Charter Schools: So Much for Market-Inspired Efficiency

From the BJ today: seven charter schools have to pay federal income taxes because they failed to apply for 501(c)(3) status:

Some of the money that Ohioans pay for public education has ended up in the pocket of the federal government rather than in state classrooms.

The reason is that at least 12 privately run charter schools -- funded with Ohio tax dollars -- were not qualified as federal 501(c)(3) nonprofit corporations.

As a result, those schools paid about $311,000 out of their state aid to the IRS over a three-year period.

OK, seems pretty basic. Why wouldn't they apply?

The reasons the schools gave for not seeking federal nonprofit status varied. Some said that because it wasn't required, they didn't file. Others said the paperwork was overwhelming.

Oh, well. Score one for the Education Management Organizations like White Hat and Edison, right. because providing this sort of technical help is one of the reasons charter apologists give for allowing for-profit companies to manage charter schools.

White Hat Learning Services, founded by Akron businessman David Brennan, operates seven of the schools. The Leona Group, a school-management company in East Lansing, Mich., operates the other five.

D'oh!!

Ironically, the day I see this in the paper, I also get the Fordham Foundation's Ohio Gadfly. The Fordham Foundation is a free-market oriented think tank located in Washington, but with historical ties to the Dayton area. They have been providing technical expertise to charter schools in the Dayton area and have nursed some along to a fair level of acheivement.

Last month they trotted out a survey of attitudes of public school parents that they are awfully darned pleased with. Among their favorite findings: That 59% of parents think they don't get their money's worth and that 69% think that if the state gave more money to public schools it wouldn't make it into the classroom.

I can generally put up with Fordham's stuff. They are a good check on my liberal views. I pick up real information. They are only occasionally dishonest.

But this month, they really pissed me off. They actually crow about the poor passage rate of school levies in the last election. They say it vindicates their findings. Well let's talk about that.

First, such findings are inevitable considering the complex intellectual debate about the role of government in American life that has occurred since the Reagan administration. The conservative side of the debate goes something like this:

Government SUCKS! It just SUCKS!! All the time, it just SUCKS!!!! Thank you.

This argument becomes something of a self-fulfilling prophesy. My favorite example was during the savings and loan debacle when Congress deregulated the S&L industry, S&L's cratered left and right, leaving a $200 billion mess to clean up and talking heads pointed to the Congressional action as an example of governments screwing up. No, it was an example of the government abdicating its role in regulating the economy. Not the same thing, but the difference is lost on those making the argument.

Talking trash about the government, while a long a venerated tradition in American life, doesn't have a strong relationship to how the government actually functions.

Second, and related: a huge swatch of the population doesn't think it gets good value for anything. I'd love to see these results compared with, say, a value metric for the gas company.

Third problem with the findings: the system is rigged to undermine confidence in school districts. Between H.B. 920 and the phantom revenue effect of the school funding formula, the system automatically defunds local school systems every three years. Add on to that the steady erosion of state support over the last couple of budget cycles and you have school districts in profound financial difficulty, often not of their making. But the average citizen sees that the last levy was only five years ago, and now the district is asking for another and wonders "WTF?" Until the system is fixed, these public perception measurements will always be skewed toward the negative.

Finally, people know about charter schools. That is to say that they know that a lot of their money goes to charter schools and that charters are underperforming. I'm not sure what my answer to the question would be. Depending on the wording, I might very well agree that money would not get to my kid's classroom because in the last budget cycle it didn't The budget increased, but it looks like the increase will overwhelmingly end up in voucher schools and charters.

Getting back to the BJ story, I may need to go in for irony detox. Fordham demonstrates that people don't think that money is being well spent in traditional public schools. But their vaunted market solution didn't create enough incentive for these schools to competently set themselves up.