Study: Majority Of Arizona Charter School Owners Awarding Contracts To Family Businesses

Published: Wednesday, September 27, 2017 - 5:00am
Updated: Wednesday, September 27, 2017 - 5:05am

It’s not illegal, but financial analysts have found that charter schools that use taxpayer dollars for “related-party transactions” are acting unfairly.

Because charter schools receive more than $1 billion in taxpayer dollars under free-market principles, the Grand Canyon Institute set out to see how economic freedom works for Arizona’s more than 500 charter schools.

Dave Wells led the research team, which scoured four years of financials from the IRS, Department of Education, and the State Charter School Board. 

“Three out of four charter holders are engaged in financial irregularities that would not be tolerated in district schools,” he said.  And, in some cases he said, “would be downright illegal.”

By “irregularities,” he said he found most charter-school owners were reportedly buying services or goods from businesses they own — or a close family relative owned.

In one case, a charter school paid $12 million dollars for a management learning software system. They compared that to public schools and found, in Mesa Unified School District, they were spending less than a million dollars for the same learning software.

“Somebody should be asking whether that’s an appropriate expense or not,” he demanded.

Appropriate or not, it is legal under state statues, and Eileen Sigmund with the Arizona Charter Schools Association said the report ignores what matters most.

“Student success,” she said passionately, before adding, “That is absolutely no coincidence because for the last three years, Arizona charter students, in all racial and ethnic groups, are outperforming their peers.”

Wells reminded that the study was not focused on the academic achievements of charter school students, but since she brought it up he pointed out that many of those high performing schools did not fall in the 77 percent of charter schools that appear to be abusing the open-market system.

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