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What Biden’s proposed reforms to U.S. charter school program really say

Education Secretary Miguel Cardona speaks at the Education Department in January. (Chip Somodevilla/Getty Images)

When he was running for president, Joe Biden said if elected he would eliminate federal funding of for-profit charter schools, a section of the charter sector that has been riddled with financial scandal. My Washington Post colleague Laura Meckler wrote that the Biden administration’s proposed new rules for Charter School Program grants “go a long way to fulfilling that vow.”

Charter school enthusiasts are deeply unhappy about the proposed rules, saying that they are intended to discourage anybody from trying to obtain federal money for charter schools. This post looks at what the rules really say.

The proposed regulations come amid growing disenchantment within parts of the Democratic Party with charter schools, which are publicly funded but operated outside of traditional school districts, usually without much or any public oversight.

Biden administration proposes tougher rules for charter school grants

Charter advocates say these schools offer necessary choices to families that want alternatives to troubled schools in traditional public school districts. Critics say charter schools are given funding that public districts need to educate the vast majority of American children, and are part of a movement to privatize public education. As for performance, charter schools are not monolithic, and public school districts are all different, but the weight of studies done on this issue shows that overall charters do not do better in educating students than public schools.

The Network for Public Education, an advocacy organization that opposes charter schools, has since 2019 published several reports on the federal Charter School Program that revealed the waste of hundreds of millions of taxpayer dollars on charter schools that did not open or were shut down. They also showed that the Education Department failed to adequately monitor federal grants to these schools. You can read about two of those reports here and here. A third report details how many for-profit management companies evade state laws banning for-profit charters.

Before the pandemic, about 6 to 7 percent of U.S. schoolchildren attended charter schools, with most states plus the District of Columbia, Guam and Puerto Rico permitting them. Since the pandemic began, charter advocates say that enrollment in charters jumped significantly, with most of the gain in virtual charters, which have long been the worst-performing schools in the sector.

Charter advocates have been worried that President Biden would try to cut back on overall spending in the Charter School Program. He didn’t. Congress recently approved a bill that keeps the funding steady, at $440 million, as the president requested, perhaps in an effort to show that he is not planning to eliminate the program but instead to reform it.

In her Post story, Meckler quoted Michael Petrilli, president of the conservative Thomas B. Fordham Institute and a charter supporter, as saying that he would support some limits on for-profit management but that the proposed rules seem “like an aggressive attempt to keep schools managed by for-profit companies from receiving these funds.” Considering that Biden said he wanted to end funding for for-profit charters, that would make sense as a goal for the administration.

Meckler also quoted Carol Burris, an award-winning New York school principal who is now executive director of the Network for Public Education, as saying she supports the new rules but expects they will have limited impact because for-profit operators will open schools without federal funds.

This post was written by Burris and takes a look at what the proposed rules do and don’t say. Burris has written extensively about charter schools and other school reform efforts for more than a decade on The Answer Sheet.

There's big money in selling publicly funded charter schools

By Carol Burris

For the first time since the federal Charter Schools Program was established in 1994, the U.S. Department of Education is setting forth meaningful regulations for its grant applicants. While these proposed rules are aimed at ensuring greater transparency and control on how nearly a half-billion tax dollars are spent each year, charter supporters oppose them. We’ve also seen objections to reform — many of which I believe are misinformed — in op-eds, including those in the Wall Street Journal, The Washington Post, and the New York Post (though these don’t all mention the same concerns). What follows is an explanation of the program and why these regulations are needed to protect taxpayers as well as the families who use charter schools.

Let’s begin with an explanation of the CSP. The program began in 1995. It is a competitive program that, among other things, gives awards to states, charter chains (known as CMOs), and sometimes directly to charter school developers to open or expand a charter school. The CSP program does not determine which charter schools can open and which cannot. The majority of charter schools that have opened over the past few decades never received a penny from the CSP. The average grant to a school is $499,818, although charter chains have received hundreds of millions of dollars.

Congress mandates that the Education Department give away a large proportion of the money appropriated to the program each year. The rush to spend the money helps explain why low-rated schools can get grants and unqualified or deceitful applicants whose schools never open can dip into those federal funds for planning. The mandate to spend the money is a problem only Congress can fix. Nevertheless, the proposed regulations would put in some solid rules of the road to better protect the tax dollars that are spent. What follows is an explanation of what the proposed regulations say and do not say.

*The proposed regulations say charter schools that for-profit operators fully or substantially control would not be eligible to get grants. They do not say that charter schools cannot use for-profit vendors.

The federal definition of a public school under the federal laws IDEA (Individuals With Disabilities Education Act] and ESEA (the Every Student Succeeds Act) is that it must be a nonprofit. When the department challenged for-profit charter schools in Arizona over a decade ago, the for-profits created nonprofit facades to allow the for-profit and its related organizations to run the charter school and still receive federal funds, including CSP dollars.

The present provisions in the CSP are not now strong enough to close this loophole; thus, the proposed regulations say:

Each charter school receiving CSP funding must provide an assurance that it has not and will not enter into a contract with a for-profit management organization, including a nonprofit management organization operated by or on behalf of a for-profit entity, under which the management organization exercises full or substantial administrative control over the charter school and, thereby, the CSP project.

Why is this important? Because for-profits have used CSP dollars to enrich their bottom line at the expense of students for years. I offer as examples the recent CSP expansion grant awarded to Torchlight Academy Charter School of North Carolina, which is now being shut down, as well as a grant to Capital Collegiate Preparatory Academy of Ohio, which has been passed from one for-profit operator to another.

The State Comptroller of New York specifically chided a school run by the for-profit National Heritage Academies (NHA) in New York for letting NHA take oversized fees for its services. NHA uses its schools to acquire and sell real estate and operates them with “sweeps contracts,” requiring the school to pass all or nearly all funding and operational control to NHA.

When taxpayer dollars go into the pockets of owners or corporations, fewer dollars go into the classroom for students.

Some argue that public schools do business with private vendors for books or transportation and that is true. However, the relationship between a for-profit management organization (EMO) is quite different from the relationship between a vendor who works with a district or a charter school to provide a discreet service. A school or district can sever a bus contract and still have a building, desks, curriculum, and teachers. This is not the case when a sweeps contract is in place. In cases where charter schools have attempted to fire the for-profit operator, they find it impossible to do without destroying the schools in the process. And public schools are subject to bidding laws to ensure that nepotism does not drive vendor choice. Charter schools are not.

13 ways charter schools shape their enrollment

The Network for Public Education identified more than 440 charter schools operated by a for-profit that received CSP grants totaling approximately $158 million between 2006 and 2017, including CSP grants to schools managed with for-profit sweeps contracts. It is a way to evade the law, and it must stop. It is remarkable that the IRS has not, to date, stepped in.

*The proposed regulations say an applicant must include an analysis of school enrollment in the area from which it would draw students. Regulations do not say that grants only go to charter schools in districts facing over-enrollment.

More than one in four parents who walk their kindergartners into a new charter school will have to find another school for their children by the time they reach the fifth grade. That is how alarming the charter closure rate is. Over one in four closes during the first five years; by year 10, 40% are gone. Between 1999 and 2017, nearly 1 million children were displaced due to the closure of their schools.

One of the primary reasons charters close is under-enrollment — they cannot attract enough students to their school to keep it going. Sometimes that occurs because of school quality. But often, it happens because a new, shiny charter school with great marketing opens nearby and draws students away.

New Orleans, a district where virtually all nonprivate schools are charter schools, is facing a crisis because they allowed the charter sector to grow out of control; they no longer have sufficient enrollment, and the district cannot force schools to merge because they are charter, not district-run, schools.

The proposed regulations do not preclude applicants who want to open a charter school in a district already saturated with public and charter schools from getting a CSP grant. It simply asks them to provide information on enrollment trends — specifically:

include any over-enrollment of existing public schools or other information that demonstrates demand for the charter school, such as evidence of demand for specialized instructional approaches.

In other words, it is asking the applicant to make their case for why the school is needed. That information will be used by reviewers of applications when they evaluate applications and rank them. Sounds like common sense to me.

*The proposed regulations say that applicants must provide assurances that they would not get in the way of district-mandated or voluntary desegregation efforts. They do not say that you cannot open a charter in a non-diverse or economically disadvantaged neighborhood.

Charter schools have been magnets for white flight from integrated schools in some places. Other charter schools attract high-achieving students while discouraging students with special needs from attending. In this letter submitted to the Department of Education last year, 67 public education advocacy and civil rights groups provided documentation that the North Carolina SE CSP sub-grants were awarded to charter schools that actively exacerbated segregation, serving in some cases as white flight academies.

The proposed regulations clarify that an application from “racially and socio-economically segregated or isolated communities would still be eligible for funding.” Nevertheless, it is repeated over and over in editorials that schools in non-diverse neighborhoods would not apply as well as “schools that don’t prioritize racial diversity,” a polite way to refer to white flight charters.

*The regulations do not say charter schools must engage in a cooperative activity with districts. The regulations state that they may receive some bonus points on their application if they do.

According to the op-ed in the Wall St. Journal: “The administration also plans to require applicants to ‘collaborate’ with a traditional public school or school district on an ‘activity’ such as transportation or curriculum.” It doesn’t, actually.

When deciding which schools get a grant, reviewers rate applications using a point system. Every grant cycle, the department puts forth priorities as a way for applicants to get a few bonus points on their applications. The majority of schools get CSP grants without them.

The regulations propose two priorities. One gives points if the school is commonly referred to as a “community school.” The second provides points to schools that work cooperatively with a district on a transportation plan, curriculum, or another project. Neither priority is required to apply for or to receive a grant.

The 72 pages of proposed regulations are tedious reading. Because they apply to three separate programs in the CSP, there is much repetition. But the details matter. Read the new regulations. You can see the Network for Public Education’s statement of support for them here, and submit your own comments before April 13, 2022.

(Correction: Fixing date of start of charter school program)