You may not be aware that the U.S. Department of Education—under President Barack Obama’s appointees, Arne Duncan and John King—has been awarding billions of dollars to promote the growth of charter schools across the states. Even less reported has been the failure by the U.S. Department of Education to ensure good stewardship of federal funds through careful administration of the federal Charter Schools Program. Although the operation of the federal Charter Schools Program has been little-reported, there have been warnings. A 2012 report from the Department of Education’s internal Office of Inspector General (1) exposed the Department’s failure to ensure careful oversight of federal funds by the state departments of education who received grants, and (2) confirmed the Department’s failure to regulate the charter school management organizations that have been charged with overseeing the operations of the schools supposedly under their purview.
Another—September 2016—report from the U.S. Department of Education’s own Office of Inspector General has uncovered the very same problems. On Wednesday, Valerie Strauss of the Washington Post, broke the story of the scathing, new indictment by the U.S. Department of Education’s Office of Inspector General of the Department’s own Charter Schools Program: “The Education Department has… poured in excess of $3 billion into the creation and operation of charter schools, but according to a new audit by the agency’s own inspector general’s office, it has failed in some cases to provide adequate oversight and as a result has put its own grants at risk. The audit titled, Nationwide Assessment of Charter and Education Management Organizations, and conducted by the department’s inspector general… looked at the relationship that several dozen charter schools have had with their own charter management organizations (CMOs). It found, among other things that there were ‘internal control weaknesses’ related to the schools’ relationships to their CMOs that were so severe that the department’s own program objectives were at ‘significant risk.'”
Strauss continues: “The newly released report comes just as the department announced $245 million in new grants to state educational agencies (state departments of education) and CMOs under its Charter Schools Program, which funds the creation and expansion of charters around the country. The Charter Schools Program has invested more than $3 billion into these schools since 1995, helping more than 2,500 charter schools open… According to the audit… the department didn’t do enough to ensure that some of the charter schools it is funding have been able to reach the stated goals.”
At the end of Strauss’s column where it is posted, you can examine the new review by the Office of Inspector General (OIG) of the Charter Schools Program. This year’s investigation by OIG focuses on charter schools that are part of large chains—some nonprofit and some for-profit—and examples of conflicts of interest and financial malpractice. These are the sort of widespread problems the press continues to expose in the complicated arrangements between charter school sponsoring organizations, charter school management organizations, and the particular schools operated by the larger charter chains. We continue to read news articles about problems across the states, but little has been done to prevent the abuses.
Here is how the U.S. Department of Education’s OIG explains this year’s report: “The objective of our audit was to assess the current and emerging risk that charter school relationships with charter management organizations (CMOs) and educational management organizations pose to the Office of Elementary and Secondary Education (OESE) the Office of Special Education and Rehabilitative Services (OSERS), and the Office of Innovation and Improvement (OII) program objectives and evaluate the effectiveness of… internal controls to mitigate the risk… We judgmentally selected 6 States and 33 charter schools with CMOs as case studies and reviewed the authorizers related to those charter schools. We also reviewed internal controls and monitoring performed at the Department.” Here are some of the OIG’s new findings:
- “(W)e found that 22 of the 33 charter schools in our review had 36 examples of internal control weaknesses related to the charter schools’ relationships with their CMOs (concerning conflicts of interest, related-party transactions, and insufficient segregation of duties).”
- (T)hese… internal control weaknesses represent the following significant risks to Department program objectives: (1) financial risk, which is the risk of waste, fraud, and abuse; (2) lack of accountability over Federal funds, which is the risk that, as a result of charter school boards ceding fiscal authority to CMOs, charter school stakeholders… may not have accountability over Federal funds sufficient to ensure compliance with Federal requirements; and (3) performance risk….”
- “Further, the Department did not implement adequate monitoring procedures that would provide sufficient assurance that it could identify and mitigate the risks specific to charter school relationships with CMOs.”
This is Orwellian language about he federal government’s current incapacity to prevent situations in which charter management organizations create conflicts of interest by helping schools choose the school’s charter school board members when the board, once appointed, is supposed to choose the charter management organization the school itself will hire to run the school. Or this Orwellian language may describe the charter management organizations that have vast, hidden real estate holdings including school buildings for which the CMOs then charge their own charter schools enormous rental fees.
The new September 2016 audit from the Department’s OIG merely repeats alarms that were raised about the operation of the federal Charter Schools Program in 2012 by the same Office of Inspector General. A year ago in June, 2015, the Alliance to Reclaim Our Schools—sent a letter to then-Secretary of Education Arne Duncan complaining that while the Department had granted $1.7 billion to states for expansion of charter schools since 2009, the Department of Education’s own Inspector General had been raising alarms about the Department’s own lack of any kind of quality control. The Alliance’s letter to Arne Duncan cited formal audits in which the Department of Education’s Office of Inspector General (OIG), “raised concerns about transparency and competency in the administration of the federal Charter Schools Program.” The Alliance to Reclaim Our Schools cited questions raised in OIG’s 2012 audit about the weak regulatory capacity of the Department of Education’s Office of Innovation and Improvement and the incapacity of state departments of education which disburse the majority of the federal funds, as ill equipped to keep adequate records or put in place even minimal oversight. The Alliance to Reclaim Our Schools accused the Department, according to its own 2012 OIG assessment, of failing to maintain records of the charter schools funded through grants to states, lacking internal controls, and failing to train its employees in fiscal and program monitoring. The Alliance noted that in 2012, none of the three states selected as samples for investigation by the Office of Inspector General—Arizona, California, and Florida—sufficiently monitored the charter schools funded with federal grants. Twenty-six charter schools in these three states were shown to have been closed after being awarded $7 million, and that even when the schools closed, nobody tracked what happened to assets that had been purchased with federal funds.
Finally in 2016, led by Ohio Senator Sherrod Brown, Congress has begun to raise serious concerns about the Department of Education’s failure to monitor and oversee the huge federal grants for charter schools. A year ago, the Department made a $71 million grant to Ohio based on a grant application submitted by the Ohio Department of Education—a grant application whose bragging about Ohio’s oversight of charter schools has since been found to have been vastly overstated. In June of this year, Senator Brown wrote to Secretary of Education John King demanding that more be done “to provide order to the state’s chaotic charter school sector… I ask that you examine the performance of Ohio charter schools who have received CSP (Charter Schools Program) grants to determine whether grant recipients are failing or closing at a higher rate than those in other states and how the academic performance of CSP grant recipients in Ohio compares to CSP grant recipients nationwide.” Senator Brown asked the U.S. Department of Education to insist on the appointment of a special monitor to oversee Ohio’s $71 million grant.
Apparently Senator Brown’s pressure worked, because just weeks ago, when the U.S. Department of Education finally released the grant to Ohio, the money came with what the Department called “high risk” conditions—that Ohio must get prior approval from the federal Department of Education before transferring money to any charter school or charter management organization; that Ohio must improve its oversight of what are called “dropout recovery schools; that Ohio must provide quarterly reports on its progress in overseeing charter schools; that Ohio must strengthen regulation of charter school sponsors; that the Ohio Department of Education must hire an independent monitor of the administration of the $71 million grant; and that Ohio must create a Grant Implementation Advisory Committee.
The report Valerie Strauss brings to our attention this week—from the U.S. Department of Education’s own internal Inspector General—confirms that Ohio’s lax regulation of charter schools typifies a widespread problem underwritten by the federal government. The U.S. Department of Education that has spent $3 billion since 1995 for charter school expansion across the states needs to clean up its oversight and strengthen regulations. It is to be hoped that Senator Sherrod Brown and Congress will keep up the pressure. (This blog has covered the need for better regulation of the federal Charter Schools Program here, here, and here.)
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