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School choice a sham, profits on the taxpayers’ dime

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It is time for Arizonans to take a hard look at who really benefits from school choice. While some families may want tax-payer funded options, the dizzying array of choices, combined with lax oversight and weak laws, make Arizona’s taxpayers easy marks for profiteering on the taxpayers’ dime.

Arizona is the Mecca of School Choice – for-profit charters, non-profit “fronts” for for-profit charters, Empowerment Scholarships Accounts (ESAs), and tax credits all compete with little regulation and oversight.

Carol Burris

Carol Burris

Let’s begin with charters. Arizona’s charter laws are some of the worst in the nation when it comes to protecting taxpayer money. For example, the Arizona State Office of the Auditor General is not allowed to monitor charter school spending. Only the Arizona State Board for Charter Schools (AZCB), whose members (with one exception) are appointed by the charter-friendly Governor, can keep an eye on charter school finances.

Does that lack of thorough, objective oversight matter? You bet. Sound oversight produces fiscally responsible charter schools that can afford to stay open. Without it, scams, bad real estate deals and old-fashioned mismanagement abound. When charters close, millions of taxpayer dollars are wasted and students are left stranded. In a five-year period (2009-2013), 111 Arizona charters shut down. According to former superintendent and charter school administrator, Curt Cardine, in 2013-2014, 138 charter schools “did not meet the AZCB Financial Performance Recommendation. This is fully 33.91% of the charter groups in the state that were financially rated by AZCB.”

Yet, remarkably, there is no penalty for the owners if the school fails. In fact, it is an opportunity for enrichment. All property belongs to the charter owner by law. That means taxpayer-funded buildings, books, computers, and equipment go to the owner of the failed school, which he can sell.

Fiscal problems are not limited to “mom and pop” charter schools. Even well-established charter chains can run into fiscal difficulty. The most recent audit for the BASIS charter chain shows a huge deficit in assets of over $13 million, and a 2014-2015 net loss of $3,074,317. BASIS School Inc., which collects the taxpayers’ dollars, is a non-profit. However, it is managed by the for-profit, BASIS Educational Group, LLC. In 2014-15, just shy of $60 million went from the BASIS non-profit to the for-profit corporation to provide services to BASIS schools. When that happens, spending is blocked from public view.

While some may argue that schools like BASIS are worth the problems because of their results, others argue that the high achievement of the school has more to do with who attends BASIS then it does with the quality of instruction.

A quick look at the demographics of the 18 Arizona BASIS charter schools compared with the demographic profile of all Arizona students in the public and charter systems (2015-16) provides insight.

Asian American Indian/Alaska Native Black Latino White Mixed
Arizona 3% 5% 5% 45% 39% 3%
BASIS 32% 0% 3% 10% 51% 2%

But differences in the students served do not end with race and ethnicity.

In 2015-16, only 1.23 percent of the students at BASIS had a learning disability, as compared to 11. 3 percent of students in the state. BASIS schools had no English Language Learners and while it claims to have disadvantaged students, it does not serve free or reduced lunch.

Like the “no-excuses” charter schools found in cities, the attrition rates at BASIS middle and high schools are extraordinarily high. Of a cohort of 85 students who began 8th grade in BASIS Flagstaff during the 2011-12 school year, only 41 percent (35) remained to enter 12th grade in 2015-16. In the flagship school (see below), BASIS Tucson North, a 7th grade class of 130 became a class of 54 by senior year.

7th grade 8th grade 9th grade 10th grade 11th grade 12th grade
130 100 82 69 61 54

It is reasonable for Arizona taxpayers to wonder whether they should pay for an elite education for some, especially given that in several states, BASIS schools are for-profit private schools.

But charter schools are not Arizona’s only worry. Empowerment Scholarship Accounts (ESAs), which some in the legislature want to expand, have been a “hot mess” of misspending and even fraud.

For those unfamiliar with the program, parents who participate are given a debit card to buy educational services for their child instead of sending them to a public school. Although it is touted as a program to help poor families escape “failing schools,” an analysis of the state’s ESA program found that most families using it are leaving high-performing public schools in wealthy districts to attend private schools. Students from schools with the fewest students receiving free or reduced-priced lunches received an average ESA benefit of $15,200 – more than twice the average ESA benefit of $7,350 given to students from schools with the highest share of children receiving free or reduced-price lunches.

Parents have used the debit card to purchase personal items for themselves instead of their kids. There was even an attempt made to use it for a dating service. There are cases of parents getting and using the debit card even though their children are enrolled in public school. The state has collected only a fraction of what has been misspent.

Other Arizona school privatization programs have been equally fraught with problems. The $140 million dollar a year tax-credit program is nothing more than a gift of public funds masquerading as a “good cause.” Contributors get a dollar for dollar credit with the money going to support private school tuition. Yes, you make a contribution, but it costs the taxpayers, not the donor.

The tax credit program awards $5,200 on average to parents participating in the program – an additional $1,000 for every child who leaves a public school for a private or religious school, with some private schools receiving as much as $18,000 per scholarship. Parents can even get multiple scholarships for a child from multiple tuition organizations – something the state doesn’t even bother to track.

To cover the costs of the money transfers through tax credits, Arizona skims 10 percent off for administration. Senate President, Steven Yarbrough, profits in both salary and real estate dealings from one of the state’s voucher administration groups, Arizona Christian School Tuition Organization.

For some who are reading, the above may be nothing new. But as an outsider looking in, I am shocked that a conservative government would not be better stewards of state tax dollars.

It would not be hard to put in regulations and oversight to rein all of this in, but it would cost the taxpayers a lot to do it well. And then the question would be asked, “Why do we need all of these parallel school systems, with layers of administration and oversight, anyway?”

And that, I believe, is exactly what those who are profiting do not want Arizonans to ask.

EDITOR’S NOTE: A counter-point to this commentary can be found here.

Carol Burris is executive director of the nonprofit Network for Public Education.

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The views expressed in guest commentaries are those of the author and are not the views of the Arizona Capitol Times.

4 comments

  1. Well said.

    Another way to look at vouchers that disproportionately benefit higher income and wealthier citizens is the continued shift to a two class system in Arizona and the US.

    I believe we are returning to a society that existed prior to WW1 where we basically had two societies. The top 10% of society owned over 80% of all wealth in the United States (typical of other Western nations at the time), the next 40% of society owned <20% and the bottom 50% owned 0% of national wealth (Piketty – Capital in the 21st Century). This basically means further deterioration of our venerated middle class that was created in the years following WW2 through 1980.

    Vouchers may feel like "choice" to the individual but to the broader society, I feel it is one more degree of tilt, shifting resources away from building trusted state institutions for the common good such as K-12 education to disproportionately benefit higher income and wealthier citizens.

    btw … my projections from Piketty data show within a decade or two we will be approaching 90% of all US wealth owned by <10% of the people … at such high levels of inequality he wonders how a democracy can work when we have taken away ladders of opportunity to succeed for the general population.

  2. The author appears to totally ignore the needs and motivations of the parents who are desperate to offer their children an alternative to the failing public schools.

  3. This is even bigger than simply profiting from “education”. The rich do not want to pay for your kids’ education. This movement started years ago, when it became clear that whites would someday not be the majority, with “No child left behind” (a program designed to leave some children behind). If they can accomplish a two-tiered education system, they can keep a “working class” with little knowledge or rights, that will not compete for power.

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