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As charter school expansion continues, regulatory oversight varies: Tips for digging into local education

January 26, 2016

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Photo taken by Flickr user Michelle TeGrootenhuis

Backed by wealthy advocacy groups like the Bill and Melinda Gates Foundation and the Walton Family Foundation, charter school proponents have long touted the schools as the way to improve education performance for low-income children. Backed by millions of dollars from pro-business interests and market-based reform-minded groups, they aim to expand charter school options and school vouchers.

Earlier this month, The Bentonville, Ark.-based Walton Family Foundation pledged to spend $1 billion backing new charter schools over a five-year period, Arianna Prothero of The Associated Press reported. A foundation spokesperson said poor families deserve more school options that help children succeed, including charters.

The problem: charter school oversight varies widely across the country — and while some charter schools have succeeded well, many remain no better (or even worse) than their public school counterparts. In some states, records laws are so lax, finding data to compare charter schools to the performance of public schools is tough. Opponents to charter schools, like former U.S. Assistant Secretary of Education Diane Ravitch, argue that charter schools hollow out existing public schools and benefit business interests without any clear upside to poor (often majority black) students.

Even the often-promoted, “2015 Urban Charter School Study,” found that, on average, less than half of urban charters perform better than traditional public schools in both reading and math.

Use the old journalism adage: follow the money in your own community. What foundations and business interests back education reform in your community? And how is that support changing the local education landscape?

Charter school laws and funding varies widely across the U.S. but in general charter schools receive public tax dollars from the local school district for each student enrolled, including for transportation. That formula puts them in competition with local, traditional education districts. Unlike public schools, in many states, anyone can start a charter school: parents, community leaders, businesses and even professional athletes.

Institutional Investor writer Imogen Rose-Smith reported former tennis star Andre Agassi has partnered with money manager Bobby Turner to fund charter schools across the nation through two private hedge funds. In October, Rose-Smith reported Agassi and Turner had just closed their second fund, expecting to raise $400 million from investors.

The charter school movement is a boom for hedge funds and investors, Huffington Post contributor Alan Singer explained. Tax code incentives designed to promote economic development in low-income areas allow banks and equity funds that invest in charter schools in these areas to take advantage of “a very generous tax credit,” he wrote. By some counts, investors can double the money they’ve invested over a seven-year-period. Singer muses the tax credit may have even encouraged Facebook CEO Mark Zuckerberg to promote charter schools in New Jersey. Zuckerberg donated half a million dollars and opened his own foundation to build charter schools.

Justin Murphy, a reporter with The Democrat and Chronicle in Rochester, N.Y. found that a powerful education consortium backed by local business interests and politicians has raked in millions of public funds, with little regulation. Murphy’s investigation found questionable administrative practices, including a school lease with a holding company controlled by a school trustee. The lease contract includes a rental fee more than twice the median rate that other charter schools pay in Monroe County. The charter school also applied for a grant to renovate the school. But in a twist: the school doesn’t own the building.

The real estate business benefits when charter schools open by helping them find and locate property, purchase property, and negotiate leases. Many real estate investment trusts hold charter schools in their portfolios alongside movie theaters, hotels and shopping centers.

The possibilities for digging into charter schools abound. A few questions to get you started follow:

  • How do the salaries of local charter school leaders compare to traditional public school salaries?
  • What nonprofits and business groups back education reform in your area?
  • How does the performance of area charter schools stack up to traditional schools?
  • What stances do your local politicians have on charter schools? What interests finance their campaigns?


  • Jennifer Backer

    Jennifer is a business writer and news junkie who has written about everything from copper mining to soaring cotton prices. Her work has appeared in Bloomberg News, The Arizona Republic, The St. Louis Business Journal, and The Seattle Times, among ma...

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