Charter schools have developed into a problem for some in the past three to four decades. While these schools operate as nonprofit organizations, many believe they are generating massive profits at the expense of taxpayers.
One such person is Our Schools Chief Correspondent and Writing Fellow Jeff Bryant. Bryant joined AWF Union Podcast to explain how some charter schools are generating profits and taking from taxpayers. He later told the story of two Floridians generating large profits through the schools.
How do charter schools generate profit?
By definition, charter schools are not designed to turn a profit. However, those operating these schools have found loopholes that allow them to generate large sums of money, and it’s legal.
Bryant explained how charter schools are run by a board of directors. This board dictates which companies receive contracts for the ownership of the school building, the land, the hiring process and more. Many times, board members own the companies who receive these contracts.
With more charter schools beginning to receive taxpayer funding, the companies who receive charter school contracts can raise prices without fear of losing money, since they typically own the company and make the decisions for the charter school. In return, they receive contracts that use taxpayer dollars to enrich themselves.
Although there is very little national reporting on the issue, Bryant called for federal action to be taken in order to close these loopholes and protect taxpayers.
Examples of charter schools exploiting loopholes
Bryant detailed two examples of people taking advantage of the loopholes surrounding charter schools.
One example consisted of a private Christian school losing money, which was turned into a so-called nonprofit charter school. The owners of the school opened a management company, which was given all contracts for the school. After raising prices on supplies, rent and other services, the owners of the charter school became wealthy.
He detailed another story about a real estate professional who began building charter schools nearby the developments he was invested in. This turned into the largest charter school chain in the country.