Democrats urged to make public Michigan charter school financial records

• Michigan’s charter schools received $1.4 billion in public funding last year, but precisely how that money was spent is unclear 
• The State Board of Education wants the Legislature to require charter management companies to submit detailed spending reports  
• Democratic majorities in January improve the likelihood of such legislation, previously blocked by Republicans

Michigan’s 295 charter schools received $1.4 billion in state funding last year. But exactly how that money was spent, and how much of that went to for-profit management companies remain unclear, because those companies aren’t subject to public disclosure laws.

The state Board of Education has been trying to change that, and members are hoping to get help from the newly elected state Legislature controlled by Democrats, who are less protective of the for-profit companies that operate many of the state’s charter schools.

At a meeting Tuesday, the board voted 5-1, along party lines, to ask the Legislature to require every charter management organization to post audit reports of its use of public funds, including information related to salaries, benefits, and contracts.

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“To send this over now … will be really, really important in setting a priority for the new Legislature and the new legislators that will be starting” in January, said board member Ellen Cogen Lipton, a Democrat and former state representative. 

Republican Tom McMillin, the lone no vote, called the resolution a partisan attempt to discourage charter school expansion and deprive parents of school choice. Nikki Snyder, the board’s only other Republican, was absent.

Eighty-two percent of Michigan's charter schools contract with private management companies, according to the Michigan Department of Education. In many cases, the management company provides a full range of services, including curriculum, financial, staffing, and custodial. In other cases, charter schools manage the day-to-day operations, but contract with a company that provides one or more of those services.

Those management companies are not subject to public disclosure laws.

“Our laws are tremendously weak,” said state Board of Education President Casandra Ulbrich, who spearheaded an effort to obtain financial records from charter schools in five counties. She and Department of Education staff members filed Freedom of Information Act requests with 166 charter schools asking for information about leases and contracts for food service, custodial work, and more. Nearly all said they could not provide the information because their management companies hold the contracts.

The Michigan Association of Public School Academies, a charter school advocacy group, says its members meet their legal obligations to provide staff rosters, annual reports, board minutes, budgets, and management agreements to anyone who requests those records under the Freedom of Information Act.

The trouble, Democrats say, is that those management agreements often aggregate all expenditures into a single line item for “purchased services.” That means it’s impossible for taxpayers to know how much teachers are being paid, which company is mowing the lawn, or the price of textbooks, for example.

“What information is available is difficult to break down in any meaningful way,” Ulbrich said Tuesday. “As we learned from our FOIA attempts, it cannot be easily compared to the same information from traditional schools. For these reasons, I think it’s time for taxpayers to know how their tax dollars are being spent.”

She said she wants to ensure tax dollars are being used effectively and efficiently. She also wants to know how much charter management companies are keeping as profit.

McMillin said charter management companies are being singled out for scrutiny because Democrats oppose school choice. “There are plenty of other entities that get huge amounts of money from the state” and are not subject to public disclosure laws, he said.

State Superintendent Michael Rice said the debate is not about whether charter schools should exist, but about the need for transparency.

“We have the right to know what happens to taxpayer dollars,” he said. “They’re our dollars, and in some cases with respect to public school academies (charter schools), we lose oversight over them. That’s wrong. It’s unacceptable.”

In March, Democrats in the House and Senate introduced the School Freedom, Accountability and Transparency Act, which would have required more transparency from charter schools.  

The legislation would have made charter management companies subject to the state Freedom of Information Act and would have required them to disclose audited financial statements, post student recruitment costs, and hold monthly public meetings.

Republicans, who then led both chambers, did not allow the bills to advance.

Tracie Mauriello covers state education policy for Chalkbeat Detroit and Bridge Michigan. Reach her at tmauriello@chalkbeat.org.