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President Trump’s first federal budget proposal seeks a $168 million increase for charter schools, which is a 50 percent funding increase from the current level set by the previous Obama administration. For Trump and Education Secretary Betsy DeVos, charters are one tool in the school choice tool box that they say will be front and center of their education reform agenda.

Charter schools — which are publicly funded but privately operated, sometimes by for-profit companies — have been proliferating for some 25 years and today there are thousands in the United States. While the few million students they enroll are a fraction of the number of young people who attend K-12 schools in this country, the charter movement has been a key part of the school choice movement and the education reform debate.

Supporters of charter schools say they give parents an alternative to failing traditional public schools. Critics say they take vital resources away from traditional public schools and that many charters are poorly run.

While some charter schools are well-run and high-performing, others aren’t, and some states that allow charters have little or no oversight. A 2016 audit by the Education Department’s Inspector General’s Office found that the department — which awards multi-million-dollar grants to states for the creation and expansion of charters — had failed to provide adequate oversight of some of its relationships with charter management organizations.

[Education Department slammed for charter school oversight — by its own watchdog office] 

This post details issues with charter schools in Arizona. It was written by Carol Burris, a former New York high school principal who is executive director of the nonprofit Network for Public Education. She has been chronicling problems with corporate school reform for years on this blog, and this post is part of her occasional series about troubled charter schools in California and other states.

Burris was named the 2010 Educator of the Year by the School Administrators Association of New York State, and in 2013, the same organization named her the New York State High School Principal of the Year. She was helped with this piece by Jim Hall, an elementary and middle school principal in Arizona for 23 years who, in 2014, founded Arizonans for Charter School Accountability. He is quoted in this post.

Burris attempted to contact officials at the BASIS charter school network she writes about in this post but received no response.

By Carol Burris

In the age of President Trump and Education Secretary Betsy DeVos, many charter school advocates are quick to point out that they are not part of the school privatization agenda. They place the adjective “public” in front of “charter school,” to distinguish themselves from voucher schools, which are private schools that accept public funding for some students. This branding effort has been somewhat successful — especially with politicians and the press.

But there are very big differences between what we have come to accept as public schools and charters.

Democratically elected school boards govern most public schools; charter boards are appointed and not accountable to parents or the community. Charters control the number of students they have, and they do not have to take students mid-year, like traditional public schools do. Transparency laws, especially in spending, that public schools must follow can — and often are — ignored by charter schools.  Many conflict-of-interest laws that regulate public schools can be skirted — and sometimes are — by charters. And in some cases, when a charter school is closed because of poor performance or another reason, the school building and property is not returned to the public who paid for them, but is retained by the charter owners themselves.  And, by the way, charters can shut their doors whenever it suits them.

They only thing truly “public” about charters, is that taxpayers foot the bill. Calling charter schools “public schools” because they receive public tax dollars is like calling defense contractors “public companies” because they also depend on public funding.

One of the best illustrations of the “non-public” nature of charters is the much heralded BASIS charter schools that began in Arizona, a state with extremely lax charter laws. A close look at BASIS provides insight into how charter schools can cherry-pick students, despite open enrollment laws.  It also shows how through the use of management companies profits can be made — call hidden from public view.

[Will the thing that charter schools love so much be their undoing?] 

BASIS School Inc. began in 1998. Two economists, Michael and Olga Block, believed that students in the United States were not sufficiently challenged, and so they began BASIS Tucson built upon the Advanced Placement (AP) curriculum and tests. That school was followed by BASIS Scottsdale in 2003.

BASIS Tucson and BASIS Scottsdale became top-ranked schools on Newsweek’s “America’s Most Challenging High Schools” list, and later flew to top spots on the Best High Schools list of U.S. News & World Report.

Advocates touted the Tucson and Scottsdale schools as miracles, holding them up as examples of what high expectations, combined with the freedom afforded charter schools, can do. BASIS exploded. There are now 18 BASIS charter schools in Arizona, three in Texas and one in Washington D.C., all managed by the for-profit corporation, BASIS Educational Group, LLC. The same LLC also manages five for-profit BASIS private schools in the United States and one private international school.

There is no doubt that BASIS provides a challenging education. What is questionable is just how “public” their charter schools really are.

Critics of charter schools have long observed the differences in school populations that charters serve, and charter schools counter that that is not by design. 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, however, should give pause that such differences are not accidental. The following enrollment figuresare from the 2015-2016 school year.

The proportional over-enrollment of Asian-American students and under-enrollment of Latino students in BASIS charter schools is startling. 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 in a state in which over 47 percent of all students received free or reduced- priced lunch, BASIS had none.  Although BASIS may have some students from qualifying households, it chooses not to participate in the free or reduced-priced lunch program.

The stark differences in school demographics between the 18 schools of BASIS and the state are the result of several factors — all within BASIS’s control.

Linda Lyon is the president-elect of the Arizona School Boards Association. She has been observing the growth of BASIS schools for years. She believes that where BASIS chooses to open schools is based, in part, on the students it hopes to attract.

“BASIS and other for-profit charters are really good at penetrating affluent markets where they can recruit already high performing students from district schools,” she said. “According to the U.S. Census, communities in Arizona with BASIS schools have poverty rates of only about 10 percent, median incomes of $69,000 and households that are mostly white.”

Because BASIS provides no transportation, where it places schools — along with the lack of a free-lunch program — discourages disadvantaged students from applying. There are also hefty “suggested” parental contributions. BASIS requests that families contribute at least $1,500 a year per child to the school to fund its teacher bonus program. Enrollees must also pay a $300 security deposit, purchase some books, and pay for activities that would be free if the student attended a public school.

The barriers to enrollment do not end there. The “rigorous” curriculum of BASIS prevents prospective enrollees from transferring in after middle school. Students must take six Advanced Placement exams and pass at least one with a score of 3 or above, in order to graduate. However, they are required to take more AP classes than that, beginning in middle school. There are comprehensive tests that must be passed or students are retained. When I inquired about whether a tenth grader could enter BASIS, the two schools I contacted did their best to make it appear that it would be impossible. One of the reasons given was that ninth-grade students take either AP Calculus AB or AP Calculus BC — courses that are taken typically in grade 12 by strong, accelerated math students in most public and private schools.

[Why California’s charter school sector is called ‘the Wild West’] 

Even after getting into BASIS however, there is less than a 50 percent chance the student will stay to graduate. During each successive year, students leave when they cannot keep up with excessive academic demands.

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 eighth grade in BASIS Flagstaff during the 2011-12 school year, only 41 percent (35) remained to enter twelfth grade in 2015-16. In the flagship school, BASIS Tucson North, a seventh-grade class of 130 became a class of 54 by senior year.  The same pattern exists in every BASIS charter high school in the state.

This is not just an enrollment decline due to students leaving BASIS after middle school. Attrition occurs throughout the middle and high school years.  Below is the attrition rate for the cohort of students that remained to become twelfth-graders at BASIS Tucson North in 2015-16.

All of the above, of course, gives advantage to BASIS charters in the “Best High Schools” ratings. For example, the America’s Most Challenging High Schools list now published by the Washington Post, makes its ranking determination based on the number of tests divided by the number of graduating seniors. By requiring AP tests throughout high school, in combination with having a very small senior class, BASIS schools become a shoe-in for top spots.

Likewise, the US News & World Report’s final ranking is based on the number of AP tests taken and performance on those tests for graduating seniors only. The more elite the group of twelfth-graders, the better the rank.

BASIS schools operate on a tournament model, where only the strongest survive. Ironically, however, the prize at the tournament’s end goes to the BASIS chain. The  “best high school” rankings that put BASIS near the top, are the catalyst that allowed the Blocks to build an empire.

Jim Hall is a retired principal who lives in Arizona and is the founder of a watchdog group called Arizonans for Charter School Accountability. He has written about the state’s charters, including BASIS, for years.  “When BASIS began, we used to be able to see Olga an Michael Block’s salary,” he said. ” We knew that in 2007 the couple were paying themselves $315,000 plus nearly $39,000 in benefits for running two schools, in addition to having their daughters, son and even Olga’s sister in the Czech Republic on the payroll.”

That same year, according to the 2007 BASIS School Inc.’s 990, the couple spent over $46,000 on travel expenses.  The distance between Tucson and Scottsdale is 115 miles.

Salary and travel transparency disappeared in 2009 when the Blocks opened a private, for-profit limited liability company, BASIS Educational Group, LLC. Now the couple’s salary and expenses are hidden from the public. According to the 990 for 2009, BASIS School Inc. spent $3,902,122 in total on school salaries, and $1,728,000 on “management.” BASIS Educational Group, LLC, the for-profit that contracted with BASIS Schools Inc., received $4,711,699 for leased employee costs and $1,766,000 for management, indicating that there were also substantial fees that went to the Block’s LLC.

The latest 990 shows just shy of $60 million going from the non-profit to the for-profit corporation to provide services to BASIS schools.

According to Hall, who has carefully studied BASIS audits, “As the BASIS empire has grown, so have the management fees paid to the for-profit corporation.” Between 2012 and 2015, BASIS administrative costs were some of the highest in Arizona, taking in over one third as much in management fees as in all school salaries and benefits. According to a 2015 study by the Grand Canyon Institute and Arizonans for Charter School Accountability, BASIS schools spent an average of $2,291 per pupil on administration while the average public district spent just $628 per pupil.

BASIS general administrative costs alone amounted to nearly $12 million for less than 9,000 students, while the six largest public school districts serve a quarter million students for less than $10 million in General Administrative costs. “

It is important to keep in mind that BASIS Educational Group, LLC. also known as Basis.ed, is also managing for-profit private schools, and it intends to open more.  These private schools are located in Silicon Valley and upscale neighborhoods of New York City. Could the taxpayers of Arizona, along with all U.S. taxpayers[1] be indirectly subsidizing these schools and their expansion?

I called the BASIS Educational Group twice to get answers about the financial status of BASIS. My calls were never returned.  So I turned to Arizonan Curt Cardine, a former East Coast superintendent and former charter administrator.

Discouraged by the unethical practices he says he has observed in Arizona charters, he left the charter world and has spent the last three years conducting an extensive study of charter financial health and financing in Arizona. According to Cardine, “Once money goes to the BASIS Educational Group, the profits now belong to the for-profit to use as they please, including for expansion.”

Cardine then analyzed the latest audit for BASIS and he sees trouble ahead for the charter chain. “The most recent audit shows that BASIS School Inc. is now running a huge deficit in their assets of over $13 million.  The charter schools’ net loss for the 14-15 year alone was $3,074,317.”

Cardine said he was not surprised. “In the state of Arizona, the financial failure rate on charters is 42.79 percent. Over-leveraging is a huge problem,” said Cardine.  “Charters fail, but somehow folks leave making money. Charters like to say they are ‘for the kids, not the adults.’ That has certainly not been my experience — especially here in Arizona.”

[1] It should also be noted that federal tax dollars subsidize charter schools. BASIS received nearly $2 million in federal grants in 2015.