October 1, 2014

Release: PA Charter School Fraud Totals $30 million, Education Groups Launch State-by-State Investigation

CONTACTS: Alison R. Park (917) 805-0830, [email protected]
Cliff Schecter (202) 270-7011, [email protected]

Report: Pa. Charter School Fraud Totals $30 Million, Education Groups Launch State-by-State Investigation

Groups Call for Moratorium Until Oversight Measures Adopted

Philadelphia, PA, Washington, D.C. and New York, NY, October 1, 2014 — Today, the Center for Popular Democracy, Integrity in Education and ACTION United released a report titled “Fraud and Financial Mismanagement in Pennsylvania’s Charter Schools” that exposes at least $30 million lost to waste, fraud, and abuse in Pennsylvania since the passage of that state’s charter school law in 1997 and was the subject of a Philadelphia Inquirer exclusive this morning. ACTION United will hold rallies at Governor Tom Corbett’s offices in Philadelphia at 11:00 a.m. today and in Pittsburgh tomorrow.

“Pennsylvania’s children and families have been robbed by charter school operators to the tune of $30 million, and enough is enough,” said Ted Stones, who is on the board of directors of ACTION United. “Leaders in Michigan and other states are taking a stand, recognizing that there’s no sense in expanding a broken system without the oversight and integrity that our children deserve. We hope Governor Corbett has the same common sense.”

The report’s authors and local groups in Philadelphia and Pittsburgh are calling for a moratorium on new charter schools until the report recommendations are met, including that all charter schools must undergo fraud risk assessments so that oversight agencies can conduct targeted fraud audits as necessary—a practice various federal agencies currently employ.

“Public funds should be spent nurturing students’ growth and potential, not on charter industry fraud,” said Sabrina Stevens, Executive Director of Integrity in Education. “With over $1 billion going to charter schools in Pennsylvania, it’s time for charter schools to be held to the same standards of transparency and oversight that public schools are held to.”

“The current oversight system in Pennsylvania falls miserably short when it comes to detecting, preventing, and eliminating fraud,” said Kyle Serrette, Director of Education at the Center for Popular Democracy. “We plan to uncover fraud in charter schools state-by-state. The millions of children who are enrolled in charter schools nationwide deserve strong protections.”

The report attributes the system’s deep vulnerabilities to grossly understaffed oversight agencies lacking the most basic resources; auditors’ failure to adequately check for fraud; and possible violations of fiduciary duties by charter school boards of directors. The report suggests that $30 million is the minimum possible amount lost to fraud, and in addition to the state moratorium, calls on the Attorney General to launch an investigation. The report’s release marks the beginning of a state-by-state initiative to investigate charter school fraud by the report authors.

The most common type of fraud in Pennsylvania was found to be misappropriation involving the misuse or theft of assets. In many instances, fraud went unnoticed by governing boards—in some cases for years—which experts say would not have happened had governing boards established strong internal controls. The problem is not limited to Pennsylvania—last May, a national report titled “Charter School Vulnerabilities to Waste, Fraud, and Abuse” by the two organizations exposed over $100 million in public tax funds stolen from just 15 of 42 states that have charter schools.

To read the full report, click here.

The Center for Popular Democracy promotes equity, opportunity, and a dynamic democracy in partnership with base-building organizations, organizing networks and alliances, and progressive unions across the country. CPD builds the strength and capacity of democratic organizations to envision and advance a pro-worker, pro-immigrant, racial and economic justice agenda. Visit www.populardemocracy.org and www.twitter.com/popdemoc.

Integrity in Education is a nonprofit organization dedicated to restoring integrity to the conversation about public education. IIE exists to promote education for democracy, by shining a light on the people making a positive difference for students and communities, while exposing and opposing the outside interests that stand in their way. Visit www.integrityineducation.org and www.twitter.com/EduIntegrity.

ACTION United is a nonprofit membership organization of low and moderate income Pennsylvanians working to build power through organizing communities to win changes on the issues that are important to them. ACTION United’s 53,000 members are organized into 17 neighborhood chapters throughout the state.