DC's oldest charter school charged with falsifying data concerning disabled students in order to funnel millions into the pockets of operators.

Courtesy of Nonprofit Quarterly:

The burgeoning scandal involving the Options Public Charter School is an all-in-one composite of everything that might go wrong with private, for-profit “educators” trying to make more than a buck from public education under the guise of charter school management. To wit: 

Federal investigators charged that managers of Options diverted millions of dollars to for-profit companies they ran through a Medicaid fraud scheme. The federal investigation is still underway regarding how Options may have exaggerated the number of students with disabilities it enrolled and the services the school provided them in anticipation of federal Medicaid reimbursement. 

Jeremy Williams, a senior official working for the D.C. Public Charter School Board, the entity that oversees charters—and who was responsible for “rooting out financial wrongdoing,” according to the Post—allegedly took $150,000 from the managers of Option Public Charter School to help them “evade oversight and take millions of taxpayer dollars for themselves.” He allegedly funneled inside information to the Options managers, alerting them to “surprise” inspections and other oversight issues. In August, Williams left the board, joining a Virginia-based company he owns, which allegedly received over $100,000 in fees from one of the for-profit companies owned and run by the Options managers. 

A local television news personality, J.C. Hayward of CBS-affiliate WUSA (Channel 9), had an ownership interest in one of the companies contracted to manage Options and was paid $8,500 to attend company board meetings. Hayward was also board chairwoman of Options and signed contracts that provided hundreds of thousands of dollars to Exceptional Education Services (EES), one of the two for-profit companies controlled by the Options managers, in which she was recognized as a part owner, having received 10 percent of the company’s shares. WUSA put Hayward on leave after the allegations about Options arose. 

EES was originally a for-profit subsidiary of the nonprofit Options, which meant that all EES profits were supposed to go to the school, but in 2012 the Options managers and Hayward transferred EES ownership from Options to themselves personally. 

After the Options managers took full personal ownership of EES, they hired a subcontractor for busing Options students but charged Options a 77 percent markup for the service (a $45,000 markup on top of the subcontractor’s cost of $31,000 a month), plus a $100,000 “ridership bonus.” 

The Options Form 990 for July 1, 2011, through June 30, 2012, indicated that the salary of Options “CEO” Dr. Donna Montgomery was $254,679, a decent salary for a charter school principal. According to the Post, Montgomery allegedly received compensation of $660,000 from Options and EES, plus another $212,000 from the other company the Options executives ran, EEMC. 


And if you think all of THAT was bad, get a load of this comment from the company's lawyer.
 
The lawyer representing the for-profit management company offered the “it’s well known common practice” defense. “These related-party transactions between for-profit management companies and the nonprofit public charter schools are not only appropriate and lawful, but the same arrangements exist with several other public charter schools,” said A. Scott Bolden, though he didn’t identify those other nonprofit charter schools pursuing the Options model.

In other words, EVERYBODY is doing it.

It is no secret that I dislike the concept of charter schools, unless they are located in regions with a serious public school deficit.

They drain tax dollars from public schools, cherry pick the high performing students to inflate their test scores and by comparison make the public schools appear to be performing poorly, and cut corners at every opportunity in order to increase their profit margin.

In other words they are everything that a school is NOT supposed to be.

Any time you put making a profit over providing education, this is going to be the result.

Republicans constantly trumpet the "fact" that private enterprises do a better job of providing services than to government or public entities, but that it really just wishful thinking on their part, and there is little data to back up such a contention.

However on the flip side, we have numerous cases just like this one.

(Original story in the Washington Post.)