Education for Sale: LAUSD Throws the Fight in Its Competition with Charters


On Saturday, July 30, 2016, I presented at Charters, Privatization and the Defense of Public Education, a California Education/Action Conference at Richmond High School in Richmond, California. My speech asked “If the charter law was passed to improve education through competition, why isn’t the LAUSD School Board playing to win?” and is based on the following paper:

Men associating with crooks and gamblers could expect no leniency

-Judge Kenesaw Mountain Landis

In 1992, the California legislature gambled with our children’s futures and allowed “teachers, parents, pupils, and community members to establish and maintain schools that operate independently from the existing school district structure”. Freeing these charters “from many of the state statutes and regulations that apply to school districts”, was seen “as a method to accomplish” a series of outcomes. Specifically written into the legislation was that these privately run organizations would “provide vigorous competition within the public school system to stimulate continual improvements in all public schools”.

Examples of “vigorous competition” can be readily found in professional sports. Larry Bird and Magic Johnson were not “partners in basketball,” but rivals, even if they were friendly off of the court. When watching each other play against other teams they would hope “for the other’s success so that each could measure himself against the other and continue to improve as a player”, but going head to head was the ultimate goal. As expressed by Bird, “I couldn’t imagine going to the Lakers and playing with Magic Johnson. I’d rather try to beat him.”

The introduction of outside forces has a tendency to compromise competition. In the 1919 World Series, gamblers met with the players and resulted in charges that the games were fixed. Even though they were acquitted in criminal proceedings, eight players from the White Sox were still banned from baseball for their part in the scandal. This was seen as the only way to restore integrity to the game.

Today, the The Los Angeles Unified School District (LAUSD) School Board looks a lot like the players from the infamous Black Sox team. Charter supporters have replaced gamblers, spending “nearly $2.3 million” in “the nation’s most expensive school board elections in Los Angeles last spring”. Instead of learning from the examples of Johnson and Bird and recognizing legally mandated competition, Board President Steve Zimmer refers to “charter partners” and complains that the “CCSA [California Charter School Association] has not been the partner that I had hoped.” Superintendent Michelle King has “called for traditional public school [sic] and work together.” In the meantime, Eli Broad threatens the District with bankruptcy through his proposal to spend $490 million "to reach 50 percent charter market share”, charters operate within the District without proper oversight and Proposition 39 co-locations continue to disrupt school communities.

The Broad Way Towards Bankruptcy

Despite the fact that the Los Angeles Times receives funding for their education coverage from the Eli and Edythe Broad Foundation, their reporters were still able to publish a leaked copy of the foundation’s “Great Public Schools Now” plan to “place half of the students in the Los Angeles Unified School District into charter schools over the next eight years.” While the LAUSD is already “the largest district charter school authorizer in the nation, with about 250 independent and affiliated charter schools serving over 130,000 students”, this initiative would “accelerate charter schools’ existing growth plans by providing financial capital and addressing three major growth barriers: facilities, talent and the political climate.” Ultimately, the foundation hoped that their plans “would serve as a model for all large cities to follow.”

Even before the implementation of Broad’s plan, the District was said to be in a dire financial condition with some estimates that “a $333 million budget deficit looms in the 2017-2018 school year and the shortfall is predicted to balloon to $600 million two years later. One reason for these shortfalls is the significant lost revenue as a result of declining enrollment, about half of which can be “attributed to the growth in charter enrollment”. In “the past six years, the District has lost almost 100,000 students” and “this trend is likely to continue if not accelerate in light of a recently released charter expansion plan.” Robert Ross, President of the California Endowment, has expressed concern “that opening large numbers of new charters “actually leaves children who don’t have access to those charter schools with a lower quality of education than they had before.”

This loss of students is exacerbated by the fact that charters often cherry-pick the easiest to educate students, leaving the District with higher per pupil costs. As an example, Granada Hills Charter High School (GHCHS), which bills itself as “the largest single education reform effort in the country”, states that 301 of its 4,300 students received special education services in the 2014 - 2015 school year. This represents 7% of the student population. In comparison, 12.7% of the students in LAUSD district schools receive these services. For independent charters, those with special needs represent 10% of the students enrolled.

The raw data only tells part of the story as the amount of intervention required varies from student to student. Specifically, there are two categories. One consists of those with moderate to severe disabilities who require an Individualized Educational Plan (IEP) that is “developed to ensure that a child who has a disability identified under the law...receives specialized instruction and related services”. The second category contains those who do not need specialized instruction but instead receive a 504 plan that specifies “accommodations that will ensure their academic success and access to the learning environment”. In the case of GHCHS, the data provided includes both “IEPs and 504s” without a breakdown of how many students are being served by each. The former Executive Director of LAUSD’s Special Education Department, Sharyn Howell, did not provide exact numbers, but confirms “that District schools have a higher number of students with moderate to severe disabilities.” This conforms to a report which found that there is evidence that charter schools in large urban districts and throughout the country tend to enroll disproportionately greater numbers of students with high incidence disabilities – such as specific learning disabilities – and lower numbers of students with low incidence, more significant disabilities (e.g., intellectual disabilities and autism) with more educationally intensive and costly needs.”

Another criticism of the charters is that they engage in the practice of “pushing or counseling [students with disciplinary or academic challenges] out [after they have been enrolled], a process that [critics] say inflates academic standing.” LAUSD Board member and former school principal Scott Schmerelson has publicly related his experience of having former charter school students looking to enroll at his school just before standardized testing time because they had been told that they were not a good fit for the charter. A 2013 study of traditional public schools and charters within the LAUSD found that charters suspended more students at the Elementary, Middle School and High School levels.

These policies create both direct and indirect costs to the District. For example, if charter students are counseled out or expelled because of poor attendance, then the LAUSD will end up with students who are more likely to skip school. Since state funding is based on attendance and not enrollment, the District will average less revenue per student. Additionally, if charters are able to artificially inflate their average test scores, they will look more desirable to prospective parents. This not only results in lower enrollment in District schools but fuels the transfer of easier to educate students to the publicly funded private schools. Eventually, the District’s budget will collapse under the weight of more costly students.

Lack of Oversight

On the other side of the equation, the CCSA has proven that they are more than willing to compete with the LAUSD on a fight to the death basis, especially during the electoral process. Prior to the last election, the most vocal opponent of charters on the LAUSD Board was Bennett Kayser, who the Broad Foundation describes as “an implacable foe of charters [who] opposed charter petitions routinely.” To silence this opposition, $600,000 was spent in the campaign against him that included literature that Board Member George McKenna described as “misleading and racially inflammatory in nature” and an ad that Diane Ravitch called a “shameful hit piece” which appeared to mock the fact that Kayser has Parkinson’s disease. Another $1,670,765.64 was spent supporting his opponent, “Ref Rodriguez, the co-founder of Partnerships to Uplift Communities (PUC) charter schools”. During the election, “School Board member Monica Garcia, a political ally of Ref Rodriguez,” attempted to delay the release of an audit that found PUC failed “to consistently follow some required business practices.”

This spending has produced two types of LAUSD Board members; those who support charters and those who are afraid to confront them. They have put José Cole-Gutiérrez, a former staff member of the California Charter School Association, in charge of the Charter School Division (CSD). Instead of promoting competition, Cole-Gutiérrez describes the organizations that he is supposed to oversee as “valuable partners and viable choices among the District’s robust set of educational options” and advocates “to ensure that charter schools have...autonomy”. This was not how the law was written. The CSD itself admits that the LAUSD “is responsible for ensuring the charter school operates in compliance with all applicable laws and terms of its charter.” Without proper oversight, the 250 charters within the District have been allowed to operate without accountability to the taxpayers who fund them or the 130,000 students who rely on them to provide a quality education. In some cases, the results have been disastrous.

On October 28, 2015, the LAUSD issued a “Notice to Cure” to El Camino Charter High School that noted numerous questionable credit card charges and a lack of a credit card policy. This notice demanded that the Governing Board provide an action plan to the CSD by October 30, and “copies of updated board approved fiscal policies and procedures and proof of implementation of the above requested board action items no later than close of business on November 30, 2015.” El Camino’s Chief Business Officer Marshall “Mayotte called the district’s scrutiny ‘nitpicky’” and the Board apparently ignored the deadline. It appears the CSD did not take further action.

While the CSD seemed to lose interest in what was going on at El Camino, the story did attract the interest of a reporter. Fully aware of this investigation, the Executive Director, David Fehte, sent a pre-emptive letter to parents referencing “the request made by LAUSD last October” and stating that a “reporter has approached several staff members on campus to ask leading questions.” Despite acknowledging that the reporter had “made multiple requests under the Public Record [sic] Act and had been provided with years of receipts and invoices from our accounting staff”, Fehte concluded that “he has shown a lack of interest in researching all of the facts or understanding our school policies.” Concern was expressed that “because of the nature of the reporter’s questions, and his lack of interest in anything positive about the school, we believe this article is being crafted in a way that will put ECRCHS in a negative light.”

Fehte had a reason to be concerned because the article published on May 22, 2016 was extremely dark and critical of him and the charter. In summary, the Executive Director had “charged more than $100,000 to the [school’s credit] card”, including “$15,500 at Monty’s” Prime Steaks & Seafood, “first-class airfare and luxury hotel rooms” and “more than $5,700 for flowers over the two years.” Contrary to the Executive Director’s letter to the parents, the article also stated that Fehte had “declined to sit down for an interview.” A followup article focused on an $866 bill for an “itinerary to [Fehte’s] office at the San Antonio Spurs corporate headquarters” but paid for by El Camino. Fehte was moonlighting as a scout for the NBA team.

Following the news reports, the Governing Board finally took the steps that had been demanded by the CSD. At its June meeting the Board “voted unanimously to pay Oracle of Chino Hills $195 an hour to perform a forensic accounting of the school credit card charges.” It “also requested the assistance of the state Fiscal Crisis and Management Assistance Team” at a cost of “an estimated $28,000.” It was clear that it while the CSD had found the problems and recommended solutions, it was the news reports that had forced the Governing Board to act.

The CSD has also been slow to act on violations at GHCHS. It took them almost ten months to force the charter to remove from the Student-Parent Handbook the warning that students who do not “participate fully in California CAASPP and Granada Testing” will be prohibited from participating in “optional activities such as senior activities, school extracurricular activities and school athletics”. This clearly violates a parent’s opt-out rights under state law. The CSD is still looking for ways to “encourage” GHCHS to comply with the California Public Records Act by allowing anyone reviewing records to take pictures of the documents. However, the most concerning failure to take action involves possible improprieties with the Associated Student Body (ASB) account.

On April 14, 2016, the CSD and all of the Board members were notified that the charter’s management had made the following transactions from the ASB account in 2012:

Jan04     Emergency transfer - LACOE ACH       310,000.00-

June28   Emergency loan for cash flow.          600,000.00-

Jul13       Emergency Transfer                               100,000.00-

Aug07     Emergency Transfer                               25,000.00-

While these loans were all repaid, no interest was included. It is unclear if the ASB had approved the loans, if these types of loans are even allowed by law or if the loans were a violation of the charter’s fiduciary responsibility to the student body’s funds. The amount of funds in the ASB is also concerning as these funds are supposed to be used for the benefit of the students. This account was also not fully protected as the funds were only “federally insured up to $250,000 by the NCUA”. Thus far, the only response from anyone in the district has been that the Administrative Coordinator is “turning this over to our fiscal team for review.” On December 1, 2015, the school removed another $600,000.00 from the account.

The CSD also looked the other way when, in violation of its charter, GHCHS eliminated the elected teacher and classified employee representatives from the Governing Board. While a representative from the state’s Charter Schools Division states that “changes in [a charter school’s] governance relating to the composition and/or qualifications of members of their board of directors” “would require a material revision,” and, therefore, require approval from the LAUSD, a request for this change was never submitted it to the LAUSD Board for approval.

The education code also gives districts “the right to appoint a single representative to the [charter’s] governing board,” but the LAUSD has refused to avail of itself of this opportunity. Imagine if the rules of baseball allowed each team to place a player in the opposition’s dugout and a manager did not take advantage of this opportunity! Having a set of eyes on these Boards would give the District early warning when charters were engaged in illegal or inappropriate behaviors. If the District chose parents or teachers for these positions, it would be a way to make sure that stakeholders were involved in the governance of these schools even when the governing boards were not democratically elected.

GHCHS and El Camino are both conversion schools. They were high performing traditional schools and continue this tradition as charters. However, as a whole, “charters have been shown to offer no tangible academic advantages over traditional public schools.” By the Broad’s own account, 48% of charters in Los Angeles had an API below 800. If the purpose of charters is to “improve pupil learning” and deliver “on the promise of a great public education”, then only excellent results should be acceptable. Yet the LAUSD Board rarely revokes charters, almost always renews them (even when the CSD recommends against doing so) and keeps on accepting new ones.

While the CSD states that “the final decision on any approval, revocation, or renewal is within the discretion of the Board of Education”, the Board often states that the law requires these approvals. They do not explain how a law can require an elected official to rubberstamp a decision against their will. Another popular excuse is that, if they reject the petition, the county or state will step in and approve the charter, leaving the LAUSD without any control. It is true that this has been the case with the limited numbers of charters that have been rejected in the past. However, the county and state do not have the infrastructure to deal with a large number of charters. If the LAUSD rejects enough sub-par charters, the county and state will also be forced to be more discriminating in what they accept. That is how competition is supposed to work.

Proposition 39

The CCSA has also shown a willingness to use the courts to gain the upperhand in its competition with public schools. It has been particularly litigious in claiming what it calls “charter school’s share” of space under Proposition 39, having sued both the LAUSD and the Oakland Unified School District. This unelected group states that they “are fully committed to ensuring that charter students have fair and equal access to classroom space across the state”, even if it disrupts the students of public schools.

While the word “co-location” does not appear in the text of Proposition 39, LAUSD schools constantly have to battle the District in order to remain a single, unified community. In one example, the stakeholders at Bushnell Way Elementary School described to the members of the Arroyo Seco Neighborhood Council how their campus was already overcrowded with not enough room for all of the teachers to park on campus. In an effort to make room for Celerity Charters to move onto their campus, teachers and parents allege that the District brought in a succession of three principals, eliminated the sixth grade from the school and reneged on a promise to remove aging bungalows. It is unclear how having students from this Schoolwide Title 1 school share their facilities would “increase learning opportunities for all pupils, with special emphasis on expanded learning experiences for pupils who are identified as academically low achieving.”

While Bushnell is represented by Ref Rodriguez, this Board member also knows that CCSA funds helped elect him last year. Therefore, instead of a resolution to protect LAUSD students from co-locations, he introduced one stating that “Proposition 39 presents an opportunity for charter schools and traditional District schools to collaborate by sharing resources that benefit all public school students”. Board President Zimmer expressed frustration about the Prop 39 proces, stating that he “would be a bigger believer in collaboration if the [District were]... not under the threat of being sued at every turn”. But he still voted with the majority to make co-locations easier for the charters. In voting “no”, George McKenna signaled that not everyone has given up on competing with the charters stating that it is “not our job to make it comfortable for charters to co-exist with us.”

With the vote of support for the Rodriguez’ resolution, the LAUSD Board ended their last meeting of the year. Four of the seven members were elected despite the opposition of the charter industry, but they were still unwilling to confront the CCSA when McKenna says that the “biggest challenge is the co-location.” It appears that the fight has already been thrown.