FOCUS DC News Wire 10/4/13

 

 

Former managers of the District’s Options Public Charter School on Thursday denied accusations that they diverted millions of dollars from at-risk students to enrich themselves and their for-profit companies, but they agreed to sever their financial relationship with the Northeast Washington school.

 

The companies run by former Options chief executive Donna Montgomery and two other ex-managers had lucrative contracts to provide bus transportation, bookkeeping and other management services to Options, which enrolls about 400 students, many of whom have disabilities. Those contracts will now be voided.

 

During a hearing Thursday, D.C. Superior Court Judge Craig Iscoe appointed a receiver to oversee the operation of the school, choosing Josh Kern, a former charter school leader who now runs a for-profit consulting firm.

 

Iscoe said there appear to have been “flagrant abuses” at the school, pointing to large bonuses that were paid to the three managers shortly before they left Options this summer to run their businesses full time.

 

“My goal is to keep the school running to provide educational services to the at-risk students, many of whom have disabilities,” Iscoe said. “Someone needs to be able to run that school to protect the students directly” and District taxpayers indirectly, he said.

 

The court’s appointment of a receiver comes days after D.C. Attorney General Irvin B. Nathan filed a civil complaint alleging a “pattern of self-dealing” at Options that led to exorbitant bonuses and the diversion of more than $3 million from the school since 2012.

 

The three ex-managers and their lawyer said Thursday they did nothing illegal and that no taxpayer money was misused.

 

“All of the supposed ‘improper’ transactions were disclosed, supported, and approved,” lawyer Pamela Marple wrote in a response to the complaint, arguing that the contracts in question went through the D.C. Public Charter School Board, which has oversight of the city’s 60 charters.

 

City officials have accused one of the board’s former top officials — Jeremy Williams, who was in charge of financial oversight — of aiding the alleged scheme. Troy W. Poole, Williams’s attorney, said his client did nothing wrong.

 

Marple accused the District’s lawyers of publicizing “hastily compiled and heated allegations” to build support for closing Options. She alleged that the charter board is seeking to take over the school’s valuable Capitol Hill building to draw in a national charter operator.

 

The school is “financially and programmatically sound” and has a $4 million surplus, Marple said in court. “The buses are running on time and the children are getting their services.”

 

The ex-managers agreed to void their contracts with Options because they felt it was in the best interest of the school’s students, said Paul Dalton, one of the ex-managers named in the legal complaint. Dalton has roles at both of the for-profit companies allegedly involved in the diversion of taxpayer dollars: Exceptional Education Management Corp. and Exceptional Education Services.

 

“We’ve spent our entire adult lives serving special education kids, and we felt we could best serve them by agreeing to the terms that we agreed to today,” Dalton said.

 

In February, Montgomery — who was then chief executive of Options — signed a $500,000 check from the school to EEMC, a company she founded. That transaction and others detailed in the complaint were “absolutely” legal, Dalton said, and the school reported the financial relationship to the charter board.

 

“All of the procedures were followed,” Dalton said, explaining that the money was meant to help the fledgling company get off the ground. “Every business has to have start-up expenses.”

 

The charter school board maintains that the former Options leaders did not report transactions through proper channels. The charter board, which can close schools for financial mismanagement, has said it plans to vote on initiating a process to close Options at its Oct. 16 meeting. Scott Pearson, the board’s executive director, said the board will consider postponing that vote.

 

Under the agreement reached Thursday, Options will pay Kern $300 per hour for up to 80 hours as he determines what needs to be done at Options.

 

Kern will then present a budget to the court for approval. Iscoe made it clear that he wants to ensure as many dollars as possible go to Options students instead of to for-profit firms.

 

Anthony Herman, a lawyer representing Options, said he understands that concern but that the task facing Kern is “monumental.” The cost of the receivership is likely to reach “well into six figures,” but that is a price that must be paid if the school is to have a chance of staying open, Herman said.

 

A second receiver, yet to be named, also will be appointed as early as next week to oversee the two for-profit companies that the ex-Options leaders founded. Company assets will be frozen in the meantime.

 

EEMC officials said they welcomed the outside oversight as a chance to clear their names and restore their reputations. “We look forward to an honest and transparent assessment, instead of unfounded allegations so often repeated this week,” the officials said in a statement.

 

Lawyers for the District initially sought to freeze the companies’ assets indefinitely as the case continues, but Marple argued that would cripple the companies’ ability to provide services to 20 other charter school clients.

 

A lawyer representing J.C. Hayward, who allegedly signed the lucrative contracts and approved the bonuses for former Options leaders in her role as chairwoman of the school’s board of trustees, said that she has done nothing wrong. Hayward has since stepped down from the board and was suspended from her role as a news anchor at WUSA (Channel 9) while the investigation continues.

 

“The bottom line is my client didn’t benefit one penny,” said Jeffrey Jacobovitz, who represents Hayward, adding that Hayward was not paid for her work as board chairwoman. She has “had a stellar reputation in the community for 41 years” and “was acting in good faith,” Jacobovitz said.

 

The District was not seeking any action Thursday against Hayward or Williams, the former chief financial officer of the charter school board.

 

 

 

I wrote an article on the findings of the financial report card on charter schools compiled by law by the DC Public Charter School Board, the Office of the State Superintendent of Education, and the Office of the Chief Financial Officer. The Charter Audit Resource Management (CHARM) review found the fiscal health of the movement to be strong, with schools in general demonstrating improved positions in fiscal 2012 compared to the previous year.

 

As you may recall the study included four groupings of institutions characterized as demonstrating "financial circumstances." These included:

 

1. Charters with reportable audit findings,

 

2. Charters with unresolved reportable findings from the previous year,

 

3. Charters with negative cash flow. and

 

4. Charters with negative net asset positions (total assets minus total liabilities) indicating the schools use borrowed money to finance operations.

 

Options PCS appears in none of these lists. In fact, when you take a look at the fiscal year 2012 individual financial snapshot for this charter you see an extremely positive picture. The school had over $2.2 million in unrestricted cash at the end of the year, about a $150,000 drop from 2011. The net asset position at over $4.6 million improved from the previous 12 months, and the school ran a $405,000 operating surplus. The one warning sign, perhaps, is that the cash flow from operations went from approximately $787,000 in fiscal year 2011 to a little over $206,000 in fiscal year 2012.

 

However, when you consider the six trending measures included on the report all are on an upward trajectory in 2012 except for the occupancy expense ratio which was 11.1 percent compared to 8 percent the previous year. The PCSB comment on the audit summary states that "based on audited results, PCSB deems the school to be compliant with GAAP standards, to be economically viable, and to have shown no patterns of fiscal mismanagement."

 

In the wake of news stories that the school's executives and board chair diverted over $3 million from the school to two private companies they controlled in fiscal year 2012, including a transportation contract to these firms totaling over $980,000 and an executive director compensation of $425,000 a year, it obviously looks like CHARM needs to be replaced.

 

 

Education reform under D.C. Mayor Vincent C. Gray (D) has been a covert operation, with secret maneuvers and closed-door meetings involving a select few. That critical flaw is at the heart of the controversy surrounding the Office of the State Superintendent of Education (OSSE), the agency charged with establishing academic standards and ensuring the integrity of the District’s public education system.

 

The OSSE decided over the summer to apply an old grading system to the District’s new standardized test — despite recommendations from experts that it use a tougher scale. Officials made that decision only after seeing the scores and realizing that in some instances the numbers would be far from impressive if the new grading scale were applied.

 

Undoubtedly, any decrease in proficiency rates would have been equated by the public with education reform failure. So, OSSE officials used the old grading system and rolled out test scores it could herald as historic.

 

Jeffrey Noel, OSSE’s data director since June, defended the agency’s actions last week before the D.C. Council’s Committee on Education, chaired by Council member David Catania (I-At Large), who blasted the decision. Noel disputed claims that he acted to camouflage decreases in proficiency. Rather, he said, he retained the original scoring system so that he could compare student performance in 2013 with that of previous years. He also worried that using the new grading system would “upset” the charter board’s performance management framework, which is designed to rank independently operated but publicly funded schools.

 

Interestingly, Abigail Smith, the deputy mayor for education, who has oversight of OSSE, told me the agency’s approach was reasonable — although she said other methods could have been used to achieve the comparison. She said the most important issue was whether there was student growth.

 

“What we’re doing is making progress. That’s the most meaningful information for parents,” Smith added.

 

On the surface, this all may seem like some superfluous data-geek conversation. It is not. This is also not about Catania, as some have contended — although his history of strong oversight was one reason I and others advocated for his appointment as committee chairman. Were it not for him, OSSE’s actions might have remained a secret.

 

This debate is about the public’s right to know and the role it should play in education reform. District residents have made significant financial investments in the city’s six-year-old education reform movement. Parents have placed their children in city schools with the promise of receiving a quality education. Surely they have earned the right to be treated as partners, not nebulous stakeholders.

 

“If they only notified [the public], which other states have done, it would have made all the difference,” said Monica Warren-Jones, a member of the D.C. State Board of Education, which doesn’t supervise OSSE staff. She cited New York as an example of a jurisdiction where a switch to a tougher system resulted in proficiency declines; parents received warnings and explanations.

 

“The fact it happened [in D.C.] after the test scores came in made it all the more disturbing,” added Warren-Jones.

 

“OSSE appears to have the mind-set that [it] can’t trust parents; that there is no confidence they could possibly understand, interpret or reason with the full information provided,” said Council member David Grosso (I-At Large), a member of the education committee.

 

At Catania’s instigation, the OSSE released this week so-called “alternative test scores,” using the new grading system. According to the agency spokesperson, the combined citywide reading scoresfor D.C. Public Schools (DCPS) and charters were higher — 52 percent proficient instead of the 49.5 percent released this summer — but the math scores were much lower — 45.5 percent proficient instead of 53 percent.

 

Catania said he was happy the “correct scores” were released. “I believe you fix issues by facing them,” he said. “You don’t change the rules when no one’s looking.”

 

OSSE also kept key education leaders in the dark. Smith said she knew nothing of Noel’s decision until Catania and The Post’s Emma Brown began investigating. Why was a bureaucrat, just a few weeks in his position, allowed to take such significant action without prior approval from the interim state superintendent or the deputy mayor?

 

A spokesperson for the Public Charter School Board said that body also didn’t know of the change. DCPS spokesperson Melissa Salmanowitz didn’t respond to multiple requests for a comment. But in a Sept. 30 letter posted on the District’s Web site, Chancellor Kaya Henderson seemed to downplay the issue, offering that “the most important assessment tool I ever use is my own eyes.”

 

Seriously?

 

Each year, thousands of District parents make education decisions using standardized test scores. They make assumptions about schools based on rates of proficiency because officials in the mayor’s office, at OSSE, at the DCPS and charter schools have trained them to think and act that way.

 

This episode has raised questions about the efficacy of such data. Equally important, it has further injured the relationship between parents and the Gray administration. Fortunately, that hasn’t escaped Smith: “We have to be much more proactive about getting people involved in the process.”

 

Can someone say amen?

 

 

DC Council Education Committee Chair David Catania has alleged that testing officials inflated the percentage of students reported as "proficient" on standardized tests given earlier this year.

 

Officials say they were just trying to ensure this year's scores could be compared with those from previous years. But according to multiple sources, the real story has to do with inappropriate questions from DC's testing vendor.

 

In recent years DC schools have begun teaching more rigorous content aligned with the Common Core standards, and this past school year students took a revised version of the DC CAS designed to test that content. Because the test had changed, some OSSE officials were working with the District's testing vendor, CTB McGraw Hill, to change the grading scale. The new scale would have used different minimum scores, or "cut scores," to define levels like "proficient" and "advanced."

 

 

In June of this year, responsibility for testing was transferred from the Director of Assessments to Director of Data Management Jeff Noel. Noel says he was surprised to learn that testing officials had expected to implement the new grading scale this year.

 

Using the new scale would have made it impossible to compare this year's proficiency rates to the levels reported in previous years, a fact no one outside OSSE had been made aware of. Only 6 days after taking over responsibility for testing, Noel decided to switch back to the old grading scale, with the support of others at OSSE.

 

Catania alleged in a hearing last Thursday that OSSE chose to switch to the old grading scale at the last minute in order to ensure gains in both reading and math. If OSSE had used the new grading scale, with its new cut scores, math scores would have been lower, by 3.6 points, and reading scores would have been higher, by 6.6 points.

 

These scores would not have been comparable to previous scores, since the grading scales were different. But observers might have missed that point. When other states, like New York, adopted new Common Core-aligned grading scales, they saw dramatic drops in scores. These states made it clear that comparisons to previous years would not be possible, but the decline in scores led to a public outcry nonetheless.

 

Test vendor's question

 

At the hearing Catania accused OSSE officials of manipulating the grading scale to produce gains in both reading and math scores—gains that Mayor Vincent Gray declared "historic" when they were released in July.

 

But two people involved in the process told Greater Greater Education that Noel was also concerned about the test vendor's approach to setting new cut scores. Those individuals said that at a June 17 meeting, a CTB executive asked OSSE officials: "What growth do you think makes sense for the state?"

 

In addition, CTB gave OSSE a form to guide the cut score process that allowed officials to explicitly indicate where the scores would be expected to end up. Choosing lower cut scores would have allowed them to report greater improvement in proficiency rates.

 

The two individuals, who asked to remain anonymous, said that the decision to return to the old cut scores was partly motivated by concerns about CTB's process and a desire to distance OSSE from it. CTB spokesperson Brian Belardi said CTB McGraw Hill has no comment.

 

Catania also made another allegation, with some justification: OSSE didn't reveal that even under the grading scale it ended up using, this year's scores are not as comparable to prior years' scores as they have been in the past. In most years the content covered by the test is the same as in previous years, but between 2012 and 2013 some of the content changed. Emily Durso, interim State Superintendent of Education, said that OSSE's failure to mention this qualification was simply an oversight.

 

While the true motives of OSSE officials in switching back to the old grading scale may be different than those Catania alleged, they are no less concerning.

 

Catania told the Washington Post that this controversy has him questioning whether so many high-stakes decisions should be made based on scores involving so much "subjectivity." Many advocates have been saying as much for years.

 

Others have argued that the problem isn't high-stakes testing generally, but rather that fundamental changes are necessary to restore faith in the testing system.

 

OSSE needs more independence

 

The first of these changes would be to give OSSE independence from the Mayor, similar to the autonomy conferred on DC's Chief Financial Officer. In fact, Catania has proposed legislation providing that the Mayor could dismiss the State Superintendent only for cause, like the CFO.

 

Mayor Gray is the only head of a public school system who also hires and fires the state superintendent in charge of testing and auditing the schools. Some observers feel that the Gray administration must have pressured OSSE to switch to the old grading system, although there's no hard evidence to support that conclusion.

 

Even if no such pressure was applied, the testing vendor's apparent willingness to base scoring decisions on expected improvements in proficiency rates creates a temptation that must be isolated from political officials.

 

The CAS controversy also demands a fresh look at the testing measures we rely on. It's precisely because proficiency metrics are so subjective that they are unreliable and open to political manipulation.

 

Measure growth, not "proficiency"

 

Instead of focusing on the "percent proficiency" metrics that are at the heart of this controversy, we need to use measures of growth—the ability of a classroom teacher to increase students' educational attainment.

 

When test results are based on a proficiency cut score, they indicate the percentage of test-takers who scored higher than that minimum. The advantage of this approach is that it gives the public a sense of what an acceptable score is. But it tends to magnify small changes and reveals little about changes in scores that are either well above or well below "proficiency."

 

Tests that are scored for "growth," on the other hand, use averages based on all participants' scores and compare them to previous years' averages. This method allows all changes throughout the test-taking group to be reflected in the final results. It's also objective: the calculation doesn't require making any year-to-year judgment calls about how to interpret the results.

 

Measures of growth would also highlight varying changes at different skill levels. Teachers would have an incentive to raise all scores, not simply to push students who are slightly below proficiency to being slightly above.

 

OSSE actually does report a metric of growth, or value added, known as MGP. But, with the notable exception of the IMPACT system for assessing teachers, few evaluations are based on such scores. Principals, for example, are assessed on their ability to increase percent-proficient numbers, even though such numbers can be impacted more by demographic changes or students transferring between schools than instructional quality. And DCPS, OSSE and the Public Charter School Board continue to present "percent proficiency" numbers most prominently in school profiles, leading parents to believe these are the best indicators of school quality.

 

Do you think the credibility of the testing regime in DC can be restored through these changes? Or do you think the problem is high-stakes testing itself, and that test scores should figure less prominently in school decisions?