Education, Teachers — August 3, 2017

Who suffers when charter schools fail? (HINT: It’s not the banks or the authorizers)

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It’s becoming an all too familiar news story in Michigan these days: A “failing” public school system faces “competition” from a charter school that sucks even more resources and students away from the traditional schools and then, when they can’t make enough money, the charter school closes and things are worse off than they were before. For example, it happened in Muskegon Heights which turned its entire school system over to charter schools. When Mosaica, the for-profit charter school management company couldn’t make a profit, they walked away leaving the newly created charter school district in a lurch. The district is back to being run by the local folks and, in just one year, they erased the debt that sent Mosaica running for the hills.

Well, it has happened again this year. The Michigan Technical Academy in Detroit was a charter school running both an elementary and middle school. They were authorized by Central Michigan University and, earlier this year, CMU ended their contract because MTA students were showing poor academic progress and the district was over $16 million in debt.

Unfortunately for everyone but CMU and the MTA’s creditors, the contract that was negotiated between their creditors and Matchbook Learning, the school’s management company, required that the bondholders and banks get paid back first and payments can be accelerated if the arrangement fell apart (which it clearly did.) The upshot is that the teachers who elected to have their paychecks spread out over the entire year (rather than the 10 months of the year when school was in session) were told they would not be receiving paychecks for the work they did.

Matchbook Learning, which had been running the school since 2015, had a contract with the school’s board that expired on June 30, George wrote in the email to teachers.

“Matchbook Learning never received and does not expect to receive any funds from the MTA Board, CMU or the bondholders to fund payment of any July or August payroll — meaning Matchbook Learning is not in a position to make payment to you,” [Matchbook Learning CEO Sajan] George wrote. “Unfortunately, the closing of MTA has had a severe effect on everyone involved. We thank you for your time at MTA, sympathize and empathize with your position, and wish you the best in your future endeavors.” […]

He said Matchbook asked the school board to approve payments that would enable the teachers to get paid in July and August. The board knew it would receive payments from the state in July and August and authorized a portion of that money to go toward paying teachers. But the bondholders are priority creditors, meaning they get paid first. The bondholders have refused to allow money to go to the teachers, George said. […]

The school borrowed about $16 million for building improvements when it first opened and only about $1 million had been paid off when the school closed last month, George said. Had the school stayed open, it would have continued to receive money from the state that could have been used to make payments on the debt. Without money coming in, the creditors moved to collect as much as they could.
[…]

“Some creditors of Michigan Technical Academy have ordered an acceleration of payments due on Academy loans,” [Governor John Engler Center for Charter Schools at Central Michigan University spokesperson Janelle] Brzezinski wrote in an e-mailed statement. “The acceleration of payments means that the Academy received no funds from the scheduled July 20, 2017 state school aid payment sent by the state of Michigan. The Academy board and the Center had been working with the Michigan Department of Education and Michigan Department of Treasury officials to ensure continued flow of state aid through July and August to allow the Academy to meet payroll and other outstanding obligations. Unfortunately, the decision of the creditors to accelerate payments under the Academy loans means that there will not be sufficient funds for the Academy to process the July 31, 2017 scheduled payroll and there may not be sufficient funds to meet the August payrolls.”

Teachers, who had already done the work, were out as much as $7,300.

Matchbook Learning, which is owed $200,000 itself, has tried to appeal to their creditors to help the teachers get paid but that seems pretty unlikely. They would rather stiff some teachers than to lose any more money on their “investment”.

I’d say this is a “cautionary tale” about the disastrous trend of putting charter schools in charge of public education but we’ve gone far beyond cautionary tales. It’s clear that far too many of these charter schools and their management companies, most of which are for-profit, don’t see education as a social good for them to foster, nurture, and encourage. Rather, it’s just one more way to siphon public education tax dollars into the coffers of corporations. Just because Matchbook Learning is a rare charter management company that is not for-profit doesn’t mean that they and their creditors didn’t hope to enrich themselves by investing in education.

The cognitive dissonance regarding education in Michigan (and elsewhere) is truly mind-boggling. It is a mindset that is promoted primarily by Republicans who have the inane idea that they can solve the problem of “failing” public schools by forcing them to compete on an uneven playing field with diminishing resources and that they can do it by spending LESS money on our children’s education. It’s been proven time and time and time again. Gov. Rick Snyder’s school district for misfit schools – the Education Achievement Authority – is the most egregious and outrageous example of this and, for a time, Republicans wanted to make it a statewide program rather than just exploiting the brown children in Detroit. It was only because of the light shown on their colossal failures by Eclectablog and Michigan Radio and others that the push to expand the EAA was killed.

But, as the situation with the Michigan Technical Academy shows, that fight is far from over.

One more thing: MTA’s website talks about their “Student Centered Learning” focus. It’s the same approach taken by the grifters than ran the EAA and tried to do so on the cheap. The idea is a fine one IF YOU PROVIDE THE NECESSARY RESOURCES. But you simply cannot run a program using such a resource-intensive approach WITH LESS RESOURCES. It is not possible. And no amount of fairy tale thinking about how businesses can run things better than government or school districts will change that.

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