OP-ED | Show Me The (Charter Management Fee) Money!
When traditional schools pay their bills to educate kids, they usually don’t have much money, if any, remaining. When charter schools pay their bills, they often have money left over to spend. How much? It depends on the school. For a number of charter schools, roughly 10 percent of all of public dollars meant for educating children in these schools go to pay fees for private companies called “charter management organizations.” That’s a problem.
Connecticut law states that a charter management organization (CMO), “means any entity that a charter school contracts with for educational design, implementation or whole school management services.” These CMOs claim that they are private corporations, not public agencies. Organizations that claim to be CMOs in Connecticut include Achievement First; Capital Preparatory Schools; DOMUS, and Jumoke/FUSE, which is now defunct. It’s often hard to tell the difference between the CMO and the charter schools they manage.
So how does this CMO thing work? As state law shows, CMOs are similar to school districts. They can provide the services that a school district would perform for local schools such as management or operations.
Roughly 10 percent of a charter school’s budget can go toward management fees. For example, the New Haven-based CMO called Achievement First charged Achievement First-Hartford Charter School a $1.14 million management fee in 2013-14. The state provided Achievement First-Hartford charter schools more than $11 million to operate. So about 10 percent of that state funding went to Achievement First the CMO, not the charter school in Hartford, which ended the year with a surplus.
For every $100 dollars the public spends on this charter school, the CMO called Achievement First gets $10 off the top.
Multiply this fee by the four Achievement First charter schools in Connecticut, and Achievement First Inc., the CMO, walks away with about $4.45 million in fees.
The charter schools that we know pay charter management fees to CMOs have included the Achievement First schools, Stamford & Trailblazers Academies (DOMUS), and Jumoke until recently. Interestingly, the proposed Capital Prep Harbor School in Bridgeport would pay a 10 percent management fee to the Capital Prep CMO. Recent reports show that lobbyists have spent thousands to get this new charter school established.
Not all charter schools are managed by CMOs or pay these management fees. In 2012-13, most charter schools in Connecticut did not pay a “charter management fee.” These charter schools included: ISAAC, Common Ground, Explorations, Odyssey, New Beginnings, Bridge Academy, Highville, Side by Side, Park City Prep, Integrated Day, and Charter School for Young Children.
Simply put, charter schools can operate without the need to pay fees to CMOs.
There is a pattern here. The groups that would benefit the most from charter management fees are among the most vocal advocates for more charter schools managed by CMOs, like Capital Prep Schools Inc.
The charter schools that don’t pay CMOs are not as active in the massive lobbying effort this year for more charter schools. This is a key difference among Connecticut charter schools.
Instead of operating schools as public responsibilities, CMOs operate charter schools as moneymaking arrangements, almost like fast-food franchises. Companies like Subway Inc. charge local franchises a fee for services ranging from start-up, food supplies, to signage. This is how Subway makes a profit.
The CMOs could be spending this money on millions of dollars in No. 2 pencils, helping to buy foot-long Subway sandwiches at lobbying events, or paying for student field trips to rally for more charter school money. It’s just unclear.
It’s also uncertain whether charter schools could simply perform these services on their own without CMOs. The contracts between CMOs and individual charter schools explain their fees. But the financial report above appears to show that the management fees were charged after paying all operating expenses for the school.
All other public schools and districts must disclose how they spend public dollars. Traditional public, magnet, technical, and charter schools must report their dollars. By law there also are regulations for CMOs, including rules about fees. But the CMOs say they are neither public agencies, nor charter schools!
And recently, Achievement First, among others, fought against a now-dead public accountability bill before the Connecticut General Assembly. The bill would have more clearly required that CMOs be subject to the Freedom of Information Act. (It’s already fairly clear, but CMOs don’t think the current rules apply to them.)
Many question where the money is coming from to aggressively lobby for more charter schools. I would add the question, “where are charter management fees going?”
As Rod Tidwell (played by Cuba Gooding Jr.) said to his agent in the film Jerry Maguire, “Show me the money!”
If CMOs won’t show us the money, then maybe we don’t need CMOs or their fees. Charter schools can manage without them.
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