The myth of Ohio's "for profit" charter school system

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Since the inception of Ohio’s charter school program in 1998, gallons of ink have been spilled documenting the missteps of a few charter operators. The most highly scrutinized have been the for-profit operators White Hat Management (R.I.P.), along with Altair Management and IQ Innovations, the companies with whom the felled ECOT contracted.

Unfortunately, the high-profile controversies surrounding these for-profit (and politically active) titans have stoked a narrative that paints all charters as “corporatizers” out to make a buck. With politicians routinely using this storyline to score political points, this notion has been amplified further. Just this week Ohio Democratic Chair David Pepper released a statement calling the state home to a “corrupt for-profit charter school system.”

There is no excuse for either corporate cronyism or government corruption. But these for-profit tall tales fail to tell the whole truth about charter schools. Let’s review the key points.

First, it’s inaccurate to call charter schools for-profits. Just like most museums, libraries, and hospitals, charter schools are organized as nonprofit organizations. In Ohio, all charter schools are officially considered public benefit corporations, which under state law must be a nonprofit entity. Moreover, charter schools are public schools—and, again, state law makes this abundantly clear: “A community school [a.k.a. a charter school] created under this chapter is a public school.” As public schools, charters do not charge tuition, are open to all students, and are held accountable for results using the same report card system as districts. Charter governing boards have the ability—should they so choose—to contract with management companies (or “operators”), some of which are for-profits. Though charter boards may hire (and can subsequently fire) for-profit organizations to run their daily operations, the schools themselves are always nonprofit.

Second, while for-profit operators grab the headlines, the large majority of charters do not contract with such entities. According to 2016–17 data from the National Alliance for Public Charter Schools, just 28 percent of Ohio charters contracted with for-profit management companies. Instead, most were either managed by non-profits (26 percent) or were completely independent schools with no management company at all (46 percent). Considering this breakdown, it’s an exaggeration (if not worse) to characterize Ohio as a “for-profit charter school system.”

Third, charter schools’ ability to contract with private organizations, including for-profits, is not unique to the charter sector. In fact, it happens all the time in government. For instance, Ohio districts spend millions on products produced by for-profit corporations—anything from textbooks (Pearson or Houghton Mifflin Harcourt), electronic hardware (iPads and Chromebooks), food services (Sodexo), and transportation services (Blue Bird). Of course, it’s not just educational institutions that contract with big  business; agencies such as the U.S. Department of Defense and the City of Columbus regularly contract with private companies to get the people’s business done.

Fourth, some critics have pointed to Altair’s Bill Lager as the worst sort of “crony capitalist” who abuses taxpayer funds for personal gain, and that’s not an unfair depiction. But let’s be clear: He does not represent the typical charter leader. The ones that I know are dedicated individuals who, while likely reasonably compensated, aren’t living in the lap of luxury. Rather, most charter leaders—whether a founder of a successful management organization or a school principal—are motivated by a deep desire to improve the educational outcomes of children, many of whom come from disadvantaged backgrounds. Just like those working in district schools, the vast majority of charter leaders work passionately to serve the families and children in their communities.   

Fifth, portraying all for-profit operators as low performers is misleading. Although this could be said of Altair and White Hat, there are also responsible, educationally sound for-profit management companies. Perhaps the most notable is the National Heritage Academies (NHA), which, according to a rigorous study undertaken by University of Michigan researchers, produced significant gains in math in its Michigan-based charters. Research from CREDO corroborates the positive effects of NHA schools across the nation, including the half-dozen or so in Ohio. It’s true that many of the finest charter management companies are non-profits, including well-known national outfits such as KIPP and Uncommon Schools, along with Ohio’s own Breakthrough Network, the Graham Schools, and United Schools Network. Nevertheless, the profit status of an operator doesn’t necessarily determine its ability to deliver a high-quality education.

The follies of a few of Ohio’s for-profit operators have left many people understandably angry. Throughout the years, we at Fordham have consistently pushed back when they’ve tried to use their political muscle to weaken accountability measures. We’ve also successfully advocated for reforms that enable charter boards to make key governing decisions independent of operators (as well as empower boards to separate from them should the need arise). The forces of competition and an improved accountability framework have taken their toll on the most notorious for-profit operators. Despite this bitter experience, we should continue to remain agnostic about the ways in which schools organize themselves. Great schools can be district schools governed by publicly elected boards, nonprofit charters that contract with management companies, or private schools, some of which have religious affiliations. Ultimately, organizational design should be left to school leaders. What matters most is that children receive a world-class education. 

 
 
Aaron Churchill
Aaron Churchill is the Ohio Research Director of the Thomas B. Fordham Institute.