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North Carolina charter schools are poised to rake in millions 

Charters play by a different set of rules than traditional public schools

A year ago after too many brushes with unmotivated teachers, I put my sons, ages 7 and 12, in a lottery to attend my local charter school.

I arranged a visit to the campus and programmed the address into my GPS. I looked for a school building but, to my surprise, we arrived at a church.

That day, I withdrew my children from their lottery. Not because of the church thing, but because during my visit, I learned the school had no transportation system. I'd have no way to get them to and from school every day while maintaining my day job.

Although charter schools are public schools in that they receive taxpayer money, they go by a very different set of rules. Charters are not required to operate in a traditional school building, so they often rent space from local churches. They aren't required to provide transportation to students, and are exempt from providing free or reduced meals to low-income students, teaching a standard curriculum, and enforcing a maximum limit to class size. While charters are partially funded with county funds intended for schools, they are not accountable to their local elected school board.

Charter schools arrived in North Carolina in 1996. State legislation authorized up to 100 "to provide more educational opportunities" for students who were either academically gifted or academically at-risk. In 2011, the General Assembly removed the 100-school limit and reduced minimum student enrollment requirements, opening the door for a flood of new charters. In 2013, lawmakers sought to create an even more lenient environment for charters with the introduction of Senate Bill 337, which attempted to remove requirements for teacher certification altogether and make criminal background checks for employees optional. It also attempted to establish a Charter School Advisory Board, appointed by the General Assembly as the overseeing body of charters, instead of the elected Board of Education and state superintendent. The version of the bill that finally passed and became law compromised a bit, but is still troubling. Only 50 percent of a school's teachers must be certified, though all teachers of core subjects must hold a college degree. Criminal background check standards must mirror local district requirements; however, charters can employ teachers and workers temporarily while awaiting the results of the check — potentially just enough time for a predator to pose as a teacher. The Charter School Advisory Board made its way into the final bill, with members appointed by the General Assembly, governor, lieutenant governor and state Board of Education. It makes recommendations to the board about which charters should open, and the board has the final say.

Unlimited charter schools regulated by a private board, the members of which are appointed by conservative legislators (instead of a public board elected by citizens), is a signature facet of the American Legislative Exchange Council's Education Task Force agenda. Indeed, SB 337 was nearly identical to charter school bills introduced in 13 other states last year and heralded by ALEC.

According to its website, the nine task forces of ALEC "serve as public-policy laboratories where legislators develop model policies to use across the country." Corporations can join these task forces for $2,500 a year and sit at tables with state legislators to handcraft these "model policies," which are pre-written bills that lawmakers file in their home states. In 2013, ALEC's Education Task Force was co-chaired by Mickey Revenaugh, the executive vice president of Connections Learning by Pearson, a for-profit charter school contractor. (Her profile on the company's website features a quote next to her picture: "Ask for forgiveness rather than permission and proceed until apprehended.") In 2013, lawmakers in 43 states filed 139 education bills that supported ALEC's Education task force agenda, aimed at privatization, which can include increasing charter schools and voucher programs.

Nationwide, charters are gaining bigger and bigger percentages of public school districts and sometimes, as in the case of New Orleans, overtaking them completely. The last five public schools in New Orleans' Recovery District closed this summer, leaving nothing but charter schools, which follows a plan that was implemented after Hurricane Katrina to completely reform the education system. North Carolina now has 153 charters out of 2,526 (as of the 2012-2013 school year, most recent figure) public schools as a whole, with at least 11 more expected to be approved this year.

Proponents of charter schools say it's all about giving parents more choices, but there is big money to be made in the charter school business. And where there is money, there is often corruption.

TO START a charter school in North Carolina, the founder or founders must establish a nonprofit board of directors that govern the school. The founder chooses the board, and while their resumes are submitted along with the charter application, there are no real requirements to be on the boards. Members don't even have to live in North Carolina.

The board sends an application for a charter school to the Charter School Advisory Board, detailing the school's mission statement, financial plan, proposed location, projected attendance and academic goals. The Advisory Board then recommends to the state Board of Education whether to confirm or deny the charter.

Once confirmed, the school is governed by its board of directors. However, in some cases, the nonprofit board is a subsidiary of a for-profit contractor. These contractors are called Education Management Organizations (EMOs) and they have the potential to rake in millions at the expense of local public schools.

Here's how: The EMO creates a nonprofit board to apply for a charter school. Once the school is approved, the board hires the EMO to manage and operate the school for a hefty fee. The EMO runs basically every aspect of the school, including the hiring of teachers and management of supplier contracts. Charter schools may not publicly account for tax dollars in the same way as traditional public schools in that they aren't required to use a public bidding system for vendors, so they can award facilities and supplies contracts to whomever they see fit. Sometimes, they see their own business interests as the fittest. For example, Roger Bacon Academy, a for-profit EMO, manages several charter schools in eastern North Carolina. Baker Mitchell, a member of the Charter School Advisory Board, founded Roger Bacon Academy. He also founded the nonprofit board of directors that formed the schools. Mitchell owns another company called Coastal Habitat Conservancy, which leases computers, furniture and other equipment to the schools.

He also owns the buildings two of the schools lease. Senate Bill 337 makes buildings and land leased by charters exempt from taxes.

Mitchell has basically hired himself to manage the schools, to supply the schools and to lease buildings to the schools. It's all being paid for with tax dollars, and he's getting a tax break on his real estate assets.

In Florida, where charter schools are a $400-million-a-year business, schools were found to be paying up to 40 percent of their budgets in rent to their own management companies. That's in addition to the EMO's management fee, which generally consumes about 20 percent of a school's revenue.

One of the nation's largest EMOs, Florida-based Charter Schools USA, runs Cabarrus Charter in Concord, Langtree Academy in Mooresville, and Cardinal Charter, set to open this fall in Cary. It applied this year to launch nine more charter schools in North Carolina, including five in the Charlotte area, and the applications detailed $12 million in management fees to be paid to the EMO over five years. All nine were rejected by the Charter School Advisory Board, presumably because the applications were duplicates (emails to board members asking why the applications were denied were not returned as of press time).

In fact, the Advisory Board rejected all but two of the 17 applications filed by EMOs this year. Perhaps they were attempting to be proactive against potential abuse. But board member Alan Hawkes of Greensboro was so upset by this, he let it slip to a reporter from the Charlotte Observer that the plan all along "was to have operators come into the state like they did in Louisiana and other states and quickly affect the public school choice landscape for the better and in quantity."

Hawkes seemed to be on board with slower growth when I spoke with him, though. "Public charter schools must be done thoughtfully and maintain quality to be a success. They are not the next step for day-care operators to dip into taxpayers' education monies, as we've seen some recent charter applicants presume to do."

THE NORTH CAROLINA Office of Charter Schools, a subsidiary of the state Department of Public Instruction, has consultants who are supposed to hold charters accountable to admissions, financial and academic standards. Until recently, they employed only three consultants for 133 schools, or about one for every 44 schools. Lawmakers voted to increase their staff last summer. They now have eight consultants overseeing 153 schools, or about one for every 19, but that is still far below the national average of one for every nine.

Another huge obstacle to accountability is an amendment the House added to the Senate charter school modification bill (SB 793) that exempts EMO employees working for charters from state public records laws, which require their salaries be public information. Gov. McCrory previously stated he would veto the bill if it contains this provision, saying in a statement, "I will veto any attempt to hide the names of charter school employees from the public record and I encourage the General Assembly to pass the legislation without this provision."

Rep. Charles Jeter (R-Huntersville), who proposed the House amendment, said disclosing charter school employees' merit-based pay would create a hostile work environment. Mitchell of Roger Bacon Academy wrote on his blog, "The need for transparency is superfluous," and that insisting charter schools disclose all names and salary information implies McCrory "felt the parents were too ignorant to properly exercise their choice in selecting a school for their children."

State Superintendent June Atkinson unintentionally smacked down this reasoning in a statement to Creative Loafing. "It is important that public charter schools are held to the same accountability and public information standards as other public schools so that parents will have information in making decisions for their children." Because more information means more informed decisions, and a key piece of information is where the money goes.

The charter school bill on McCrory's desk has gone through several modifications, including a version that attempted to protect LGBT students from discrimination. The final version does not seem to include such language. Indeed, diversity is a problem for charter schools. A 2011 study by Duke University professor Helen Ladd showed that charter schools in North Carolina increased segregation and the achievement gap between black and white students. It also found that charters serve a dramatically lower percentage of low-income children than traditional public schools. The study warned North Carolina to expand charter schools slowly and cautiously to "avoid the resegregation of North Carolina schools."

CHARTERS AREN'T all bad. While studies show charter school students perform, as a whole, the same academically as their public school counterparts, there are cases in which they far exceed them. (Bear in mind charter schools have discretion over who they admit; public schools must admit anyone.) For example, Charlotte's Metrolina Scholars Academy, founded in 2000, has led the state in EOG test scores since 2010. It's an example of a great charter that was established to focus on serving the needs of academically gifted students and begins teaching high school-level courses in sixth grade, along with specialty courses like string instruments, Mandarin Chinese and Tae Kwon Do.

North Carolina allotted $304,459,644 to fund charters in 2013-14 school year. Schools receive funding on a per-student basis. According to a study of fiscal year 2011 by the University of Arkansas Department of Education Reform, North Carolina charter schools received about 17 percent less per student than public schools, mostly because charter schools are not eligible for lottery and building funds.

The Charlotte metro area has 22 charter schools, including 10 new schools expected to open in time for the next school year. But one that was approved, Charlotte STEM Academy, announced it didn't meet student enrollment projections and would not be opening. When this happens, CMS must absorb the students, but without the money the state allots per pupil.

Atkinson says she expects charter expansion to level out over the next three years. "I also anticipate that we will experience more and more collaboration between charters and other public schools."

Hawkes of the Charter School Advisory Board seemed eager to assert that traditional public schools aren't going anywhere. "Both types of public schools will be major assets as our state competes with other states for new business and increased prosperity for our people."

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