Shocking education report reveals taxpayers paying hundreds of millions for unneeded and inferior charter schools

A blockbuster report detailing how California’s charter school industry has wasted hundreds of millions of taxpayer dollars by opening and building schools in communities that don't need them and often end up doing worse than nearby public schools, is a nationwide warning about how education privateers hijack public funds and harm K-12 public schools.

“This report finds that this funding [building, buying, leasing] is almost completely disconnected from educational policy objectives, and the results are, in turn, scattershot and haphazard,” the report's executive summary begins. “Hundreds of millions of dollars are being spent each year without any meaningful strategy. Far too much of this public funding is spent on schools built in neighborhoods that have no need for additional classroom space, and which offer no improvement over the quality of education already available in nearby public schools. In the worst cases, public facilities funding has gone to schools that were found to have discriminatory enrollment policies and others that have engaged in unethical or corrupt practices.”

The report, "Spending Blind: The Failure of Policy Planning in California Charter School Funding," was written by the University of Oregon’s Gordon Lafer for In The Public Interest, a research and policy center based in Oakland, California.

Its findings are significant on national and statewide levels, especially since California has more charter schools than any other state and the Trump administration has proposed spending $20 billion for a range of “school choice” initiatives, from charter public schools to tuition vouchers for religious schools or to subsidize homeschooling. Charter schools are privately run K-12 schools and have become an industry dominated by corporate franchises seeking rapid growth.

The school reform template embraced by the Trump administration’s K-12 privatization agenda would use many of the same fiscal devices and tax-based incentives the new report has documented as wasting California taxpayer funds and harming nearby traditional schools.

Viewed from the level of state politics, where most of the nation’s K-12 education policies are sanctioned and administered, the report highlights a fundamental injustice. California’s charter industry accessed more than $2.5 billion in government-backed bonds, tax credits and grants to lease, build or buy schools in communities where school districts could not meet the legal criteria to build new schools because current or future enrollments would not justify that expansion.

“The most fundamental question to ask about any type of school construction is: how many schools are needed for the number of students we have?” the report asks. “Nearly 450 charter schools have opened [across California] in places that already had enough classroom space for all students—and this overproduction of schools was made possible by generous public support, including $111 million in rent, lease, or mortgage payments picked up by taxpayers, $135 million in general obligation bonds, and $425 million in private investments subsidized with tax credits or tax exemptions. Moreover, since this data was available for only a portion of the state’s charter schools, the real amounts of funding devoted to schools in communities that had no need for more classrooms is almost twice as great.”

The report goes further and notes that despite the charter industry’s assertions that exempting it from regulations would lead to education excellence and innovation, that absence of oversight has led to creating large numbers of shoddy schools in these unwarranted locations.

“The most commonsense question for policy makers to ask when considering funding a new charter school is: will this school provide a quality of education that is superior to that currently available in nearby public schools? Surprisingly, this question is never asked, nor has the data been assembled to easily answer it,” the report says. “This report answers that question for the first time, and for three-quarters of California charter schools, the answer is negative—that is, the quality of education they offer is worse than that of a nearby traditional public school.”

The report cites the statewide charter lobby’s research as the source for that conclusion.

“Indeed, the CCSA [California Charter School Association] has identified 161 schools that last year ranked among the worst of the worst—scoring in the bottom 10 percent of similar schools,” it says. “But this has not prevented these schools from collecting $44 million in lease payments, $57 million in general obligation bonds, $40 million in tax-credit investments, and $85 million in conduit bond financing.”

Stepping back from the worst-performing California charters, the report still paints a picture of large-scale failures by an industry whose core rationale was that the schools were wanted and needed in many communities that hungered for a reinvention of K-12 public education.

“The data suggest that at least 30 percent of charter schools fail both tests—they were opened in places that had no need for additional seats, and they failed to provide an education that was superior to that offered in nearby public schools,” it said. “Due to multiple limitations on available data, the actual share of such schools is almost certainly higher. But even by this limited measure, assuming such failures are evenly distributed across all schools, Californians provided these schools combined facilities funding of over $750 million, at a net cost to taxpayers of nearly $400 million.”

The report correctly points out that charters siphoned these multi-millions away from traditional public schools during a period of great fiscal scarcity in California. That, in turn, harmed many existing school districts that were forced to cut or curtail successful programs.

“Such indiscriminate funding comes at a time when schools across the state face urgent needs that are going unmet due to budgetary shortfalls,” the report notes. “Parents, teachers, superintendents, and school board members alike point to model programs in danger of closure; oversubscribed schools that can’t afford to expand; overcrowded classrooms that make personal attention impossible; and insufficient funding for school counselors, social workers, special education, and English-language learners.”

The report concludes by restating what many critics of K-12 privatization have been saying for years—that the original vision for a charter school—a locally created and overseen experimental public school—has been usurped by educational entrepreneurs who see great profit-making potential in accessing billions in taxpayer funds. It points out, for example, that charters in the Los Angeles area have used these state fiscal devices to buy and transfer more than $200 million in real estate property to private ownership—all under the guise of improving public schools.

“When California legislators first created charter schools, their intent was clear,” the report notes, referring to the 1990s. “They sought to empower small groups of educators to launch a wide variety of innovative startups that, by experimenting with new approaches to education, would develop superior models fit to meet the needs of the diverse students that make up the state’s school population.

“However, because legislators’ vision for charter schools has not been incorporated into funding formulas, the hundreds of millions of dollars spent annually on charter facilities have not created the hoped-for incubator of innovation and continual improvement,” it continues. “While some charter schools have proved exemplary, much of the industry has become dominated by the same types of organizations legislators had sought to reform: large chains of schools where materials, methods, and evaluation are centrally dictated and teachers lack the power to set the curriculum; Charter Management Organizations (CMOs) that replicate a single model over and over again with little variation; and schools whose quality of education is no better than that of nearby public schools, and who do not serve to spur improvements in the wider system.”

The report notes that California has raised $500 million from bond sales to fund an upcoming round of public school construction and very strongly suggests that the state develop new criteria to more wisely spend that money than has been the pattern up to now.

“It is not too late to shift course,” the report’s author writes. “With $500 million in newly appropriated general bond funding waiting to go out the door, now is the time for legislators to establish spending rules to guarantee that available funds serve to meet the most critical needs of California students. It is my hope that this report may help shed some light on this pressing issue.”

It’s not just a pressing issue for California’s public schools. As the Trump administration and Congress craft a fiscal year 2018 federal budget, one would hope that the lessons seen in the states on how privatization schemes waste public funds and harm institutions like public schools would be heeded. But just as the charter lobby has prospered in the biggest bluest state, California, there’s even less inclination for government oversight in the reddest federal government in recent memory.