In the wake of testimony this spring about charters needing, and deserving, the monetary increase that DCPS teachers fought for (and won) through their union, this blog post aims to be an outline of some basics of charter school funding and expenditures in DC as well as public accountability behind both.
The bottom line is that accounting of DC charter finances is disaggregated, incomplete, inconsistent, and sometimes purposefully obfuscating, and lacks any meaningful democratic governance and guardrails. As a result, true public oversight is almost impossible for the finances of the publicly funded schools that educate nearly half of DC’s students. This landscape represents a real danger to good use of taxpayer funds and, consequently, proper financing of all of DC’s publicly funded schools.
Each year, DC charter schools receive $1 billion from DC taxpayers (about the same as DCPS receives) by way of the uniform per student funding formula (UPSFF). That public money for charters (apportioned to each on the basis of student population and characteristics, as it is to DCPS) goes directly to the individual, privately run nonprofits that operate each of DC’s 69 charter LEAs.
A separate funding formula is used to provide charters with facilities funds from DC taxpayers. Those facilities funds are apportioned based on the number of students in each LEA, with a set amount per student. The total amount of facilities funds slated for charters for FY24 is about $175 million. Though the idea is to ensure charters have funds specifically for facilities (something that DCPS does not have to pay for itself), DC charter facilities funds can be used for anything and are entirely untracked and unmonitored by DC.
While those two funding streams from DC taxpayers constitute the majority of each DC charter school’s annual revenue streams, DC charters can also receive federal and local grants from the office of the state superintendent of education (OSSE) as well as philanthropic and other (private) grant revenue.
To better outline charter finances, how they are reported, specific problem areas (reserves, audits, facilities funds, and philanthropy), and what all this means for DC democracy, I have organized this blog post in the following broad categories:
I. The Current Landscape
II. Problems With The Current Landscape
V. Facilities Funds
I am happy to include more and correct what is here as you, my readers, may advise–including adding more solutions to what is an annual $1 billion anti-democratic mess.
I. THE CURRENT LANDSCAPE
To account for their spending, DC charters provide to the public charter school board (PCSB, their authorizer) annual 990s as well as annual budgets, annual audits, and annual reports.
In addition to publicly posting all of that, PCSB provides its own annual financial analysis reports and annual at risk funding reports, while posting the deputy mayor for education’s annual per pupil funding analyses (which look at a high level of per pupil funding in charters). The financial analysis reports are created by PCSB to analyze the fiscal health of individual charter schools, while at risk funding reports are compilations of what individual charter LEAs report of their planned use of at risk funds.
Between all of these, there is a lot of financial information—which sounds good except for its inherent disaggregation and resulting lack of meaningful and connected detail:
—annual reports of charter schools outline minimum, maximum, and average teacher salaries and also list “salaries of the 5 most highly compensated individuals in the organization, if over $100,000” for the prior school year. There is no requirement for donations to be outlined, and while listing the top five salaries is perhaps sufficient for a small LEA, it doesn’t work well for a large LEA like KIPP DC, whose latest annual report outlines top five salaries ranging from $216K to $359K (by comparison, the DCPS chancellor makes less than $300K, while DC’s mayor makes $220K). Moreover, each annual report is done by school year, not fiscal year like the financial analysis reports, annual budgets, and annual audits.
—annual budgets (done by fiscal year) appear to have more finely outlined details than annual reports, but again do not outline who donated what and do not outline all executive salaries, individual teacher salaries, specific grants and donations, and specific facilities costs and expenditures.
—annual audits are also done by fiscal year, but a year prior to the budgets, making alignment of the information between publicly available financial sources difficult (not to mention that some of the audit information is frankly out of date by the time of its posting). The audits appear to outline federal grants; contracts; lease activities; and real estate obligations as well as loans and other fiscal obligations. They also outline donor restrictions on funds. But as with the annual budgets, there is no outline of who donated what; all executive salaries; individual teacher salaries; all grants and donations; and clear delineation of facilities costs and expenditures as well as actual real estate holdings. As with the annual reports and budgets, the reporting is dependent on what the school itself provides to the auditing companies they hire for this purpose.
—990s for each DC charter LEA are publicly available on websites other than PCSB’s (for instance, the IRS website, guidestar, and pro publica’s nonprofit explorer)–but all are literally years behind the current year. (For example, the latest form for DC Prep is for 2019 on both PCSB’s and pro publica’s websites, dating from 2020, while guidestar has a 2018 form dating from 2019.) The 990s are the only place I have seen where some charter LEAs indicate that they have engaged in lobbying. The 990s also list the highest paid salaries, contracts, and fundraising expenses as well as contributions in excess of $5000—but without any donor information (i.e., just 5 individuals gave KIPP DC $14 million as reported on its 2019 990—but who they are is publicly unknown).
—financial analysis reports are created by PCSB based on information in the audits and data submitted directly to PCSB by charter LEAs. The financial analysis reports put that information into more readily understandable categories. The reports contain the days of cash on hand and percentage of DC and grant funding for each charter. The reports use this data among others to present “report cards” on each LEA’s fiscal strength.
—at risk funding reports before FY23 are collections of aspirational wishes and actions, not only because charters have not been required to report how their at risk funds are used, but also because the reporting is (perhaps obviously) highly variable. That will change slightly starting in 2024, when charters will report both their budgeted and actual at risk expenditures. But the variability of use will likely continue, as at risk funds in each charter are not mandated for any specific uses, unlike in DCPS.
II. PROBLEMS WITH THE CURRENT LANDSCAPE
As outlined above, the public has a lot of available fiscal information around our charters–but it is not easily or even directly related to the most basic questions of accountability with respect to public money.
Setting aside clear and direct fiscal mismanagement, here are the problems:
1. There are no truly independent audits of DC charters, whether for attendance (which is directly related to DC’s school ratings and payments) or taxpayer funds. Charters’ annual audits are done by companies hired by individual charter businesses.
2. There is no forensic accounting, or tracking, by DC government of any charter money, including randomized tracking of taxpayer funds and money following students from charters to DCPS after count day. This is important inasmuch as DCPS sees an influx of students from charters every year—but the money cannot follow those students because there is no tracking of it OR of students. It is also important because all publicly available information on DC charter finances originates with the charter nonprofits themselves, incentivizing obfuscation. (More on that under “audits” below.)
3. There are no rules on reporting specific charter expenditures for teacher pay and facilities. As noted above, the facilities funding is completely untracked and without any mandate for its use. As a result, public reporting on these and other areas of charter spending is entirely voluntary, incomplete at best, and publicly untransparent.
4. There is no required disclosure of donors and their donations to charter schools. While donations do not constitute a large percentage of DC charter revenue as far as I can see, for some charters donations are sizable and constitute a powerful tool in their operations. Moreover, the way in which philanthropic revenue is accounted for is less than clear, with literally unbelievable reporting of $0 in philanthropic revenue for some LEAs. (More on that under “philanthropy” below.)
5. There are no mandated charter reserves or limits on reserves.
6. There are no rules for investments, or use, of charter reserves, which are mainly DC taxpayer funds. This represents a boon for the financial sector, essentially transferring public dollars to private hands without any way for the public to have a direct say in that investment and a direct benefit from it.
7. Although there is public reporting of charter contracts, it is completely disaggregated (see the PCSB website here), with charter 990s the only other source of this information (where it is truncated and years behind the present). This means there is no way for anyone outside the LEAs themselves to know what contracts any given LEA has at any given moment.
8. No elected or appointed DC official with any oversight of DC charters has knowledge of individual LEA charter donors, use of reserves, teacher pay, per pupil expenditures, facilities expenditures, contracts, or use of at risk funds, so oversight of DC charters by officials directly accountable to the public is necessarily limited.
As a result of this weak and publicly unresponsive governance, several things are apparent with respect to DC charter finances:
–Every LEA has different methods, different desires, and different uses for its money. While the central tenet of DC charters is their independent governance, those different things are not accounted for anywhere clearly or unambiguously. In fact, if revealed at all, that information is disaggregated such that meaningful public oversight is nearly impossible.
–At no point can anyone outline basic financial issues in charters, such as which LEA pays teachers the best or even the most consistently (i.e., is there a minimum and a maximum salary for teachers and administrators); what return on investment LEAs have for their investments; and what hundreds of millions in facilities funds are used for.
–Many charter executives have large-scale pay that is revealed explicitly only in the LEA’s 990s—and thus disaggregated from all teacher pay in all public accounting and not up to date. But when plotted against charter teacher pay (see here if that link isn’t working), the disparity is jarring—especially as at least 10 charter executives are currently making more than DC’s mayor, despite no charter LEA having as many students as DCPS, which the mayor herself is nominally in charge of.
The bottom line: There is no way for anyone in the public sphere to understand where that annual $1 billion investment in our charters actually goes and how much is being directly invested in our kids.
Below are a few areas of charter finances where the lack of public sunshine is very problematic.
Per FY21 guidelines (the most recent available) for PCSB’s financial analysis reports, PCSB recommends that schools have “at least 45 days of cash on hand. Fewer than 30 days of cash on hand may be cause for concern.”
But the median of cash on hand for charters, per the FY21 financial analysis report, is 165 days. It is not clear what level, if any, is actually required (as opposed to recommended)—and certainly there is nothing about what a maximum should be.
At the March 3 oversight hearing, starting at the 4 hour and 55 minute mark of the video, at large council member Christina Henderson asked the PCSB executive director about cash on hand, noting one school with 24 days of cash on hand while another school with about 700 days. Henderson mused that if charter LEAs have all that cash, why not just pay their teachers more?
In response, the PCSB executive director and the PCSB director of finance noted that refinancing or saving for mortgages may be a reason a school has small or large reserves, respectively.
A few minutes later in the same hearing, Ward 3 council member Matt Frumin noted that if cash on hand is being banked for expansions, it’s getting ahead of the issue. He also noted that charter cash on hand goes up annually by $50 million.
Unfortunately, it’s not clear how to account for that annual growth.
For instance, the FY20 financial analysis report showed $351 million in “unrestricted cash” for DC’s charter schools.
But the FY21 financial analysis report showed that “unrestricted cash and cash equivalents” amounted to $419 million.
So: what is “unrestricted cash” versus “unrestricted cash and cash equivalents”? It is not defined clearly anywhere.
Moreover, annual growth in cash reserves appears to be different for each LEA, without any clearly delineated and publicly specified reasons for that growth, such that it is impossible for any DC officials or taxpayers to know if the growth is due to investments, better use of money, or something else (layoffs of staff, reorganizing, etc.).
Possibly the only deduction one can make around the annual growth of DC charter cash reserves is that it is mainly money paid by DC that is not going directly to students now or (possibly) ever, because most funding to DC charters comes directly from DC taxpayers.
When I mentioned last year to the PCSB director of finance this obscured public view of charter spending because of the obscurity around cash reserves, he noted that not only do PCSB staff check in with charters regularly when they see large reserves (or lack thereof), but that charter review and renewal reports show “patterns of cash” that elucidate their operation.
The trouble is that the public is not privy to PCSB staff conversations on that subject—not to mention that those charter renewal reports occur only every 5 years, which for the sake of public clarity and accounting is an eternity.
DC Prep provides an excellent example of these problems.
A year ago, at its May 2022 board meeting, DC Prep’s board discussed investing almost $30 million in cash reserves. That amount represents more than 10% of the LEA’s annual operating budget with about 2000 students. Shortly thereafter, DC Prep advertised for an investment manager (see the notice in the charter school section of the DC register, 69/26, dated 7/1/22).
As a staffer noted at minute 39 of the May 2022 meeting video, DC Prep has seen an extra $4 million in its coffers annually, mainly due to “healthy increases in per pupil funding.”
Not surprisingly, given that the school receives almost 90% of its revenues from DC taxpayers, at the 56 minute mark of the video of that May 2022 board meeting a DC Prep board member worried about the “optics” of a publicly funded charter school having an investment strategy for tens of millions.
But housing developer and board member Terry Eakin had a different view. At 58 minutes in the video, Eakin noted that “donors have given us over $36 million since the beginning [in 2003]. If we were investing in the stock market monies from the taxpayers, I think it would be different.” Eakin also noted (boldface mine) that “in the unlikely event we were to make a major investment and lose all of [the invested cash], it wouldn’t be monies we had gotten from DC. I would earmark it as monies we received from donors. . . . the way I look at it, we’re just trying to get a better return for our kids.”
At that same May 2022 board meeting, DC Prep’s board declined to give permanent raises to staff—even though teachers there are paid on average less than $70,000 per year; the school struggles with staff retention (that topic alone took up almost half of the May 2022 board meeting discussion); and the school’s top administrators have recently been paid more than the mayor.
Let us put all of this into perspective:
DC Prep’s most recent publicly available audits show that between 2014 and 2021, DC Prep got an average of 82% of its revenues directly from DC taxpayers. Each audit makes this statement: “DC Prep receives a substantial portion of its revenue from DC.” The school also has a fairly high debt load—something that the FY21 financial analysis report noted.
So we know that
–Terry Eakin’s statement regarding DC Prep’s cash reserves as given (mainly or wholly) by donors is incorrect;
–DC Prep’s teachers are not well paid relative to its administrators; and
–Despite troubles with staff retention, relatively low pay for teachers, and a high debt load, DC Prep’s board avoided using the LEA’s extra millions in cash to address any of it, declining to raise salaries overall or to offer (as detailed at minute 31 of the board video) a “substantial bonus” or “money” to discourage mid-year staff departures.
Even though charter cash reserves largely come from DC taxpayers, the purposefully weak governance structure of DC charters ensures that DC taxpayers (and the elected and appointed officials representing their interests) have NO control or say in any of it, even though all of it is central to the operation of those LEAs and the mission of teaching our kids and constitutes hundreds of millions transferred from the public to private hands.
As noted above, DC charters’ annual audits are conducted by companies charters themselves hire and then provide with statements about the schools’ accounting. In addition, those audits and individual LEA reporting are the basis for PCSB’s financial analysis reports, which analyze and report on the fiscal health of charters.
But even while they appear to be extensive, charter audits have two glaring problems.
1. Charter business dealings and investments are not entirely (or at all) clear in the audits.
For instance, both KIPP DC and DC Prep own property that is not as far as I can see currently used or rented. As a result, I could not figure out how that is reported in the audits, because it is not specifically mentioned.
In December 2019, DC Prep bought 1619 Frankford St. SE, a decrepit residential property with a large lot, as a location for a future middle school. In the wake of public protest, DC Prep promised to sell the property if it got another location for its middle school. (See p. 79 of the transcript of the PCSB November 18, 2019 meeting here: “If we can secure an alternative site for our permanent location, we will resell the Frankford Street site.”)
But DC Prep still owns the property in 2023, despite being awarded in 2021 a huge site by DC for its middle school. How DC Prep’s ownership of 1619 Frankford is accounted for in publicly accessible documents is unclear–even when the school owes property taxes and accrued penalties on it.
In early 2017, KIPP DC bought 12 wooded, undeveloped acres behind Gainesville St. SE, in Hillcrest, and days later proposed to build a 900 seat high school there. While that proposal was defeated by community opposition, half a decade later KIPP DC still owns that land. The tax rate and assessed value is very low, amounting to a tiny fraction of KIPP DC’s expenditures and assets—but how this is accounted for, including the millions used to purchase the land and what KIPP DC’s future plans are for it, remain publicly obscured.
And that is not mentioning DC charters that also operate in other jurisdictions (i.e., Friendship and Eagle). Those operations are unaccounted for in publicly available documents for DC charters, even though those operations outside DC could affect the financial health of the LEAs’ DC operations.
2. Audits are delayed relative to other charter financial information, and this ensures poor information for the public while vitiating meaningful oversight.
Perhaps the most obvious example of that is the recent revelation that $2 million was embezzled from KIPP DC—which was (incredibly) not the only OR largest recent fiscal impropriety of KIPP DC.
KIPP DC’s $2 million embezzlement took place from April 2020 through August 2021, a relatively long period. But the school’s most recent publicly available audit, from June 2021, doesn’t mention it. That may be because KIPP DC was reported to have found the problem only months after that June 2021 audit, “during a routine internal review in December .”
That said, the embezzlement did not become public knowledge until nearly a year after KIPP DC’s reported discovery of it, after the feds filed a lawsuit for civil forfeiture in August 2022.
In other words, but for the feds suing 8 months after KIPP DC said it discovered the $2 million embezzlement, we the DC public might STILL not know about any of this. As it is, the lawsuit was filed months after multiple spring oversight hearings in 2022 by the DC Council, hearings in which none of this was raised.
In addition to that embezzled $2 million, more than $5 million around construction contracts and commitments was in the last 2 or more years underreported by KIPP DC (see p. 42 in the June 2021 audit).
The most recent PCSB financial analysis report, from FY21, came out sometime after September 15, 2022–in the wake of reporting around the federal forfeiture lawsuit around the embezzlement at KIPP DC. The analysis of KIPP DC in that FY21 report gives the LEA a good rating for fiscal health, but also notes the $2M embezzlement AND the $5M underreporting. The financial analysis report goes on to note that it didn’t believe the underreporting was related to the embezzlement, but that the LEA will take “further corrective actions.”
So: what are those “further corrective actions” and when will we taxpayers hear about them?
In an early September 2022 story about the embezzlement, PCSB was reported to be holding a public hearing later in that same month to “highlight the steps it has taken and will take in the future to prevent other incidents of fiscal malfeasance in the charter sector.”
It never happened.
Then, in October 2022, when I spoke to him about the embezzlement, the PCSB director of finance said PCSB was “continuing to gather information and review it” and expected to have a “robust conversation” in November or December  about it.
If that conversation ever happened, it certainly was not public.
That said, the charter board recently held a closed session on April 24, 2023 to discuss KIPP DC’s finances (remember: three YEARS after the embezzlement started and about two YEARS after the underreported $5 million). That 4/24/23 Monday morning meeting was publicly noticed only 72 hours before, on a Friday (April 21) in the DC Register.
And this is not even getting into the confusing information provided to the public about the $2 million that was embezzled.
For instance, the federal lawsuit specifically says this:
“Between July 1, 2019 and June 30, 2020, KIPP DC received approximately $1,372,412 in federal grants, and between July 1, 2020 and June 30, 2021, KIPP DC received approximately $3,426,314 in federal grants.”
One would thus conclude that the embezzled $2 million constituted federal grant money that the federal government is seeking to get back.
Yet in 2022 public reporting in the wake of that lawsuit filing (see here and here), a KIPP DC spokesperson said the embezzled funds came from “KIPP DC’s financial reserves and from a single private grant.”
So which is it: “private” money kept as cash reserves OR money the federal government is entitled to?
Now, three years after the embezzlement started, and two years after the underreporting of $5 million, we don’t know
whose money was taken;
what the misreporting means for the public;
when any missing money will be returned and how; and
why none of this was ever publicly reported by KIPP DC and/or PCSB directly and unambiguously.
In fact, not one syllable about any of this was uttered at the recent spring 2023 oversight hearings at the council.
V. FACILITIES FUNDS
DC charter LEAs are granted facilities funds that provide a set amount per student each year, without any specification about how those funds are to be used. In addition, there is no tracking of them by any DC entity. In the last decade alone, DC charter LEAs received more than $1 billion in facilities allocations.
In a recent letter about charters wanting to have more money as a result of the DCPS teacher contract, the PCSB executive director noted that charter facilities funds must cover both capital expenses as well as maintenance for DC charter schools.
But that is in fact incorrect (as C4DC noted in its own correspondence on the subject): The UPSFF is meant to cover charter maintenance costs—which it in fact does in DCPS.
At the March 3 hearing, after noting that DC charter facilities allocations are about $25 million less than reported occupancy expenses in the sector, Ward 3 council member Matt Frumin said that $50 million of charter occupancy expenses are for maintenance. Thus, he noted, one might conclude that the facilities allowance for charters is $25 million too much!
Unfortunately, the accounting here is not good. For one, no one is tracking facilities funds. For another, facilities funds are given without regard for need. And for yet another, as a result of both of those things, no elected or appointed officials can exercise any oversight whatsoever.
It’s not just a blind trust—it’s needlessly anti-democratic and inevitably wasting public money.
Consider that in 2019, Rocketship applied to open a Ward 5 campus. Its application noted that eventually, the total facilities costs for all three of its DC campuses would amount to $6.5 million per year, for about 2112 students. The application noted that that comes out to about $3068 per student–which is less than what the school would expect to receive in per student charter facilities funds (in FY20, that was $3335 per student).
Until sometime after 2017, philanthropic revenue in DC charters was reported unambiguously as precisely that: philanthropic revenue. (See, for example, the chart here for 2017, from the financial analysis report for that year.)
But sometime after 2017, PCSB stopped reporting philanthropic revenue clearly, eventually removing the term “philanthropy” entirely and changing the years of reporting, such that it is now practically impossible to know what, exactly, each charter has for philanthropic revenue.
Here’s what happened:
This document is a sequential compilation of screenshots of the FY18-FY21 financial analysis reports for exhibit 10, which starting in FY18 purportedly showed philanthropic revenue in DC charters.
In the FY18 report, this exhibit 10 table is titled “philanthropic revenue by school.” But unlike the 2017 table (where the column reporting this data is labeled “philanthropy”), here the values for individual LEAs are put into a column labeled “FY [X year] grants and contributions.”
As OSSE can and does give grants to charter schools, this is a bit confusing: what grants and what contributions? It’s not said. But if one looks at the 2017 table, and compares the 2017 values to the values reported for FY2017 on the FY18 table, it seems like they are the same values.
But while we can thus deduce (at least for the few LEAs I checked) that “grants and contributions” for 2018 = philanthropy for 2017, this is not explained anywhere.
For the FY19 financial analysis report, this information is reported differently yet. Instead of labelling the columns in exhibit 10 “FY [X year] grants and contributions” (as was done for the prior year’s report), the FY19 financial analysis report labels all of them with a 2-year span—for example, “2018-2019 total grants and other contributions.”
So: Is that a fiscal year? A school year? A calendar year?
Again, it is unexplained—but again, one can deduce that these are likely the same values as shown in the same exhibit for the same years in the FY18 financial analysis report.
That is, the “FY2017 grants and contributions” reported in the FY2018 financial analysis report for exhibit 10 (“philanthropic revenue by school”) appear to be the same as the “2016-2017 total grants and contributions” reported in the “philanthropic revenue by school” (exhibit 10) in the FY2019 financial analysis report—at least for the few I checked. The totals certainly add up to the same numbers.
But who will check from one year to the next to see if the reporting changed at all, in the event that these are in fact *not* intended to be equivalents, as no explanation is provided?
For the same exhibit in the FY20 financial analysis report, the labelling appears to be the same for the columns as in the FY19 financial analysis report—but the entire table is titled differently, as “grants and other contributions by school.”
Thus, with the FY20 financial analysis report, we have entirely lost any mention of philanthropy or philanthropic revenue!
As with the FY19 financial analysis report, exhibit 10 in the FY20 financial analysis report labels the columns with a year spread—for instance, the column with the most recent data is “2019-2020 total grants and contributions.”
In the latest financial analysis report, for FY21, exhibit 10 is different yet again, with the entire table being labelled “grants and other contributions by LEA” and columns being labelled thusly: “FY [year] total grants and other contributions.”
For all the exhibit 10 tables contained in the FY18-FY21 financial analysis reports, it appears that the column with the most recent data has the same values as a column outlining grants and contributions by LEA in those reports’ exhibit 9, which outlines sources of revenue by LEA (including total revenue, federal revenue, grants, and other (unspecified) income). The column in each report’s exhibit 9 that appears to be identical to that exhibit 10 column is titled “total grants and other contributions.” Perhaps unsurprisingly, each report’s exhibit 9 and all their columns, including the ones outlining grants and contributions, doesn’t mention philanthropy at all.
Thus, back in October, to better understand where philanthropic revenue figures in this reporting, I spoke with PCSB director of finance Michael Bayuk. He told me that the exhibit 9 column for the FY21 financial analysis report (“total grants and other contributions”) is state and local grants and philanthropy. He told me that “we didn’t think it” worthy of including philanthropy separately as a category.
He then noted that a “large part of these funds” (i.e., in that column of total grants and other contributions) is philanthropy. (I discovered, however, that this last bit is not true, at least for FY21—read on.)
As far as OSSE grants go, Bayuk noted that sometimes OSSE is a pass-through for federal money, so in that case, if an OSSE grant to a charter is federal money, it gets counted as federal for this table. The column in exhibit 9 titled “other income” is activity fees, interest income, rental income, and anything that doesn’t fit into the other columns. He noted that it is variable; it is certainly not forthcoming in terms of defining, or breaking out, where the money is coming from.
To better suss out philanthropic revenue in DC charters, in October 2022 I requested by FOIA from PCSB the source files for the column on exhibit 9 of the FY21 financial analysis report titled “total grants and other contributions,” broken out in terms of state, local, and other grants; philanthropy; and whatever else is contained in that column for each school.
Therein ensued nearly 6 months’ worth of obfuscation including unlawful delays; creation of documents specifically for me that were not what I requested; incomplete production; and document manipulation such that dates were obscured. (You can read the whole sorry saga here.)
But by March 2023, I had in my possession (finally!) what I think (and hope and believe) is a complete set of what are most likely original source files for this information. They consist of spreadsheets with an actual line item called “income from philanthropy.” Here’s a link to all the different folders and files, produced over a period of more than a month.
That line item, income from philanthropy, is separated out from grants and is apparently what DC charters report each year directly to PCSB. By compiling the FY21 income from philanthropy line items for each charter and comparing them to the values shown for each charter for grants and contributions on the FY21 financial analysis report, I discovered a few things:
1. PCSB collects information every year from DC charters specifically on their philanthropic revenue. But because there is no required reporting of philanthropy in DC charters other than this, the only measure we have is what PCSB gets—and it is available to DC taxpayers only by FOIA and until such a time as PCSB decides not to request that data from charters.
2. For the most recent year of grants and contributions in the FY21 financial analysis report, the values shown for that in exhibits 9 and 10 are identical—but in most cases not the same as “income from philanthropy” as reported on the documents I received via FOIA.
3. For only a relatively small subset of schools (12 out of 66 by my count), philanthropy constitutes the vast majority of grants and contributions.
4. For other schools, the majority of their grant and other contribution income appears not to come from philanthropy. For some of these, however, the utter lack of philanthropic revenue reported is mystifying. How is it that KIPP DC doesn’t have any philanthropic revenue for an entire year? (See this webpage for KIPP: “KIPP DC relies 100% on private donations to fund growth efforts to reach more students and operate critical programs like KIPP Forward and the Capital Teaching Residency.”)
5. For yet another subset of schools, there is nothing–no philanthropy and/or no grants—which appears to highlight disproportional outside funding in DC charters.
Notwithstanding that lack of clarity around philanthropic revenue, the sheer amount in charter “grants and contributions” is astonishing. In that short period starting with FY18, for instance, the total grew thusly:
FY18 financial analysis report: $38.3M
FY19 financial analysis report: $42.48M
FY20 financial analysis report: $49.6M
FY21 financial analysis report: $72.769M
All of that begs the question: what was/is behind that growth? Federal money in the pandemic? Something else? The point appears to be that no one knows—least of all DC taxpayers.
And this analysis of PCSB reporting shows that obscurity is purposeful.
All of these issues—the obfuscation, the lack of data, the impossibility of oversight, and the lack of budgetary guardrails and basic guidelines—make clear that there is no way for anyone in the public sphere to understand where DC taxpayers’ annual $1 billion investment in our charters goes and how much is directly invested in our kids.
This isn’t about the ever-mentioned “outcomes,” whether test scores, graduation rates, or post-secondary career or college achievement. It is, literally, about where the money DC taxpayers provide is going. Simply put, such “outcomes” are meaningless metrics without understanding where OUR money is actually going–and where it isn’t going.
So let us look at what we CAN and SHOULD do better regarding public accountability in charter finances:
–Track students so money follows them.
–Require teacher minimum pay in charters, along with full disclosure of all charter teacher salaries as in DCPS.
–Require documentation from individual LEAS that all their charter teachers receive increases as a result of any cash the charter sector receives as a result of DCPS teacher wage increases from union contracts.
–Disclose all donors and the amount they donate to all DC publicly funded schools.
–Hold regular investigative, independent audits of all DC charter businesses.
–Make DC—not private businesses or the financial institutions they choose to enrich—the reserve holder for all charter reserves, in amounts proportional to the percentage of taxpayer funds received. DC would be responsible for investment of that money and would pass the investment proceeds only to charter LEAs that have demonstrated need of it. This underscores that DC charter businesses are not mere nonprofits–they are chartered entities that are chartered for a specific public purpose and do not exist to profit from (or to profit others in) that public purpose.
–Enact a maximum pay limit for charter executives and administrators.
–Decouple all efforts to specifically increase charter teacher pay from increases in DCPS teacher pay. The two sectors are separate and governed differently, and teacher pay is purposefully different in each. If DC charter teacher pay is inadequate at any given moment, that is an issue solely to be addressed by the charter sector–not coupled to anything in DCPS.
–Disclose all charter school business deals and assets explicitly and directly, naming each.
–Have a website for all charter contracts per LEA at all times.
–Have explicit disclosure of, and tracking for, all facilities funds to charters, and apportion facilities funds based on demonstrated need and without regard for maintenance costs, which are included in the UPSFF.
3 thoughts on “Public Accountability & DC Charter Finances”
Thank you for this amazing report! It gives me the impression that some charter school people are taking you as a force to be reckoned with and hooray for that!
I’ve been hearing scattered reports for the past few years that some charter schools are sitting on piles of money but that video of DC Prep’s board meeting really brought it home–in no uncertain terms.
What this report and others here and around town tells me is that there is a very bad case of mission creep setting in with charter schools and I agree that it’s time for some solutions. While I support the ones on your list, especially the one about charter schools benefiting at the expense of DCPS teachers, which is outrageous!, another one that I think would be helpful is to limit who can apply for a charter.
As stated in the DC Code Sec. 38-1800.02 on the Council’s website, an “eligible applicant” is “a person, including a private, public, or quasi-public entity, or an institution of higher education…that seeks to establish a public charter school in the District of Columbia.”
In other words, in my reading, anyone from anywhere and that is just too broad. If we taxpayers are forced to pay for charter schools, then let our taxes go to our fellow taxpayers in DC only! And I mean the ones who’ve lived here without representation in Congress all these years, not people or “entities” who move here just to get their dream, school school, profitable or not, on our dime.
Correction to last sentence in comment above: I meant it to say “And I mean the ones who’ve lived here without representation in Congress all these years, not people or “entities” who move here just to get their dream school, profitable or not, funded on our dime.”
Thank you for another excellent report about D.C. schools. It’s scary that no one else is providing such scrutiny of the system.
More than one item on your great list of solutions would be checked off by ending public charter schools’ exemption from the Freedom of Information Act. Among other things, the exemption allows these public schools to pay teachers differently for doing the same work.
I think you are right that school governance is anti-democratic, not just non-democratic.
— Jeff Schmidt