Tag Archives: Sean McManus

Is Inspire Charter School the Next A3 Education?

9 Oct

By Thomas Ultican 10/9/2019

Inspire Charter School mirrors the methods of A3 Education. It employs practices strikingly similar to those that led to May’s 67-count indictment against A3’s leaders. Furthermore, the California Charter School Association (CCSA) took the unusual step of sharing concerns about Inspire and A3 with California authorities. Both are virtual schools that concentrate on obtaining authorization from small school districts. These systems have a similar structure in which a central organization controls the schools that are contracting with it and they transfer funds among multiple organizations making it difficult to monitor their activities. Students at Inspire and A3 struggle academically.

Inspire picture 5

The First Inspire Charter School Opened in 2014

The Acton-Aqua Dulce Unified School District is infamous for authorizing suspect charter applications while not having the resources to adequately monitor those schools. It enrolls 1085 public school students and 14,734 charter school students. Acton-Aqua Dulce authorized Inspire’s first charter school which was located in Los Angeles County. Strangely, Inspire Charter grew from 151 students in the 2014-15 school year to 4,321 students in the 2018-19 school year and then closed up shop this June 30th.

Founder Nick Nichols needed a program that would service his target audience of home school students.  The Inspire 2016 tax form shows that he purchased curriculum from Academic Arts and Action for $149,625. This is notable because the chairman of Academic Arts and Action was Jason Schrock and the President was Sean McManus. That is the same Schrock and McManus indicted in the A3 scandal.

The education writer for the San Diego Union Tribune (UT), Kristen Taketa, has been relentlessly pursuing the Inspire story. She explains one of the the charters selling points,

“Inspire parents have been able to spend state-provided money on expenses they say are educational, from Disneyland annual passes to private ice skating coaching. The list of places where Inspire parents could spend school funds has included Costco, Amazon, Big Air Trampoline Park, Medieval Times, Guitar Center and the DNA testing company 23 and Me, according to Inspire’s list of approved vendors.”

Inspire provides each parent $2600 to $3000 to spend on field trips and other educational resources.

In 2015, Inspire rolled out a successful but legally questionable method for attracting students. They offered parents $200 paid out of enrichment funds for every student they recruited and they incentivized staff $100 in extra work hours for each learner they signed.

Last year Nick Nichols oversaw nine schools with 23,300 total students. In the 2016-17 school year, Inspire took in $76,018,441 yet their debt was skyrocketing. Their pay for officers went from $65,318 for the 2014-15 school year to $2,011,898 in the 2016-17 school year. Nick Nichols did especially well.

Inspire Income-Debt-Wages-Table

Data from Inspire Tax Documents

The UT’s Taketa reports, “Inspire expects to pull in $285 million in state funding this school year.”

Inspire just secured another $50,000,000 loan from the California School Finance Authority. With booming student daily attendance income and large financial backing from the state, it is strange that Nick Nichols chose now to take a temporary leave of absence. Former Mount Diablo Superintendent of Schools and Inspire’s chief operating officer, Steven Lawrence, is taking over as executive director.

Unethical and Academically Miserable

It is not just the CCSA but other destroy-public-education (DPE) groups like APLUS+, who labels itself “the leading voice for the personalized learning choice” are alarmed by Inspire. Aplus+ director Jeff Rice stated, “We are all concerned about actors like this who are repeatedly violating generally acceptable best practices.” Rice removed Inspire as a member school in 2016.

In March of 2018, the Winship-Robbins school district threatened to rescind Inspire North’s charter because of what then-Superintendent Laurie Goodman called “gross financial management.” Taketa revealed, “Four months after she issued the notice of violation to Inspire, Goodman left her job at Winship-Robbins and became Inspire’s director of leadership development, according to her LinkedIn profile.”

Inspire Charter School Network

Authorizing Districts are Small with Histories of Lax Charter Oversight

Shortly after the A3 Education indictments, Carol Burris, writing in the Washington Post’s Answer Sheet observed, “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.” Herbert “Nick” Nichols has followed the same strategy at Inspire.

With the coming 2-year moratorium on virtual schools in California, it appears there was a big push to get six new schools authorized before 2020. Taketa shared, “Inspire has been submitting petitions to districts this summer to open new schools, but it withdrew at least two after district officials questioned Inspire’s practices.” Irvine Unified School District had their lawyer respond to Inspire’s charter school petition. The lawyer presented more than 100 requests for more information including:

“What systems, policies, and procedures does Inspire have in place to ensure that public school charter funds are being spent in a proper manner and that a gift of public funds is not taking place?”

“Does Inspire require parents to produce receipts for all purchases?”

“Has Inspire conducted an audit of these funds to be sure that they are properly spent?”

“Is the charter school required to contract with Inspire or may it contract with other vendors for services?”

Four Inspire Charter schools changed their name this summer. San Diego’s Inspire South became Cabrillo Point Academy and Inspire Central is now Yosemite Valley Charter. Inspire North has changed to Feather River Charter and Inspire Kern’s new name is Blue Ridge Academy. They all removed Inspire from their name. Attorney Sarah Sutherland who has represented school districts in charter school litigation noted, “They can morph their existence and change their names faster than anyone can keep up with recognizing they’re the same organization.”

Charter school competitors believe Inspire is using unethical practices to poach from other schools. Terri Schiavone, the Founder and Director of Golden Valley Charter School in Ventura said her school is one of many that are losing students to Inspire Charter.

Schiavone claimed on NBC channel 39, “They target a school and then they try to get as many of their teachers and students as possible.” She said families and teachers are given incentives like using instructional funds to buy tickets to theme parks and there is a lack of oversight and accountability. Schiavone also points out that parents can buy whatever they want from vendors who she says are not fingerprinted or qualified.

The UT’s Taketa observed, “There are virtually no state rules about how home school charter families are allowed to use enrichment funds, partly because home school charters are not well-known outside of home school circles.”

Inspire picture 2

An Enrichment Opportunity Posted on the Inspire Facebook Page

Poor academic performance plagues Inspire. The graduation rate was only 69 percent last year and just 7 of 209 graduates met California state college admissions requirements.

In 2014, California adopted the California Assessment of Student Performance and Progress (CAASPP) System. These Smarter Balanced assessments are new computer-based tests that measure student knowledge of California’s English and mathematics common core standards. The results show 2 categories for students who achieved an arbitrary expectation level and 2 categories for students who did not. For simplicity the 2 met expectations results are added together. Using these results, the following comparison data table was constructed.

Testing Data Comparison Chart

CAASPP Data Comparing Inspire Results with California Results

Standardized testing does not do a good job of measuring school quality, but it does a very good job of identifying poverty and language learners. That is what makes these results so stunningly awful for Inspire. California data shows 60.9 percent students in poverty and 19.3 percent English language learners. Inspire schools report 38.8 percent students in poverty and 2 percent English language learners. With their demographic advantage, it is difficult to explain away Inspires miserable testing results.

Opinion

There are a few obvious questions about Inspire Schools that need an answer. Why did Nick Nichols step down in September? Why did Inspire close its oldest and apparently lucrative school? Is any district attorney currently investigating Inspire? If not, why not?

Terri Schiavone also mentioned on Channel 39 News,

“It’s very desirable for some parents to enroll in schools in which nobody’s looking over their shoulder. They can utilize whatever curriculum they want, including religious curriculum, which is illegal if using public dollars.”

The National Center for Education Statistics did a 2003 study on why parents choose to homeschool their children. They found that 72% cited being able to “provide religious or moral instruction”.

In 2001, Dick and Betsy DeVos sat down for a lengthy interview at The Gathering which Jay Michaelson described as the “hub of Christian Right organizing.” Betsy said,

There are not enough philanthropic dollars in America to fund what is currently the need in education…Our desire is to confront the culture in ways that will continue to advance God’s kingdom.

Dick lamented the fact that schools have displaced churches as the center of community activities. He says that Bill Bennett’s new K12 Inc. cyber schools although not Christian could be a great help to evangelical homeschoolers.

I have always felt that it is an Americans right to choose where their children are educated. I also believe in free universal public education. However, it should not be the responsibility of taxpayers to pay for people’s private choices. If parents do not want their children in the free taxpayer funded school system, that is fine, but that choice should not be subsidized by the government.

Cyber schools have consistently achieved horrible academic results and at the same time been the center of amazing corruption and greed. Just look at what happened at A3 Education. It is time to end public spending on cyber education and to remember President Ulysses S. Grant’s admonition,

“Leave the matter of religion to the family altar, the church, and the private school, supported entirely by private contributions. Keep the church and state forever separate.”

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.