Alliance for Philadelphia Public Schools members speaking in front of School District of Philadelphia central office, behind gravestone props representing closed Philadelphia public schools

by Alliance for Philadelphia Public Schools and Philly Power Research

The privatization of public schools has never been about improving education. The goal was to create opportunities for businesses while diminishing the political power of parents, educators and the community. In that respect, the expansion of charter schools in Philadelphia has been an undeniable success.

The privatization of public schools, though a reform agenda funded by wealthy corporations, individuals, and foundations, has been devastating to school districts across the country. The school privatization movement has been funded by right-wing billionaires including Jeffrey Yass, the richest person in Pennsylvania; it is a major plank in the Republican party platform. The strategies and methods of the corporate reform agenda have been incorporated into both the curricula and pedagogy of both public and charter schools, including standardized testing of children in every grade after third and the requisite test prep classes that edges out creative teaching and learning. Students are judged on how well they can take a standardized multiple-choice test, not on creative thinking and problem-solving. Schools whose students score lower, for a number of reasons including poverty, inadequate resources and understaffing, are labeled “failing”. Schools in underserved neighborhoods have found themselves on the chopping block, either handed over to a charter company in a hostile takeover or closed for good.

Charter schools were sold as the answer to struggling schools. They promised to improve student achievement. Some investors even contended that more charter schools would lead to the elimination of poverty and violence.

None of that has come to pass. By every measure, including those instituted to justify the creation of charter schools—data-driven education—charter schools have failed to keep the promises they made. The median Philadelphia charter school in 2022-2023 had a lower percentage of students who scored at least proficient in PSSA math than the median Philadelphia public school.(1) Charter schools excuse their failure to meet standards by saying they are educating children in underserved neighborhoods, despite the fact that they sold themselves as a means to educate those very children.

The city’s board of education proclaims itself to be child-centered. Yet they continue to renew substandard charters that fail to meet academic standards every year. Even worse, they renew schools whose personnel files are missing child abuse clearances, even after an 8th grade teacher at Christopher Columbus Charter School was arrested after allegedly carrying on a sexual relationship with a student. Christopher Columbus, in its last renewal evaluation, was found to be missing those same clearances.

The Board of Education shields charter administrators from accountability in many ways. They refuse to hold public renewal hearings, instead holding private negotiations with charter operators. They violate the state’s Sunshine Act by voting in secret on charter applications, renewals and amendments by withholding the contents of the transaction from the public. They grant enrollment expansions with minimal public notice. The board renews charters that fail to meet basic academic standards; they renew charters that have engaged in questionable financial dealings. Why? Because the closing of a charter school means the disruption of the benefits to the management companies and contractors that make up the charter sector’s patronage network.

For the good of the children, families and communities of Philadelphia, the Board of Education and the city’s elected officials must hold charter school administrators accountable.

Lisa Haver
September 2024

Scatter plots showing percents of students in grades 3-8 at each Philadelphia school who scored proficient or advanced in PSSA math during school year 2022-2023, with separate plots for charter schools and public schools. The median public school had a higher percent of students who scored proficient/advanced than the median charter school.

Charter schools have provided a way for many to profit from real estate deals, management fees, and exorbitant salaries and benefits for charter CEOs and administrators.

APPS has written about the high salaries, benefits, and bonuses received by some charter school administrators.(2) According to 2022 tax filings, four charter school organizations’ executives received $375,000-475,000 in total compensation that year (Global Leadership Academy, MAST, Esperanza Academy, and KIPP North Philadelphia). For comparison, the 2022 salary of School District of Philadelphia Superintendent Tony Watlington, for overseeing 225 district schools, was $340,000.

Charter school companies have built their own patronage system. Charter operators have control over hiring and firing of employees, vendors, and contractors. West Philadelphia Achievement Charter Elementary School lists five relatives of its CEO among its employees.(3) Mathematics, Civic & Sciences Charter School paid a company, “School Attendance & Truancy Services LLC,” which is owned by the charter school CEO’s husband, $36,000 for services in 2022.(4) Philadelphia Performing Arts: A String Theory Charter School reported paying a whopping $2,777,500 management fee to former school CEO Angela Corosanite during FY22(5) and $2,903,750 in FY23.(6)

Our review of charter 990s shows that the much of the business done by charter schools does not benefit the communities they claim to serve. Many of the companies they do business with are not located in the city; many are out of state. Among the companies that Philadelphia charter schools pay for contracted management services and consulting include:

Brett DiNovi & Associates (Cherry Hill, NJ): Received at least $2.5 million in 2022 from Philadelphia Charter School For Arts and Sciences at HR Edmunds, First Philadelphia Preparatory Charter School, Lindley Academy Charter School, Russell Byers Charter School, and Freire Charter School
Santilli & Thomson LLC (Marlton, NJ): Received at least $998,056 in 2022 from Philadelphia Performing Arts: A String Theory Charter School and MAST Community Charter Schools
CPC Management Inc. (Cherry Hill, NJ): Received at least $438,263 in 2022 from Laboratory School Of Communication and Languages Charter School and KIPP Dubois Charter School
Omnivest Management (Newtown, PA): Received at least $422,262 in 2022 from Franklin Towne Charter Schools, People For People Charter School Inc, and Green Woods Charter School
Charter Choices Inc. (Glenside, PA): Received at least $350,064 in 2022 from Richard Allen Preparatory Charter School Inc, Boys Latin Of Philadelphia Charter School, and Ad Prima Charter School
Total HR Solutions (Mt. Laurel, NJ): Received at least $305,685 in 2022 from Northwood Academy Charter School

Splitting a public School District into a patchwork of miniature privatized school management organizations is a huge waste of resources, requiring lots of duplicative bureaucratic work, which becomes a profit-making opportunity for suburban management consultants when contracted out like this. Administrative work like accounting, human resources, IT, data reporting, and legal services can be much more efficiently done at large scale by a centralized public district administration. In FY21, the median Philadelphia charter school spent 20% of its total current expenditures on administration, while the School District of Philadelphia spent just 12% on administration, according to data from the NCES Common Core of Data.(7)

Gerald Santilli, a founder of Santilli & Thomson and a former executive director of fiscal management for the school district in the 1990s, helped found several charter schools for which his consulting firm went on to do consulting work, including String Theory Schools (Philadelphia Performing Arts), First Philadelphia Charter School, and Tacony Academy.(8) Santilli & Thomson and the legal firm Sand & Saidel have helped charter school clients secure bonds to pay for developing new school buildings, which are often owned by nonprofits with close connections to the charter school management nonprofits. Santilli and Thompson founded American Paradigm Schools in 2011 in order to take advantage of the Renaissance charter initiative developed by Superintendent Arlene Ackerman as part of her “Imagine 2014” plan that targeted schools in poor neighborhoods for takeover by private companies. Philadelphia charter schools pay millions of dollars each year in rent to related organizations, which often share board members with the school. These arrangements allow the schools to receive state reimbursement for lease payments, while still essentially controlling the buildings that they use.(9)

Bar chart showing the amounts of 2022 lease payments paid by charter schools to related organizations

Charter school construction financed by tax-exempt bonds is a profitable business for investors, as well as for firms like Santilli & Thomson and Sand & Saidel, which have collected millions of dollars in bond cost of issuance fees for their work supporting charter school construction bonds.(10) Since charter school bonds are considered to be riskier, they tend to carry much higher interest rates than bonds used to finance public school construction and maintenance, which means that charter schools in these situations have had to devote large shares of their budgets toward debt service (helping enrich Wall Street investors).(11)

Another charter school management firm, Omnivest Management LLC, specializes in financing construction of new school buildings. Its CEO, Robin Eglin, is also president of Mandrel Construction Co., which built Franklin Towne Charter High School.(12) In some of these cases, the school buildings represent prime real estate, which could mean that after the owners have finished paying off the bonds for school construction (subsidized by taxpayer-funded rent payments and using school assets as collateral for the bonds), the related organizations may be able to sell the properties for large profits. A recent example of this is Mathematics, Civics, and Sciences Charter School, which closed this year because its founder, who is retiring and likely selling the school building owned by her nonprofit, claims that no one else can run the school as successfully as she has (MCS has failed to meet basic standards in its last three annual evaluations).

Some charter networks appear to have taken the circular relationship between charter schools and related organizations from which they rent buildings a step further, by sending payments in both directions between schools and supporting organizations. In 2022, Universal Companies’ seven charter schools reported paying over $1.8 million for management services to Universal Education Companies and about $950,000 worth of sharing of facilities, equipment, mailing lists, or other assets with Universal Community Homes. Meanwhile, Universal Community Homes paid $143,631 to Universal Institute Charter School for unspecified services that year, according to their 990 tax filing. Universal Institute Charter School also listed $67,901 in payments due from Universal Education Companies.(14) These sorts of circular payment relationships further contribute to a general lack of public transparency into how charter schools are spending taxpayer money and open the doors for fiscal mismanagement and corruption. This is especially concerning considering that former executives of Universal Community Homes have been convicted of conspiracy to defraud the United States, wire fraud, and filing false tax returns.(15) In May 2024, former CEO of Universal Community Homes and Universal Education Companies Abdur Rahim Islam was convicted of wire fraud and filing false tax returns.

With so much charter school money spent on exorbitant executive salaries, debt service, management consulting fees, and rent, it should be no surprise that there is less money left over for the actual work of education. Median teacher salaries at Philadelphia charter schools are only about 3/4 those of public school teachers. Charter school teachers often also face more precarious working conditions and less job security due to lack of union representation. Teacher attrition at Philadelphia charter schools (22.6%) was nearly twice as high in 2022 as at Philadelphia public schools (12.7%).(16)

Besides teachers, charter school students also suffer from charter school financial instability and lack of accountability, as seen in the recent sudden closings of Universal Daroff, Universal Bluford,(17) and Math, Civics, and Sciences charter schools. At String Theory Charter School, the school’s high spending on building and debt costs forced the school to halt bus service and cut French and creative writing classes in 2014.(18)

Meanwhile, when students leave the School District of Philadelphia for charter schools, they take tax dollars with them, leaving the district with a shrinking pot of money to meet the education needs of the rest of the population, including those students who charter schools are unwilling to admit. The school district is then stuck with stranded costs, billions of dollars of deferred maintenance in public school buildings which the district cannot afford, and increasing likelihood of school closures due to under-utilization of public school buildings. In fact, at its September action meeting, the Board of Education began the process of closing more neighborhood schools. Instead of continuing down this path toward a shrinking and chronically under-funded public school system, the Board of Education must take a stand against education profiteering and privatization by rejecting new charter school applications and holding existing charter schools accountable by holding public renewal hearings.

Published on Alliance for Philadelphia Public Schools website October 1, 2024

Footnotes:

1. Data from School District of Philadelphia’s School Progress Report on Education and Equity (SPREE), https://www.philasd.org/performance/programsservices/open-data/school-performance/#school_progress_report_education_and_equity

2. https://appsphilly.net/2023/10/11/charter-ceos-collecting-high-salaries-benefits-and-bonuses/

3.https://projects.propublica.org/nonprofits/organizations/233084321/202301359349309680/IRS990ScheduleL

4.https://projects.propublica.org/nonprofits/organizations/232999718/202341359349316254/full

5.https://projects.propublica.org/nonprofits/organizations/233040987/202301309349303305/full

6. https://projects.propublica.org/nonprofits/organizations/233040987/202441349349304469/full

7.https://nces.ed.gov/ccd/districtsearch/district_list.asp?Search=1&details=1&InstName=&DistrictID=&Address=&City=Philadelphia&State=42&Zip=&Miles=&County=&PhoneAreaCode=&Phone=&NumOfStudents=&NumOfStudentsRange=more&NumOfSchools=&NumOfSchoolsRange=more

8. https://www.inquirer.com/philly/news/20150914_The_get-richbusiness_of_charter_consulting.html

9.ttps://www.chalkbeat.org/philadelphia/2016/6/14/22185496/own-a-school-or-rent-for-charters-it-s-complicated/

10.https://www.inquirer.com/education/inq/charters-building-boom-20150914.html