School Choice & Charters

D.C. Considers Creating More Fiscal Oversight for Charter Schools

By Arianna Prothero — October 15, 2015 2 min read
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Washington D.C. might soon follow in Ohio’s footsteps in efforts to more closely monitor charter school finances.

City council members and education advocates debated a bill yesterday that would give the city’s sole authorizer more power to dig into the finances of charter school operators, according to the Washington Post.

The bill is aimed specifically at charter management companies that are either getting paid 10 percent of a school’s annual revenue to provide services, or if 25 percent of a company’s total revenue comes from a particular school.

Charter schools often hire management companies to handle the administrative side of running a school. This is an attractive arrangement for charter school leaders because it frees up school staff to focus on instruction.

However, some predatory operators have shown this setup can go awry.

For example: D.C.'s authorizer recently shut down a charter school that spent millions contracting for services with a company owned by the school’s founder.

The issue isn’t limited to the District. Similar abuses have popped up across the country, particularly in Ohio and in Michigan, where charter management companies have been the subject of several federal, state, and press-led investigations into the convoluted and self-enriching contracts operators sometimes hold with the schools they run. Even if charter school leaders raise concerns about such arrangements, it can be difficult, if not impossible, to extricate the school from a contract with a management company.

In the face of growing criticism from both anti- and pro-charter advocates, Ohio’s legislature passed a bill earlier this month aimed at overhauling the state’s charter law. If signed by the governor, the new law would require in-depth financial reporting from schools and management organizations, among many other new rules.

But the flipside to increased oversight is increased paperwork, which can be particularly burdensome for small, standalone charter schools.

“I wear a lot of hats,” Richard Pohlman, the interim executive director of D.C.'s Thurgood Marshall Academy told the Washington Post. “I was administering the PSAT this morning. I was disaggregating data last night until 1 a.m.”

That quote underscores an ongoing tension in the charter sector between providing enough oversight to make sure taxpayer dollars aren’t getting wasted, but not so much regulation that schools are subject to the same kind of bureaucracy charter laws were initially designed to free them from.


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A version of this news article first appeared in the Charters & Choice blog.