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ICYMI, Brunswick County Public Schools official Jessica Swencki has a great essay in this morning’s edition of Raleigh’s News & Observer in which she explains what’s really driving a large and growing segment of the charter school movement: private, for-profit companies out to milk the public coffers.

“In North Carolina, charter schools are operated by ‘nonprofit’ corporations, which are not subject to the same laws that demand public accountability for state and local tax dollars. These ‘nonprofit’ corporations can be subsidiaries of larger for-profit corporations – all the nonprofit corporation needs is a ‘board’ of purportedly earnest, well-intentioned people during the application process. Once the charter is granted, there is very little to stop the potential exploitation of our state’s limited public education resources.

In fact, one doesn’t have to look any further than the Eastern part of the state for a case study in how savvy companies use this loosely regulated system to pocket millions of taxpayer dollars.

Click here to read the rest of Swencki’s explanation of how this scam works.

Moody’s Investment Services, one of the nation’s major bond credit rating businesses, put out a report this week warning that dramatic growth of charter schools can undermine the financial footing of public school districts.

The report found that urban school districts already on shaky financial terms are most at risk of a downgrade in credit ratings from a sudden surge in charter school enrollment.

From a news release about the report:

The dramatic rise in charter school enrollments over the past decade is likely to create negative credit pressure on school districts in economically weak urban areas, says Moody’s Investors Service in a new report. Charter schools tend to proliferate in areas where school districts already show a degree of underlying economic and demographic stress, says Moody’s in the report “Charter Schools Pose Growing Risks for Urban Public Schools.”

“While the vast majority of traditional public districts are managing through the rise of charter schools without a negative credit impact, a small but growing number face financial stress due to the movement of students to charters,” says Michael D’Arcy, one of two authors of the report.

Charter schools can pull students and revenues away from districts faster than the districts can reduce their costs, says Moody’s. As some of these districts trim costs to balance out declining revenues, cuts in programs and services will further drive students to seek alternative institutions including charter schools.

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The ASPIRA Association, a charter school operator at the heart of controversies in Chicago and Philadelphia, has filed three letters of intent to open charter schools in Mecklenberg, Union, and Iredell counties.

The NC Department of Public Instruction received 171 letters of intent last week from charter school operators keen on opening up new schools in time for fall of 2015 — the highest ever received since lawmakers lifted the 100-school cap in 2011.

ASPIRA is a national advocacy organization dedicated to developing the educational and leadership capacity of Hispanic youth. ASPIRA also supports the charter school movement in districts where significant numbers of Latino students are failing.

In Chicago, ASPIRA has run into allegations of financial corruption and misconduct at its charter schools. Last year, the CEO of ASPIRA Illinois, Jose Rodriguez, was fired by the charter operator’s board.

And in troubled Philadelphia, ASPIRA Inc. of Pennsylvania owes more than $3 million to four charter schools it runs, according to the Philadelphia City Paper. That money, according to school district officials, is taxpayer funds intended to fulfill the purposes of the charters. The organization has also spent $17,000 to a union-busting law firm to deal with a “teacher unionization issue,” according to the City Paper.

The lack of accountability with regard to ASPIRA’s fiscal house comes at a time when Philadelphia is struggling to close a budget gap of more than $300 million, prompting the layoff of nearly 4,000 teachers, counselors and other staff.

The Philly school district’s Charter School Office, which is tasked with overseeing the financial health of charter schools, apparently provides minimal financial oversight according to a 2010 report by the city’s controller. The CSO reviews charter school financial operations just during the run up to the charter’s renewal–once every five years.

In North Carolina, public charter schools must seek renewal of their charters once every ten years, although some charter schools have received shorter terms due to academic or fiscal compliance issues.

“Each charter school must have an annual, independent audit that is submitted upstairs to the Division of School Business,” explained Joel Medley, Director of North Carolina’s Office of Charter Schools told NC Policy Watch.  ”There are also monitoring site visits to verify student enrollment that are made on an as needed basis.”

North Carolina is no stranger to academic, ethical and financial problems associated with its public charter schools.

Earlier this year, the N.C. Policy Watch investigation  “’A factory of excellence’?” found that the public charter school Quality Education Academy recruited nationally and internationally for a basketball team that was subsidized by North Carolina taxpayers who have sent $13 million in education dollars to the school.

And just this past month, Kinston Charter Academy surrendered its charter moments before the State Board of Education was set to initiate the process of closing the school thanks to its serious financial and academic problems. More than 230 students were left to find new schools in just a few days’ time. Questions remain surrounding the school’s financial debts and whether or not the state will be repaid.

Calls went unreturned to ASPIRA of North Carolina and the national headquarters of ASPIRA in DC.

Kinston Charter Academy surrendered its charter Wednesday afternoon, moments before the State Board of Education was set to initiate the revocation of its charter, which would have ultimately closed the school. More than 230 students must now find a new school to attend beginning Monday.

Kinston Charter Academy has had significant fiscal and academic problems. The school had a $347,000 deficit in 2007 and has been delinquent in payments to the NC Treasurer. Kinston Charter has also demonstrated inadequate growth in students’ academic performance, and has been noncompliant with Race to the Top requirements as well as federal requirements related to its Title I status. Cash flow problems have resulted in late payments for facilities and operations expenses.

Last year, Kinston Charter Academy’s reading proficiency score was 38.1% and math proficiency score was 36.4%. The state averages were 71.2% and 82.8% respectively.

The school does have a high poverty student population. Ninety-seven percent of students qualify for free or reduced price lunch.

State Board of Education member Buddy Collins said he’s concerned about the local school district, Lenoir County Public Schools, which must deal with the fallout of Kinston Charter Academy’s closing.

“Dumping 230 students into a small school district will cause financial problems,” said Collins. How will the school system ramp up its instructional staff to accommodate Kinston Charter’s students by Monday, once they have no school to attend, he inquired.

DPI officials said there were ways to get funds to the local school district quickly so they could hire the teachers they need.

A transition team is in place to help families and Lenoir County navigate the process of placing students into new schools.

WITN reports that Kinston Charter Academy’s principal sent a letter to parents asking them to immediately enroll their children in the local public school system or nearby Children’s Village Academy, another public charter school in Kinston.

Children’s Village Academy was close to losing its charter just a few months ago. That school has also had significant financial problems, but for now they remain open.

The good folks at Public Schools First NC have issued a scathing review of the budget deal:

Public Schools First NC urges reconsideration of brutal cuts to public education
Proposed budget fails students and families while undermining North Carolina’s economic foundation

Raleigh, NC—July 22, 2013—Public Schools First NC is disappointed by the General Assembly’s aggressive attack against public education in its proposed biennial budget. By syphoning public dollars away for private school vouchers, slashing funds for teaching assistants, eliminating teacher professionalism and increasing class size, the budget strikes at the heart of proven strategies that lead to strong schools; adequate funding, small class sizes, and experienced educators. Read More