Dozens of charter schools in New Jersey have closed over the past few years with millions of dollars of federal taxpayer money unaccounted for, a report alleges.
The report, titled “Asleep at the Wheel” from the Network for Public Education, the advocacy group co-founded by education policy expert and charter school critic Diane Ravitch, found that of the 100 charter schools in the state that were awarded grants by the federal Charter Schools Program (CSP) between 2006-2014, at least 42 have since closed — or never opened in the first place. And what happened to the total of $8,226,311 awarded them in federal taxpayer dollars is largely unknown.
“We were never able to get a great answer on what happened to that money,” Darcie
Cimarusti, who contributed research for the report, said. “We spent a lot of time going back and forth with U.S. Department of Education and they wouldn’t give us a straight answer.”
To answer this question, NJ Spotlight reached out to the federal and state departments of education as well as to advocacy groups that support charter schools and others that oppose them. No one could produce a definitive process for how taxpayer money is handled if a school closes or if it never opens. The federal government said any unspent money is expected to be returned but that spent money is not. State officials said an independent trustee is tasked with handling those funds and the state does not interfere. Advocacy groups did not know.
As of May 2019, there were 88 charter schools operating in New Jersey, with enrollments of approximately 52,000 students. According to the state Department of Education’s organizational chart, the position overseeing these schools, the Officer of Charter and Renaissance schools, is vacant.
Members of Congress take notice
On a national level, the report found as many as one-third of all charter schools receiving CSP grants never opened or they opened and shut down. It calculated that from 2006 to 2014, federal funding has totaled well over $4 billion with potential waste in taxpayer funds of around $1 billion.
Members of Congress have also taken notice. Last month, a coalition of members of Congress — none from New Jersey — sent a letter to the U.S. Secretary of Education Betsy DeVos “expressing deep concern over the lack of oversight of the… Charter Schools Program (CSP).” They wrote that it is “unknown what happens to CSP grant funds when an awardee fails to open or opens and closes within one academic year.”
A U.S. Department of Education official told NJ Spotlight that charter school funds remain in the department’s grant management system and are not disbursed until the grantee draws down funding to pay for approved expenses. In that way, funds tend to operate as a reimbursement for expenses already incurred. Any money not spent is returned to the United States Treasury, according to the official. However, spent funds are not returned even after a school closes and liquidates its assets.
Some schools approved for CSP grants have never opened. In one case, Tikun Olam Hebrew Language Charter High School in Highland Park was approved for a $600,000 federal grant in 2011 despite its failure to get state approval on its application. In fact, Tikun Olam had been rejected by the state three times prior. Subsequently, the grant was rescinded.
Feds say it’s states’ responsibility
The report concludes that, “the department claims it is unable to stem the flow of good money going to bad results because the states are responsible for oversight. The current Secretary of Education denies the existence of the problem altogether, arguing that stronger oversight of the program would be ‘inconsistent with the federal role in education.’ This impasse leaves American taxpayers with the expectation that public funds intended to proliferate the privately-managed charter school marketplace will continue to be subject to unavoidable waste, fraud, and abuse.”
A charter school can be closed in New Jersey if it’s not meeting its financial or academic obligations to students. If a school runs out of money, it can close or if its students aren’t performing well enough on its Performance Framework (which includes measures of student performance, graduation rate, attendance, fiscal responsibility and more), a charter board can voluntarily surrender its charter, the state Commissioner of Education can revoke a charter or can decline to renew one at the end of the charter.
According to the state statute governing charter schools enacted in 1996, the closure process works like this: If a school is not meeting the standards set out in the state’s Performance Framework, it may be put on probation by the Commissioner of Education. If it can’t meet its remediation goals, within a set period determined by the Commissioner, the charter can be revoked.
At that point, a school’s board must appoint an “independent trustee” to essentially follow bankruptcy procedures: liquidating the school’s assets, transferring student data to the district, and ensuring that teachers and debtors are paid. But there is no official rule in the state’s charter law that mandates grant money — from the federal government, foundations, or otherwise — must be returned to the granter. However, if a grant was scheduled to be disbursed over a series of years, it is ceased once the charter is revoked and the school dissolved.
The independent trustee must also carry out an auction of items and, and if it has not been spent on physical items, the trustee must “ensure appropriate distribution of remaining assets,” including of funding that has been expended.
State says it’s a job for independent trustee
“The independent trustee is responsible for recouping and returning as much federal funding as possible,” Mike Yaple, a spokesperson for the state DOE said in an email. The full weight of that responsibility falls on the trustee, not the DOE.
The state charter law, which is now over 20 years old, is currently under review by Gov. Phil Murphy’s administration. New Jersey only has one authorizer who can approve applications for a new charter school or expansions of current schools and that’s the Commissioner of Education. Commissioner Lamont Repollet has rejected the last of the bids for new charter schools to open next year and has also rejected five expansion requests. One new school is expected to open under a previous cycle of applications and two others opened this year, but it is a clear slowdown from the state’s growth of charters under former Gov. Chris Christie.
Some observers point to this as an indication of pressure from the New Jersey Education Association, the powerful union of public school teachers — which has long been among Murphy’s most powerful supporters. The NJEA has publicly called for a moratorium on the approval and expansion of charter schools.
This is not the first time that charters in the state have come under scrutiny for their alleged misuse of taxpayer money.
A recent investigation by NorthJersey.com and the USA Today Network found millions of public dollars going to pay for charter school buildings that are owned privately. They reported that “lax oversight by multiple state agencies and flaws in the law governing charter schools created the current situation, where information is often hidden and schools can become entangled in questionable deals with high fees and can pay rents to support groups that far exceed building costs.”
Dissolving charter schools
Julia Sass Rubin, an associate professor at the Edward J. Bloustein School of Planning and Public Policy at Rutgers University, said dissolving a charter school can mean that a lot of money simply disappears.
“Once a charter school is out of money, it’s out of money. You can’t go after the
buildings because they are not owned by the school; there are not a lot of assets to collect on,” Sass Rubin said. “In a policy sense … there’s a lot of people left holding the bag.”
Sass Rubin noted that when a school is closed, teachers have their salaries pulled out from under them, and districts that have sent funding along with students to a charter school do not get that money back.
In one case in Newark in 2017, teachers at Merit Preparatory Charter School — which received $274,706 in federal grant money — were told they would not receive their paychecks in July and August after the school closed in June, a breach of teachers’ contracts. The school was ordered to close for abysmal overall performance on state exams. Only 7 percent of its students met grade-level expectations on the state math exams in 2015-2016.
In Trenton, the Emily Fisher Charter School was closed in 2012 for poor academic performance despite its mission to educate some of the state’s most challenging students who had trouble performing in other district schools. Nearly all the 400 students were poor and about 40 percent had special education needs. After the school closed, the district was forced to find space for the students at its already crowded schools without the guarantee of the full $7.5 million in funding originally allocated for Emily Fisher.
The record in New Jersey
In New Jersey, a significant number of charter schools have closed in recent years. As of 2018, 20 schools have had their charters revoked by the Commissioner of Education. Nine voluntarily surrendered their charters, and 17 were not renewed — meaning they were operational for the life of at least one charter contract and were not granted a renewal.
According to the National Center for Education Statistics, from 1995 to 2016 (the latest data available), 2,746 charter schools have closed across the country. Overall, however, charter school closings are on the decline.
Cimarusti, who is studying charter school closures in several states, said the constant churn of schools is “distressing” for students, parents, teachers and everyone involved.
“The ones that are being closed down, there are kids that were learning in those schools, teachers who were teaching there. [Charter advocates] are saying that’s how they remain accountable but that’s not accountability to me.”
How would traditional districts fare?
Harry Lee, interim president at the New Jersey Charter Schools Association and former School Performance and Accountability director at the state Department of Education (under former Gov. Chris Christie) said these closures are, in fact, evidence of the high accountability standards for New Jersey charter schools.
“The idea that charters aren’t held accountable is laughable,” he said. “Charter schools are the most accountable public schools in the state. High-quality charters grow and bad charters are closed.”
Lee said charter schools run on performance contracts that focus on student outcomes above everything else. He noted that multiple school closings mean that “the low hanging fruit” has been eliminated. Lee added that if traditional districts were measured by the same standards as charters, dozens of struggling districts would likely be forced to close as well.
“If a school is failing students and families, they do not have the privilege to educate kids,” he said.”