Dear Ms. Ryder:

 On behalf of the undersigned organizations, we submit the following response to the Department of Education’s request for comments related to the proposed priorities, requirements, definitions, and selection criteria of the Charter Schools Program (CSP). We commend the Department for proposing thoughtful and well-reasoned regulations that will end funding to start or expand charter schools managed in whole or substantially by for-profit organizations, provide greater supervision to the program, ensure that the charter school does not increase segregation and via impact analysis, demonstrate that the charter school is truly needed.

 The Charter Schools Program (CSP) is a statutorily established grant program that began in 1994 with the purpose of expanding high-quality charter schools when charter schools were experimental and intended to supplement, not supplant, public schools. Since its modest beginnings, the program has expanded as has the charter school sector. The CSP has been responsible, in great part, for the expansion of the charter sector and therefore indirectly responsible for problems in the charter sector that include the frequent closures of charter schools, the drain on public school funding, and the fraud and mismanagement that is frequently reported in the press. We believe that your proposed regulations are a good first step in addressing those problems.

 We the undersigned further believe that all charter schools, like public schools, must provide their students with a free education that guards students’ civil rights, provides a rich educational opportunity and protects their health and safety. Further, we believe that any school that is financed by the public must ensure that tax dollars are judiciously spent in compliance with the law. That means we support compliance with open meetings and public records laws; prohibitions against profiteering as enforced by conflict of interest, financial disclosure, and auditing requirements. We believe that all students deserve to be taught by teachers who have met state certification requirements in a classroom where they have an opportunity to engage with their teacher and their peers. We do not support virtual charter schools which are ineffective in meeting the academic and socio-emotional needs of students.

Eliminating CSP Funding to Charter Schools Managed by For-profit Corporations

 We strongly support the proposed regulations to ensure that charter schools operated by for-profit corporations do not receive CSP grants.

 The federal definition of a public school under IDEA and ESEA is “a nonprofit institutional day or residential school, including a public elementary charter school, that provides elementary education, as determined under State law.” 20 U. S.C. §§ 1401(6) (IDEA), 7801(18) (ESEA) Similarly, the statutes define a “secondary school” as “a nonprofit institutional day or residential school, including a public secondary charter school, that provides secondary education, as determined under State law․” 20 U.S.C. §§ 1401(27) (IDEA), 7801(38) (ESEA).

Former for-profit entities have created non-profit facades that allow the for-profit and its related organizations to run and profit from the charter school, following the judgment of the Ninth Circuit Court of Appeals in Arizona State Bd. For Charter Schools v. U.S. Dept. of Educ. in 2006 (464 F.3d 1003).[i]

Ineffective provisions undermine the present regulations against the disbursement of funds from the federal Charter Schools Program (CSP) to charter schools operated by for-profit entities. We identified over 440 charter schools operated for profit that received grants totaling approximately $158 million between 2006 and 2017, including CSP grants to schools managed with for-profit sweeps contracts.[ii]

The relationship between a for-profit charter school management organization, commonly referred to as an EMO, is quite different from the relationship between a vendor who provides a single service. A school can sever a bus contract and still have a building, desks, curriculum, and teachers. However, 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.

Recommendations:

 Many for-profit organizations operate by steering business to their for-profit-related entities. They are often located at the same address, and the owner of the management company or a member of the immediate family is the owner of the related entity. Therefore, it is recommended that wherever references to for-profit organizations appear, the phrase “and its related entities” is added.

(a)   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 non-profit management organization operated by or on behalf of a for-profit entity, under which the management organization and its related entities exercise(s) full or substantial administrative control over the charter school and, thereby, the CSP project.

Quality Control of Awards and the Importance of Meeting Community Need via Impact Analysis

We strongly support the proposed regulations that seek to bring greater transparency and better judgment to the process of awarding CSP grants. We especially support the inclusion of a community impact analysis.

We are pleased that “the community impact analysis must describe how the plan for the proposed charter school take into account the student demographics of the schools from which students are, or would be, drawn to attend the charter school,” and provide “evidence that demonstrates that the number of charter schools proposed to be opened, replicated, or expanded under the grant does not exceed the number of public schools needed to accommodate the demand in the community.”

More than one in four charter schools close by the end of year five.[iii] A foremost reason for both public school and charter closure and the disruption such closures bring to the lives of children is low enrollment, as seen this past month in Oakland.[iv] In New Orleans, school closures have resulted in children being forced to attend multiple schools during their elementary school years, often traveling long distances. Between 1999 and 2017, nearly one million children were displaced due to the closure of their schools, yet only nine states have significant caps to regulate charter growth.[v]

We applaud language that states, “The community impact analysis must also describe the steps the charter school has taken or will take to ensure that the proposed charter school would not hamper, delay, or in any manner negatively affect any desegregation efforts in the public school districts from which students are, or would be, drawn or in which the charter school is or would be located, including efforts to comply with a court order, statutory obligation, or voluntary efforts to create and maintain desegregated public schools…”

In some states, charter schools have been magnets for white flight from integrated schools.[vi] Other charter schools have attracted high achieving students while discouraging students with special needs from attending.[vii]  And, as you know from the letter you received in June of 2021 from 67 public education advocacy and civil rights groups, the North Carolina SE CSP sub-grants were awarded to charter schools that actively exacerbated segregation, serving in some cases, as white flight academies[viii] The information requested by the Department is reasonable and will help reviewers make sound decisions.

In addition to our support for the proposed regulations, we have two additional recommendations to strengthen the impact analysis proposal.

Recommendations: (1) That impact analysis requirements include a profile of the students with disabilities and English Language Learners in the community along with an assurance that the applicant will provide the full range of services that meet the needs of students with disabilities and English Language Learners.  (2) That applicants include a signed affidavit provided by district or state education department officials attesting to the accuracy of the information provided.

Regarding proposed rules regarding transparency, we note that in the past, schools were awarded grants without providing even one letter of support[ix], or provided false information indicating support that did not exist.[x]

We also strongly support the requirement state entities provide additional supervision of grants. The Department should require a forensic audit for any charter school applying for CSP consideration. Furthermore, any charter school that does not operate as a classroom-based entity or is operated by a for-profit entity should be barred from being awarded grant money under the CSP.  We also believe these requirements can be strengthened by requiring review teams to include at least one reviewer representative from the district public school community and that applications be posted and easily accessible for the public to review and comment upon for a period of no less than 60 days before awarding decisions.

Further we believe that the Department must require its Office of the Inspector General to conduct annual audits of 5 percent of all active awardees in each of the programs.

Proposed Selection Criterion for CMO Grants

ESSA places the following restriction on grants awarded to State Entities: No State entity may receive a grant under this section for use in a State in which a State entity is currently using a grant received under this section. However, ESSA is silent regarding the awarding of grants to CMOs. This has resulted in CMOs having several active grants at the same time, with new grants being issued without proper inspection of the efficacy of former grants. For example, it has resulted in the IDEA charter CMO receiving six grants in a ten-year period totaling nearly $300 million.[xi] These grants occurred under a leadership structure that engaged in questionable practices, including the attempted yearly lease of a private jet,[xii] related-party transactions, and the rental of a luxury box at San Antonio Spurs games.[xiii]

IDEA received two awards, in 2019 and 2020, totaling more than $188 million even as the 2019 audit of the Inspector General found that IDEA submitted incomplete and inaccurate reports on three prior grants. The IG report also looked at a randomly selected sample of expenses and found that IDEA’s charges to the grants did not always include only allowable and adequately documented non-personnel expenses.

Recommendations:

That department regulations disallow the awarding of grants to any CMO currently using a grant received under the CMO program and that for any grant exceeding $25 million, the Department’s OIG conducts an audit before an additional grant is awarded.

We thank you for the time and thought that went into the proposed regulations.