New Report: Taxpayers lose $216 million to charter waste, fraud, and abuse

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by Brian Washington

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A new report concludes that taxpayers in 15 states have lost about $216 million to charter-school waste, fraud, abuse, and mismanagement.

The report, issued this week by the Center for Popular Democracy, says that number is based on confirmed and alleged reports linked to charter schools.

Entitled “Charter School Vulnerabilities to Waste, Fraud, and Abuse”, the report gives several examples of cases that have grabbed headlines. One involved the founder of three charter schools in Atlanta who was arrested and charged with misappropriating about $600,000 he allegedly obtained through ATM withdrawals linked to the schools’ accounts.

Another case mentioned in the report involves the Hope Academy Charter School in Kansas City, Missouri. Law enforcement officials are suing the school for $3.7 million in state funding they charge was misappropriated by the school.

According to the report, with the rapid growth of charters nationwide, local and state governments are not equipped to adequately oversee the public’s investment in these schools. It adds that state, local, and federal governments nationwide could lose more than $1.8 billion this year due to deficiencies related to oversight. That’s up from losses totaling $1.4 billion in 2015. The report claims the bulk of these losses will go undetected because of the inability of government at every level to adequately monitor and regulate charters.

Public funding for charter schools (including local, state and federal expenditures) has reached over $30 billion annually,” states the report’s executive summary. “Yet despite this tremendous ongoing investment of public dollars to charter schools, government at all levels has failed to implement a system that proactively monitors charter schools for fraud, waste, abuse, and mismanagement.

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Click here to read the full report.

The report states that within the last 20 years, the federal government has given more than $3.3 billion to states to increase its number of charter schools. However, it has not laid out any significant requirements for oversight.

Under the Every Student Succeeds Act (ESSA), the new law that replaced No Child Left Behind, the federal investment in charter schools is expected to grow exponentially—making the need for charter reforms all the more important.

“With the recent passage of the Every Student Succeeds Act (ESSA), the federal Department of Education is set to increase the pace of spending significantly over the next 10 years, doubling the total federal investment in charter schools in half the time,” states the report.

“With the continuation of inadequate oversight mechanisms and the new influx of federal dollars likely under ESSA, 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.”

However, CPD has several recommendations to improve oversight, including the following:

  • Mandate audits that are specifically designed to detect and prevent fraud and increase the transparency and accountability of charter school operators and managers;
  • Design clear planning-based public investments to ensure that any expansions of charter school investments ensure equity, transparency, and accountability; and
  • Increase transparency and accountability to ensure that charter schools provide the information necessary for state agencies to detect and prevent fraud.

CPD has issued similar reports and recommendations in 2014 and 2015. In its initial 2014 report, CPD concluded that taxpayers in those same 15 states had experienced over $100 million in charter losses. In its 2015 report, that number was bumped up to over $203 million.

Reader Comments

  1. I find it increasingly difficult to vote for school measures and bonds like propositions 51 and G1 this election cycle as they may or may not be used to improve public education or may be designed to give Charter Schools even more of the desperately needed funding over the languishing public schools. G1 is so muddy that this college grad cannot make any sense out of the way the funding will be determined. Building more classrooms for charters seems imprudent. Let the billionaires who are funding the election propaganda fund these “public” charters that are disguised private schools themselves.

  2. Funny you talk about public schools that sue Charter schools. Recently in our area, it was the Charter school that hired a high priced power attorney over a dispute to take over more classrooms. The Charter school was not happy with the additional rooms offered to them, but instead wanted the newly remodeled classrooms (classrooms they had not wanted the previous year). They also removed the State preschool because their presence was not wanted and did not fit with the Charter school. The district tried to negotiate with the Charter, but to no avail and did not want to pay more public funds fighting a private lawyer. Something needs to be done. Seems the wealthy are getting private schooling on public monies.
    By the way, now those children attending the State preschool have been displaced and are looking for another place to get a jump start on education. Ridiculous!

  3. Is America okay with an entire generation of young people were harmed educationally by resources not available due to this squander and theft.

  4. What group is responsibe as well as authorized to investigate and report findings? I hear “abuses!”, but where are the clear statistics and verifiable research studies that can be used by attorneys for the public schools to sue so called guilty charter schools? Your accusations and arguments are specious without clear, DOCUMENTABLE proof of your claims…. AND if you’re not getting the verifiable proof out there in the public eye what are you waiting for???? The public schools as well are very guilty of wasting vast amts of money changing progrsms that dont work, battling lawsuits that should not have happened, etcetera! etcetera etcetera! I am not a proponent of charter schools.

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