Working single mom Samonia Jacobs was on the way to a doctor’s appointment when she noticed a sign for Iberville Charter Academy, which opened this fall in Plaquemine.
“My first thought was, Let me go find out what this school’s about,” she recalls.
School officials stressed the importance of parental involvement, which was no deterrent for a mother who always tries to “work side-by-side with the teachers.” She says she chose the charter school for her first-grader and fourth-grader because it offered smaller classes, better technology, and more individualized instruction than her traditional neighborhood school. So far, she’s happy with her decision.
In previous years she shopped around for schools for her two older children but found few practical options.
“They didn’t have many [public] schools that you could actually choose from. Everywhere you go, they’re basically looking for addresses” to determine whether a child can enroll, she says. “I didn’t really want to move my children out of my home.”
But Iberville Charter Academy can accept students from anywhere in Louisiana. It’s part of a new wave of charter schools that’s bringing new choices—and controversies—to the Capital Region.
Charter schools have been around more than 20 years, but they remain one of the most divisive concepts in education today. There are about 6,400 charter schools in 42 states, including more than 130 in Louisiana.
Charter schools are privately managed but publicly funded. Early proponents envisioned charter schools working with the neighborhood-based school district, serving students who had failed in traditional schools and functioning as laboratories for innovations that might later be applied more broadly.
But whatever the original intent, in practice charter schools are seldom partners with traditional systems. Instead, charters breed competition, for children and tax dollars.
Backers say competition in education, as in other sectors of the economy, is a good thing. They say charter schools give new choices to parents dissatisfied with their neighborhood schools, and teachers and principals can be more flexible and responsive when freed from central office bureaucracy.
Critics say charters skim money and students from traditional schools, which can be left worse off than before. They worry about diverting public dollars to private entities and say charters usually perform no better than traditional schools despite being able to screen out children who are unlikely to succeed.
In the current environment, those arguments are purely academic. While the political winds may one day shift, charter schools appear to be here to stay, at least for the foreseeable future.
But while the charter school concept isn’t going anywhere, the schools themselves have no such guarantee. Recent years have brought new players to the local market, some of which have deep ties to well-funded private companies and foundations in other states.
Education is a business, and charters don’t only compete with neighborhood schools; they compete with each other. And the stakes are high: Attract students and raise test scores, or get shut down.
Advance Baton Rouge tried and failed to turn around several long-struggling schools that had been taken over by the state. Those failures left charter schools with a bad reputation among some families and educators.
Patrick Dobard, superintendent of the Louisiana Recovery School District, which works to transform chronically underperforming schools, said last year that some of the people who tried to turn around those schools didn’t have enough time to prepare before opening. Some schools were unable to create a disciplined student culture, didn’t set high enough academic expectations, or didn’t have the right leadership, he said.
New Schools for Baton Rouge is helping recruit the next batch of charters to this market. Chris Meyer, a former state education official, says his nonprofit group is luring operators with a proven track record of success. He says New Schools has raised about two-thirds of its $30 million goal in hopes of eventually serving 12,000 students, primarily in north Baton Rouge. The group also won state grant money—$650,000 in fiscal year 2014-2015—as part of the “New Schools Incubation” program.
So far, New Schools is backing Celerity Educational Group (based in Los Angeles), Democracy Prep (New York City), Yes Prep (Houston), KIPP (founded in Houston and New York City), and Collegiate Academies (New Orleans). Beyond traditional charter groups, it recruited Christo Rey Network (Chicago) and Hope Christian Schools (Milwaukee), private religious schools that plan to enroll low-income students through the state’s voucher program.
Connecticut-based Family Urban Schools of Excellence was among that group. But after getting state approval to take over Dalton Elementary, FUSE crumbled upon revelations that its CEO lied on his resume and failed to disclose an embezzlement conviction. State officials say they’re expanding background checks in response, and Celerity has stepped in for FUSE.
New Schools judged charter operators based on criteria developed by LSU Professor George Noell and Stanford University’s Center for Research on Education Outcomes, better known as CREDO. Meyer’s group selected operators whose schools in other markets ranked in the top quintile against their peers, he says.
New Schools is raising money for local startup costs, excluding buildings and technology. While charter schools are entitled to the same per-pupil Minimum Foundation Program money as other schools, they don’t start getting those dollars until they’re up and running.
Joe Keeney is a former executive with Edison Schools Inc. and the founder of 4th Sector Solutions, which provides school support services. He says a typical school might budget $125,000 to $350,000 for startup, excluding building costs. That includes up to $20,000 for teacher recruitment and up to $25,000 for advertising, canvassing and events to attract students.
Several operators are starting only one school here at first, with an eye toward expansion. “We get into the financial model and determine what is the gap based on the way they want to grow,” Meyer says.
New Schools helps them figure out how their approach fits into the Louisiana context. Meyer says operators should be able to show clear lines of authority and accountability—New Schools is “agnostic” about the exact modeland a business plan to be stable on public dollars within the first few years.
Meyer went into the project expecting to grant operators between $500,000 and $1 million over three years, but says so far the schools haven’t needed quite that level of support. “We’re going to learn a lot over these next couple years,” he says.
Florida-based Charter Schools USA manages 70 schools in seven states, including Iberville Charter Academy. CSUSA is a relatively new (although not unique) sort of animal in the Capital Region: a for-profit, multistate charter management organization, or CMO. In some states, for-profit CMOs are allowed to run schools directly. In Louisiana, charters must be led by local nonprofit boards, although the boards can join forces with CMOs.
Schools pay management fees to their CMOs out of their revenues (including tax dollars). Keeney says fees often range from 8% to 10% of school revenue for nonprofits to 15% to 20% with for-profits, although it varies widely depending on the school and services rendered. Generally, he says, about half of the money is for instruction and half is for other services. Independent schools can engage third parties like 4th Sector to provide back-office support.
CSUSA offers more than ancillary functions like IT and food service, says Richard Page, the company’s vice president for development: namely, 15 years of education expertise.
“It’s very complex to run a school, especially a charter school where you’re completely on your own,” Page says. “We know how to set up. We know how to hire effective teachers, we know how to train teachers to be effective in the classroom, monitor them, develop them, and hold them accountable.”
Every state is different, Page stresses. But without taking a position for or against the controversial Common Core standards, which have been adopted by most states, he says greater “commonality of standards” across state lines is good for his company’s business.
CSUSA contracts with the South Louisiana Charter Foundation, which oversees Iberville Charter Academy, South Baton Rouge Charter Academy, and Baton Rouge Charter Academy at Mid City. Attorney John Pierre, the foundation’s board chairman, says he looked closely at CSUSA’s first Louisiana school in Lake Charles.
“What impressed me first was the commitment to quality facilities,” Pierre recalls. “That has often been a problem in the East Baton Rouge school system.”
As described by Pierre, the local board provides oversight like a district school board, while CSUSA is sort of like a district central office running day-to-day operations. According to the management contracts, CSUSA is entitled to 15% of the revenue associated with each local school’s revenue. The local board must approve the budget, the contracts say, and Pierre says the company has been flexible about payments when necessary.
This summer, the State Bond Commission balked at a proposal by the South Louisiana Charter Foundation to use state education dollars to pay off construction debt at two of its schools. CSUSA says the model has worked for other schools.
“The state doesn’t back the bonds in any way,” Page says. “The only guarantee comes from the revenues the school collects on a per-pupil basis.”
CSUSA and its for-profit real estate development partner, Red Apple, have relationships with large financial institutions to secure initial construction funds. For some schools the companies replace that short-term financing with 35-year tax-exempt bonds, reducing interest costs for the school, Page says. The model is similar to commercial construction, where a developer often gets a short-term construction loan first before refinancing the project with a longer payback timeline.
Pierre says he may revisit the issue with the bond commission—although that option is off the table for now, a CSUSA official says—but the relationship with CSUSA opens up other financing options. Page says ownership of their schools can stay with CSUSA, Red Apple, the local entity, or a combination of all three.
As for their three local schools, Red Apple owns Baton Rouge Charter Academy at Mid City, which was privately financed by Red Apple through a commercial bank credit arrangement, CSUSA says. Numbers provided by a CSUSA spokeswoman indicate that Mid City paid out almost $1.5 million for school management, rent and debt service during the fiscal year that ended June 30, or about 25% of its $5.8 million in revenue.
The two newer schools were financed by Ryan Construction, a contracting company that often works for Red Apple, and to a lesser extent by Red Apple itself. The two schools are owned by Ryan, but Red Apple has purchase options that it intends to exercise.
Charter schools don’t have to hire certified teachers. But Pierre says it’s important to his board to do so anyway rather than, for example, relying on faculty from organizations like Teach For America who usually move on to other professions in a few years.
Ultimately, he says it is his board, not Charter Schools USA, that is accountable for the schools’ success or failure.
Of course there’s tension between charter schools and traditional school districts as they compete for money. But the Iberville Parish School Board has taken an unusual step by voting to sue the state Board of Elementary and Secondary Education.
It accuses BESE of improperly funneling MFP funds meant for the district to Iberville Charter Academy. (The MFP combines state and local revenue under a formula BESE creates.) The academy is a type 2 charter approved and governed by BESE, and is the parish’s first charter school.
Among other issues, member Tom Delahaye says the Iberville School Board objects to sending public education tax dollars to a for-profit company like CSUSA, which is “hiding behind” a nonprofit entity like the South Louisiana Charter Foundation. He says the charter operator will claim about $1 million for its services in 2014-2015 and about $1.2 million in 2015-2016.
Colleen Reynolds, a spokeswoman for CSUSA, acknowledges that the group makes political contributions, in CSUSA’s case locally, to BESE board members and to Gov. Bobby Jindal.
“We do exactly what every good American should do,” says Reynolds about campaign contributions. “We support those who support what we believe in.”
Page says the Iberville Parish School Board is “using our school” to take issue with the state’s funding practices for charters, and says teachers unions far outspend the charter movement in their donations to charter critics.
“The state should be able to dictate where the MFP [money] from the state goes,” contends Bernard Taylor, superintendent of the East Baton Rouge Parish School System. “I do not think the state should have the right to trump the intent of voters in terms of local efforts. I think that local voters should be asked: Do you want your local property taxes used to support these charter entities?'”
Taylor says charter schools account for nearly 29% of the district’s general fund expenditures, totaling close to $44 million over the past four years.
“If we did not have to make those payments, we would be able to fund early childhood education,” he says.
Shouldn’t schools be flexible enough to cut expenses accordingly when students leave for a charter and take funding with them? Taylor says students don’t leave as intact classes. When a handful of students leave, the district loses a proportional share of MFP revenue. But it can’t cut part of a teacher, and it still has to heat and cool the entire building as if the previous number of students were there.
“We’re taking a finite number of students and spreading them over more entities, which means that no one is capturing the revenue they need to really serve these children well,” he says.
Taylor says the system’s enrollment is holding pretty steady even with the charter competition.
Still, he wants to expand the system’s popular magnet programs and create new options that might appeal to families drawn to charters. For example, the new Progress Elementary in Scotlandville has room for about 300 students.
“We’re going to have a community conversation: What types of programming would you like to see in this school?'” he says. “Wherever there is a charter entity, I’m going to look where we have available space or we can reconfigure space to offer a community-driven choice option.”
Beyond the promise of education innovation, charters offer investment opportunities. David Brain, head of Entertainment Properties Trust, called charter schools “our highest growth and most appealing sector” in his firm’s real estate portfolio, and referred to charter schools as “a two-and-a-half billion dollar opportunity” in a 2012 CNBC interview.
“The development of common standards and shared assessments radically alters the market for innovation in curriculum development, professional development, and formative assessments,” wrote Joanne Weiss, former chief of staff to U.S. Secretary of Education Arne Duncan, for Harvard Business Review. “Previously, these markets operated on a state-by-state basis and often on a district-by-district basis. But the adoption of common standards and shared assessments means that education entrepreneurs will enjoy national markets where the best products can be taken to scale.”
But while someone might be making a lot of money in the charter business, it isn’t Nancy Roberts. The CEO of the Louisiana Resource Center for Educators also founded The Career Academy charter school.
“Nobody’s getting rich on this over here,” she says during a conversation at LRCE. “It’s me, one accountant, and one person who handles all the HR. We didn’t add any more full-time employees at this building when we took this [school] on.”
The state has no responsibility toward Career Academy, a type 1 charter governed by the EBR school board. And as a single-site, purely local school, the academy isn’t backed by a deep-pocketed and well-connected national charter organization. Roberts says generous community support provided the “financial runway” for startup.
The school opened in 2011 at the former Brookstown Elementary, but EBR needed the building for a new middle school. At one point, Roberts thought Career Academy would be allowed to move into the Capitol High building, which was controlled by the state’s Recovery School District and already had equipment for craft skills training. But the state promised Capitol to the new local branch of Friendship Public Charter School (founded in Washington, D.C.), which didn’t want to share the campus.
Baton Rouge Community College agreed to host the school, but it turned out BRCC didn’t have the space. So this year, Career Academy is in classrooms leased from Mount Pilgrim Baptist Church.
Attracting and keeping strong faculty is the biggest challenge, Roberts says, although she offers competitive salaries and a 401(k) (Charters often don’t participate in the state retirement system for public school teachers.). Career Academy is under tremendous pressure to raise test scores, which puts serious stress on teachers in the core subjects. The school is on its third principal, not counting one who served on an interim basis.
Roberts says she can tweak the business model in areas like food service to save money without shortchanging instruction. And this year her school beat its enrollment target of 270.
“Most charter schools don’t fail because of academics; they fail because of finances,” she says. “If you don’t have enrollment, you’ll go broke.”
Nelson Taylor is board chairman for J.K. Hanes Elementary Charter School, a local school operating in Baton Rouge for 17 years. He’s keenly aware that some schools have more access to funding than his.
While he says the MFP is enough for basic operations, it’s not enough for some of the “special things” he wants to do, like buying instruments for a jazz band. He says his board is looking hard for grant funds, forming relationships with people who have connections out-of-state.
As is typical among charter schools, J.K. Haynes grew slowly, building its school culture over time. The school started with kindergarten through third grade before adding pre-K and fourth and fifth grades.
Last year, J.K. Haynes applied to the state to expand into the middle school grades. But despite what Nelson Taylor calls “a good track record of educating inner-city kids,” the school was not awarded a Type 2 charter.
“We knew that the state recruited these conglomerates from out of state,” he says. “We were the odd man out.”
But the East Baton Rouge Parish School Board stepped in and approved J.K. Haynes’ expansion as a type 1 charter. It is currently open with about 200 students in a building EBR provided.
While acknowledging the resources that charter chains can bring to the table, Nelson Taylor says citizens should be concerned about how out-of-state companies might impact local control of education. He hopes Baton Rouge doesn’t go the New Orleans route, where almost the whole system was chartered in the wake of Hurricane Katrina.
“I think schools and neighborhoods still go together,” he says. “Education is not a production line.”
The state’s charter school manifesto says the best education decisions are made by those closest to the students. But the state Department of Education says there’s no conflict between this principle and bringing in out-of-state charter operators.
The charter management organizations are adapting their models to suit Louisiana students, state officials say. Each organization is affiliated with a nonprofit local school board, of which 60% of members must reside in the parish where the school is located or in adjacent parishes. Those members are not allowed to be on the CMO’s payroll, and all contracts between a charter school and any other entity are considered public records. In other states, charter managers have been known to consider themselves public when it’s time to collect tax dollars but insist on privacy when government tries to audit them.
Sister Judith Brun was principal at St. Joseph’s Academy for 25 years. She was the founding board chair of Inspire Charter Academy in Baton Rouge, which Brun says was the first Southern affiliate of National Heritage Academy, a for-profit CMO based in Michigan. Inspire recently expanded to Baker.
“Without additional funds [from a CMO], it is extra challenging to build a successful school,” Brun says. “They set up some efficiencies of scale and some ways to generate funds from within. Nothing wrong with that; shame on nonprofits or governmental entities that don’t do the same thing.”
National Heritage Academy owns the Inspire building in Baton Rouge, and the school will pay $1,044,960 in rent to NHA this school year. According to the management contract, NHA basically collects all revenues associated with the school and keeps whatever is left over after the school’s expenses are paid, although it must submit the school’s budget to the local board for approval. NHA also pays 2% of the per-pupil allocation or $35,000 annually, whichever is less, into the “board spending account.”
The local board ultimately is responsible for the school’s results; but if the school struggles, the board will demand more help from National Heritage, Brun says.
And presumably, National Heritage has a profit motive to make the school successful, right?
“They’ve got a big investment,” she responds. “And they’re very mission-oriented, too. They chose to come here.”
Meyer, with New Schools for Baton Rouge, says his group hasn’t yet deemed a for-profit CMO worthy of its seed money. He’s not philosophically opposed to that changing, as long as the fees are not “outrageous.”
“In the for-profit space, I’ve heard as high as 20 percent, 25 percent [of school revenue], that kind of craziness,” he says.
There’s nothing magical about charters, and it’s extremely difficult if not impossible to make apples-to-apples performance comparisons of charter schools and traditional schools. Some charter schools deliver what they’ve promised and some don’t, just like traditional schools.
But state officials say the regulatory leeway charters get is balanced by tougher accountability. While the state can take over a “failing” traditional school, with charter schools the burden is on the school to prove why the charter should be extended, the education department says.
If nothing else, the waiting lists at some charter schools show that at least some consumers appreciate having more choices.
“Parents are very energized when they choose, and they tend to be more engaged,” Brun says. Is that because the very act of choosing leads to better engagement, or because parents who are more engaged in general like the ability to choose their child’s school? She doesn’t venture a guess.
Charters are most popular among the same business-friendly education “reformers” and foundations who also oppose teachers unions (most charters are not unionized) and support vouchers, Teach For America and Common Core. But support for charters is bipartisan, including politicians from Jeb Bush to Mary Landrieu to Barack Obama.
Jindal is a staunch charter supporter, as is his hand-picked education superintendent, John White, and a solid majority of the Louisiana BESE. Heck, the president of BESE and the head of the state charter school association—Chas Roemer and Caroline Roemer Shirley, respectively—are siblings, and Chas Roemer helped start one of the region’s first charter schools.
So while folks in the charter movement still consider themselves reformers, in many ways they are the new mainstream. At least in Louisiana, they’re in charge.
“Charter schools are here to stay,” says Nelson Taylor. “We’re not going anywhere.”