July 3, 2024

Jeff Bryant: For-Profit Charter Schools Provide an Entryway for Private Investors to Exploit Public Education

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For many charter school supporters, the movement has nothing to do with education, and everything to do with investment opportunities. Jeff Bryant reports for the Independent Media Institute.

Ever since charter schools were created in the 1990s, there’s been a persistent question1 of whether or not the schools introduce an element of profit-making into the public education sector. In statutory law, legislatures have generally ruled that charter schools must be operated as nonprofits. In fact, only one state,2 Arizona, technically allows for-profit organizations to be licensed to run charter schools. Yet, the charter school industry has proven to be an innovator in developing business arrangements in which third-party and related organizations profit handsomely off a nonprofit charter.

One such entryway for profit-making enterprises to exploit charter schools, according to an in-depth examination conducted by Our Schools in 2021, occurs when for-profit charter school operators partner with private investors intent on turning quick profits from public dollars meant for educating children.

Our Schools examined the relationship between Pansophic Learning, owner of the Accel Schools chain of for-profit charter schools, and Safanad Limited, a private equity firm, originating in the Middle East, with extensive investment holdings in K–12 education, senior living, and other public sector-related enterprises.

What Our Schools found was that for-profit businesses like Pansophic Learning are providing entryways for wealthy investors from abroad to flood the U.S. with money to buy up struggling taxpayer-funded enterprises and put into place elaborate business schemes and networks of interrelated companies that hide their profiteering while doing little to improve the quality of services to the public.

A request for comment regarding Pansophic’s relationship with Safanad and the partnership’s potential for conflicts of interest that was left as a press inquiry at the Pansophic website did not receive a reply.

The combination of for-profit operators backed by private equity has become prevalent in other publicly funded sectors that have traditionally been operated by federal and/or state governments or nonprofit organizations. And the results have not been beneficial to the public or the individuals the publicly funded system was intended to serve.

For example, in the government-funded prison system, “The involvement of private equity firms, which manage large investment portfolios, presents a conflict between the financial and social goals of some investors,” reported Prison Legal News in 2019, citing two studies—one from the nonprofit Worth Rises, which advocates for “dismantling the prison industry,” and the other from the American Federation of Teachers, a national teachers’ union.

Another analysis, by the ACLU, found that for-profit prison operators backed by private investors are more apt to create profit for their investors by maintaining high rates of incarceration, which results in significantly higher social and fiscal costs to the public.

Our Schools found that this combination of for-profit entrepreneurs backed by private investors is having a similarly corrosive impact in the charter school industry.

There’s plenty more to see in this article. Read the whole piece here. 

 

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