Archive | July, 2019

Five Decades of ‘MarketWorld’ Education Reform

27 Jul

By T. Ultican 7/27/2019

There has been a fifty-year push to reform education using business management principles. In the period, Harvard Business School has trumped Columbia Teacher College concerning pedagogy. Unfortunately, the results are an unmitigated disaster for most communities and students. This market based endeavor – financed by billionaires – has transformed public schools into non-democratic profit centers. It is the precursor to the ultimate goal of dismantling universal free public education.

The radical right is pushing to privatize everything from policing; to prisons; to schools. They have spread the gospel that governments are incapable of solving problems but businessmen can. In his first inaugural address, Ronald Reagan declared “…, government is not the solution to our problem; government is the problem.” Viewing society as consisting of “makers” and “takers,” these apostles of privatization fear the tyranny of democratic majorities. They strive to make property rights the paramount civil right.

When it came to privatizing school, the right originally tried to use vouchers, but that was a tough sell. Jeff Bryant quoted Jeffry Henig an Education Professor at Teachers College, “The Walton foundation itself was one of the early organizations to transition from vouchers to charters.” In his AlterNet article Bryant explained,

“Henig believes many conservatives view charter schools as a way to “soften the ground” for potentially more private options, though he isn’t entirely sure “the Waltons view charters as a Trojan Horse for eventually providing vouchers universally.’”

When putative progressive organizations like the Center for American Progress or Democrats for Education Reform promote charter schools they are promoting an anti-democratic and anti-union position. When politicians like Corey Booker and Joe Biden say they support public charter schools, they are in fact supporting the radical right’s privatization agenda. When Bill Clinton eliminated depression era banking rules and “welfare as you know it” plus campaigned for school choice; he was advancing Charles Koch’s ideology.

Two recent books have brought the privatization agenda into sharp relief.

The first book is Democracy in Chains: The Deep History of the Radical Right’s Stealth plan for America by Nancy MacLean. Through serendipitous good fortune, MacLean stumbled onto Nobel Prize laureate James M. Buchanan’s unorganized papers shortly after his 2013 passing. They were in boxes and stacked on tables in his George Mason University cabin. The other more well known American Nobel Prize winning economist from the right is the Milton Friedman. However, MacLean discovered that Charles Koch, the financier of the radical right “bypassed Friedman for Buchanan.

The other book is Winners Take All: The Elite Charade of Changing the World by Anand Giridharadas. He takes the reader inside the worlds of elite philanthropy in New York City and of thought leaders in Aspen, Colorado. He writes,

And what these winners wanted was for the world to be changed in ways that had their buy-in – think charter schools over more equal public school funding, or poverty-reducing tech companies over antitrust regulation of tech companies. The entrepreneurs were willing to participate in making the world better if you pursued that goal in a way that exonerated and celebrated and depended on them.

James M. Buchanan, John C. Calhoun and Segregation

James M. Buchanan grew up in Tennessee. His grandfather had been an unpopular governor of the state; however Buchanan was raised in near poverty. It was his academic abilities that took him from the obscurity of Middle Tennessee State Teachers College to a doctorate in economics from the University of Chicago in 1948. The youthful socialist became a “zealous advocate of market order.” It was at the University of Chicago where Buchanan met Friedrich August Hayek and the Austrian School of Economics.

Writing in Atlantic Magazine Sam Tanenhaus disclosed, “Hayek initiated Buchanan into the Mont Pelerin Society, the select group of intellectuals who convened periodically to talk and plot libertarian doctrine.” After World War II ended, The Mont Pelerin Society was a relatively small group of economists mostly from Europe and the United States who were widely viewed as a fringe group. They were against initiatives such as social security, universal health care and public education. The title of Hayek’s 1944 book The Road to Serfdom encapsulates their antipathy to any government social endeavors.

Professor MacLean, who is a historian from Duke University, compared Buchanan’s economic ideology with John C. Calhoun. Calhoun was a son of the antebellum south, a senator from South Carolina and a Vice President of the United States. MacLean quotes him stating, “A ‘government based in the naked principle that the majority ought to govern,’ was sure to filch other men’s property and violate their ‘liberty.’” Calhoun was also a leading defender of slavery. In his most famous speech he said slavery is “instead of an evil, a good–a positive good.

Buchanan and Calhoun

Buchanan’s first plumb teaching assignment came at the University of Virginia in 1956. This was also when the “massive resistance movement” to Brown versus the Board of education and desegregation of public schools in Virginia was heating up.

In 1959, Buchanan joined with another new hire at the university, G. Warren Nutter (who later became a key Goldwater advisor) to write “The Economics of Universal Education.” They argued that the root of the desegregation problem was that “state run” schools had become a “monopoly” that should be broken by privatization. They said if the state sold off their school buildings and equipment, they could limit their involvement in education to setting minimum standards. Then all kinds of schools might blossom.

Since MacLean’s book was published there has been some push back against her tying Buchanan and his paper to the “massive resistance movement” saying he did not involve himself in desegregation politics only in the economic issues of education. However, Buchanan and Nutter did state in their paper, “Every individual should be free to associate with persons of his own choosing.” In any case, schools in Virginia were closed. Black children stayed home while white children attended tax-subsidized private schools. In Prince Edward County, schools were locked closed from 1959-1964. MacLean says that for Buchanan segregation was just a side issue in his life-long libertarian pursuit.

Murray Newton Rothbard was an American economist of the Austrian School and a political theorist whose writings and personal influence played a seminal role in the development of modern right-libertarianism. MacLean discovered “Murray Rothbard encouraged Koch to study Lennin.” Not Lenin’s economics but his methods for advancing an unpopular ideology. On this point MacLean noted, “At a 1973 March log cabin meeting Buchanan stressed the key thing moving forward was that ‘conspiratorial secrecy is at all times essential.’”

In 1978, I saw the Communist Workers Party takeover the Iron Workers Union at National Steel and Ship Building Company (NASSCO). When watching the development of the radical right for the past few decades, similarities with the tactics of communist movement were unmistakable. Both movements are secretive, anti-democratic and motivated by extreme economic theory.

MacLean states, “The Mont Pelerin Society cause since the 1950’s is the end of public education.

Killing Public Education

In 1978, Congressman Ronald Mottl D-Ohio 23 introduced a bill promoting education standards. It was the first time a bill was proposed that amended the 1965 education law to promote a particular theory of education. Mottl’s bill went nowhere like another similar bill (H.R.371) introduced the next year by his colleague Tennyson Guyer R-Ohio 4. However, these were the first harbingers of education standards that emulated business practices.

In 1983, the Reagan administration produced the infamous “A Nation at Risk: The Imperative for Educational Reform.” This polemic was neither factually nor pedagogically well founded. Serious academic research has subsequently shown this non-peer reviewed writing to be the misguided work of amateurs. Its glorification of business practices opened the door for federal control of education and fostered standards based accountability. It made legislation like the proposals introduced by Mottl and Guyer viable.

In Winners, Giridharadas labels – modern social reform based on the belief that business leaders and market forces are the sure way to a better society – “MarketWorld.” He explains,

In an age defined by a chasm between those who have power and those who don’t, elites have spread the idea that people must be helped, but only in market-friendly ways that do not upset fundamental power equations.

Giridharadas shares three criteria for being a “MarketWorld” thought leader speaking at the Aspen Institute or the Clinton Global Initiative or the main TED talk stage. Thought leaders should:

  • Focus on the victim, not the perpetrator.” Condemning a perpetrator is a “win-losey” solution not a win-win.
  • Personalize the political.” If you want to be a thought leader and not dismissed as a critic, your job is to help the public see problems as personal and individual dramas rather than collective and systemic ones.
  • Be constructively actionable.” … “People, especially the winners who shape tastes and patronize thought leaders, want things to be constructive, uplifting, and given to hope.

He gives examples including this one:

“What the thought leaders offer MarketWorld’s winners, wittingly or unwittingly, is the semblance of being on the right side of change. … Take, for example, the question of educating poor children in a time of declining social mobility. A true critic might call for an end to funding schools by local property taxes and the creation, as in many advanced countries, of a common national pool that funds schools more or less equally. What a thought leader might offer MarketWorld and its winners is a kind of intellectual counteroffer – the idea, say, of using Big Data to better compensate star teachers and weed out bad ones.”

Data shows that “MarketWorld” and libertarian philosophy has damaged public education and harmed all but the top 10% of wage earners in America. Giriharadas shares the following data table information and notes, “One hundred and seventeen million people had been completely shut off from economic growth since the 1970s.

Earning Level 1980 2014
Top 0.001 % $17,000,000 $122,000,000
Top 1% $428,000 $1,300,000
Top 10% $58,000 $116,000
Bottom 50% $16,000 $16,200

It is possible that Charles Koch and “MarketWorld” think this is a feature. To me, it looks like a powerful data set that says we need an empowered Government to protect Americans from ravenous billionaires and their self-serving anti-public education and anti-democratic views.

 

 

 

Reforming California’s Dysfunctional Charter School Law

18 Jul

By T. Ultican 7/17/2019

Members of the California legislature have engaged in an internecine battle over charter schools. Even the California Charter Schools Association (CCSA) has expressed concern over lawless cyber charters and filed the first known complaint with the California Department of Education over A3 Education and Valiant Prep which were recently charged with stealing a stunning $50 million. California State Sen. John Moorlach (R) is warning that 85% of school districts in California are running deficits. Governor Gavin Newsom has statedrising charter school enrollments in some urban districts are having real impacts on those districts’ ability to provide essential support and services for their students.”

The drive to privatize schools in Oakland, San Diego and Los Angeles has been fueled by enormous sums of money spent on elections. Billionaires led by Eli Broad and Richard Riordan have successfully installed a former investment banker – a proponent of school privatization with no education experience – as Superintendent of Schools for Los Angeles. In Oakland, hundreds of thousands of dollars have been donated to pro-privatization independent expenditure committees and a similar amount has been donated directly to charter friendly candidates running for that city’s school board. Very few of the donations come from Oakland. The story is similar in San Diego.

With so many extremely wealthy individuals like Michael Bloomberg from New York City, Stacy Schusterman from Tulsa, Oklahoma and Alice Walton from Bentonville, Arkansas continually making six and seven figure donations to privatize public schools in California, the defenders of public education are fighting with all they have against what they see as an undemocratic attack by oligarchs. At the same time, many charter school leaders are feeling insecure and under attack.

It is this Gordian Knot that legislators are addressing. As Upton Sinclair observed, “It is difficult to get a man to understand something when his salary depends on not understanding it.

California’s new Democratic governor does not seem as mindlessly pro-charter school as the outgoing Democrat but his long time backers and chief of staff have public school advocates concerned. The Sacramento Bee reportedGavin Newsom turns to top Hillary Clinton adviser to launch administration.” That would be his Chief of Staff, Ann O’Leary, whose Fortune magazine biography says she was a key voice in creating the No Child Left Behind (NCLB) law. She defends NCLB stating, “We were committed to high standards and helping states get there.

For those of us working in classrooms in 2001, it became clear that O’Leary’s education ideology harmed students and facilitated privatizing public schools. Her theory comes from the neoliberal business mindset that venerates market based solutions and competition. The writer Anand Giridharadas recently labeled this philosophy “MarketWorld.”

Leading up to the 2018 general election, the Los Angeles Times ran an in-depth article about the eight elite San Francisco families that have funded Newsom’s political success. Although his own family was not particularly wealthy, they did provide him with connections to the wealthy elite. The Times story included,

“He has said he was primarily raised by his mother, who at times struggled to make ends meet. But Gordon and Ann Getty viewed him as a son, according to interviews the couple gave to the San Francisco Chronicle and W Magazine, and they provided him with experiences his parents could not afford, including an African safari when he was a teen, Newsom said in an earlier interview with The Times.

‘“It all goes back to the Gettys as far as Gavin is concerned,’ said Jerry Roberts, former managing editor of the San Francisco Chronicle and an expert on Bay Area politics.”

The Getty’s are the heirs of John Paul Getty. However, of the eight families described in the Time’s article it is the Fishers and Pritzkers that most concern public school advocates. Doris Fisher and her late husband Don founded The Gap. They were the first major contributors to KIPP charter schools and Don was a cofounder of the Charter School Growth fund. Doris continuously contributes to efforts for privatizing public education. The Fisher family has provided more than $300,000 in contributions to Newsom since 1998.

The Pritzker family are heirs to the Hyatt Hotel empire. Penny Pritzker was Barack Obama’s campaign treasure and his Commerce Secretary. As Secretary of Commerce, she used the Malcolm Baldrige award to promote charter schools in the mall. In Chicago, the family financed a charter school called Pritzker College Prep which is part of the Noble Network of Charter Schools. Since 1998, the Pritzker family has donated more than $600,000 to Newsom.

Newsom and the SF Billionaires

Newsom Hob Knobbing with San Francisco Elites (from the LA Times)

Legislature Takes on the Issue

Four bills were introduced in February aimed at reforming the charter law. Newly elected Senator María Elena Durazo from Los Angeles submitted SB 756 for a moratorium on new charters. Over at the assembly education committee three reform bills were presented AB 1505, 1506 and 1507. AB 1506 would have introduced a new meaningful cap on new charter schools. In May, both SB 756 and AB 1506 were pulled by their respective authors. The Los Angeles School Report said,

“On Wednesday, Sen. Maria Elena Durazo sidelined the Senate moratorium bill, which she authored. The bill would have placed a two-year halt on new charter schools in the state unless the Senate passed further regulations. The measure could return for consideration next January, according to Senate rules.

“The next day, Assemblyman Kevin McCarty opted to hold his bill on the last day it was eligible for a vote in the chamber. AB 1506 would have mandated a statewide cap on charter schools…”

Now the battle is centered on AB 1505 and AB 1507. 1505 increases local control over chartering and reduces rights of appeal and 1507 bans charters not authorized by the district in which they operate.

On July 9th, EdSource reported,Governor’s team jumps into fray over contested charter school bill.” It said,

“On Wednesday, the Senate Education Committee held a hearing on Assembly Bill 1505, which included a substantial number of amendments that Newsom’s office submitted after numerous discussions between his advisers and representatives of charter schools, organized labor and the bill’s author, Assemblyman Patrick O’Donnell, D-Long Beach, according to sources familiar with the discussions.

“With the final vote expected at day’s end, Senate Education Committee Chairwoman Connie Leyva, D-Chino, characterized the amended bill as ‘the makings of a deal with the governor’s office’ and said she is ‘cautiously optimistic’ that remaining issues can be resolved over the summer for passage in the fall.”

Scholar and former US assistant Secretary of Education, Diane Ravitch, reacted to this news with a post on her blog titled, “California: Is Governor Gavin Newsom Selling Out to the Charter Industry?” Diane points out that the one thing the charter Industry has going for it is money. She noted that politicians are always in search of money for their next campaign and says, “Big donors always find open doors.

Back in the Education Committees

The Assembly Education Committee chairman is Patrick O’Donnell a 20-year classroom teacher who worked mostly in middle school. He is leading AB 1505 through the difficult legislative process. The authors of the bill are San Jose Assembly member Ash Karla and East Bay Senator Nancy Skinner who are both representing areas suffering at the hands of the charter industry.

The other bill still alive is AB 1507 which blocks districts from authorizing charter schools out of their own boundaries. Assembly members Patrick O’Donnell, Kevin McCarty and Christy Smith authored this bill.

The Assembly Education Committee has seven members; five Democrats and two Republicans.  One of the first big hurdles for these two bills came at an April 10th hearing. It was the first opportunity to keep these bills alive or kill them. Charter school supporters came out in droves to talk the bills down. It was during this hearing that Assembly member Shirley Weber from San Diego said “since the four coauthors are here this is a done deal.” Weber also said she did not think these bills addressed the right issues and announced she would not be supporting them. Interestingly, Weber did not vote against the bill, she just didn’t vote. The bills passed out of committee by a vote of 4 to 1 with the lone descent coming from the only Republican in attendance Kevin Kiley.

There was a similar dynamic when these bills finally arrived at the Senate Education Committee this July. The Senate Committee is also a seven member committee with five Democrats and Two Republicans. Democratic Senator Steven Glazer said “781 public schools in the state have poor performance” and “We have failures all across the state.” Like Weber he was not satisfied with the content of the bills and said we need to worry about too many students in failing schools. Glazer did not make clear what he based his failing schools charges on. However, the charges by the Contra Costa Senator are similar to the charges made by leaders of the school privatization movement like the current US Secretary of Education, Betsy DeVos.

Both AB 1505 with the Governor’s amendments and AB 1507 were voted out of the Senate committee by identical 4 to 3 votes. The two Republicans and Glazer were the no votes.

Possibly Weber and Glazer agree with DeVos and her choice advocacy and that is why privatizing money is going to them or did they take this anti-public school position to attract that money? In any case, privatization money is flowing their way.

Glazer and Webber

Data from California Secretary of State Glazer ID #1377665 and Weber ID #1393376

When these two bills went to the Assembly for a floor vote, every Republican voted no or didn’t vote. Weber didn’t vote and Glazer joined two other Democrats voting no. The final tallies were AB 1505 44 yes 19 no with 17 not voting and AB 1507 54 yes 18 no with 8 not voting.

As a child growing up in a Republican community in Idaho, I remember Republicans as being very pro-public education and suspicious of big business and big centralized government. What happened to my grandfather’s Republican Party? How can it be that not one Republican during any of the votes taken supported protecting our public schools from plunder by large charter management organizations or stood against the demise of Democratic local control of schools?

If we consider the development of political action committees (PAC) for privatizing public school, the anti-democratic nature becomes stark. If your holdings are $2 or $3 billion, then you are generating at least $100 million income every year. So, donating $1 million to four PACs is not a strain. That means besides creating a huge pot for independent expenditures, the 4 PACs will also send 4 more max donations to your favored candidates. No matter how bad the idea being pushed, this kind of spending gives it consideration and drowns out opposition.

The Bills and Amendments

Former State Sen. Gary Hart, a Democrat who represented Santa Barbara in the Assembly and Senate for 20 years, authored the original 1992 California charter school law. Sue Burr, a current member of the State Board of Education, played a major role in drafting it. EdSource interviewed Sen. Hart last year. Reporter John Fensterwald noted that the financial impact on a district was not part of the law and asked, “Was it brought up at the time?” Hart replied,

“I don’t think so. The law didn’t have large-scale financial ramifications. We were talking about 100 charters statewide.”

The original law capped charter schools at 100 statewide. In 1998, the cap was raised to 250 with a 100 schools a year escalator thereafter. Today, there are 1310 active charter schools in California and the current cap statewide is 2,250 for the 2018-19 school-year. Neither this uncontrolled growth with essentially no cap nor its financial implications were addressed in the original law.

As originally proposed, AB 1505 would have given all school districts broad authority to reject a charter school’s application and renewal after considering the financial impact on neighborhood schools and the district. That provision has been restricted to just school districts already certified as being in financial crisis.

The amended version also sides with charter schools in changing the language back to “shall” issue a charter to a petitioner who met the state requirements from the less demanding “may” issue the charter.

None of Governor Newsom’s amendments are more demanding on the charter industry and most make things easier on the industry.

While Mayor of Oakland; Jerry Brown created a military charter school with the National Guard. Language added to the education funding bill AB 75 in December was automatically added to the charter law. That mysterious language seems written solely for the benefit of Brown’s school.

“Notwithstanding any other law, a charter school in operation as of July 1, 2019, that operates in partnership with the California National Guard may dismiss a pupil from the charter school for failing to maintain the minimum standards of conduct required by the Military Department.”

The Oakland Military Institute had tried during its reauthorization to be allowed to dismiss students who had too many demerits. The Chartering Authorities rejected the request. They felt that demerits were given for such minor offenses as not having a badge sewn on correctly and that a student should only be dismissed from a public school in extreme circumstances. Now the charter school’s questionable request is written into law.

Conclusions

Money is still ruling but even the watered down bills as amended are better than what we have now, so it is important to keep pushing for their passage.

A parent and fellow Bay Area resident named Jane Nylund wrote a letter to Newsom expressing her disappointment at his amendments. Diane Ravitch posted the letter. I encourage you to read the whole letter. It makes many strong points. Jane personalized the letter noting,

“You and I have something in common-we both attended well-resourced public high schools. You went to Redwood High School in Marin, and I attended Miramonte High School in Orinda, located in what is now one of the wealthiest suburbs in the East Bay. Lucky us.

“The irony regarding your potential alliance with privatization groups like CCSA is that, because of your severe dyslexia, you would have been rejected by the same schools that are now being touted as “high quality seats”, aggressively marketed as superior to real public schools because of test scores. According to the bio I read, you were rejected from a private prep school and enrolled in your local public high school instead. So you have first-hand experience with the idea that real public schools enroll all children, not just the easy ones.”

Charter Scandal a Product of Shabby Law and Ignored Oversight

7 Jul

By T. Ultican 7/7/2019

Notoriously clever operators of an online charter empire were indicted for allegedly stealing $50 million dollars. The Grand Jury of San Diego County heard the testimony of 72 witnesses and voted out a 67-count indictment against Sean McManus, Jason Schrock, Justin Schmitt, Eli Johnson, Steven Zant and six others. The charges were centered on the byzantine operations of the A3 Education organization which took full advantage of weak charter school laws in California.

From the indictment,

“Conspirators knowingly obtained state funding for children who were not assigned certificated teachers as required by law, were not in contact with the charter school, and who were not provided any educational services during the dates claimed.”

“Conspirators themselves, and through subordinates courted small school districts across California who were suffering budget woes and suggested they authorize charter schools as a means to generate additional state funding for the district in the form of oversight fees.”

The Small District Authorizer Model

Carol Burris was one of the first people to identify McManus as a predator. In her 2017 investigative report “Charters and Consequences”, she wrote about the Wise school which calls itself a Waldorf inspired charter school. She noted,

“No one really seems to be wise to Wise—except perhaps California STEAM Sonoma, which claims Wise Academy as its project.”

“The former Academy of Arts and Sciences CEO, Sean McManus, described Wise as “a boutique program that people usually have to pay for, so to be part of a free charter school appeals to a lot of people in the area.” Wise and the state funding it brings left the Academy of Arts and Sciences, and so did Sean McManus, who is now listed as the CEO of a new corporation–California STEAM Sonoma.”

“Despite its classroom schedule, Wise refers to itself as a ‘learning based resource center.’ This classification allows California STEAM Sonoma to sponsor the program, and the Liberty School District to acquire the cash cow.”

Wise is still in operation under the name Heartwood Education Collaborative. McManus exited the Academy of Arts and Science (AAS) in 2016. AAS renamed itself Compass Charter Schools. Shortly after leaving AAS, McManus cofounded A3 Education with Jason Schrock.

Heartwood Educational Collaborative

Heartwood (AKA Wise) Education Collaborative Independent Journal Photo

Carol Burris recently posted,

From 2009-2015, McManus was the CEO of the Academy of Arts and Science Charter Schools for which he served as CEO from 2009-2016, developing his model of using cash-strapped, small districts as authorizers of online charter schools that draw students from all over adjoining counties in exchange for fees.”

“And who gave the seed money to start this adventure?”

“The U.S. Department of Education’s Charter Schools Program (CSP) did.”

“Eleven Academy of Arts and Sciences charter schools that used the for-profit K-12 curriculum received a total of $2,825,000 from the CSP state grant to California. Today, all 11 schools are closed.”

McManus and his associates at A3 implemented the small district authorizer model with a vengeance.

Previously, one of McManus’s first forays into using small district authorizers was with New Jerusalem Elementary School District which authorized the Academy of Arts and Sciences – San Joaquin and CalSTEM – San Joaquin. For unknown reasons, AAS closed both those schools and its renamed successor Compass Charter Schools has departed San Joaquin County. New Jerusalem only had 22 Public School Students this year but it had 4,809 Charter School Students, few of whom lived in their Tracy, California area. New Jerusalem appears more sinister than just a cash strapped small district.

Apparently, part of the problem McManus had at AAS was that some of their schools were blended learning academies which meant they had physical addresses. This led to a law suit by Los Angeles Unified School District for opening schools in their district without notification and the closure of some schools. A3 Education has been careful to only implement Independent study; AKA 100% cyber schools with no physical addresses for students.

A3 Small District Model

Based on California Department of Education Enrollment 2018-2019

All of the schools listed above with the various districts have the same business address, 3300 Irvine Ave. #330 Newport Beach, Ca 92660 which is A3 Education’s business address. The non-profit tax filings available for theses schools all show this address and have some combination of Rob Sikma, Kevin Tu, Eric Johnson and Klarc Kover on their boards. As an example see these legal documents for California Steam San Bernardino, California Steam Sonoma, University Prep and Uplift California.

Board member Eric Johnson is probably the person indicted in San Diego under the name Eli Johnson. Board members Sikma, Tu and Kover all testified before the grand jury investigating A3.

Various California news sources reported details about the alleged scheme to steal $50 million. San Diego’s Courthouse News wrote about the funding of the charter schools,

“The funds were then transferred to multiple companies owned by McManus and Schrock, including A3 Education, A3 Consulting, Global Consulting Services and Mad Dog Marketing. The money was spent on start-up investments and real estate and some funds were wired directly to themselves or family members, according to the indictment.”

“Another co-defendant, Steve Van Zant, 56, created the company EdCBO to provide back office services for A3 Charter Schools. He hid his involvement with EdCBO and McManus by filing all corporate paperwork under another person’s name, prosecutors say.”

The Los Angeles Times stated,

“From the affiliated businesses, at least $8.18 million went into personal bank accounts, some in Australia, and into charitable trust accounts for McManus, Schrock and their wives, and $500,000 went to a family member of McManus, according to the indictment.”

“McManus and Schrock also used $1.6 million of A3 Education’s funds to buy a private residence for McManus in San Juan Capistrano, the indictment states.”

“The alleged violations included Valiant Academy paying A3 about $3.6 million during the 2017-18 fiscal year. The invoices were approved for payment by McManus at A3 and another man, neither of whom were employees of the charter school, according to the district’s report.”

“The school also paid Mad Dog Marketing — a company that has common ownership with A3 — $288,000 during the 2017-18 fiscal year, according to the report.”

The Voice of San Diego added,

“An early step in establishing the A3 empire came when Steve Van Zant, a former superintendent of Dehesa Elementary School District, “brokered” the sale of an online nonprofit charter school to A3 for $1.5 million, prosecutors say.”

“In winter 2017, Chris Thibodeau was performing an annual audit of Cal Prep Sutter in Sutter County …. He noticed that McManus was listed as the CEO of Cal Prep Sutter, but that the school was also doing business with McManus’s company A3 Education.

The Voice of San Diego explained that prosecutors allege McManus and Schrock fabricated a set of minutes dated July 6, 2016 that said McManus was replaced as CEO by codefendant Eli Johnson. They purportedly used these false documents to allay Thibodeau’s concern about “related transactions.”

Sean McManus appears to have fled the country and is thought to be in his native Australia. The other 10-defendents have entered not guilty pleas.

State Charter Law was Designed to be Weak

Cyber Charters in California can serve all of the students in the home county of the authorizing district plus all of the students from bordering counties. That means these eight small school districts gave A3 access to millions of students.

A3 Athorizer Map

Voice of San Diego Map of Counties Served by A3

In the school year 2018-2019, Dehesa Elementary had 5010 students in online only schools. Of those 2267 were in kindergarten to third grade or 45.2% of the total. There were similar numbers in the other districts. Why would people put babies in front of computer screens? It must be that the main attraction for these cyber schools is home-schooling.

Since home-schooling does nothing to build community and is driven mostly by religious convictions, why should taxpayers fund it? All Americans should have freedom of choice, but taxpayers should not be expected to pay for private choices. The public already provides the world’s best public education system for free; taking funds from those public schools for the benefit of a small minority is inequitable.

The state of California puts more than $80 billion annually into k12 education. Because that money is a natural target for profiteers and scammers, extra vigilance is needed. However, California’s charter school law was developed to provide minimum vigilance.

During its early stages, several billionaires like Carry Walton Penner, Reed Hastings and Arthur Rock made sure the California charter school law was designed to limit governmental rules and oversight. For example, charter schools are not required to meet the earthquake standards prescribed in the 1933 Field Act, which holds public schools to higher building code requirements. Since that laws enactment no public schools have collapsed in an earthquake. The picture of the Education Collaborative School above is evidence that students in a known earthquake zone are now at increased risk of injury and death.

A few weeks ago Louis Freedberg observed that a key weakness in California’s chartering law is that there are no standards for authorizers and a lack of expertise. He also wrote about the number of charter authorizers saying, “unlike many states, California has hundreds of them: 294 local school districts, 41 county offices of education, along with the State Board of Education.” Among these 336 authorizers, several are school districts of less than 1,000 students which have neither the capacity nor training to supervise charter schools. Some of these small districts look more like charter school grafters than public school districts.

A state audit dated October 17, 2017 reported,

“ActonAgua Dulce Unified’s and New Jerusalem’s decisions to authorize the outofdistrict charter schools we reviewed may have resulted partly from weaknesses in the districts’ authorization processes. Specifically, neither of the two districts has an adequate process for ensuring that petitions comply with state law.”

This state audit which was promptly ignored by Governor Brown and the legislature was pointing directly at the weaknesses in California’s chartering law that A3 Education is accused of exploiting. A3 is not the only organization that is using these weaknesses. K-12 Inc. is selling products into both A3 and California Virtual Academy. Furthermore, K-12’s relationship with California Virtual is legally questionable. Pearson Corporation is using Connections Academy to market their online products and Epic is also looking to expand their own dubious online schools.

Not only are state officials not reacting to warnings from auditors, they are providing the offenders loans through the Charter School Revolving Loan program. The A3 schools have received over $2,000,000 in loans through this program.

A majority of Governor Gavin Newsom’s Charter School Policy Task Force supported banning authorizing charter schools outside of district boundaries. Secretary of Public Instruction, Tony Thurmond explained,

“Prohibiting districts from authorizing charter schools located outside of district boundaries would allow for greater local control and oversight of charter schools. In addition, such a prohibition would limit the potential for the detrimental practice of using oversight fees as a revenue stream, while incurring only limited expenses associated with authorizing the charter school.”

In addition, the task force unanimously backed a call to “create a statewide entity to provide training for authorizers.” A majority also proposed enacting “a one-year moratorium on the establishment of new virtual charter schools.” Concerning this last point Thurmond’s report said, “There  has  been  growing  concern  that  virtual  charter  schools  are  operated  without  appropriate academic rigor and oversight, providing a sub-par education for their students …”

A Few Points and Observations

A3 Education was looking to expand across the country. In 2016, Johnson, Schrock and McManus put together a proposal for Ohio Steam Columbus. The Colorado group Thompson School District Reform Watch reports that Justin Schmitt is still involved with Foundations Learning and Colorado’s Online Charter’s. They also note that Schmitt has virtual charter school interests in Arizona. Schmitt brought Mosaica virtual schools to California which A3 purchased and evidently Schmitt was part of the purchase. It is also interesting that A3’s Marketing Director, Mary Clare Coyle, lives in Jacksonville, Florida.

In an April EdWeek article, Arianna Prothero and Alex Harwin reported,

Nationally, half of all virtual charter high schools had graduation rates below 50 percent in the 2016-17 school year.The most high-profile study, done by economists at Stanford University in 2015, found that students attending an online charter school made so little progress in math over the course of a year that it was as if they hadn’t attended school at all.”

The charter school experiment is a national disaster. It has clearly failed and virtual charter schools have a lengthy history of corruption and poor performance. Shut them down and only allow elected school boards to provide online education. It is time for an extended moratorium on new charter schools while existing charter schools are carefully transitioned to management by elected school boards.

Maybe Alice Walton and Charles Koch think property rights are the only freedom to be valued. Maybe they want to end public education. Maybe they think markets are a magic elixir that never fails. I don’t! I agree with the statement in Nancy MacLean’s Democracy in Chains,Market fundamentalism – the irrational belief that markets solve all problems ….” I believe in democracy, human rights and public education.