Back in 2011, your editor wrote a series of pieces on how school reformers — especially charter school operators and school choice activists — must learn from the issues of financial mismanagement and low academic quality that plagued the for-profit higher education sector. Three years later, scandals involving charters in Hartford and Chicago have once again served as reminders of how the bad behavior of operators can end up casting the entire sector (and the school reform movement as whole) in a bad light.

transformersOnce again, reformers need to take stronger measures to force out charter operators and authorizers responsible for letting such lapses to happen in the first place. Or else charter schools will face the same regulatory pressures that are now buffeting for-profits.

The latest reminder of the importance of good conduct came last week when federal investigations issued subpoenas to Hartford’s Family Urban Schools of Excellence, the former operator of the Jumoke collection of charters, amid allegations of shoddy hiring practices and financial mismanagement. The federal investigation came after a month of revelations by the Hartford Courant that the charter school operator’s founder, Michael Sharpe, had falsified his academic credentials, lived in a building owned by Jumoke, and overseen the hiring of a school staffer whose felony conviction landed him on a sex offender registry. There is a chance that the Jumoke schools, which have been successful in improving the achievement of the poor and minority kids in its care, could end up being shut down.

The federal probe into FUSE came a month after another charter school operator, Chicago’s UNO Charter School Network, settled civil fraud charges brought by the U.S. Securities and Exchange Commission related to charges of financial mismanagement, conflicts of interest, and nepotism. The agency alleged that UNO deceived bondholders about its financial condition even as it faced sanctions by Illinois state officials for handing out contracts to firms owned by the brothers of Juan Rangel, the onetime Second City powerbroker who ran the chain, as well as placing three of his relatives on its payroll. For the Chicago Teachers Union, the American Federation of Teachers local, the UNO scandal has offered it an opportunity to renew its opposition to efforts by mayors Richard Daley the younger and Rahm Emanuel to expand school choice.

Certainly both FUSE and UNO are rare examples of financial and operational malfeasance within a charter school sector that has served children well. Just as importantly, school reformers and charter school operators have condemned both for their bad acts. Both ConnCAN and the Nutmeg State branch of the Northeast Charter Schools Network issued their condemnations of FUSE this past weekend.

Yet these scandals come amid other episodes of fiscal mismanagement by charter school operators. The most-notable: The scandal that enveloped American Indian Charter Schools after a California state audit revealed that its former boss, Ben Chavis, had allegedly embezzled $3.8 million from the school during its tenure. Thanks to Chavis’ alleged malfeasance, the failure of American Indian to develop strong financial controls, and the poor oversight by its board, the schools the charter school chain operates (all of which have done well in improving achievement for the kids in its care) are under the threat of being shut down. Only a state court ruling has kept the traditional district that oversees the schools — which are its competitors in the education space — from closing them down altogether.

American Indian’s situation, along with that of FUSE and UNO, prove this reality: That criminal allegations like bad studies on charter school performance, last forever and do even more damage that good news can’t always overcome. Especially when you consider that  school choice sector is a new part of an American public education dominated by traditional districts, the fact that only 13 percent of Americans can accurately describe charters, and that traditionalists are willing to play fast-and-loose in their rhetorical and tactical gamesmanship, charter schools are vulnerable to mudslinging.

It isn’t just about rhetoric. After three decades, the charter school sector (along with vouchers and other choice programs) have proven that its schools help kids succeed academically and economically in their adulthoods. A study of 521 kids attending charter schools released this month by a team led by University of California, Los Angeles researcher Mitchell Wong determined that high-quality charters can help keep kids from engaging in gang activity and drug abuse. Rand Corp. determined in its 2009 study that students attending high-quality charters are seven-to-15 percent more likely to graduate than their traditional public school peers.

But charter schools aren’t an unqualified success. Far too many charters perform no better than traditional district failure mills. Three years ago, the Thomas B. Fordham Institute pointed out in its study of failed schools that few laggard charters are ever turned around, and even fewer are shut down; this betrays the claim made by reformers that charters, unlike traditional public schools, can be easily shut down. There are cities such as Detroit where charter schools are often performing as badly as the Motor City district’s appallingly bad operations. Add in the admittedly sparse episodes of mismanagement and fraud by charter school operators, and it is clear that reformers can’t just simply declare success and go home.

At the heart of the problem is the that charter school authorizers — including traditional districts — have been far too willing to allow shoddy charters to remain in operation long after it is clear that they should be shut down. Traditional districts such as Detroit Public Schools, for example, are allowed to involve themselves in overseeing schools even though they lack the manpower (and, given their awful performance, even the credibility) to do a good job of it. [The fact that traditional districts are allowed to oversee charters in the first place, which is akin to McDonald’s having the power to watch over a Wendy’s, is especially ridiculous.] But as seen in Fordham’s own woeful experience as a charter authorizing, oversight efforts by independent outfits is no guarantee of high quality.

This is because charter authorizers can often derive revenue from charters, especially through the provision of services to schools that effectively lead to conflict of interests; it’s hard for an authorizer to provide proper oversight to schools if they are also a vendor. Only Louisiana, Minnesota, Nevada, and Washington State restrict authorizers from overseeing charter operators and offering them services without a separate contract in place. Lax oversight from states is also a problem. Only Hawaii and Washington State (along with the District of Columbia) meet the National Alliance for Public Charter Schools’ requirements for holding authorizers accountable for their work in overseeing schools; note that Washington State has only gotten legalized charters in the past few years.

Even when charter authorizers try to hold schools accountable, they can be hamstrung by state laws that allow for charters to go for as long as a decade without their academic, financial, and operational performance being subjected to formal review, and, if necessary, be shut down. In Michigan, for example, a charter authorizer can allow school operators to go for as long as seven years without any formal review. In fact, few states require charter authorizers to conduct high-stakes reviews of school operators every five years.

The good news is that key players such as the National Association of Charter School Authorizers are pushing states and reformers to pass laws that will lead to the shutdown of shoddy charter authorizers (and ultimately, shut down laggard charters). But that work has been complicated by opposition from choice activists — especially outfits such as the Center for Education Reform — out of concern that stronger accountability could lead to fewer charters and options. This shouldn’t be shocking. One of the problems these days in the school reform movement is many school choice activists — both out of genuine concern over restricting choice and because their own finances are dependent on a growing school choice sector — have become as opposed as traditionalists to the kind of accountability measures needed to transform American public education.

What the charter school sector (along with choice activists and other reformers) must acknowledge is that the expansion of school choice cannot continue without assuring taxpayers that charters (along with other forms of choice) will operate effectively and that they will do a better job than traditional districts of improving student achievement. When charter oversight is faulty, when choice programs aren’t subjected to strong accountability and oversight, they become vulnerable to scandals that do damage to the cause of systemic reform, even if they are isolated incidents compared to their overwhelming benefits. And ultimately, it is intellectually, ethically, and morally unacceptable for charter operators and choice activists to demand accountability for traditional districts and then tell taxpayers to simply trust that the programs are working properly.

So charter players and the rest of the school reform movement must take critical steps to ensure that charters are operating properly. This includes pushing for laws at the state level that force authorizers to be more-effective in overseeing charter operators or leave the sector, as well as legislation to allow for academically- and financially-failing charters to be shut down quickly. This includes only granting charters five-year contracts. Getting districts out of the business of charter authorizing — a move undertaken by D.C. a few years ago — is also critical to improving quality.

Meanwhile the sector must also engage in more-stringent self-policing, publicly and privately shame laggard charters and authorizers to either turn things around or shut their doors. The charter school sector must embrace better approaches to financial and operational management. Given that most nonprofits are terrible at their own activities, the movement should look toward the private sector for models of better practices; this includes even embracing outsourcing of functions that school operators shouldn’t be handling on their own in the first place. It also involves crafting standards and procedures for contracting and procuring services — rules that can easily be picked up from the private sector, particularly in the healthcare field — that would assure taxpayers that charters are operating properly.

Finally, reformers must step up on public relations. This includes painting portraits of what charters are doing for their students, putting kids and their teachers front and center in campaigns, traditional and viral, and touting high-quality examples of charters that are successfully building brighter futures for kids, families, and communities. As I also mentioned three years ago, charter school operators and authorizers must also build stronger ties with communities, grassroots activists, and Parent Power groups in order to blunt opposition, especially when bad actors in the sector behave, well, badly.

The FUSE and UNO scandals offer an opportunity for the charter school sector, choice activists, and the rest of the school reform movement to address challenges can hinder the expansion of high-quality opportunities our children need. Either they take the chance now — or wait until it’s too late.


Featured photo: Michael Sharpe, former chief executive officer of FUSE, before he resigned as head of the charter school operator.