Center for Popular Democracy: Charter School Vulnerabilities to Waste, Fraud, and Abuse

Is it reasonable to give taxpayer dollars to entities that are deregulated and unsupervised? That are unaccountable and non transparent? What do you think will happen when government funds are turned over to organizations that are basically on their own and who make campaign contributions to legislator who prevent accountability for their donors?

The Center for Popular Democracy explains what you expect under these circumstances: waste, fraud, and abuse.

Here is the executive summary:

“In 2014, the Center for Popular Democracy (CPD) issued a report demonstrating that charter schools in 15 states—about one third of the states with charter schools—had reported over $100 million
in fraud, waste, abuse, and mismanagement since 1994. In 2015 and 2016, we released additional reports documenting millions of dollars in new alleged and con rmed cases of fraud, waste, abuse, and mismanagement in charter schools.

This report offers further evidence that the money we know has been misused is just the tip of the iceberg. With the new alleged and con rmed cases reported here, the nancial impact of fraud, waste, abuse, and mismanagement in charter schools has reached over $223 million since our rst report.

“Public funding for charter schools (including local, state, and federal expenditures) has reached over $40 billion annually. Yet despite this tremendous ongoing investment of public dollars in charter schools, all levels of government have failed to implement systems to proactively monitor charter schools for fraud, waste, abuse, and mismanagement. While charter schools are subject to signi cant reporting requirements by various public agencies (including federal monitors, chartering entities, county superintendents, and state controllers and auditors), very few of these agencies regularly monitor for fraud.

“The rapid expansion of the charter sector in recent years is a particularly important factor in the fraud epidemic. Local and state entities charged with oversight of charter schools are quickly becoming overwhelmed, yet the federal government continues to pour taxpayer dollars into this expansion project. Over the past 20 years, the federal Department of Education has channeled over $3 billion into states to increase the quantity of charter schools without requiring strong oversight systems. As a result, millions in federal dollars have been lost to fraud, waste, and mismanagement. The Every Student Succeeds Act (ESSA), passed in December 2015, required the federal Department of Education to increase the pace of spending signi cantly over the next 10 years, essentially doubling the total federal investment in charter schools in half the time. In 2017, President Trump and his Secretary of Education, Betsy DeVos, have proposed to increase federal funding for charter schools from $333 million in 2017 to $501 million in 2018. This increase comes after a 2016 report from the US Department of Education’s Of ce of Inspector General which found “significant risk” in the US Department of Education’s Office of Innovation and Improvement (OII) charter school grant program.

“DeVos should be particularly familiar with the dangers of fraud and abuse in charter schools. As a staunch advocate for charter schools in Michigan, DeVos has spent millions in campaign donations supporting state candidates who favored “school choice” and opposing increased oversight and regulation. The result of Michigan’s experiment in charters has been a system of failing schools run by for-pro t companies, and millions of dollars lost in fraud and waste.

“With the perpetuation of inadequate oversight mechanisms and the new in ux of federal funding, the amount of federal, state, and local dollars at risk of being lost to fraud, waste, and abuse in the charter sector is only going to grow.

“The number of instances of serious fraud uncovered by whistleblowers, reporters, and investigations suggests that the fraud problem extends well beyond the confirmed cases we know about. Based on the widely accepted estimate of the percentage of revenue the typical charter organization loses to fraud, the deficiencies in charter oversight throughout the country suggest that federal, state, and local governments stand to lose more than $2.1 billion in 2017, up from $1.8 billion in 2016.8 The vast majority of fraud perpetrated by charter officials will go undetected because federal and state governments, as well as local charter authorizers, lack the oversight systems necessary to detect the fraud.

“Setting up systems of oversight that can detect and deter charter school fraud is critical. The money saved by these oversight systems will almost certainly offset the cost of implementation. We recommend the following reforms:

“■ Mandate audits specifically designed to detect and prevent fraud, and increase the transparency and accountability of charter school operators and managers

“■ Design clear planning-based public investment programs to ensure that any expansion of charter school investment also ensures equity, transparency, and accountability

“■ Increase transparency and accountability to ensure that charter schools provide the information necessary for state agencies to detect and prevent fraud

“State and federal lawmakers should act now in establishing systems to prevent fraud, waste, abuse, and mismanagement. ESSA unfortunately does very little reduce these vulnerabilities in the Charter Schools Program. Without state and local lawmakers passing policies to increase oversight, taxpayers stand to lose millions of additional dollars to charter school fraud, waste, abuse, and mismanagement.”

from sarah


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