LOS ANGELES — California charter schools are facing more scrutiny as their numbers grow.

The number of charters in the state has grown from 200 schools in 1998 to 1,230 schools with 581,100 students, representing 10% of California students, according to a study, “Spending Blind,” produced by In the Public Interest, a research and policy center skeptical of privatizing of public services. It’s an affiliate of the Coalition for Working Families.

The state has spent $2.5 billion in tax dollars or taxpayer subsidized funds to lease, build or buy charter school buildings, said Gordon Lafer, the study’s author, who is a political economist and associate professor at the University of Oregon’s Labor Education and Research Center.

Lafer highlighted allegations of corruption and unethical practices at three California charter school systems: the bankrupt Tri-Valley Learning Corp., Magnolia Public Schools and Celerity Schools.

The East Bay Times, a northern California newspaper, has reported that Bill Batchelor, the former chief executive officer of Tri-Valley Learning, is under investigation by the Alameda County District Attorney’s office for allegations of fraud and embezzlement involving the district’s bond issues. A spokeswoman for the DA would not confirm or deny it.

Several federal agencies including the Federal Bureau of Investigation and the Internal Revenue Service raided Los Angeles charter operator Celerity’s corporate offices in January seizing records and computers, but no charges have been lodged.

And Magnolia has weathered an audit and concerns that a significant percentage of its staff is Turkish. There were several U.S. charter schools with similarly large percentages of Turkish teachers, who were found to be providing money to the Gulen movement, but that has never been proven with Magnolia. The movement is being targeted by the regime of Turkey’s president, Recep Ergodan.

That claim remains unproven regarding Magnolia. But the chain was denied charter renewal for three of its Los Angeles schools by Los Angeles Unified School District. It appealed to the State Board of Education and obtained the renewals.

“Those cases show that there is not enough of a filter on who can get money,” Lafer said. “Anytime there is government money, where there is a low bar to entry, you get people looking to make a buck in ways that are unscrupulous.”

Lafer said the larger problem isn’t the potential for corruption, but that the state is spending millions and is not accomplishing the goal stated in the 1990s legislation of creating extraordinary choices for students.

The California Charter Schools Association countered the Lafer's findings in a statement saying that the study “distorts the charter public school facilities situation.”

“ITPI has a well-documented and biased point of view on the role charter schools play in the public education system, and their longstanding relationship with teachers unions,” CCSA said. The “report is likely just the latest tactic by the California Teachers Association to not only stop charter schools from growing, but to shut down even the most effective charter schools.”

The association said the report also leaves out facts, including that charters are growing because of parent demand for high quality public school options for children, that charters locate where demand is greatest and that charters spend a larger amount of funding on facilities because they are unable to access public school facilities, to which their students are entitled under state law.

“Charters and CCSA have had to sue districts all the way to the California Supreme Court to try to secure compliance with Proposition 39 law, and still the districts fail to allocate space equitably to all public school students,” CCSA said.

The idea behind the charter school legislation written in the 1990s was to fund start-ups where parents and teachers could try new and innovative things, but, in general that is not happening, Lafer said.

“There are two parts to it,” Lafer said.

First, he said, charter schools are building new schools in areas where there is already enough existing classroom space. If a traditional school district wants to build a school and issue general obligation bonds, it has to show it needs the additional space through enrollment projections, but that is not the case for charters, Lafer said.

“So that is one problem, the state is spending millions for unneeded classroom space, according to its own calculations,” Lafer said.

But the larger question, according to Lafer, is why the state is spending that much public money for charter schools that perform the same – and sometimes worse – than public schools.

“I would say that taxpayers should not be paying money to open more schools for kids unless they are receiving something extraordinary,” Lafer said. “I don’t know what that bar should be – if the schools should be producing test scores that are 30% higher, or something else.”

Charter schools are not even required to provide an education equal to what public schools provide, he said.

He pointed to data from the California Charter School Association that said 160 charter schools are performing in the bottom 10% compared to similar schools.

Political economist Gordon Lafer authored the report.
Political economist Gordon Lafer authored the report.

“As long as a charter school is not breaking the law and is financially solvent, it gets state money, no matter how bad the education is,” Lafer said.

To some parents, and former parents whose kids enrolled at the four charter schools that make up the bankrupt TVLC, founded in 2005, scrutiny of the state’s charter schools is a long time coming. Parents interviewed said they were fans of the charter school concept who have since become disillusioned.

TVLC has defaulted on nearly $60 million in conduit bond financing over the past several months. It plans to close Acacia Elementary and Acacia Middle School in Stockton at the end of the school year, according to a letter Lynn Lysko, TVLC’s chief executive officer, sent to parents. The charter school declared bankruptcy in November.

Parents and Livermore, Calif. residents – the city where the two other Tri-Valley charters are located – created a Facebook watchdog page where they post updates on the charter school’s latest controversy. The page has almost 500 followers.

Through a spokeswoman, Lysko declined an interview for herself and her staff.

“I have felt for a long time that TVLC had lost focus on the kids,” said Paul Mansfield, a former school board member and parent.

In 2012, when TVLC issued $42.5 million in debt to build a campus for its Livermore Valley Charter School, Mansfield said he wrote to the California School Financing Authority, the conduit that issued the bonds, saying he thought the deal was excessive.

Lafer paints a picture of TVLC in which the charter school had financial difficulties before approval of both bond issuances, but was still able to issue unrated debt through state treasurer conduits.

“In the two years, preceding its bankruptcy, Tri-Valley took money from its teacher’s paychecks designated for pension and insurance contributions, but never deposited the funds when they were due,” Lafer wrote. “The company also failed to make its own contributions toward teachers’ pensions and was delinquent in paying its landscapers, therapists, contract instructors, and even its statutory oversight fee to the local school district.”

Despite, all of this, TVLC received approval to issue an additional $25 million in bonds through a conduit issuer in 2015 to open a high school, he said.

The extensive cost of Tri-Valley’s failed strategies might have been avoided if charter facility funding were held to stricter standards, Lafer wrote.

“The failure to do so does not suggest that the charter industry as a whole is more corrupt than others,” he said. “But it does point to extensive loopholes in current regulations, and suggests a critical need for the state to be more particular about how it spends school facilities funds.”
Legislators have responded with reform bills.

The most contentious is Senate Bill 808, introduced by Sen. Tony Mendoza, D-Artesia. It would eliminate the appeals system that allows charter schools denied authorization or renewal by their local school districts to seek approval from county boards of education of the State Board of Education. Instead, local school districts would be the sole decision-maker on charter school petitions and renewals.

Mendoza’s bill would also allow school districts to deny a petition if granting one would create a financial hardship for the district. State funding is based on student enrollment numbers and charters draw students away from traditional school districts. The growth of charters has been cited in LAUSD’s financial struggles over the past few years.

The California Charter School Association opposed the bill saying it would give traditional districts cover to deny charter petitions.

The CCSA has sponsored its own bill, Senate Bill 806, introduced by state Sen. Steve Glazer, D-Orinda. SB 806 would “add teeth to provisions in the corporation’s code that govern nonprofit conflict of interest and self-dealing policy and further, prohibit the operation of for-profit charter schools in California,” said Brittany Parmley, a CCSA spokeswoman.

“We agree that all public schools, including charter schools, should be publicly accountable, transparent, and educate students in a manner that preserves and protects the public trust,” Parmley said.

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