The Lucrative Side of Charter Schools

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Key NEPC Brief Takeaway: New report puts first pieces together on how charter schools are profiting through the privatization of public assets

One of the less-noticed elements of the new Every Student Succeeds Act is the authorization of hundreds of millions of federal tax dollars annually to support the increased growth of charter schools. Charter schools are educational providers, but they are also businesses, as noted by NEPC researchers in a new brief released today. A large portion of them are run by private corporations, and receive taxpayer dollars to provide their services. Yet there is very little public understanding of the often-convoluted ways these companies use those dollars and take advantage of laws in ways that enrich owners, officers, and investors.

A new research brief by Bruce Baker and Gary Miron details some of the ways that individuals, companies, and organizations secure financial gain and generate profit by running charter schools, leading them to operate in ways that are sometimes at odds with the public interest. In The Business of Charter Schooling: Understanding the Policies that Charter Operators Use for Financial Benefit, they explore the differences between charters and traditional public schools, and they illustrate how charter school policies sometimes function to promote profiteering and privatization of public assets.

The authors explain, for example, how charter operators working through third-party corporations can use taxpayer dollars to purchase buildings and land. The seller in these purchases is sometimes the public school district itself. That is, taxpayer dollars are used to purchase property from the public, and the property ends up being owned by the private corporation that operates or is affiliated with the charter school.

“This particular type of transaction is usually legal and it can be very logical from the perspective of each of the parties involved,” said Baker. “But we should be troubled by the public policy that allows and even encourages this to happen.”

“In addition,” Miron explained, “less than arm's-length leasing agreements and lucrative management fees are extracting resources that might otherwise be dedicated to direct services for children.”

The authors conclude with eight recommendations for policies to help ensure that charter schools pursue their publicly established goals and that protect the public interest.

Find The Business of Charter Schooling: Understanding the Policies that Charter Operators Use for Financial Benefit, by Bruce Baker and Gary Miron, at: http://nepc.colorado.edu/publication/charter-revenue

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William Mathis

Bruce D. Baker
Rutgers University
(848) 932-0698
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