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Did Michigan waste $3.5 million on charter schools with questionable futures?

Ghost tales



Up until a month ago, if you searched for “Bertha B. Williams Academy” online, you would have been directed to an undated, three-page PDF spotlighting the vision statement for a K-2 charter school with intentions of opening on Detroit’s east side.

The digital bulletin, hosted on the website of a West Virginia nonprofit, detailed plans to start a "museum-learning" school, featuring a hands-on, project-based curriculum.

It talked about the school's proposed location — Barbour Middle School, a shuttered Detroit Public School — and the $110,000 grant it had already received from the federal government.

Overall, the document, with its DIY collage of smiling schoolchildren peeping out from the corners of each page, was charming, if not a tad banal.

There was, however, one surprising fact buried within the flowery language and images: While the literature explained that the team behind Bertha B. Williams Academy received a public planning grant, it also noted that it was still waiting to hear back from an authorizer. In Michigan, charter schools need a public university, community college, traditional school district, or intermediary district as a sponsor in order to open.

Further Googling would show the school was never authorized — there is no record of the school's existence beyond the three-page PDF. And, as anyone familiar with charter law can tell you, without an authorizer’s go-ahead, a charter school is nothing more than a two-dimensional, or in this case, one-dimensional vision statement.

A Metro Times review of the charter school development teams that were awarded federal planning grant dollars from the state of Michigan between 2010 and 2015, found that Bertha B. Williams Academy was not an anomaly. Of the 87 teams that received funds, over half never succeeded in opening schools. All told, nearly $3.5 million in public funds went to development teams that never taught a single student.

While the efficacy of the program is not up for debate — 45 teams have yet to open a school — whether or not this was a waste of public funds remains a highly contested question.

Michigan vs. Everybody

In 1995, four years after the first charter school law was enacted, the U.S. Department of Education started its Charter Schools Program grant. The general gist of the initiative was state education agencies could vie for funding and then host their own competitions for sub-grantees who wanted to create or expand charter schools.

The goal of the grant is two-pronged: 1. It aims to expand the number of "high-quality" charter schools across the nation and, 2. It seeks to evaluate the effects of charter schools. The first aim is achieved through three types of grants that the U.S. Department of Education asks state education agencies to offer: planning grants, implementation grants, and, lastly, dissemination grants.

That first year the department gave out just over $4 million; today it doles out upward of $125 million. According to the Department of Education, the federal government has spent more than $3 billion on the charter sector in the past 20 years.

Michigan received $23 million from the program in 2007 and in 2010 decided to apply again, this time asking for $44 million. By this point the state had 240 charter schools, and as the application explained, there was an expectation of growth. Just a few months earlier lawmakers decided to lift the cap on the number of charter schools university-authorizers could sponsor.

This predicted expansion was highlighted in MDE's application, as was the goal of ensuring authorizers would have high quality operators to choose from when they weren't burdened with a cap.

In 1995, the same year that the Charter Schools Program grants started, Michigan opened its first charter school, a National Heritage Academy in Grand Rapids. Today, NHA, which was started by billionaire J.C. Huizenga, is the state’s largest charter school operator, with 48 different schools across Michigan. This multi-site, for-profit model has proliferated in Michigan — currently, 79 percent of Michigan’s charter schools are run by for-profit charter management organizations — and cracking this monopoly was a stated goal in MDE's application. Specifically Michigan explained how "planning funds" could help level the playing field and empower grassroots community groups with charter school ideas.

"Without this early funding, more applicants would be deep-pocketed corporations able to advance themselves funding for the development work and reimburse themselves from later grant funds," Jean Shane, the project director, wrote in the application.

She went on to detail Michigan's grant blueprint, which included awarding 20 "planning grants" per year to "developers that propose quality financial and administrative program models and demonstrate the capacity to effectively deliver them."

The application explained in the outcomes section that giving funds to development teams would strengthen the pool of charter applicants that authorizers could pick from. Because of this, applicants did not need to be authorized when selected — they merely had to submit an application to an authorizer. The funds could then go towards refining that application.

The U.S. Department of Education’s grant evaluators recognized "weakness" in this statement, writing in the comments section of the application that "strengthening the pool of charter applicants" is an objective not an outcome and Michigan lacked "any measure of actual schools opening." However, despite this shortcoming, in August 2010 the U.S. Department of Education awarded Michigan with a $44 million grant that would be disbursed over five years.

The fact that the federal government approved the state's application is a big sticking point for the department. It's why it believes public money was not wasted.

"The federal funds were all spent as they were intended to be spent in the federal law — to help in the planning of prospective charter schools," William DiSessa, MDE spokesperson, wrote MT in an emailed statement.

A 50-50 proposition

The sheer number of planning teams that received funds from Michigan but never succeed in opening schools is somewhat astonishing — over 50 percent — raising questions if this was in fact a prudent intention on the part of the state. MT was inspired to investigate these figures after the Center for Media and Democracy, an investigative reporting outfit based in Wisconsin, published a 68-page in October on the topic of how states have misspent Charter Schools Program funds.

According to the report, apocalyptically entitled “Charter School Black Hole,” MDE gave at least $1.7 million in federal funds to 25 charter schools that never opened.

These financed but never actualized ideas were christened "ghost schools" in the paper, and they conjured shadowy images of the department handing out big wads of cash — with no follow-up — to anyone with a decent charter school vision.

With Detroit Public Schools currently operating in a $46.5 million deficit the findings of the CMD report brought the realities of today’s "education marketplace" into stark relief. The takeaway: While one sector is losing millions and having schools shut down, another is given millions for schools that never educate a single student. It crystallized fears of public school advocates that charter school operators have run amok with little to no oversight.

While MDE would point to the monthly budgets they required of all development teams as proof that they held subgrantees accountable, what can't be denied, is a whole lot of money went towards projects with no deliverables. The Freedom of Information Act requests that

MT's submitted following the CMD report unearthed new data, showing the number of schools that never opened were in fact even higher than was previously reported.

In the 2010-2011 school year, the first year the grant money was made available, 31 charter "development teams" were awarded planning grants to open schools in Michigan. Two of the teams withdrew their proposal before funds were disbursed and another's funding was rescinded. Of the 28 teams that did receive funding (all were approved for the full $110,000, though not every spent that much), 16 — or 57 percent — never opened schools. One school that did open was closed a year later.

Of the funds disbursed that year, $1,231,047 went to development teams that never opened schools.

Of the 16 teams that didn't open schools, MDE asked six of them to return some of the funds. The request ranged: $1 from one team, a full $109,000 from another. In total, the department asked that $117,511 of the $1,231,047 be returned. However, it's unclear if the funds were ever returned, as the money flows to the treasury and not MDE.

It goes on.

The second year of the grant (2011-2012),MDE awarded 38 teams with planning grants. Three withdrew from the program. Of the 35 teams that did receive planning grants, 20 — or, once again, 57 percent — never opened a school. One of the 15 that opened closed within two years.

That year $3,487,817 was disbursed for planning grants, and of that sum, $1,689,157 went to teams that never opened schools.

In the 2012-2013 year, 16 planning grants were awarded, and of that number seven teams never opened schools. That year $407,609 went to teams that never opened charter schools.

While in the first two years most teams received the full $110,000 even if they never opened, by the third year the department was more in tune with knowing when a team was off-track, cutting off funding before the full funds were disbursed.

In the third year, planning grants were only $100,000 — the department nixed a requirement that $10,000 be spent on educational training after nearly 75 percent of the grantees complained about the uselessness of training sessions hosted by the Michigan Association of Public School Academies (MAPSA) — and only three of the seven teams that didn't open schools made it above $80,000.

In the fourth and fifth years of the grant, fewer planning grants were distributed as the department was focusing its energies on implementation grants — a grant that a school can only receive once its been authorized. In the final two years of the grant, a total of eight teams received planning grants; only two have opened so far. However, considering the planning grants are supposed to last for 18 months, this is a bit more reasonable, as there is still hope that the newer recipients can still open their schools.

In total nearly $3.5 million went to teams that failed to open schools. So while MDE argues the federal funds were spent as they were intended, questions arise if this was in fact the best intention for public dollars.

A review by MT of the applications of the 11 other states' education agencies that received Charter Schools Program grants in 2010 showed that none of them said they would give planning grants to school teams without authorization. In fact, most required approval of an authorizer as a prerequisite in order to ensure the grants went to schools with a real future ahead.

More specifically, several other states were more specific in how the planning grants would be used. California, for example, requested that Planning and Implementation grants could be used for personnel salaries during the first year of a school's operation, since they knew state funds could sometimes lag and charter schools, unless a major for-profit education management organization runs them, don't have the flexibility to absorb the costs. In Arkansas, planning grants would only go to six teams, and be limited to $10,000. It would also come with technical assistance from the state. Missouri detailed how planning grants would be used for the hiring of an administrator to work on the curriculum, professional development opportunities, the purchasing of media and library materials, and the creation of evaluations.

The tangible goals of these planning grants lay in stark contrast with Michigan's objectives, which divided the planning grant into two parts: $35,000 to refine an academic vision and determine what data it would use to measure success and $75,000 to work on the business plan and finalize a full charter application for an authorizer.

In 2012, WestEd, a San Francisco-based nonpartisan non-profit provided an audit of Michigan's grant program. While it spoke highly of the program's selection process — how it picked which development teams and schools to award grants to — it expressed some confusion in why the state's planning grants were not in fact "pre-planning grants."

In response, Michigan defended its system, explaining that, "most development teams would never receive charter contracts if they didn't have access to the resources from the planning grant."

Flying blind

The Michigan model of giving seed money to the little guys — the teams that wouldn't stand a chance without the planning grants — creates an interesting dilemma. While the grassroots qualities of these teams are coveted, whether or not they have the capacity to open a school on their own — even with extra funds — is debatable. Michigan's amorphous goal of using $110,000 to refine an authorization application makes it even more difficult to assess if funds were used responsibly.

In July 2011, Lois Williams, the former president of Knoxville College in Tennessee, reached out to Lorilyn Coggins, the CEO and founder of American Charter Education Services Inc., a for-profit organization that helps development teams write charter proposals for the MDE grant and for traditional authorization applications.

Williams, who lived in West Virginia but had friends and family in Detroit, wanted to start a museum-based charter school similar to a successful model in place in Avondale, Georgia. The school was to be named after her husband’s mother Bertha B. Williams, the granddaughter of slaves who led a life as an education warrior and advocate.

While Williams felt confident in her idea, she was unfamiliar with the K-12 arena after years in higher education and reached out to the MAPSA for help. They recommended she get in touch with Coggins, who had been involved with the charter sector since the '90s and was working with a number of other development teams.

After several emails and phone conversations, Coggins submitted the grant application, on behalf of Williams, to the state department of education.

In October, they found out Friends of Bertha B. Williams Corp. (every development team had to be a non-profit) would be awarded a $110,000 grant. Coggin wrote her organization into the application’s required budget, as it would be assumed that if/when the program received a grant Coggins’ team would stay on to help refine the application for authorizers and provide board training.

According to documents provided to MT by MDE, in stage one of the planning grant, where recipients receive $35,000, $25,670 went to Coggins’ company, ACES. The line items were vague: “Ongoing Planning Grant Activity” and “Misc. Stage I Planning Grant,” read two of them.

In stage two, when the rest of the funds — $75,000 — were disbursed, ACES took in $36,544.27. Added together, Coggins’ company took in nearly $65,000 of the $110,000 grant.

How MDE views budgets like this unclear. It’s neither good nor bad; it’s simply, as they would say, “allowable.”

When MT asked Coggins for an explanation of where the funds went and why so much went to her company, she was thoughtful, acknowledging that it does sound like a lot.

"So we did board support, which is one thing we got paid for. We also did grant management, which is another piece that we get paid for. And then in the case of the Bertha group I can’t tell you how many phase one applications — the company just kept knocking on doors of authorizers — so there was a bit of money that went behind that. Every time we would do a rewrite it would be a real rewrite," she explains.

In that 2011-12 grant cycle Coggin's company worked with 8 different development teams — two succeeded in opening schools. MT viewed the budget that she created for another team, the Detroit Coalition for Education Excellence, that also failed to start a school and found many of the same trends when it came to ACES invoices.

Of course nebulous spending goes beyond consultants. According to the monthly budgets for the Friends of Bertha B. Williams Corp. $6,000 was allocated to "museum visits." MDE questioned this, however, after Coggins responded with an email about the school's mission of museum-based learning and the board's desire to visit museums for possible partnerships the topic was dropped. It became "allowable." Another expense of note was the amount of the grant that went towards travel. Since Williams lived in West Virginia, funds were spent on flying her to Detroit and then putting her up in hotels. Nearly $10,000 went towards this. Also "allowable." While Coggins expresses sadness that not every school she worked on was able to open — largely blaming the authorizers for this failing — she contends that the planning grants, as MDE designed them, were valuable for the charter sector's progress. "I personally — and this is not because it would benefit me — would love to see more dollars dedicated towards the incubation, think-tank process," she told MT. "I think in the last twenty years charter schools have become more and more like the traditional districts and we haven't done anything to really support innovation."

Williams, who thought she was on the path towards opening an innovative school has mixed feelings. Today, she vacillates between anger, frustration, sadness, and finally incredulity when she thinks back on her experience with the Michigan Department of Education planning grant.

"The funds that were given was an excellent idea, or offer, by the state," she tells MT. "We made a mistake by getting a consultant to work with us. Before we knew anything, the money was gone."

Perhaps if her team had been successful in obtaining an authorizer and opening she wouldn’t have minded giving Coggins’ company so much — it would have paid off. But it hasn’t open and so she is only left with "what ifs," a consequence of any "innovative" endeavor that doesn't take off. The question of course, is whether or not public funds should be going towards such gambles.

Looking ahead

This summer, Michigan's 2010-2015 charter program grant finished, and the department applied for another round of funding. This time Michigan asked for $45 million. They were rejected.

The issue of grant recipients not opening schools didn't come up — why would it, it was "allowable" — but a slew of other problems did.

According to Lori Higgins of the Detroit Free Press, the state's application was rejected because "the state lacks oversight of the authorizers who approve and oversee them," and because of poor academic performance of charter schools in the state.

The department's application received 17 of 45 possible points when it came to oversight of authorizers and 15 out of 30 points for the academic performance of their charter schools. It also scored dismally on its ability to identify success in charter schools and disseminate the practices to other schools.

While development teams not opening schools could have been viewed as a waste of funds, the more pressing issue appears to be what actually happens when these schools do open. Looking at results from the 2015 application, perhaps it's for the best not every development team was successful.

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