Testimony before the Senate Education Finance Subcommittee May 14, 2013

Chairman Gardner, Vice Chair Lehner, Ranking Member Turner and Members of the Committee, my name is Denis Smith, and I speak to you today as a retired school administrator with extensive experience in and knowledge about Ohio's community schools.

For more than thirty-five years, I served school districts and educational service centers in Ohio and a neighboring state as a teacher, principal, curriculum director, director of professional development and as a sponsor representative for Ohio community schools. In addition, I have acquired experience outside of education in the areas of marketing and communications in the publishing industry and as executive director of a national professional society. Prior to my retirement in 2011, I worked with community schools for almost four years as a consultant with the Office of Community Schools, Ohio Department of Education. In these varied roles, it has been my experience to critically examine the quality of education being delivered in school districts as well as public charter schools, and based upon my experience and firsthand observation, both as a community school sponsor representative with an educational service center and as a staff member of the Ohio Department of Education's Office of Community Schools, I wish to raise very serious concerns about Ohio's community schools, their creation, oversight, performance and status in our system of public education. Community schools, or public charter schools as they are called in the rest of the country, were originally designed to offer parents and stakeholders educational choice and school options in an innovative environment independent of a public school district. But the theory and the rhetoric behind the formation of many of these schools is separate from reality, and we need to first look at a few instances of what has gone terribly wrong in some schools of choice. Consider these recent examples from Ohio's public charter schools:  A community school with only 175 students enrolled was led by a school director who handpicked her governing board, which then employed her at a salary of $156,000 per year plus benefits. The governing board also employed the school director's sister at an inflated salary. Another community school leased space from the building's owner, who also happened to be president of the school's governing authority. In a recent audit, the state auditor revealed a pattern of overpayments above the stated contract for the school's lease and shell companies that were created to function as school vendors. Nearly $2,000,000 in questionable payments have been identified by the state auditor and 10 people associated with the school, including administrators and board members, have been indicted as a result. Three of the 10 indicted were family members who originally established the school. In spite of all of these misdeeds, the school can't be padlocked because it is held to a different operating standard due to the nature of the students served.

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Several years ago, a school established by a member of a vocal group was opened, and thousands of dollars of start-up funds were spent to build a state-of-the art audio recording and production studio on the school premises. Reports at the time indicated that the students were denied access to the recording studio and that adults were the primary beneficiaries of public funds spent on its construction. The school closed in less than two years. One group of schools, part of a national chain and established and operated by an organization with international ties, has a tendency to populate its schools with governing board members, almost exclusively male, who are not representative of the clientele of the schools. The New York Times reported extensively on this school management group nearly two years ago. During the course of several years at the Ohio Department of Education, I received dozens of phone calls from the public who had grievances against a number of community schools but were unable to find out the names of governing board members and contact information for them, their supposed representatives and overseers for public charter schools.

There are many additional examples that I can provide this committee about the structural flaws found in Chapter 3314 of the Revised Code that defines the nature of these schools of choice and which, unfortunately, created the climate for the mismanagement and lack of oversight evident in these unfortunate examples. As we approach the 15-year mark of the establishment of these public schools, I believe it is time for the legislature to reflect on the structural flaws that allow their establishment and proliferation that, in the end, weaken public education due to lax oversight. The constitutional requirement of a thorough and efficient system of common schools, unfortunately, is not realized with such lax oversight. How then do we repair the structural framework that can promote a system of schools of choice and foster innovation and sound educational practice? I offer you these recommendations as a way to start the process of necessary community school reform: School Authorizers and Management Companies  High-performing charter schools are enabled by competent authorizers or sponsors that have sufficient oversight capacity, a proven educational mission that puts the welfare of children first and are not driven by the profit motive. As in many states, public universities should be charged to serve as authorizers of community schools, along with educational service centers. To that end, Section 3314 should be revised to ensure that non-profit and community based organizations, let alone sectarian organizations, do not serve as sponsors. Several of the examples cited at the beginning of this document are evidence of the poor performance of certain non-profit charter school authorizers, and Ohio is one of only two states that allows nonprofits to have a role as school authorizers. Policymakers need to consider whether the very conspicuous presence of for-profit management companies promotes the very basis of a thorough and efficient system of schools. In a time of scarce public funds, it is antithetical to allow largely unregulated for-profit management companies to operate with the mindset that profits at all costs trump the need to 2

make the needed investments in children and their learning needs. Further, it is the view of many observers knowledgeable about community school issues that the flow of public money by for-profit management companies back into the political process shortchanges the required investment in instruction needed to operate successful, high-performing schools. The Revised Code allows a management company to replace a governing authority if there is a dispute among the authorizer, sponsor and management company. This provision is testament to the supremacy in existing Ohio law of an operator or management company over a school governing authority, the very entity which is supposed to represent the students, stakeholders and any prevailing public interest. The public interest will be served by repeal of this odious provision.

Professional and Licensure Requirements for Administrators, Teachers and Treasurers  The Revised Code does not specify educational and professional requirements for community school administrators. If public policy demands that young people should be prepared to meet 21st century challenges, that the nation needs to produce skilled, thoughtful and ethical citizens, then the school leaders themselves should hold appropriate academic and professional credentials that equip them to administer and lead high-performing schools. Professional licensure for community school teachers should in all cases be the same as those for teachers serving in traditional school districts and should not be stated in terms of minimum requirements. Community school treasurers should be held to the same licensure requirements as traditional school district treasurers. Moreover, a cap needs to be in place to define the maximum number of schools a treasurer may serve at a time. I know of at least one instance where a treasurer served as the CFO of more than 30 schools. The poor performance of a number of community school treasurers may be the result of greed demonstrated by overextension through multiple school responsibilities spread across the state of Ohio.

Governance  A governing authority of a public charter school should exist to serve the public interest, convenience and necessity by providing oversight that serves the interests of the parents, students and school stakeholders. A governing authority that is appointed either by the school developer or the management company has the appearance of a conflict-of-interest. Legislation should be considered that provides for governing boards to be populated by qualified persons appointed by the school authorizer and also, ideally, elected by parents and stakeholders of the school served. Governing board meetings should be held in the school, and names of board members and contact information should appear on the school's website. Incredibly, I have reviewed contracts submitted by authorizers that had schedules of board meetings in cities located more than 100 miles from the school. On my own initiative, I refused to sign off on such contracts and returned them to the authorizers for modification, and the Revised Code should be explicit on such requirements. 3

Since community schools are in fact public charter schools and thus constitute their own independent school district, governing boards of such schools need to resemble the population served rather than be creations of the management company. Statute should clearly identify this need as a requirement of any public school district.

Summary and Conclusions Today, I have provided some examples of the glaring inadequacy of many charter schools and how many of these entities do not support the constitutional requirement of a thorough and efficient system of common schools. It took a century for Ohio to scale down to 612 school districts and address the efficient requirement, but now we have added nearly 400 more districts with the advent of public charter schools. Clearly, charter schools, which typically enroll fewer students than traditional public schools but in many cases have higher administrative operating costs per unit due to the employment in many cases of a superintendent, school leader, treasurer and governing board, do not add an efficiency dimension to the state's system of public schools. Unfortunately for the students enrolled, there have been all too many cases of theft, misappropriation of funds, overpayment to vendors, nepotism in the employment of siblings, spouses and children, excessively high administrative salaries against the number of enrolled students and comparative budget size. There is even a website devoted to documenting national issues with charter schools, http://charterschoolscandals.blogspot.com/. According to former Bush Administration Assistant Secretary of Education and well-known authority on education, Dr. Diane Ravitch, "The scandals in public schools pale in comparison to the charter school scandals. The public sector is regulated; the private sector is deregulated." Though many of you in the legislature may be reluctant, it is nevertheless time to provide needed regulatory and oversight measures to counter the image held in other states that in the case of charter schools, Ohio is the "Wild, Wild West" and the locus of "anything goes." While public funds are being squandered in many of these schools, the state of Ohio is now approaching an annual expenditure of $ 1 billion to support these entities in a deregulated environment, and this scope of investment is not returning the yield we need in order to prepare that skilled, thoughtful and ethical 21st century citizenry that we need in order to be competitive in an increasingly competitive world. There are many in the educational and policy community that are waiting for the legislature to begin to address the glaring structural problems inherent in Ohio charter schools, and I have deliberately stayed away from the funding issue for these schools because that topic is a Gordian Knot that must also be addressed, though it is separate from the School Authorizers and Management Company, Professional Licensure, and Governance needs for these schools that are detailed herein. You may ask if I am opposed to public charter schools in general, and the answer is no. There are a number of successful schools that I am familiar with, and they share some of the same characteristics. For example, one group of successful schools provides its own management services and is thus not beholden to a for-profit management company that otherwise might have skimmed off operating funds and appointed people of its liking to the board. This same group of schools is administered by licensed 4

professional educators who are familiar with standards-based instruction and assessment, pupil services, school accounting procedures, technology integration, and an embrace of community partnerships and local business support. These schools feature appropriate administrative salaries commensurate with the size of their schools and hire highly qualified teachers at prevailing wages comparable to nearby traditional school districts. Their sponsor is also a regional educational agency, and not a non-profit which might view charter school authorization as a sideline for revenue generation to bolster its other, non-educational purposes. In addition, there are other nationally recognized schools in Ohio that share similar profiles and thus engender their success due to the investments made in support of student learning and not to support the bottom line of some remote and at times disengaged management company. In conclusion, we now have 15 years of history with charter school operations in Ohio but little empirical data to measure their contribution to our system of public education. Yet there is an abundance of anecdotal evidence similar to what I have provided you to give us pause regarding the continued proliferation of these schools within our public education framework without needed reforms. With this in mind, I respectfully ask this committee and the legislature as a whole to suspend any further charter school expansion until such time as the major reform recommendations detailed in this testimony are incorporated in the Revised Code as well as the authorization of a research study conducted by a respected independent organization to determine the efficacy of these entities as part of our system of public education. My former colleagues were aware of a transition study prepared by the previous state administration that characterized Ohio charter schools as a "slow motion trainwreck." There is enough evidence that I have presented here to give credence to that characterization. It is my hope that you will carefully examine the critical path necessary to strengthen public education by considering these reforms. By doing so, our young people will be better served and a greater yield on scarce public funds will be realized in the long run. A final reminder, I am here representing no organization but describe myself as a retired professional who is concerned about the future, because all education must be future-oriented in preparing the next generation which must transmit our heritage and ideals. In order to be future-oriented, our public charter schools require urgent transformation in the areas of authorizer quality and management performance; qualified leadership, professionalism and licensure; and of course, governance, where we the people are represented rather than private management companies. Thank you very much for your time today.

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