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D.C. bill looks to strengthen charter school transparency –

dcogcadmin | March 12, 2015

WASHINGTON, D.C. — A member of the D.C. Council wants to ensure for-profit charter management companies are accountable to taxpayers.

The move, by Council member David Grosso, is in response to two pending lawsuits that allege charter officials diverted millions in public money to private management companies for personal gain.

Grosso’s measure, introduced last week, would require an organization that receives 10 percent or more of a school’s annual revenue or obtains a quarter of its total revenue from a charter to provide its financial records to the D.C. Public Charter School Board.

Co-sponsored by Council member Elissa Silverman, it would also require management companies to disclose conflicts of interest.

In February, the board voted to revoke the charter of Dorothy I. Height Academy Public Charter School, citing fiscal mismanagement. The school’s founder, Kent Amos, created a for-profit management company and funneled more than $13 million for personal gain, a lawsuit contends.

In 2013 the District sued Options Public Charter School over allegations it diverted more than $3 million in taxpayer money. The school reopened under new management this past fall.

Neither school was found to have engaged in fiscal mismanagement until records made public by the lawsuits revealed the companies’ finances. The board asked the D.C. Council to pass a transparency measure last year, saying its oversight was limited.

Grosso said he introduced the bill because the charter school board had asked the Council for more legal authority over for-profit management companies.

“If something goes wrong and there’s somebody taking money or not doing the right thing by that school,there’s no way for the public charter school board to know that and frankly in the end they need to know what’s going on because they’re the authorizor that manages and oversees what’s happening there,” he said.

He said introducing the bill made sense because “charter schools spend D.C. public money as well as education D.C. public kids.”

It’s not uncommon for a for-profit management company to run a charter school, but some companies have come under scrutiny for corruption and misuse of taxpayer money.

Traditional public schools must provide detailed information about their budgets, including employee salaries. Charter schools, on the other hand, are considered independent nonprofits and aren’t required to reveal employee salaries, unless an employee makes more than $100,000.

But some charter’s use private, for-profit companies to manage the school. Under federal law, a private management company for a school getting public money doesn’t have to disclose how it spends that money.

The D.C. Public Charter School Board did not respond to a request for comment.

The bill would affect three charter schools in the District run by for-profits — Somerset Prep, Basis D.C. and Hope Community.

The other 108 charter schools in the city are run by either nonprofit companies or manage the school themselves.

Robert Cane, executive director of pro-charter group Friends of Choice in Urban Schools, said he thinks giving the charter school board more authority to learn the financial arrangements between schools and management companies is a good idea.

But, he said, it’s also important to make sure the threshold percentage of required revenue isn’t too low.

“I think it’s important that they get those right so that people aren’t scared of and that we aren’t collecting in the sweep of this bill companies that aren’t really management companies, so relationships that aren’t large enough to make them subjects of interest,” he said.

Note: This article was update on 3/10/2015 at 4:52 pm to include comments from David Grosso.