards and others have repeatedly expressed concerns about insufficient oversight of charter schools. School board members are not alone in pointing out that charters should be subject to the same rigorous oversight and financial controls as other public schools—a sensible approach given the source of funding.

The Education Department’s Inspector General found significant problems with the relationships between charter schools and the management organizations that run them. These included instances of a conflict of interest, a lack of internal controls to detect fraud or waste, or cozy business relationships that increased the risk of financial irregularities.

In Pennsylvania, the former CEO of one charter school wrote checks to himself totaling millions of dollars. Another school paid $485,000 to a vender owned by the charter school management firm—without the knowledge of the charter school’s governing board. Meanwhile, an independent examination of Ohio charter schools back to 2001 discovered more than $27 million in improper expenditures at 166 charter schools. These are just a few examples of how children and families are being hurt because money that should be used to educate children is instead lining the pockets of private companies.

Such gross misconduct begs for a thorough review of federal rules, and not for the purpose of creating more bureaucracy. Expanding oversight by state and federal agencies whose responsibilities already have been spread thin is not a workable solution. Supervision at that level likely would result in less oversight. And, it is painfully clear that this oversight is not always adequate.

There is a path forward. Oversight that is closest to the schools is a proven method of wisely managing funding and academic performance. School boards—more than 14,000 in the country—are comprised of elected or appointed members who are directly accountable to their communities. They serve as trustees whose mission is to ensure a high-quality education for local schoolchildren. And they are succeeding because they have the ability to develop plans, budgets and standards based on their understanding of the students in their district and their unique needs.

If charter schools are to be a successful option for children and families—and receive hundreds of millions of dollars in public funding—making charter schools, and the management companies that run them, accountable to local school boards is a critical step in the right direction.

This common sense action will provide the necessary governance to ensure charter management companies are putting taxpayer dollars to their proper use. In doing so, we won’t have to worry that the next Education Department audit will leave us shocked that waste, fraud and abuse are still taking place.

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