The Office of the Controller (Controller’s Office) conducted two previous fraud vulnerability assessments of the city’s charter school operations, in 2010 and in 2014 that included a review of the oversight provided by the School District of Philadelphia (SDP). For this report, the Controller’s Office reviewed two education service providers’ compliance with the state Charter School Law and the SDP’s Charter School Office’s (CSO) oversight capabilities. This included examinations of the two education providers selected, ASPIRA Inc. of Pennsylvania (ASPIRA) and The Universal Companies (Universal), which operate five and seven schools, respectively.
What the Controller’s Office Found
After reviewing City of Philadelphia and SDP records, as well as inquiries with the education providers and SDP staff, the Controller’s Office found the following conditions:
- The state’s Charter School Law is in need of reform to include oversight of education service providers and associated nonprofits. For example, charter schools continue to rely on leasing practices that are not considered to be “arms-length” agreements. The president of a Universal school’s Board of Trustees, for example, is also the chairman of the parent organization, Universal Companies. In addition, one of its subsidiaries is Universal Community Homes, which receives $720,000 per year in rental payments from the school.
- Significant reform of the Charter School Law is overdue. The Controller’s Office raised similar oversight issues in its 2010 Charter School Review and the Controller testified before the Pennsylvania Senate Education Committee during that year. Despite public outcry to the review, proposed legislative changes and the Controller’s testimony, the law has yet to be updated or amended.
- Education service providers appear to be parent corporations of their respective charter schools. These schools are not operating as independent organizations. For example, members of the Board of Trustees at the ASPIRA and Universal schools continue to serve on several school boards within their respective education service providers. These entities comingle funds among each other and the question of which entity’s interests are best served is left unclear.
- SDP does not adequately staff the CSO, which is tasked with providing appropriate oversight and accountability of charter school operations. The CSO employs eight staffers, including the Executive Director, to monitor 83 charter schools with 63,500 students. If Philadelphia’s charter schools were considered a separate school district, it would be the state’s second largest, ahead of Pittsburgh, which has 54 schools and an enrollment of 25,000 students. In contrast, the Washington, D.C. Public Charter School Board Office has a 39-member staff overseeing 39,000 students. This issue of understaffing was also highlighted in our previous reviews.
- ASPIRA and Universal failed to disclose information about the Right to Know Law such as filing a records request and providing the name and contact information of the schools’ Right-to-Know officers, on the schools’ websites as mandated by the law. The Charter School Law states all charter schools, as public agencies, are subject to the state’s Right to Know Law. Additionally, the Controller’s Office had difficulty in securing public records from the education service providers.
- Charter School state certification standards, requiring 75 percent of school staff to have appropriate state credentials, were not met in five of seven Universal schools reviewed.
The Controller’s Office has developed a number of recommendations to address these findings:
- Pennsylvania legislators must reform the Charter School Law to empower local school districts with greater oversight and compliance authority over education service providers and their associated entities. State lawmakers should also propose procedures that would include penalties on charter schools and education service providers for non-compliance of rules and regulations.
- The CSO should make impromptu visits to charter school facilities as part of its oversight of charter schools.
- The CSO must hold charter schools accountable when they fail to comply with Charter School Law requirements, by enforcing all applicable penalties.
- The SDP should allocate resources to boost staffing levels at the CSO, an office that oversees approximately 32 percent of Philadelphia’s public school population.
- Education service providers should hold primer classes and follow-up sessions on the Right to Know Law throughout the school year for leaders within the charter schools and the providers.