Should a charter school be reimbursed for a lease to itself?
That’s the question at the center of yet another scandal about the industry.
Auditor General Eugene DePasquale found nine Pennsylvania charter schools taking $2.5 million from the state to pay themselves back for properties they already own.
“What we found in some of our audits the same people who own and operate charter schools create separate legal entities to own the buildings and lease them to their charter schools,” DePasquale says. “We keep finding it and supplying the information to the department and they do nothing with it.”
His office found this happening in nearly a third of the 40 charter school audits done since he took office in 2013.
This goes against Pennsylvania Department of Education (PDE) guidelines adopted 14 years ago, says DePasquale. A charter school is not eligible for lease reimbursement if it owns the building.
PDE spokeswoman Casey Smith agrees. Charter school CEOS “are required to sign a self-certification statement verifying that the charter school does not own the building and that the building is being used for educational purposes,” she says.
This is exactly the kind of malfeasance the U.S. Department if Education warned states to look out for as recently as 2015.
However, DePasquale found questionable lease reimbursements at Propel Schools in Allegheny County, School Lane in Bucks County, Chester Community in Delaware County, Perseus House of Erie County, Fell of Lackawanna County, Roberto Clemente of Lehigh County, Bear Creek Community of Luzerne County, Keystone Education Center of Mercer County and Evergreen Community of Monroe County.
If this practice has been going on since the guidelines were enacted in 2002, many more charter schools also may have cashed in. DePasquale estimates charter operators could have bilked the state out of $10 million to $15 million over that time period.
It’s shocking that so many charter school operators would consider themselves entitled to state money for something that doesn’t cost them anything to provide. They are supposed to be running public schools, but they continually flaunt their ability to disobey the law at state expense. This money doesn’t do a thing to help students learn. It goes directly into charter operators’ pockets.
For education advocates, this is one of the most pervasive problems with the charter industry. Making profits is put before educating children. At traditional public schools, surplus earnings are not allowed by law. All taxpayer funding goes to provide services for the students. While staff earns a salary, no taxpayer money is ever allowed to be pocketed in excess to boost the bottom line. Extra money – if it appears – is saved to be spent the following year or later.
Charter advocates see it differently. They think competition is necessary to produce superior results, though the result is often a waste of tax dollars that could be put to better use helping our underfunded public schools.
In this case, lawyers for the charters in question say their clients have done nothing wrong.
These payments meet the letter of the law, says Alan Shuckrow, a lawyer for Propel, which took $376,922 in lease reimbursements of this kind.
“From Propel’s perspective, we’re following the law and if the law changes, we’ll comply with that law,” Shuckrow says.
It all depends on how you interpret the law, says Robert Fayfich, executive director of the Pennsylvania Coalition of Public Charter Schools.
“The auditor general takes the position if the building is owned by a charter school then it’s not reimbursable and PDE says ownership is irrelevant to reimbursement,” he says. “I’m sure charters are working based on the recommendation from their legal counsel plus direction from PDE.”
DePasquale agrees with Fayich to a point. The auditor general says the fault isn’t so much with the charter schools for applying for these reimbursements. It’s with PDE for granting them in the first place, and then taking no action to get the money back.
DePasquale and his predecessor, Jack Wagner, pointed this out numerous times, he says, yet the department has “never made an attempt to clawback any of these funds.”
This is just one of many reasons he considers the Commonwealth’s charter school law the worst in the nation and in desperate need of reform, he says.
However, reform seems unlikely in a state where lawmakers typically put their own names to legislation written by the American Legislative Exchange Council (ALEC).
Just such a “reform” bill was pushed during the adoption of the 2016-17 state budget, but it was dropped due to lack of support.
Known as House Bill 530, it would have allowed for unlimited proliferation of charter schools without input from the traditional public school districts or voters who would have to foot the bill. While it did provide a bit more oversight, the bill was an unforgivable giveaway to the industry at the expense of taxpayers.
Supporters are threatening to take the bill up again later this month.
If this is what lawmakers mean by reform, we’re in big trouble.
The problems are out in the open. Public servants like DePasquale keep pointing them out to us, but no one has the guts to stand up against a big business like this one – even if it hurts school children.
The PDE needs to stand up. Lawmakers need to stand up. Voters need to stand up.
Otherwise we in Pennsylvania will continue to sell our children short in favor of the immediate financial gain of corporate vultures disguised as educators.
6 thoughts on “PA Charter Schools Caught Gaming the System for $2.5 Million”
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