Big Business Charter School Chains Seek Millions in Taxpayer Dollars With No Accountability

Charter schools are big business, even when they are run by "non-profits" that pay no taxes on the revenue they receive from public taxes or other sources.

Take KIPP, which describes itself as a "national network of public schools."

KIPP (an acronym for the phrase "knowledge is power program") operates like a franchise with the KIPP Foundation as the franchisor and the individual charters as franchisees that are all separate non-profits that describe themselves as "public schools."

But how public are KIPP public schools?

Not as public as real or traditional public schools.

New documents discovered on the U.S. Department of Education's website reveal that KIPP has claimed that information about its revenues and other significant matters is "proprietary" and should be redacted from materials it provides to that agency to justify the expenditure of federal tax dollars, before its application is made publicly available.

So what does a so-called public school like KIPP want to keep the public from knowing?

1. Graduation and College Matriculation Rates

KIPP touts itself as particularly successful at preparing students to succeed in school and college.

Yet, it insisted that the U.S. Department of Education keep secret from the public the statistics about the percentage of its eighth graders who completed high school, entered college, and/or who completed a two-year or four-year degree.

A few years ago, professor Gary Miron and his colleagues Jessica Urschel and Nicholas Saxton, found that "KIPP charter middle schools enroll a significantly higher proportion of African-American students than the local school districts they draw from but 40 percent of the black males they enroll leave between grades 6 and 8," as reported by Mary Ann Zehr in Ed Week.

Zehr noted: "'The dropout rate for African-American males is really shocking,' said Gary J. Miron, a professor of evaluation, measurement, and research" at Western Michigan University, who conducted the national study.

Miron's analysis was attacked by KIPP and its allies, who said KIPP's success was not due to the attrition of lower performing students who leave the school or move to other districts. One of its defenders was Mathematica Policy Research, whose subsequent study was used to try to rebut Miron's analysis. (That name will be important momentarily.)

The Department of Education has been provided with the data about what percentage of KIPP students graduate from high school and go on to college, but it is helping KIPP keep that secret—despite the public tax dollars going to these schools and despite KIPP's claim to be operating what are public schools.

Real public schools would never be allowed to claim that high school graduation rates or college matriculation rates are "proprietary" or "privileged" or "confidential."

Why does the Education Department's Charter School Program "Office of Innovation and Improvement" defer to KIPP's demand to keep that information secret from the public?

Meanwhile, the KIPP Foundation regularly spends nearly a half million dollars a year ($467,594 at last count) on advertising to convince the public how great its public charters are using figures it selects to promote. No public school district in the nation has that kind of money to drop on ads promoting its successes.

2. Projected Uses of Federal Taxpayer Dollars (and Disney World?)

Even as KIPP was seeking more than $22 million from the federal government to expand its charter school network, it insisted that the U.S. Department of Education redact from its application a chart about how much money would be spent on personnel, facilities, transportation, and "other uses" under the proposed grant. KIPP also sought to redact the amount of private funding it was projecting.

The agency's compliant Office of Innovation and Improvement obliged KIPP.

However, after the grant was approved, KIPP did have to comply with IRS regulations to file a report on its revenues and expenditures, as all entities given the privilege of having their revenue tax-exempt or tax-deductible do. (Those filings usually are made available a year after the revenue and expenditures accrue.)

That is, the federal government's Office of Innovation and Improvement redacted information about KIPP's revenue and expenditures on the basis of an unsupportable assertion that such information was exempt under the Freedom of Information Act as proprietary, confidential, or privileged even though it is not.

Here are some of the key details from KIPP's 2013 tax filings (uploaded below):

• KIPP received more than $18 million in grants from American tax dollars and more than $43 million from other sources, primarily other foundations;
• KIPP spent nearly $14 million on compensation, including more than $1.2 million on nine executives who received six-figure salaries, and nearly $2 million more on retirement and other benefits;
• KIPP also spent over $416,000 on advertising and a whopping $4.8 million on travel; it paid more than $1.2 to the Walt Disney World Swan and Resort;
• It also paid $1.2 million to Mathematica for its data analysis; that's the firm that was used to try to rebut concerns about KIPP's performance and attrition rates.

KIPP's revenue and spending in 2014 were similar, but there are some additional interesting details (uploaded below):

• KIPP received more than $21 million in grants from American tax dollars and more than $38 million from other sources, primarily other foundations;
• KIPP spent nearly $18 million on compensation and nearly $2 million more on retirement and other benefits;
• KIPP paid its co-founder, David Levin, more than $450,000 in total compensation, and its CEO, Richard Barth, more than $425,000 in total compensation, in addition to six-figure salaries for eight other executives;
• KIPP also spent over $467,000 on advertising and more than $5 million on travel;
• It also paid nearly $1 million to Mathematica for its data analysis.

In that tax year, which covers the 2013-2014 school year, as traditional public schools faced budget cuts across the country, KIPP spent more than $3.5 million on "lodging and hospitality," including more than $1.8 million alone at the posh Cosmopolitan Hotel and Casino in Las Vegas.

Since its revenue from taxpayers is commingled with its revenues from wealthy charter school advocates and the foundations they control, there is no way to sort out how much of taxpayer money has directly gone into luxurious trips for KIPP employees versus how much having revenue from taxes helps subsidize such largesse.

But, there is no public school district in the country that would be allowed such travel or advertising expenditures for its executives or teachers if the voters knew about it or had a say in it.

Perhaps it should be no surprise that KIPP would want the grant-makers at the U.S. Department of Education to redact the amount of its expenditures for personnel, facilities, transportation, and "other uses"—especially with extravagant expenditures like its transportation and lodging at fabulous resorts, as opposed to transportation for kids to school—but why would the federal agency charged with oversight go along with redacting information about how much KIPP was projecting to spend in those categories?

KIPP did request that budget information about how much it or its affiliates paid the executive directors for individual charters, principals, accountants, grant managers, community coordinators, and IT teams be kept from the public, under a claim that such information is proprietary.

But the Office of Innovation and Improvement did not accommodate that request.

Notably, KIPP's grant application sets forth "regional leadership" expenses that total nearly $5 million of the projected budget for the grant. There is no indication how much taxpayers are directly or indirectly subsidizing the six-figure salaries of its executive suite including the nearly half-million in total compensation for each of KIPP's two highest paid employees. (This grant application only pertains to one source of federal and state grants that annually provide revenue to KIPP.)

3. Full Disclosure of Attrition and Performance Results

Not only did KIPP seek to keep the public in the dark about how it spends tax-exempt funding and how many KIPP students make it to high school graduation or college, it also sought to redact information "KIPP Student Attrition" by region and "by subgroup" and "KIPP Student Performance" on state exams on "Math and Reading."

The Office of Innovation and Improvement did as KIPP requested.

But why would KIPP, which advertises its claimed superiority, and the Department of Education, which uses KIPP as an example of the success of charters, keep information about attrition and performance secret, especially when that subject is one of great public interest as noted by the Economic Policy Institute?

Page after page after page in KIPP's application that shows the percentage of school students who leave KIPP blacked out along with information about student test results by school for the three years prior to the grant application.

How can the Department of Education acquiesce in a request by a charter it cheerleads for to keep data about that charter's retention or dropout rate secret?

If both sets of redacted figures were truly excellent, why wouldn't both KIPP and the Department of Education release those results? After all, KIPP included glossy PR documents on some of its schools in its application materials touting select data about test results.

Why should unelected bureaucrats at the federal agency get to see the data about attrition and performance in awarding millions in taxpayer dollars to KIPP but go along with KIPP in keeping those specific statistics from the public?

In short, what are KIPP and the Department of Education hiding from the American people?

4. The CEO Foundations Pushing School "Choice" and Subsidizing KIPP

KIPP also asked the Office of Innovation and Improvement to redact the amounts of funding provided to KIPP by foundations that wrote letters of support for KIPP to receive federal taxpayer money under the grant.

The grant documents the Center for Media and Democracy has examined reveal that these are the names and amounts that KIPP sought to keep the public from knowing and that the Department of Education blacked out at KIPP's request:

• Robertson Foundation: $20M
• Atlantic Trust/ Kendeda Fund: $15 million
• Marcus Foundation: $4.5M
• Zeist: $1.7M
• Lowe Foundation: $357,000
• Webber Family Foundation: $351,780
• Sooch Foundation: $675,000
• Tipping Point Community: $2M
• Schwab Foundation: $2.5M
• Koret Foundation: $2,135,000
• SAP: $297,389
• Kobacker: $100,000
• Todd Wagner Foundation: $1,000,000
• El Paso, $1,000,000
• Charles T. Bauer Foundation: $1,242,000
• Karsh: $8M
• Charter Schools Growth Fund: $2 million
• Formanek: $526,000
• Goldring Family Foundation: $1,000,000
• Charles Hayden Foundation: $1.393 million
• Victoria Foundation: $626,000
• CityBridge Foundation: $2.9M"

Almost all of these donors are foundations that have to annually disclose to the IRS and make available to the public the names of their grantees and the amounts granted. So this information is not privileged, confidential or proprietary.

Why would the Office of Innovation and Improvement go along with a request to keep secret from the public information that is subsequently required to be made public?

While many of the foundations listed above are led by corporate CEOs or their families, only a few are corporations whose donations might not be routinely disclosed.

SAP, for example, is the name of a German corporation that made headlines 18 months ago for dumping the American Legislative Exchange Council (ALEC) after Google dumped ALEC for its climate change denial and obstruction. Should Americans be concerned that a foreign multinational corporation is influencing American "public charters" through KIPP? The truth is foreign multinationals are exercising increasing influence over American charter schools and testing. Just look at the growth in U.S. business of the British firm, Pearson.

At the same time, the volume of such private philanthropic support begs the question of why the American taxpayer ought to be subsidizing schools that are touted as public but act like private ones when it comes to executive compensation and roadblocks to transparency, especially at a time when traditional public schools are facing such budgetary pressures?

KIPP is a taxpayer-subsidized school franchise that pays no taxes on its revenue and provides a tax-deductible vehicle for uber-wealthy families to promote the school "choice" agenda.

And, the fact that taxpayer money is going to a group spending millions on luxury trips to resorts in Las Vegas is mind-boggling in an age of austerity when many public schools are going without basic necessities.

With each new fact that comes out, the charter school industry is looking more like the military defense industry with the scandals of the 1980s with the infamous $600 toilet seat. There's no indication of fraud by KIPP.

But from an optics standpoint some might consider a $600 plastic seat small change, compared with a "public school" spending more than a million to go to Disney World in one year, even if only one-third of KIPP's funding comes from taxpayers directly and the remainder comes at taxpayer expense due to CEOs writing off donations to foundations that help underwrite KIPP.

Plus, separate from the grant application discussed here, KIPP has been funded by the U.S. Department of Education to conduct leadership training summits for KIPP principals and other personnel. That application also includes significant redactions, including about key components of the budget for what it calls KIPP "summits" or annual meetings and other gatherings (as well as a total redaction of the Mathematica analysis commissioned by KIPP).

Meanwhile, KIPP told the Education Department that in its first 10 years it had raised more than $150 million from private philanthropic sources, which underscores the question of why taxpayers are subsidizing an operation that already has ample support from the corporate community when those taxpayer dollars could be going to strengthen traditional public schools that are truly public and that are not subsidized by tax write-offs for the one percent through their foundations.

Indeed, those tax write-offs serve to diminish the base of revenue available for tax revenue to fund public schools and other genuinely public goods in the first place.

A Closer Look at KIPP

It appears that all the redactions were in response to "proprietary" instructions KIPP dictated to DOE through a four-page document titled, "Proprietary Information."

The Education Department complied with almost all of KIPP's instructions, despite how contrary they are to public policy and even to publicly available information.

These black marks come at a time when cracks are starting to show in KIPP's once beyond-reproach veneer.

KIPP is the largest and most lauded charter school chain in the United States and the recipient of many millions of dollars in taxpayer grants, foundation gifts and handouts from billionaire charter school enthusiasts.

A new book by Jim Horn, Work Hard, Be Hard: Journeys Through ‘No Excuses' Teaching, focuses on the experiences and perspectives of dozens of former KIPP teachers who have become critics of the chain and many of the principles it is based on, including the Teach for America program that supplies KIPP with many of its teachers.

The book's title is a reference to "Work Hard. Be Nice" the book-length puff piece authored by Washington Post education reporter Jay Matthews about KIPP's founders Mike Feinberg and Dave Levine.

In a review of Work Hard, Be Hard that is excerpted on Diane Ravitch's blog, education professor Julian Vasquez Heilig writes that screaming at students is accepted teaching practice in KIPP schools:

Why does KIPP encourage and/or allow these practices? Horn writes, school leaders relayed that ‘because of cultural differences, black students are accustomed to being screamed at…because that's how their parents speak to them.' A KIPP teacher characterized the worst offender at her school as a ‘screamer, swearer and humiliator.'

"KIPP might also argue that they are the beneficiaries of widespread support in communities across the nation. It is very clear that KIPP benefits from powerful influential and wealthy supporters in government, the media, and foundations. Their no excuses approach to educating poor children has resonated with the elites in society and they have showered the corporate charter chain with resources for decades. So it may be surprising to some to read the counternarrative from KIPP teachers that is quite different than what you typically read in the newspapers, see in documentaries like Waiting for Superman, and generally experience in the public discourse. I proffer that the KIPP teachers' counternarratives in Journeys should be required reading for all of KIPPs influential supporters."

So what is the disgruntled KIPP teachers' counter-narrative? For one, the model seems to create lousy working conditions for the purpose of encouraging high teacher turnover. One former teacher says, "I wouldn't wish it on anyone who wanted to be a teacher for the long-term…It's exhausting. It's demoralizing."

And this is where Teach for America comes in. "Without a constant infusion of new teachers to replace all those who burn out," Horn writes, "KIPP would have to shut its doors… The role of Teach For America and programs based on Teach For America's hyper-abbreviated preparation are crucial, then, for the continued survival of… KIPP."

In short, the new book offers a devastating critique of the KIPP business model at a time when KIPP and the Department of Education appear to be aiding each other in trying to keep critical information out of the public debate through redaction.