Thursday, the state’s largest teachers union, the Connecticut Education Association (CEA), published a report conducted by Rodriguez Data Solutions, LLC, an independent research firm — in layman’s terms: probably a paid consultant — that calls out charter schools for “diverting” funds meant for children to charter management organizations (CMOs).
The document specifically targets Achievement First, one of the state’s top-performing charter school networks, and Domus Kids, Inc. which manages two charter schools in Stamford, Stamford Academy and Trailblazers Academy.
Here’s an excerpt from the report:
Yet, some CMOs receive more in revenues than they spend, which creates a surplus similar to a “profit.” In addition, CMOs receive publicly-funded grant monies (i.e. Connecticut State Charter Grant) with no transparency on how the state’s grant monies are spent. All revenues go into one pot and are expended without regard to the source of the revenue. Questions surface from this review of financial data for the two CMOs (Achievement First, Inc. and Domus Kids, Inc.) that were paid management fees in both FY 2011 and FY 2016 (other CMOs and schools in this analysis do not have FY 2011 data). 1,2 The most striking finding is a per-pupil increase in management fees but a per-pupil decrease in student expenditures…
The union claims their findings are “shocking,” but the only thing “shocking” about the report is how glaringly conspicuous their attempt at maligning charter schools is.
Who’s Lining Their Pockets?
One of the main claims of the CEA’s report is that CMOs are using money earmarked for students “to line their own pockets,” here’s an excerpt from their press release:
“Based on the evidence uncovered in this report, legislators need to take action to put an end to this excessive profiteering by prohibiting management fees and demanding that any Connecticut taxpayer dollars given to charter schools stay in the schools and not end up in the hands of millionaires and corporate reformers…”
Exactly who is profiting from these fees?
It is never mentioned in the report, only that these fees are shrouded in mystery, and thus, must be nefarious in nature — though, as it turns out, it’s not that difficult to find information on where the money goes.
A cursory glance at the Department of Education website brought me to Achievement First’s 2015 annual report; a report every charter school in the state is required by law to submit. Within the report is Achievement First’s CMO 990 form (a tax form used by non-profit organizations), as well as documentation from a certified financial audit.
This is all easily accessible, publicly available information.
The CMO’s 990 form lists a cost breakdown. For example, Achievement First’s CMO spent $81,406 on legal fees. That might sound scary, but remember that this is an organization that runs multiple schools across three states.
Presumably, the CEA is implying that charter school leaders are profiting from state funds, but looking at the 990 forms, which is publicly available for all charter schools, none of the charter school board members, nor the board members from the charter school CMOs make any salaries.
Hello Pot, Here’s Kettle
One claim the report makes is true. Top employees at these two organizations do make quite a bit of money: In 2014, Achievement First Chief Executives Dacia Toll and Douglas McCurry made $262,473 and $266,730, respectively, and the Executive Director of Domus Michael Duggan made $325,045.
While Duggan’s salary does seem high (and it is), Toll and McCurry’s salary is on par with Connecticut superintendents. According to the Connecticut Mirror, over two dozen superintendents make over $200K. Keep in mind, the CT Mirror’s listing of salaries appears not to include benefit packages, whereas 990s include all compensation.
Additionally, top leadership salaries at these two organizations are on par with the salaries of other non-profits. For example, CEA Executive Director Mark Waxenberg made $321,000 in 2014. Money made through union dues, paid by taxpayer-funded incomes, including dues collected from charter school teachers — and yes, there are charter schools teachers represented by the CEA. Their money also most likely went to fund the report the CEA just published.
Talk about the pot calling the kettle black, which brings me to my next point.
Financial Transparency Is An Issue For All School Types
The report argues that more financial transparency is needed. This is true, but not just for charter schools. Connecticut has a transparency problem all around.
According to a report published by the School Finance Project, school districts aren’t reporting expenditures and expenses in a uniformed way. While traditional public schools all use ED001 forms to report their finances to the State Board of Education, there’s no uniform set of standards of how those expenses are reported. Complicating matters, charter schools and Regional Educational Service Centers (RESCs) use different forms.
This is actually why it’s so hard to compare the way money is spent across schools.
This report gives a good of example of what goes wrong. The Executive Director of Northeast Charter School Network Jeremiah Grace, told CT News Junkie that CMOs “perform like a district’s central office.” This is true, but a one-to-one comparison is nearly impossible.
According to Grace, management organizations are usually in charge of staff recruitment and training, but in Bridgeport for example, human resources expenditures are not counted in the administrative cost line item.
On average, CMOs in Connecticut take in about 10 percent of a school’s per-pupil funding, but it’s unclear whether that can be directly compared to a traditional public school’s district office expenditures, which the Connecticut Mirror reports comes in at an average of 5.2 percent of overall expenses. The items included in the estimate may not be equivalent.
It gets worse. Unlike charter schools, traditional public schools do not report school-level finance data. Basically, there is no way of knowing how much money is spent at a particular school, nor is there a way to compare school spending within a district. Which complicates school to school comparison even further.
While it’s completely legitimate to question salaries and transparency, the CEA and their report is entirely disingenuous.
Mark Waxenberg recently told the New Haven Register that CMOs are “harboring anti-union beliefs,” and who knows, maybe that’s the case, but this report certainly makes it seem like it’s the other way around.