The feds granted millions for Michigan charter schools that never opened. Where did the money go?

By: - December 14, 2019 5:24 am

A new study from the Network for Public Education shows that 72 Michigan charter schools were granted money through the federal Charter School Program (CSP), but never enrolled a single student. Despite never opening their doors, these schools received $7.7 million from 2006 to 2014. 

The Network for Public Education, a New York City-based public school advocacy group, reviewed 5,000 schools across the country that received federal funding through the CSP. The study, “Still Asleep at the Wheel: How the federal charter schools program results in a pileup of fraud and waste,” was led by Carol Burris, the group’s executive director. 

Nationally, Michigan had the most charter schools that never opened, also known as “ghost schools.” 

Network for Public Education chart

U.S. Education Secretary Betsy DeVos, a Grand Rapids native, has been championing the state’s charter school sector for decades. She was instrumental in the 1994 legislation allowing charter schools to open up shop in Michigan and donated millions of dollars to charter schools through the Dick & Betsy DeVos Family Foundation. 

The charter school movement took off rapidly in Michigan. And by 1997 the state already had over 100 charter schools. 

The same year that then-Gov. John Engler passed the charter school law in Michigan, the CSP was formed. The following year, the federal program began giving out startup grants to charter school hopefuls to kickstart a national school choice movement. 

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When the CSP first started giving out grants in 1995, and up until 2005, states were not required to disclose what institutions were receiving the money. During that first decade, Michigan received $64.6 million in grants, but the study’s researchers weren’t able to track if the funds went to viable charter schools. 

But data does show that from 2006 to 2014, 112 Michigan charter schools accepted CSP funding that either never opened or eventually shut their doors. 

According to records researchers obtained through a Freedom of Information Act (FOIA) request of the Michigan Education Department, more than $4.5 million in federal startup funds were given to schools that never enrolled a single student between 2010 and 2014 alone.

Michigan’s lack of oversight into our charter school sector received national attention after this study was released earlier this week. 

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The Washington Post interviewed Casandra Ulbrich, president of the Michigan State Board of Education, who said the findings were “extremely troubling.”

“It raises some very legitimate questions about a federal grant program that seems to have been operating for years and years with little oversight and very little accountability,” she told the Washington Post.

In May, the board voted to not accept the $47 million federal grant from the CSP. Despite the board’s objections, Attorney General Dana Nessel ruled that the state was obligated to disperse the funds. 

“The State Board of Education was presented with a set of grant criteria to ultimately spend up to $47 million expanding and creating new charters in Michigan. The Board was never consulted when the state applied for the funds, and had severe reservations focusing on two areas,” Ulrich told the authors at Network for Public Education. 

“The first was concern over previous use of the grant funds. The second was whether a state with a 17-year record of student enrollment declines, and parallel declines in student achievement, needed to open more charter schools. Following the vote, I began reviewing previous grant information and today, am even more alarmed by what I have found.”

Ulbrich: Some charter authorizers are ‘cashing in and making tons of money’

According to the study’s author, Ulrich is continuing to investigate how millions of dollars were spent at the state’s nonexistent charters. 

The study highlighted how the money was spent at four of Michigan’s “ghost schools”:  The Harris Academy, The Great Lakes Anchor Academy, Cultivating Growth and Warren Classical Academy.

Although the inspiration to open these charters differs from developer to developer, a common thread was found within these ghost schools’ invoices ─ for-profit consultants and education management organizations. 

“With so little oversight, it is not surprising that the availability of such grants becomes a magnet for consultants and other individuals who create invoices for providing services that are delivered on an honor system,” the study’s authors wrote. “From the records we obtained, it appears that the Michigan Department of Education did no more than rubber stamp invoices. And at the U.S. Department of Education, when it comes to such expenditures, all are apparently blissfully asleep at the wheel.”

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But Michigan isn’t alone in giving out federal money to help fund start-up costs for charter schools without much thought about the potential success or failures.

Across the country, more than 35% of charters funded by the CSP between 2006 to 2014 never opened at all or closed shortly after, according to the study, costing the program up to $505 million. 

Other Midwest states that federally funded “ghost schools” include Illinois (20), Ohio (20) and Wisconsin (15).

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Allison R. Donahue
Allison R. Donahue

Allison R. Donahue is a former Michigan Advance reporter who covered education, women's issues and LGBTQ issues. Previously, she was a suburbs reporter at the St. Cloud Times in St. Cloud, Minn., covering local education and government. As a graduate of Grand Valley State University, she has previous experience as a freelance researcher for USA Today and an intern with WOOD TV-8. When she is away from her desk, she spends her time going to concerts, comedy shows or getting lost on hikes in different places around the world.