Does DC have for-profit charters? Yes and no

DC law requires that charter schools be organized as nonprofit corporations. But some of them have legally turned over management of the school to a for-profit company. Is there anything wrong with that?

Critics of charters, including some in DC, sometimes depict the schools as money-making enterprises and argue that the profit motive has no place in education. Apparently agreeing with that view, the DC Council mandated that all charters be nonprofits when it first set up the charter system in 1995.

But there’s no prohibition against charters entering into contracts with for-profit companies. While some of those contracts are just for ancillary services like transportation or accounting, it’s also possible for the board of a nonprofit school to turn over management of the school as a whole to a for-profit entity.

Nationwide, enrollment in schools managed by for-profits is growing. In DC, the vast majority of charters either manage schools themselves or have contracted with a nonprofit charter management organization. But, according to a spokesperson for the Public Charter School Board (PCSB), a few have entered into management arrangements with for-profit companies.

A mixed bag

Those schools are a mixed bag in terms of quality. Imagine Schools, which operates schools in 11 states and DC, was a for-profit company until last year, according to the PCSB. This year, one of the Imagine-operated schools in DC, Imagine Southeast, was in such bad shape that it agreed to be taken over by another charter organization to avoid closure.

Imagine Schools has also run into trouble elsewhere, most notably in St. Louis, where all 6 Imagine schools were closed because of financial and academic problems.

Imagine still manages another charter school with two campuses in DC, but it can be hard to make the connection between that school and Imagine. While the school’s website uses the title “Imagine Hope Community Charter School,” the PCSB and Learn DC websites refer to the schools only as Hope Community Lamond and Hope Community Tolson.

Neither school fares particularly well in evaluations, with Lamond receiving the lowest rating from the PCSB, Tier 3, and Tolson getting a middling Tier 2 rating. Proficiency rates are about 39% at Lamond and 53% at Tolson.

BASIS DC, on the other hand, which is managed by a high-achieving for-profit network that relies on a rigorous approach, appears to be doing much better academically. While administrators at the DC school had to adjust their expectations because incoming students lacked basic skills, last year students still scored 77% proficient in math and 81% in reading, well above the averages for both DCPS and charter students. (The school opened in 2012 and hasn’t yet received a Tier designation from the PCSB.)

At the same time, both federal and local authorities have launched investigations into complaints that BASIS DC was not providing its special-education students with legally required services.

Community Academy

One other charter in DC has contracted with for-profit management companies, according to the PCSB. Community Academy, which operates schools at 4 locations in DC, actually uses two for-profit management companies. One, called Community Action Partners Charter School Management, exists only to provide management services to Community Academy.

The other, K12, Inc., operates a branch of Community Academy that is a virtual school, with all services provided online. K12, which is based in Northern Virginia, is not only for-profit, it’s the largest for-profit provider of K-12 online instruction and one of the few education-related companies that is publicly traded.

Community Academy’s brick-and-mortar campuses have had their troubles. Two years ago, the entire school was in danger of having its charter revoked because one campus was underperforming academically, but the school was able to work out a compromise and stay open.

One of the campuses is a Tier 3 school and two others are Tier 2, although one of those, Butler Global, has been designated Tier 1 in the past. The fourth campus hasn’t received a designation because it serves only preschool and kindergarten students.

Nationally, K12, Inc. has been criticized for allegedly maximizing growth and profits and failing to meet the needs of students, especially those who are low-income or at-risk. But Community Academy Online, a K-8 school with 120 students, seems to perform at least adequately.

It’s a Tier 2 school, and its overall proficiency rates are 61% in math and 69% in reading. Students who are eligible for free and reduced lunch (presumably a mere technicality at an online school) fare only a little worse in reading, at 67%. Their proficiency rate in math is only 52%, but that’s still better than the District average.

At least some parents were happy enough with the online school that they submitted an application to start a high school that would blend online and traditional instruction, to be called DC Flex. Like Community Academy Online, the school would be managed by K12.

But in February of last year the PCSB rejected the application on the grounds that there was a “lack of support” from “the central office,” presumably K12’s. “Students who were self-motivated and asked for help from their teachers were immediately assisted,” according to the PCSB minutes, “but the students who were not engaged did not get any support from the teachers to stay focused on their academics.”

Does it make a difference?

Does it make any difference that a school is managed by a for-profit entity? Some argue that the distinction is a red herring. Even if an organization’s objective is to make money, they say, it still has to offer a product or service—in this case, education—that people find to be of value.

And, some say, for-profit management organizations even have certain advantages. Because they can attract capital more easily than non-profits, they may be able to grow faster, attract better talent, and innovate more readily.

Still, at least at first glance, it looks as though the DC Council made a judgment that charters should be nonprofits, and their ability to hand over management of the school to a for-profit appears to be an end-run around that.

But a spokesperson for the PCSB says that its policy requires that the local board of the charter school must remain completely independent of any for-profit management company it contracts with. There can be no overlapping board members, and the management agreement must be arms-length and capable of being terminated easily.

That, along with PCSB oversight, may be enough protection against operators that are just out to make a buck. Providers of virtual education like K12 are the most likely to prioritize profits over quality. Their profit margins may be higher because they don’t have to deal with the expenses of brick-and-mortar schools. From what I’ve seen, high-performing charter schools don’t actually make money. In fact, they’re usually reliant on private contributions to stay afloat.

It’s true that the DC schools operated by for-profit entities don’t have stellar records, at least so far. But their problems may have nothing to do with the for-profit status of their operators. In the end, the nonprofit/for-profit distinction is probably less important than other criteria, like how well a school is actually educating its students.

And as the recent allegations against the administrators of Options PCS illustrate, the mere fact that a school is managed by a nonprofit is no guarantee against operators who are focused on enriching themselves at the expense of children.